The Bank of Canada Will Tighten Into Market Turmoil- The Loonie Hour Episode 15

Every mainstream bank economist is calling for aggressive rate hikes from the Bank of Canada. How far will they get? Meanwhile, national home prices ripped 26% and inflation touched its highest level in 30 years here in Canada land.
Listen to The Loonie Hour on your favourite podcast platform:
The Loonie Hour on Spotify: open.spotify.c...
The Loonie Hour on Apple Podcasts: podcasts.apple...
#TheLoonieHour #Macroeconomics #PersonalFinanceCanada

[@dorissteve912]

The wisest thing that should be on every wise individual's list is to invest in different stream of income and don't depend on the government to bring in money especially now the pandemic is hitting the economy

[@wilsonjudson1650]

you are definitely right , waiting on the government is a big waste

[@dorissteve912]

Investments are the stepping Stones to success especially if you been guided by a professional

[@williamjohn1374]

Investing is good but investing in the right thing is the actual key to success . who is your pro ?

[@dorissteve912]

That was exactly what I did, I trade with a professional stock expert "VIVIAN KLAINE MORGAN " who i met in one of the seminars..

[@dorissteve912]

There are so many investment out there but if profits must be considered then not all investments are good to go into.

[@martinz6445]

You guys are awesome, fun and informative podcast

[@Rawdiswar]

Best macro podcast in Canuckistan, you guys are pretty funny too! Love Dias!

[@saretsky]

haha thanks

[@b-rare]

This hurts everyone man. Even if you own homes , we all suffer. It’s our brothers and sisters out there. We’re all in this together. I’d give up 30% of my appreciation in my folder if I was guaranteed things would be little fairer for everyone.

[@mth469]

@ The entire purpose of Central Banking is to keep the people poor and desperate.

[@notalmostfamous9773]

I would as well.

[@markhoffman]

I’d give it all away

[@mohaargurpreet]

What a comment 👏

[@mth469]

@@mohaargurpreet people say this... but when it actually comes time to give it away... you'll get a different story.

[@ts9271]

I find it very interesting looking at comments saying no rate hikes are coming. If it does come to that, then real estate will continue to gain at 10 to 20% YOY. The bubble will grow even larger. We are at a point where we have to experience the pain in our wallets regardless. Can't put it off forever.

[@sharinglungs3226]

Sadly this has not been the federal of boc thinking. They just keep trying to kick the can down the road hoping the day of reckoning never comes.

[@b-rare]

I just read in news article today that Canada is thinking of waiting till April now to raise the rates lol. Something about immigration I didn’t really get it . I’m with the Portuguese man. No rate hikes until summer and I think they’ll get to 3 hikes

[@mth469]

People have stopped listening to all that long ago. Most people are expecting high inflation followed by a massive crash in the economy.

[@sharinglungs3226]

Delaying till the summer would be catastrophic as they’re already a year behind starting to tighten. I do worry with the added of full employment it gives them that opportunity to be that stupid.

[@b-rare]

@@sharinglungs3226 well well well...looks like 0/1 on the rate hikes. waiting for steves next loonie hour i thought it was every Friday he posts.

[@jchong416]

"You're the smartest looking guy or of the three of us'' is the best backhanded compliment I've heard in a while

[@kylen4701]

The boomer is dominating the millennial guys on this podcast.

[@b-rare]

Dude things in Ontario are selling for 200k over just like your story about the cookie cutter townhouse. But it’s because inventory is mad low. Wait for spring more listings and those people that paid too dollar should lose but the problem is those prices set the price for the block (comps). It’s ridiculous. I’m sick to my stomach. Even though I own multiple prosperities, I don’t even like this asset inflation. Me making more money doesn’t make me happy. It’s not fair for people man. People work so damn hard and they get screwed like this. I hate it .

[@Iliinois18]

Hahaha, i hope you can get a good nights sleep with all that worrying about the common working man...

[@b-rare]

i have a lot of family members who are suffering from this and they work harder then I do for years. The pay stays the same, and inflation is killing them. Its very sad

[@francisfoley2109]

I think more and more homeowners will be upset when there own children can’t get a place to live, even though they benefited from house appreciation .

