November 18th Episode 01:03:24

Welcome to Money Talks. My name is Mike Campbell. And when I say I appreciate you being with us, it's so sincere. And I really appreciate when people say, hey, I've been recommending Money Talks to other people.

I can't tell you how important I think it is to raise the level of our discussion and understanding of things financial and economics. That's why we bring on terrific guests, which we're doing today, by the way. Jared Dillian, he's the author of several books, but his newest one deals specifically with financial stress, how to live stress-free. And he's got a couple of major points that I think you should hear about.

I've also got Ozzy Jerk, lots to talk about. But one of the things I want to ask him, is this a good time of year to actually sell your house? Well, Ozzy says yes, but follow these particular recommendations and you're going to enhance your chances. Also, Victor Dare is going to join me. Vic, we've got to talk about the consumer price index that came out of the States.

That's what the central bank is talking about and looking at. And man, did the markets, it doesn't matter, bond market, stock market, ever take a particular stance? They say, hey, the rate...

increases are over. Not only that, look for decreases to come. More with Victor on that. Rob Levy is going to join me about the challenge that is presented by the fact that people are watching their mortgage payments go up and how it ripples through the rest of the economy. So much more coming your way, including a great Goof Your War episode

We've got a quote of the week, this one talking about that whole trend of, whether it's a trend or not, but talking about decolonization. It's a word that sort of has entered the lexicon in a much more prominent way in the last, you know, five, six weeks. Interesting comment about that from one of the UK's best known historians. Shocking stat of the week. Wait till you hear them. Talking about the state of the Canadian economy. But first...

If there's a positive, at least for politicians and our attention being focused on the very serious, important issues that are going on in the Middle East, it's that the government gets to escape some level of accountability in other issues. Especially an example, I think a big prominent example should be the newest report, report card, from the Liberal-appointed Environment Commissioner, Jerry DeMarco, who concluded in quotes, there has been no downward trend in emissions since 2005.

Well, it has me thinking, has any government got more traction for doing less?

And it had me wondering if any of the climate cheerleaders are the least bit embarrassed by being taken in so thoroughly by the all talk, no action approach that Canada has adopted. I mean, given Canada leads the world in environmental virtue signaling, given that climate talk tops the federal government's priority list, given that Canada made no meaningful progress in reducing emissions, you think it would have made some pretty big headlines, but it didn't.

The only meaningful decline in emissions came when the economy went to a deep retraction during the 2008 subprime mortgage crisis, and then again, 220 with the COVID lockdown. But our lack of progress, it didn't make the headlines.

But that Environmental Commissioner report chronicles a damning mixture of wishful thinking, along with the familiar theme found in numerous reports from the Parliamentary Budget Office and Auditor General, because it chronicates tens of billions in spending, ineffectively and wasted, because there are no set targets and measures to assess progress. That's what's happening on the environmental front.

And that's the case with what government calls the most serious, alarming, catastrophic challenge facing mankind. Not quite serious enough to critically evaluate, measure and monitor progress. What's impressive is that it doesn't seem to bother the climate crowd, including politicians, academics, the educational establishment, the big money and environmental groups and activists. Doesn't bother them one iota. No progress? No problem.

I mean, just this week, we had the prime minister at it again, declaring that amateur sports, amateur athletes must take the impact on climate into consideration. All talk, no action.

Now, forgive me for digressing for a moment, but I'd be remiss for not thanking the many people in the climate cloud, including in the media, for the so many laughs, the happy times when they criticized the conservatives for not having what they call a workable climate plan, when clearly judging by the results, the Liberal NDP government don't either. Let me be more specific.

We were last in the G7 for CO2 emission reductions. And now the latest report found that we found no meaningful reductions in emissions. That's a sign of no workable plan. But I don't know how anyone can be surprised. I mean, most grownups have long been aware that when it comes to climate change, our politicians have been far more interested in saying the right things than doing it.

And the election results, by the way, suggest that the majority of Canadians think that's just fine. I mean, we've got stuff now like the wind power narrative is falling apart with major projects canceled in the EU as costs go up. The EV transition, electric vehicle transition rhetoric, it's falling apart with

with sales not close to forecast. Manure manufacturers taking brig losses. I mean, Ford's estimated to take a $3 billion loss on its EVs this year. Tesla's cut prices by as much as 30%. Why? Because they're trying to keep sales volumes up, and they're shelving plans for a $1 billion facility in Mexico. Well, at the same time, we're no closer to meeting the lithium demand for batteries than we were 20 years ago.

What about the supply of copper and cobalt? Not even close to meeting future demand. And God, it's taken 20 years for advocates to, and it's not all of them, a few of them now admit the need for massive change and growth of the electrical grid. I mean, the government's emissions reduction targets, along with the transition to green power and zero emissions by 250. Without a practical plan, though, we're never going to be achieved. All that the Environment Commission is doing is verifying what any practical adult can

already suspects. But you know what? Hey, if you're worried about climate, I have some solace for you. As Finance Minister Chrystia Freeland admitted, it doesn't really matter what Canada does. We're only representative of 1.5% of global emissions. So in her words, we can't move the dial. But in Canada, this is a reminder. It's always far more about politics than emissions reductions.

Hey, just a reminder, by the way, of the World Outlook Conference. How can you forget? Because I never stop talking about it. But it's coming up February 2nd and 3rd. Early bird specials are running out. So I hope you do join us. We will be talking a lot more about economics and finance than politics. But I'm sure you'll enjoy it. Great roster of speakers. Just for more information, go to Mike's Money Talks dot C-A. Mike's Money Talks dot C-A. Click on the events button. As I say, I sincerely hope to see you there. Get a chance to chat.

I'm really looking forward to this chance to talk to one of the best known financial commentators in the U.S., but the author of numerous books. I mean, I first came into contact with Jared Dillian, Street Freak, All the Evils of This World, Those Bastards. I love that's the most recent one. But he's got a brand new book coming up also that says, No Worries, How to Live a Stress-Free Financial Life.

And it's available for pre-order right now, but man, is that timely. Jared, thanks so much for finding time for us here. Yeah, thank you. Let's start with a little bit about your background. I should have said, by the way, podcast host of The Dirt Nap. I mean, this is an all-encompassing subject these days. Have you ever seen it sort of more engaging, more busy for you?

What, the topic of financial stress? Yeah, stress, but also, I mean, you having to comment on what the central bank's doing, people asking you about interest rates. It runs the gamut, it seems to me. Yeah, there's definitely a lot of stuff going on.

We are, you know, we're sort of teetering on the edge of recession. And if you think that we have a lot of financial stress now, wait until unemployment gets up to about 5% or 6%. So I think that...

I think that we are in the middle of what could be a decade of subpar stock returns. I think throughout the 2010s, people got used to new all-time highs every day. We are about 22 months before the...

before the last all-time high. And we could, you know, I think it could take 10 years for stocks to get to a point where valuation is reasonable again. So a lot of economic pain along the way.

And let me jump forward also. I know you've been commenting on the bond market, but if stocks are going to be sort of mediocre or a C-minus in returns, what about the bond market? It's certainly been an F in returns, broadly speaking, over the last couple of years. Well, it's been going around on Twitter that this is the worst bond market since 1784. You've probably seen that. Yeah.

there's never been three down years for the bond market in a row. And we're on the verge of having three down years in a row. Um, I'm actually pretty constructive on bonds here on the basis that we are probably going into a recession. Um,

You know, people are kind of chronically underinvested in bonds all the time. And especially now since the returns have been so bad. You know, people have the 60-40 portfolio or 80-20 or stuff like that. Yeah.

You know, it's not clear to me that we are going to have a 40-year rising interest rate environment like we had a 40-year declining interest rate environment. It's not clear to me that's going to happen. And I think you do have to have at least 40% of your portfolio in bonds. And government bonds or corporate are not making a particular distinction there? Not really making a distinction. I mean, anything that has duration, you know.

And when you say duration, that's a great lead-off point. Are you talking sort of take a 10-year bond out, take a 5-year or 20, what have you?

Well, I think the short-term bonds are more attractive here. The curve is still inverted. It's uninverted quite a bit, but it's still inverted by about, I think, 30 basis points. And if we're going into recession, the Fed will cut rates. They're not going to cut rates a little. They'll probably cut 200 to 300 basis points. And there's sort of chronic supply issues that affect the back end.

with the big auctions that we have, the deficits that we're running. So it kind of argues for a steeper yield curve. So, you know, if you're looking around for places to get yield, like investment grade or even high yield corporates in the front end, like two, three, five year maturities, like you can get six, seven percent

you know, without a lot of risk, you know, and it makes, I mean, it makes a lot of sense right now.

And let's go to a couple of other things. This all comes back to your new book, though, and it's available right now for pre-order, but it's called No Worries, How to Live a Stress-Free Financial Life. And, man, that must be music to a lot of people's ears. I'm reading all the polls, I'm sure, as you are, and everybody is. You know, I've never seen a period. You know, I'm going back to 2008 in the subprime, but I think this still surpasses it, and I think it's got a lot to do with people worried about their mortgages,

Worse in Canada, by the way, when you've got a five-year mortgage is the norm, not the 30-year. But still, mortgage expenses, other borrowing expenses, people watching their cost of living.

They would love to know how to live a stress-free life, I'll tell you. Yeah. I mean, I wrote the book in 2021, kind of before inflation took off. So there's really – I don't have a lot of discussions about inflation, which is kind of too bad. But basically in the book, I say that your financial well-being –

is determined by three big decisions. Okay. How big of a house do you get? How expensive of a car do you get? And how much student loans you have? Those three things. And if you get those three things right,

then you really don't need to worry about like buying generic brand soup or like how much you tip at a restaurant or whether you buy coffee in the morning. Like we are taught to believe that it's the little things that count. You know, that's like an American thing. We're taught that if you make your bed in the morning, then the rest of your day will go great. It's the little things that matter. It's absolutely not true. The little things don't matter. It's the big things that matter.

Just for example, if you get a house that costs $100,000 more over the life of a 30-year mortgage, you will spend $120,000 more in interest, assuming you don't make any prepayments, right? That is a huge amount of money. So if you get an $80,000 BMW and you finance it at 80%, you're going to spend $40,000 in interest.