[@kevinbarr9933]

Interesting episode! It caused me a flashback to when Chief Economist Rosenberg stated that Canada's housing market is "the biggest bubble in the Universe" and he further stated that a 1% increase in interest rates would Pop that bubble! Let's just see what happens on Jan.26th! Will it be the first shot fired at the growing housing bubble and overall out of control Inflation? Also, what Rich mentioned about the debt levels come due at the back end of the curve is going to be brutal, and it reminded me of the interview I saw the Stephen Harper who was worried about the QE and the debts being run and eluded to the fact that we will pay the piper for this down the line for this! And yes when the Baby Boomers come for their funds it's also known as the Silver Tsunami, so it would be a great topic for you guys to dive into The "Silver Tsunami" coming from the aging out Boomers!

[@GK-wn6ur]

I've heard the "foreign money isn't a factor in Vancouver real estate" from the industry for 20 years. My area in Richmond has an employment rate of about 50% and an average household income of $53k/yr. Yup, janitors, grocers and the cable guy are the ones bidding up 2 bed condos to $750k...............

[@mth469]

They could be - by taking on massive leverage. And why not if they get to pocket the profits on the way up while "walking away" if the housing ponzi scheme crashes. There's no downside to house flipping !

[@GK-wn6ur]

My residence was just sold. We had about 12-20 groups come in and have a look. Not a single one of those groups were native English Speakers. Sure, they could be massively leveraged but the employment statistics for the area are telling. Interest rates have been artificially low for decades being massively leveraged isn't a new thing in this market.

[@sharinglungs3226]

When Steve or any white person speaks of foreign investors I don’t take much stock in it. Foreign investors prefer to deal with people of the same ethnicity especially when English is a language barrier. It’s obvious a housing market can only move by how much credit the buyer pool can acquire. Certain income levels can never move a market by one of a higher income level as we’re seeing so obviously there is either a pooling of money or foreign investors pushing market to new heights.

[@GK-wn6ur]

@@sharinglungs3226 As soon as I see the phrase "any white (or any other race) person". I know I'm talking to an idiot who isn't worth talking to. Crawl back under your rock.

[@flyingduck22]

Yup!

[@TylerMarsh87]

Just to clarify mortgage pre-approval of variable rates. Most big banks will do Prime (2.45% currently) minus a Discount Rate. When you get Pre-Approved for a Variable Rate Mortgage, you are locking in the Discount Rate Portion. The Prime Rate can/will still fluctuate as the Bank of Canada Raises or Lowers Interest Rates. A good way to play this might be to do a split mortgage. Some banks offer products where you can have half your mortgage as Variable Rate (to take advantage of the lower rate) and half your mortgage as a fixed rate (to Guarantee a fixed rate) this way you can take advantage of an overall lower rate, without putting all your eggs in one basket and getting screwed on the rate if it moves against you. In addition to this, many variable rate mortgage payments do not increase when rates increase. This will mean your payment will remain the same, however it will increase your amortization as more of your payment amount is going towards interest rather than principle.

[@luckyPiston]

It really helps if u hook up with a lender who knows the game , the girl i had helping me at CIBC was pretty clueless , she was more like a data entry clerk ! Shopping the mortgage is as important as shopping the house maybe more so ?

[@elephantmoney]

This sucks. I paid $555,000 for a townhouse in Fort Mcmurray in 2013. Right now it is only worth around $300,000. Fort Mac has still not recovered at all while everywhere else is record highs.

[@donm2067]

Right now there's people paying 800k$ for a town home in Dundalk Ontario.. At least you still hold an asset.

[@elephantmoney]

@@donm2067 I don't know. I would much rather sell for a big profit, rent and wait for the crash to buy again.

[@donm2067]

@@elephantmoney should have bought almost any where else. Places you couldnt pay people to live in Ontario 10 years ago, are now going for millions.

[@elephantmoney]

@@donm2067 Yupp. And the kicker is I have 2 houses up here. Both underwater big time.

[@dirtguyedmonton]

The Federal Gov war on Alberta has had deep consequences.

[@martinrev8487]

Seriously guys, buy some microphone stands.

[@antonvilgan1669]

All mics are the same. This is probably advertising of the company that provides them. They show them of on purpose?