This is what gets people not buying a coffee for $4 in the morning. I think it's just a wonderful point that you're making. And I think people are experiencing it firsthand as we were chatting before, you know, the average Canadian mortgage is a five-year mortgage. So the pain is coming now with over 60% of mortgages due in 2024, 25 and 26. And, you know, they look at that extra interest that they're paying and you go, well, that's a lot of cups of coffee if that's what I was worried about.

You know, or the little things, as you point out in the book, that, yeah, we may have missed the forest for the trees there in terms of what are the big picture? What are the big things you're buying? You know, and I can go on and on about that because I get a lot of communications at me.

describing some of those mistakes you're alluding to on that point, but such an important point to make that get the big stuff right. Then the small stuff isn't that important, but don't focus on the small stuff if you got the big stuff wrong. Yeah. I mean, you know, bringing up housing, like, um,

there's a lot of people try to do these calculations as to whether it's more expensive to own or rent. Um, and in the United States we have, we really have a cult of homeownership. You know, I, I get, I get these 27 year old kids that come to me and they say, well, I got to buy a house because I don't feel like an adult because I don't own a house. And I'm

And I'm like, renting is really not that bad. Like 90% of the time, renting is cheaper than owning. Okay. And first of all, like, you know, the landlord's got to fix stuff. Like you don't, you don't have any responsibility at all. Like renting is the best thing in the world. So, you know, I would caution people against getting into home ownership, especially, you know, like you mentioned Canada, like Canada has been overpriced for many years. Yeah.

And like it's, you know, you know, rents have gone up, but still relative to owning like renting is a lot cheaper in most parts of North America. So let's talk about mistakes for a second and or even the approach. I mean, your approach is clearly different here. And one of the things I know you've talked about is how to use money sort of as a tool, but not dominating our lives, not controlling us, which a lot of people feel, especially in the environment we've been living for the last couple of years.

Yeah, I mean, really, the book is about minimizing financial stress, but also part of that is

you want to get to a place where you're not thinking about money all the time. Like I, you know, unfortunately because of my job, like writing an investment newsletter, you know, I have Bloomberg open up on the screen over here and I have all these charts and I'm always thinking about money, but I would like to be in a place where I think about money like 1% of the time. Like when I go to a soda machine and I get out my wallet and I get out two bucks and I pay for a soda and then I put my wallet back and I don't think about it anymore. Like,

Like you really want to be in a place where you just don't have to think about money. And a lot of the financial education that's out there puts people in a position where they're always thinking about money. Like if you think about Dave Ramsey and putting money in envelopes and stuff like that, you're just consumed with it. Like you're always thinking about it. And like there's much better things to be using your brain than thinking about stuff like that.

What do you think about budgeting? You know, that's another thing that, you know, sort of a staple of financial advice is, well, you got to start budgeting. And that, again, gets you thinking about money nonstop. Yeah, I'm actually, I don't talk about budgeting at all in the book. Yeah. I don't think a lot about budgeting because, look, like there's a couple of things you have to get right. If housing is less than 25% of your income,

And transportation is less than 10% of your income. Like those two things right there. If you, if your housing is less than 25% of your income and your transportation is less than 10% of your income, you probably don't really need to make a budget. Like what happens is, is that somebody, somebody pays 42% of their income for housing and it crowds out these other expenses and then they don't have the ability to save. Um,

And that's when people start making budgets. But once again, if you get the big things right, you don't really have to do that.

Let's come to the car again just for a second because you appreciate how much we talk about housing generally speaking, but we don't speak about that car purchase near as often and yet it's a depreciating asset. What are the guidelines you'd give somebody about the purchase of a car? Keep this, is it straightforward and just saying, look, man, if it's consuming more than 10% of your income, you should rethink that or get a smaller car or an older car or understand how to ride a bike.

Yeah, the way to think about it is, first of all, you calculate how much you spend in gas, which is $2,000 to $3,000 a year, but let's say $3,000. And how much you're going to spend on maintenance, which is going to be about $500 a year. And how much you're going to spend on insurance, which is about $1,000 a year. So that's $4,500 a year. And let's say you have a $55,000 car that depreciates on a straight line basis over 10 years. So you're spending $5,500 a year in depreciation.

So your transportation expenses are $10,000 a year. So since your transportation expenses are $10,000 a year, they have to be less than 10% of your income. So you have to make $100,000 in order to be able to afford that car. That's how you do the math.

But that's such a terrific example because people can understand. They go, okay, what's my gas costing? And they usually underestimate. What about maintenance? But your other part about depreciation, you know, I don't know anybody who actually includes that in the cost. And you say, what does it cost to have this?

And obviously a key component when you paid, when you put out 40 grand and whatever it is, you know, eight years later, it's worth five grand. I mean, that has to be included. And I just think that part of the educational process needs to be improved dramatically when it comes to our personal finances.

Yeah. And, you know, sometimes people think the answer is getting a used car, but that's not always the answer because, you know, a used car, depending on how old it is, might have some gremlins and you might have to spend more on maintenance. So that's not always the answer. I've always been a fan of getting a cheap new car.

Toyotas, Hyundais, Hondas, cars generally that don't give you any maintenance trouble at all. Those are usually the best deals. And Ali, your point, the other thing in many, well, virtually every part of Canada is you better, you've got to include the cost of snow tires. And I only say that because I bought some new ones not that long ago and I'm sort of jaw dropping, like that was $1,000 out of the pocket.

And again, all I'm suggesting is, as you are out of the book, is you got to include that stuff and then make an evaluation. But it doesn't do you any good to ignore some very realistic costs. Yeah, absolutely.

Any other big – no, those are big-ticket items, and that's why you wrote about them in No Worries. But any other sort of things along that sort? I just remember in dealing with a lot of people going back several years, the amount of money some people spent unconsciously and didn't get a bang for it. Like you'd go, what happened to your money? And they'd go –

Well, I went out for dinner every day last week. Wow. What's a good, I don't remember, you know, I'm just saying the cost of people's lives, they have to get more conscious about where the money's going and coming back. And then as you say, get in control, don't let it, don't let it run your life and start with the big stuff. Yeah. I think, I think there is a small minority of people out there who are overspenders, you know, people who will go out to eat every week and people who will buy, you know, fancy clothes and fancy toys and vacations and stuff like that. Um,

Americans are puritanical. We're descended from the Puritans. And what I found is that the vast majority of people are very good with money. They're not big spenders. The personal finance industry takes this person with $100,000 Chevy Silverado and a 580 credit score and says that this is the bad guy. This is the bad person.

But, you know, there's such a thing as spending too much, but there's also such a thing as spending too little.

Right. And like you can I mean, you know, I don't know if you've ever been out to dinner with a bad tipper. Right. Yeah. Like somebody somebody who's trying to chisel five bucks or 10 bucks off a tip and it's embarrassing for everybody. And, you know, like there there's there's people who won't send their kids to private school, even if they have the ability to do so. Like there's just there's like there is such a thing as spending too little.

I'm sure you've opened up a can of worms with me. I can think of someone I know and I'm not going to use the name. Think about this. Up in Canada, we have something called the GST, goods and services tax that gets added on at 7% to a restaurant bill. And I'm looking over and he's got his calculator out.

And in the calculator, he's making sure he doesn't pay 20% of the $1 or $2 that's going to be the GST tax portion. This is not an exaggeration. I saw him do it so many times, the list. And I just, I'm sorry, I can't help but laugh. I just thought this was absolutely unbelievable. Let me come to a couple of other things that are big time here. And that is we've got an aging baby boom population.

I think we've got some questionable pension solvency issues. Illinois comes to mind all the time, or Chicago does. That's a municipal I know, but California, the CalPERS. But retirement's on our mind. Any tips for that about saving for retirement, et cetera, or something like that? Well, one thing I would say is there's – I'll give you some statistics. In the United States, you can take Social Security between the age of 62 and 70.

And if you take it at 70, you get twice as much money as if you retire at 62. Okay. And it increases linearly 8% a year in between. Okay. 50% of people retire at age 62, 2% of people retire at age 70.

what I found is people have like this underlying pessimism as to how long they're going to live. You know, they get to be like late fifties. They're like, Oh, I'm going to be dead in 10 years. I should take social security age 62. And then they live to be like 87, you know? So social security at age 62 is a really bad deal. You get like 2,300 bucks a month. It's not, it's not really enough to live on. You have to have some savings or something else to supplement your income. So, uh,

You know, and the interesting thing is, is that the Social Security Administration profits off of this. Like their actuarial models depend on people retiring at age 62. If everybody retired at age 70, Social Security would be bankrupt. Right. So it's beneficial for them if you take it earlier. So you should retire as late as possible.

It's interesting because that's a question I get a lot too. I mean, I'm glad you've addressed it here, but I get that a lot is what, you know, we have that same flexibility of when to retire. People want to know when to retire.

what's the best choice for me? So that's a great answer to give people some guidelines about what to do that way. Let me come back to the environment that you're dealing with right now, because as you say, the book deals with our personal financial issues. But, you know, other books you've written, what you do on the dirt nap is talk about the current affairs in terms of our finances or the economy, that kind of stuff. What's the biggest worry you have today in that regard?

I generally don't worry about things. You know, I actually wrote a piece recently in the Daily Dirt Nap called The Life Hedge. Yes. Did you see that? Yes, I did. Yeah. Yeah. So I talked about...

this concept where you don't want your portfolio to be pro cyclical with your life, which means, you know, your life has ups and downs, basically like you're in an expansion. The economy's growing, your company's doing well, you're getting paid more, you're getting stock options, and then you hit a recession, then you get laid off and you're burning through your savings. So it's good. It's bad. It's good. It's bad. So why would you have a portfolio that amplifies those ways?

Like, why would you have a portfolio so that things are even better in the good times and just terrible in the bad times? So I like to build a portfolio in such a way that in the bad times, I have some investments that are offsetting what's going on in the markets and I feel better. Right. I'm actually, you know, like that's that's what I do for a living. So.