[@saretsky]

we have stands and they have been annoying to work with

[@martinrev8487]

@@saretsky What's really annoying is not hearing Rich's oil rant. I blame the microphones for distracting the group. You lost control of the pod, just like the BoC will ;) #LetRichRant

[@MoneyPrintingCircus]

I work Saturday mornings and look forward to listening every week! Glad you mentioned pensions. My wife is a teacher and they all assume the pension will be there in 20 years. I’m skeptical. You help me get a better understanding. Without all the doom and gloom, very enjoyable 👍

[@mth469]

I like a little doom thrown in. I agree - all the govt workers dreaming that their pension will be there are not aware of what's in store. All such govt promises of largess are fake. I'm likewise suspicious of RRSP. I think its a ploy to get responsible people to save and then deny them CPP because they will be deemed "too rich" to need it despite paying in. In general, any attempt to separate a person from his wealth via some firewall with banksters skimming cream along the way is in reality a rent seeking and fraudulent scheme. Yet not 1 in 10,000 will realize this. Its awesome to have met that 1 right here, sir - as that makes us 2. What are the odds. Have a nice day!

[@dwightcarlson7136]

The last people who will lose their pensions are government workers including teachers. It is payback for voting Liberal and NDP.

[@Jaywed]

Raising short term yields will do nothing if the long end of the curve remains flat. Central banks can only try to control the narrative but really do nothing when it comes to interest rates and money creation.

[@lindsayarmstrong8168]

Listening for a third time, getting more informed every go. Thanks for your work on this show, it’s so appreciated

[@sandralaurens5110]

Bank of England are raising their interest rates February and march so it'll be interesting to see if Canada do the same.It's unreal the way the Canadian prices are going crazy.I can remember Canadian prices dropped considerably in 1980 so it could happen again.

[@sebastienloyer9471]

Bank of CANADA should be burned.

[@nickstoddard4770]

Keith! You have to eat a Twinkie!😂The banks didn't change the rates!

[@marcus20848]

Great content that we don't hear on MSM

[@jbay088]

Thanks for the video. Two things: 1) Shelter inflation will be increasing in tandem with BoC rate hikes, as a big chunk of that basket is mortgage interest payments. 2) Tiff Macklem predicted 5% CPI by the end of 2021 at the same time that he said rate hikes could start as early as April. If he does hike in January, after CPI came in right in line with his own predictions, it will be interesting to see how he explains what changed about the situation. Of course, I think the rate hikes should have started a year ago, but he'll still have to explain that change of heart.

[@mth469]

its astonishing to me that after well over 2 decades of BSing that people actually believe the words of central bankers. they have been lieing about the real rate of inflation and blatantly so and the plan to raise interest rates forever. why anyone ever wastes their time even listening to them is beyond me. the measure of inflation is itself been corrupted (understated) to the point where its meaningless.

[@luckyPiston]

@@mth469 I think the general consensus is that whatever they say it is . just double it.

[@jeffreyasirifi9037]

Great Pod Guys!!! Pension conversation was amazing insight

[@saretsky]

thank you

[@Iliinois18]

So thankful for Trudeau and Freeland such a dynamic duo...

[@brianpereira7483]

The 1-2 punch with the economic freefall worldwide

[@steveshideler1333]

Part-time drama teacher at the helm and a journalist taking care of the books… Everything looks good here eh?

[@brianpereira7483]

@@steveshideler1333 all by design as noone wanted to hear the truth so they wanted spend spend spend

[@GearsDemon]

#BREAKING: Canada loaning $120M to Ukraine in face of Russian aggression.... what a clown.

[@georgedavidson1221]

Raise the. Interest rates to 10. % and stop the crazy market Allow all houses to be split up into apartments. Instant housing Federal. and. provincial governments need to fund water and sewer projects All municipalities need to upgrade their systems

[@mth469]

@@ryanonline4817 The market will force a rate rise.

[@gyoung4597]

Glad someone remembers when CAD was less than 70 cents! Justin Trudeau and Stephen Harper have undone so much of Paul Martin's rescue of the CAD. Thxs for the great video!

[@luckyPiston]

Yeah as i recall Martin was an open book and when you looked at what he was doing it was pretty hard to argue he wasn't doing the right thing, Freeland on the other hand gets confused when discussing difference between deficit and debt , friggin scary shit !

[@luckyPiston]

I remember getting 62 cents on the dollar on EBay back then and being grateful for how much more buying power i had when it went to 66 cents , our money has always been a joke to the yanks....

[@adamzandberg4116]

😅 Great point rich, what a peach our finance minister is wow... I figure when they roll over the short term debt, they are figuring on loosing the next election and blaming it on pc down the road....