That's why I say it's a very timely book with all the stress that's out there in the environment now, and we both understand why it's out there. The uncertainty, I think, drives people crazy, whether we're talking about the interest rates on maybe a debt that we didn't figure out would be managed at these interest rates, let's say. I mean, a lot of people obviously took advantage of the record low interest rates, say, in 2000, 2021, and

And now are coming to realize that maybe that was too much debt against these things. I mean, people have wishful thinking when it comes to their finance. I mean, don't we all own a house worth $5 million because we found somebody who did? You know, that kind of thing. So, I mean, with your experience, I mean, you're over 20 years in the markets and finances, et cetera. Let's finish with just...

You know, again, we start with that number one advice in the book, which is, hey, understand the debt you're taking on. Don't take on too much when you talk about your big decisions. Is there anything else that jumps out that way in that regard? Yeah, it's also about risk, you know, which I talked a little bit about with the life hedge. But, you know, the conventional wisdom says that you want to put all your money in index funds, right? So why do that? Well, because index funds return the most, okay?

Well, if you invest in an index, you get the return of the index, which is great, but you also get the volatility of the index. Yes. And the S and P 500 is pretty volatile, you know? So, uh, I don't like, I don't really, if you had a million dollar, um, if you had a million dollar 401k, it's moving around at about 10 or $20,000 a day, which causes you stress, you know? Yes, absolutely. Uh,

This has been fantastic. The other thing I should have mentioned more at the front end though, Jared, is you do a daily podcast. Tell us a little bit about that and what you deal with there. Yeah, it's called the Be Smart Podcast. I talk about personal finance issues. Yeah, it's a cool podcast. I mean, I don't really have anything incredible to say about it. Well, no, but it's great information and part of that ongoing education. We all need it. I need it, but we all need it.

you know, keeping this stuff top of mind. And certainly not thinking in terms of ignoring the whole issue is all I'm saying until you get an ugly surprise isn't the way of going about it, being a little proactive. And I just want to say congratulations on the new book. You can pre-order it now.

on Amazon, and it's called No Worries, How to Live a Stress-Free Financial Life, as they say, available for pre-order. Jared, what a pleasure talking to you, Jared. Thank you. Thank you. Thanks for having me. Time now for the quote of the week. Decolonizing has become the go-to narrative in rationalizing the Hamas attack under, and this is something you see, the so-called mislabeled pro-Palestinian protests.

For many of us, the term is new and an example of if you control the language, you control the narrative. I guess, what was that? Joseph Goebbels, who was an expert at that, but we're seeing it by governments and groups throughout the world. That degree of oversimplification inherent in the word decolonization, though, is meant not to only control the debate, but to stifle it. And that brings me to the quote of the week by UK historian and author Simon Sabag Montefiore, in quotes,

The decolonizing narrative is much worse than a study in double standards. It dehumanizes an entire nation and excuse and even celebrates the murder of innocent civilians. As this last four or five weeks have shown, decolonization is now the authorized version of history in many of our schools and supposedly humanitarian institutions and among artists and intellectuals.

It is presented as history, but it's actually a caricature, zombie history with authoritarian narrative of villains and victims. And it only stands up in a landscape in which much of the real history is suppressed and in which all Western democracies are bad faith actors.

Although it lacks the sophistication of a Marxist dialectic, its self-righteous moral certainty imposes a moral framework on a complex, intractable situation, which some may find consoling. Whenever you read a book or an article and it uses the phrase settler-colonialist, you are dealing with an ideological polemic, not history.

It's interesting. Well, I'm not a surprise. I mean, everybody consistently talks interest rates. No wonder, as we've been saying on the show, over 60% of people's mortgages are finally going to really feel the pinch in the next few years. That's a big issue. But as Jarrett Dillian says, that's a big concern. But he's taking a step back, as you heard. He's saying, you shouldn't have taken out that big a mortgage in the first place.

You're the one who caused stress by going too big. But yeah, lots of changes in that the pressure builds. Rob Levy joins me right now. Rob, appreciate you finding time. And as I say, you can't avoid it. This is on people's minds. They're looking at an average of a 30% increase. I think of that since February 22nd.

Someone who's had to renew their mortgage is paying 30% more. So the numbers just keep on being there. It's the biggest financial headache for people. Exactly right, Mike. And it's a story that's almost become unavoidable because you go around talking to people and the number that are facing this sort of pressure in this current environment, it doesn't take long time to find someone who's in a scenario where they're having to renew and they're having that extreme payment shock.

or even telling you a story, they're on a variable rate mortgage and they're only paying interest right now and they haven't been paying down principal for the past couple of years. So this renewal shock that everyone's been very well aware of, but it started to make some headlines over the past couple of weeks, is just becoming that much more of a financial, the financial impacts known, but then, you know, it relates also to the economic impact as well.

You know, it's funny. One of my frustrations on Money Talks is I like to talk about things that I think are coming that will impact us, but well in advance. And I'm proud of our track record that way, including telling people to lock in their mortgage and other borrowing right at the lows. I mean, that's the fact. It was right at the lows. Now people are suffering here. And I guess it comes back to until it affects them personally,

they're not really that interested. And as they say, I never know, should I talk about stuff that I know is coming, but people aren't aware of it yet or aren't caring yet or wait till it hits, but then it's too late.

Exactly right. And, you know, it just it really starts to add up now because there's been research over the past couple of weeks. And it was an RBC Capital Markets analyst that sort of made a couple headlines with this whole renewal shock or payment shock that's coming up over the next three years. And they talk about mortgage renewals over 2024 and 2025 and then the big year in 2026.

But it's the added impact of this that I think is going to be that much more significant and seen through the Canadian economy in the years ahead. It was Rosenberg and their research this past week that said, okay, we've got to take this one step further beyond just the financial shock that individual and households are going to face. What's the actual economic shock to the Canadian economy and how do we square that math out and maybe take it a little further, advance the conversation than where we...

where it's being.

Well, again, I'm looking at the numbers I've seen or so something like expect 15 billion extra dollars having to be spent over the next few years on mortgages, you know, just because you're paying more going into the mortgage. Well, how doesn't that have a big impact in every other sector? I mean, consumers have got to pull in their horns here, you know, to pay off that mortgage. And I'm just wondering what's your take on the building pressure on the Bank of Canada to finally, you know, not just freeze these rates, but to get them down at least some.

Well, and that's where the conversation is going to go is that interest rates are going to have to come down a lot faster than what people are expecting. You look at some of the rates markets and by the end of next year where a lot of the forecasts are for three interest rate cuts or, you know, that would be 75 basis points, so three quarters of a percentage point.

in terms of rates lower. And then you listen to some of the economists that are looking at this scenario a little closer and saying that's not going to be enough because this has got to start ringing alarm bells within the Bank of Canada. I mean, the words from Rosenberg and his team that, you know, we're just taking a recession and if they don't deal with it, it's going to be a very deep and prolonged crisis, saying they're going to have to be that much more proactive.

So I look at his forecast and saying that interest rates are going to be 200 basis points or two full percentage points lower in the next 12 to 18 months. So he's really sort of waving the flag saying they're going to be acting a lot faster than people are prepared for. And it hasn't really entered the folder. That level of conversation hasn't come forward as of late.

Maybe he heard Jim Thorne of Wellington Altus with us, whose scenario has been well in advance. He's going back a year on our show and with World Outlook Conference. And James said, look, he doesn't see a drop in interest rates. This is a full year before till March 24. And I asked him about that on the show. And it's worth go revisit that. You know, he says it could be even sooner. It could be even February, you know, because

The economy, he thinks, is much worse. A thought echoed by Brad Newell last week from King of Floors, who said, you know, he's never seen sort of the rental market drop so fast, the housing market drop fast, you know, and he says their company had been a bit of a bellwether. Well, that bell is ringing, but it's ringing for a much slower economy.

Exactly. And Rosenberg, I mean, what I liked about their research, you know, putting some math together and this is the upper bound, the extreme. So it doesn't necessarily happen this way because people can do some financial juggling. They can make a bigger payment out of savings towards their mortgage. So they're not all tied up in higher mortgage payments, but they say, you know, if you take the math out to the extreme,

effective aggregate national disposable income. So things we spend on additional things, going out for dinner, traveling, when we have to upgrade an appliance or that kind of thing, they estimate it could shrink by a fifth by 2026. So it gives you the impact of this economic impact going out a few years if we're just consumed by higher mortgage payments. And,

- And again, makes sense because when you borrow money, you're spending tomorrow's money today. That's what borrowing is all about. So maybe we already had our boom coming out of the pandemic when so much money had been shipped from the government into people's pockets. We had record low rates.

So maybe they did all their purchasing then. And so no wonder it's going to slow down. It's going to be a fascinating time, though, Rob, with that. And I think my go-to message here is there's that much uncertainty left here because it's a huge economy, different aspects to it. The bank is sitting there prepared to manipulate what they think, as I say, a long list. So the uncertainty isn't dead for me, at least.

No, 100%. And just, you know, central banks haven't been that active in the markets, but it makes you think that we could be going back to a world, again, where their involvement is that much greater once again. I'm going to use that as a promo for Money Talks. That's why you've got to listen in every week there. But you can also go to bordergold.com. Rob writes every week, especially obviously focused on the gold market, but precious metals there. So it's bordergold.com. Rob, thanks for finding time. Yeah, I appreciate it. Thank you, Mike.

Time now for the shocking stat of the week. Well, maybe I should say stats of the week. And all of them relate to Canada's economy. So let me first say, you know what? I'm under no illusion that the majority of Canadians suddenly have developed a strong interest in economics and finance.

But we do seem to notice when issues like affordable housing, mortgage rates or big drop in the currency, inflation, cost of living rises. I think we start getting at least interested in that, but I'm still not convinced how many people relate those to specific economics and financial policies. We don't sit around and talk about capital investment.

even though it's the foundation of job growth. We don't talk about productivity, which has a direct impact on our overall standard of living. I'm especially worried for our children's standard of living. It doesn't suddenly become the topic du jour. But that brings me to some stats every one of us should be aware of, especially with our economy basically flatlining. But worse, it's amount of activity per person that's actually falling.

There's lots of partisan talk about growing the economy thanks to the huge increase in population. But actually, economic productivity per person, GDP per person is the issue. And it's shrinking, especially our productivity part. It fell 2.1% between August last year and this August. Well, the U.S. is up 2.6% in productivity per capita. Well, basically says we're poorer today than we were last year.