[@dutchgirl7603]

I'm watching this on Monday. I'd say, by looking at the stock market, it's now 100% chance of an interest rate hike and many have been caught off guard

[@mattslowikowski3530]

I can't wait for rates to rise!

[@valerienikkel3072]

Shared your KZbin channel with my friends and even my financial advisor. 😀

[@saretsky]

Thank you !

[@purethinking269]

Why would housing slow if they raise rates? Real estate is now a national blind auction. Everywhere big city to small town. So people aren't just buying houses, they are paying way over the value, why would a small rate hike change this?

[@hjhfjahfa]

Nice to see some Canadian macro focused content, please keep making these

[@jamessilverton8640]

Fed called the BOC this morning and told them it was a no go.

[@LC-hv1qn]

Lmao.... The old guy was wrong... They didn't raise.

[@nickstoddard4770]

How dare you insult the donair! Richard! Good episode boys

[@sarahwaters7290]

Great! One of your best talks guys BUT when Keith says oil is going down and Rich says it's not.. We need to talk about that! Lol :)

[@sebastienloyer9471]

Bank of CANADA is heresy.

[@jaysz6924]

Great context!! Thanks boyz

[@TheFeroz3441]

Thanks ..............................

[@AH-mw5wx]

That's a really great point about all the short term bonds that will have to be rolled over. If the BOC doesn't step in to keep buying, wouldn't that mean that short term GIC rates will have to increase. And wouldn't this increase also mean a spike in mortgage rates, irregardless of what the BOC overnight rate is ? Why would the banks lend at rates lower than their cost of money ?

[@backup1478]

that makes sense, their strategy is to inflate away the debt

[@AlexSuperTramp-]

ty for same day upload to yt

[@matthew1106]

My prediction for rate hikes is they will wait and see what the US does first. They tend to base any and all policies off that.

[@TrudyBraiden22]

Fantastic collaboration

[@killera5216]

$9 trillion national debt? How much mortgage debt? Consumer debt? Forcing people to get injected? Truckers heading to Ottawa. Buckle up boys and girls.

[@AK-pz7om]

Damn, Rich was right 😢😢

[@Sajid7x7]

Tom Brady of Macro was right!!

[@sagefool5786]

I live in the Greater Vancouver Regional District and have been looking at real estate in the central interior of BC for about a year. Over the past week I have gotten 3 foreclosure listings. This is a new thing...I think there may have been one over the past year, 3 in one week is significant in my opinion.

[@luckyPiston]

What's the unemployment situation there ?

[@markcrowther7513]

I have a friends dad just start serving 3 to 5 people a week in the Quenel Prince George region for foreclosures. Pandemic had all these on hold. You should start seeing even more shortly.

[@luckyPiston]

@@markcrowther7513 Is yur friends dad a lawyer , sheriff or something like that ?

[@bobbyclair386]

Why is it that Mortgage rates cannot be decoupled from the Fed set interest rates? I know they are usually 1% over the fed rates, but why can't they be more than that?

[@mth469]

Why do you think they want a cartel of private banks aka the Federal Reserve with monopoly on the issuance of money and credit?

[@michaelbyrne6515]

Which bank is going to be the first to raise their rate without a BOC rate hike and let all of the customers go to their competitor. They will lose market share.

[@stephanienguyen6992]

FED said everything is OK. Bank Of Canada - said no raise rate, but the Market will hit to the bottom......💣💣💣

[@MM-yq2mc]

Trudeau and Freeland have Canadian's best interest in their heart. No reason to think otherwise

[@killera5216]

Are you serious?

[@nvanguy6868]

😂😂😂😂are you paid by then

[@bobbyclair386]

And it happened....I mean nothing happened. Rates didn't change.

[@jcook1520]

Donairs are not disgusting!!

[@mth469]

Bank of Canada will simply copy the wording that the Federal Reserve said today.

[@5MinsYoga]

Steve getting lots of gray hair, is it because you went super bullish on bitcon at 60K ? how's the tshirt btw....

[@steveshideler1333]

Can the BoC afford to raise rates ahead of the fed? As an exporting country, does it benefit us to raise rates before the fed? Doesn’t the Trudeau government like low Canadian dollar to fuel exports?

[@mth469]

BoC simply copies what the Federal Reserve does.