By the way, it's actually lower this year than five years ago. Adjusted for 2012 dollars, our productivity per person has fallen from 52,300. This is January 2018. It's fallen to 51,900. Meanwhile, the U.S., well, their productivity per person was up 9% last year. The average in the OECD up 6%. So obviously, on a comparative basis, we're not doing well.

As University of Calgary economist Jack Mintz notes, research and development spending in Canada is the same percentage as it was in 1997. The TD Bank measures that since 1967, Canada's 100-year anniversary, Canada's dropped from third in gross domestic product per person, the economy per person, to 15th.

while our GDP growth is what about a third of the average in the OECD. You don't even have to memorize any of those numbers. It's making it's painting a pretty clear picture. Whether we all know the numbers or number, an increasing number of Canadians do realize though that something's wrong. Although I have to acknowledge there are still millions of Canadians who have other priorities like climate change. But it's noteworthy that back in 2012,

30% of Canadians felt that their children would be less off than they are. You know what? That's 212, 30%. That number is now 75%.

So we'll see how many care about their children's future by prioritizing economic growth, by prioritizing attracting capital, productivity growth. All of that is absolutely key. Otherwise, we're going to realize the forecast by the OECD that says Canada is going to be the poorest performer in the OECD, not just this decade, but for the next 30 years.

I'm going to bring Ozzy Jurek in right now. Ozzy, quick warning for you. I got some stuff to throw at you today. And I want to come back to something we just alluded to slightly, but I just find it so fascinating that, you know, in the States, there's a huge judgment pending on the real estate industry and the National Association of Realtors, for goodness sakes. Maybe give me a quick lowdown on that, because anytime we combine big money, people get interested.

Well, the interesting thing is that this federal judge has ruled that the National Association of Realtors, which is about the same as the Canadian Real Estate Association in Canada, but the National Association of Realtors is sort of the umbrella organization.

but specifically Remax and Keller Williams now have to pay damages of $1.8 billion. And if they don't pay, the verdict allows the court to issue triple damages. So it could be $5 billion. I mean, those are one of those cases where the numbers just sort of roll off the tongue, million, billion. Are you kidding me is what rolls off of my tongue? I mean, this has got to be appealed up the yin-yang. I mean, that's too much money.

Well, the big thing is that, yes, you would think so, and they had indicated they would. But now the ruling is before launching their appeal, they're required to post a bond of an as yet undetermined amount, meaning the plaintiffs receive their due if the appeal is unsuccessful. So now you're really taking a chance. So the rumor is they're going to settle actually maybe this weekend.

But that is just one state. So immediately the lead lawyer for the plaintiffs filed another suit against NAH in another area and companies such as Compass and EXP World Holdings and Redfin, individual companies. So he's targeting that. You can guess that whatever the ruling is on that one, they're going to go somewhere else. And guess what, Mike? What I'm worried about is that we have some eager Canadian lawyer dusting off the lawsuit file.

Well, that's one of those to be continued. The other thing I want to come to something else here too, which is, you know, one of the reasons that we talk about different jurisdictions is because I think every jurisdiction is looking at what happens to see if they can get an idea to get more money, more this, more that kind of thing. Because I'm looking at that, again, Ontario Trust and Real Estate Services Act. Well, it comes into effect December 1st, and I don't know many people who have a clue what's going on, even in Ontario. Right.

Well, it's like with a lot of, I mean, look, they all act in what they believe to be the best interest of the public. And I think every realtor wants to act in the best interest of the public. And so some of those rules, like they have now an agreement of designated representation as an option for consumers. And that means you could have two agents in the same brokerage.

representing both a buyer and a seller in a single transaction. There's always a complaint of, "You hire me, Mike, to sell your house. You think I'm going to sell it, but under certain rules and certain jurisdictions in Canada, I'm not allowed to sell it. I have to have another agent representing the buyer to sell it. So even if I had a buyer, I'm not allowed to talk to them." So they're saying now it can be done into the two offices under good supervision. They can do it inside an office.

But they also came up with something like a self-represented party is the new name for consumer. It's no longer a customer. It is now self-represented party.

So he is a party who is not a client of any brokerages. And in fact, realtors will be prohibited from providing services, opinions and advice to these self-represented parties like used to be a customer. But nobody says how they're actually going to make an offer without a realtor. I mean, what are they going to do? Write it themselves? You know, put it on a chicken scratcher. So the details coming later. And finally, they are now as of December 1,

The content of offers can be shared with competing offers as long as the seller says yes. So that is also sort of a real hot potato. And so it'll be interesting to see that we urge all realtors in Ontario to read this new TRESA Phase 2 Trust in Real Estate Service Act.

Another one that's going to be looked at just briefly, Ozzy, is the new rules about if someone is a buyer, they get to change their mind. Remember when that couldn't happen, you sign the contract, that's it. Then you get a sort of a cool down period. And that seems to continue to grow.