[@nadeemamode]

@@mth469 like the other dude said....we export to the us so we benefit from a low dollar

[@dickenstom]

We also buy all our shit from China so it works two ways

[@nadeemamode]

It depends where we are exporting. If we export to à strong and légit American dollar, fine. If it's a weak dollar, not so much

[@steveshideler1333]

@@nadeemamode exactly. So if we raise rates before the fed does, the Canadian dollar will strengthen. Need to wait for the fed to go first was my point.

[@r.t.7925]

Hey Tom I can wait to see you eating that twinkie or donair on the next show :) You got to move that decimal point one digit to the left or Xi Jinping will be asking you to be his finance minister :)😀

[@s2syed]

Donairs are delicious lol

[@notalmostfamous9773]

So whats everyone's take on where oil prices are going?

[@opnion2294]

good content. whole world is under depression. chinois money is not moving anywhere dont under estimate your enemy. WE can see how they grow past 25 years. how we slowly break down our self. good to here different opinion. Lock your mortgage for 5 years pay more and more no free time* and work and pay. 5 years after you will laugh like other people.

[@tuvstar100]

can someone please explain me why would high interest rates damage markets? would money in stocks and etfs go to hell? does it mean that the market would crash?

[@GreenBeanGreenBean]

stock market will crater first if rates go up a lot.....then the bank will cut again.

[@kochan0410]

Already starting.

[@luckyPiston]

Well you can take a zero interest rate loan and your payments are actually paying the principal , you can use the money in the loan to make payments for a period of time and with the rest of the money you play the markets and take profits there, problem is if you have to start paying interest and your payments go up and you have to start pulling money out of your market plays the whole thing starts to unwind ... then you pull all yur money out of the market to pay the original loan before things get out of hand , hopefully when the smoke clears you've had a profit overall, Now if you dont know shit about any of that u let a money manager do it for you and hopefully he can make some money on what u borrowed and you can juggle payments and profits and not nuke yourself. At the end of the day you look at the markets and you realise that a lot of the volatility is surrounding borrowed money and leveraged assets and government getting in there and buying bonds even junk bonds (QE) just adds fuel to fire ! Some parts of the market are literally set up like a casino .... Now a long time ago ... oops that's another story. Does that kinda answer yur question ?

[@Ehsaaaaaaaaaaan]

Get some stands for those mics. You guys hold them for an hour I feel bad lol

[@saretsky]

the stands have been an utter failure

[@Ehsaaaaaaaaaaan]

@@saretsky haha fair enough! Love the show! Haven't missed an episode since the looney hour started!

[@jeffhuang5415]

why the worry about rate hikes, there is stress test, isnt there？good through 5.25

[@kochan0410]

Only for large banks and there are loopholes. Doesn’t apply to smaller lenders.

[@jeffhuang5415]

@@kochan0410 large banks lend over 70%-80%, if people are being honest about their affordability, nothing needs to be worried about. if there is, then it is not really a rate issue.

[@rahzelwashington6847]

I dont see the rate hikes playing out. If we see a levelling off of housing prices you are going to see the government get very scared. As long as CPI stays below 5, i think we might see QE back and more MBS purchases to drive down mortgage rates and stimulate the housing market

[@luckyPiston]

So why do you think that leveling would scare the government ?

[@MM-yq2mc]

THEY ARE NOT GOING TO RAISE RATES. Repeat after me. But keep dreaming.

[@stevenvanderheide6472]

If the stock market and crypto market crash real estate will follow within 6 months.

[@sebastienloyer9471]

Maritime is sold out to the Queen. Just no spines

[@donm2067]

I just want to watch most realtors cry, and have to work a job that requires skills or talent. Buh bye Range Rover.

[@Ajlyu]

You do realize our boy Steve is a realtor right? Lol

[@donm2067]

He's the exception to the rule. I got 3 realtors in my town making insane money, the biggest turd of them all was a Disney on ice skater, she just gets handed money.

[@sebastienloyer9471]

Gut reaction . I vomited

[@9999760]

Tell us something we don't know haha

[@YMu-xe4fi]

Seeing lot of the Chinese people around me in Vancouver. Lot of them left since COVID is better managed in China where cases are essentially zero in most cities and everything is opened.

[@johnnydeppp3237]

Steve is not making sales so he wants rate hikes.

[@saretsky]

I am doing just fine don't worry about me sir

[@nvanguy6868]

Chindia

[@stevenvanderheide6472]

If the stock market and crypto market crash real estate will follow within 6 months.