Well, the interesting thing is that's BC now. There's a seven-day rule, of course, when you buy a new condo. And I have nothing against that. You know what I mean? You may put your name down. You put in a number, a large deposit. But you have seven days to change your mind. But we also have a new law which forces the realtor to understand that

anybody on any deal, used home, new home, that he has three days to change his mind. Now, if that doesn't include weekends, so if I write an offer on Friday, I have to midnight, government's work till midnight, as you know, till midnight Tuesday to change my mind. So the owner doesn't really know whether or not he has a deal. And even if the subjects are removed,

You can get out of the deal, but you may have to pay a 0.25% penalty. The point is, as a realtor, take a day off and understand all the fine print, and so a buyer and a seller should.

I'm going to change gears right now. We just got the latest Canadian Real Estate Association numbers and they showed a decline in listings. First decline in listings since last March. Now, my thing is, and I have been asked this in the last couple of weeks, is this a time frame I should be selling my house or should I pull in my horns right now and wait till the spring? Clearly, some people are doing that. That's the read of this decline in listings. But

you've done lots of stuff with this in the past. You say, you know what? There may be an opportunity here. Less competition in the marketplace, but do it right. So tell me a little bit about that.

Well, as a realtor, I used to work around Christmas time and New Year and in between the holidays because the prevailing thinking is nobody buys around Christmas time. But I do believe that if you have a buyer in early December, he is really a homeowner looking. He's not an investor, but he wants to move and move soon. So I think this is the time that you should list. Now, make sure that you list your property with a realtor. First of all, the realtor should know. But don't

Have him allow appointments on Christmas Day or Boxing Day or certain days, but make sure everybody knows it's for sale. Put up those Christmas lights, Mike. We're buying, we're selling a home and you want to have a homey feeling. For $20 to $50 investment, the most tired looking home can look great, at least at night.

And you can even buy those lamps along the driveway. I used to put this from Canadian Tiles. It was $20. You had seven lights on either side. It looked really nice if you have a sort of a driveway to your property. Put up the Christmas tree. My goodness, it's a homey feeling. And then have that baked cookie smell. I would always tell my owners,

bake cookies and leave the oven door open. And if you can't do that, take a cinnamon stick, put it in a hot pot. And the point is the people are going to come into the home and they're thinking, what would it look like if I lived here? So they want to see the Christmas wreath on the door and poinsettias through the house. You need them anyway, but show the home to your sparkling best. And don't be afraid of Christmas because those people that are out looking,

They want to see your house. And if there's fewer listings, all the more reason that you should be there. No, that's great advice, especially have the home looking its best, which you, of course, say. But Christmas is actually an opportunity in terms of lighting. You're talking to a guy, Ozzy, who's already got the Christmas music going 24-7 at home. Yeah.

And no, I'm not going to admit to how many Hallmark Christmas movies I'll watch this season. I am not going to admit to that. But yes, that Christmas homie special feeling. I love that advice. Ozzy, you go out and have a great week.

and you get allowed to put your Christmas tree up early. Okay, you go ahead and do it. Oh, I do that. You know, my family, I have to hold the grandkids, and, well, half the fun is putting it up. But anyways, Mike, remember that, you know, when you're older, you know, people always come up to me. Ozzy says it's so nice to see you and your wife together because when you were a young man, you used to hold hands, and you're still walking along holding hands. And I said, well, you don't understand. If I don't hold her hand, she goes shopping. Ha, ha, ha.

Good stuff. You can find Ozzy at ozbuzz.ca, ozbuzz.ca. And of course, he'll be at the World Outlook Conference. And I'm looking forward to that. Gave a dynamite speech last year. But his latest insights, of course, where he thinks the positive action is and maybe where you should hold back, all of that will be part of his presentation at the World Outlook Conference, which is fantastic.

Easy to get. Go to Mike's Money Talks dot CA. Still enough time for the early bird special, but it closes soon. Mike's Money Talks dot CA early bird special for the World Outlook Conference, February 2nd and 3rd. Looking forward already to hearing what the man with the German accents got to say. Ozzy Jurek.

I'm going to go live to the trading desk now. Victor Dare joins me. Vic, I mean, of course, all eyes on the Consumer Price Index coming out of the States because, of course, that's what the Federal Reserve says they look at in order to determine where interest rates are going. So let's start with the Consumer Price Index number that came out this week.

Yeah, it was first thing Tuesday morning and it was softer than expected basically across the board. Like not a lot softer, but softer. And I think the message here is that the market took it as confirmation that the Fed is done raising interest rates. Yeah, and then everything follows through on that. The stock market got excited, you know, that kind of stuff. And I guess that's the number one issue. But it didn't look like it had that much follow through, did it?

Well, we had the stocks took off to the upside like a scalded cat, you know, and that the bond market the same and the U.S. dollar did a swan dive. I mean, that's what happened. And we had this happen in November of last year when we had a weaker than expected CPI number. And of course, everybody that pays attention to these things knows that last year, you know, the bonds kept going, the stocks kept going and the U.S. dollar kept falling. This year was like a one day wonder.

So you go, okay, well, that's interesting. As a trader, you always go, oh, I wonder why that is. But that's what happened. And, well, I mean, I'm just wondering, is it pretty much the consensus now that inflation's not the problem? And, you know, now they're looking maybe at things like, I wonder how earnings they're going to make out here. I really think there is something to that, Mike. I think that the worries about inflation are sort of in the rearview mirror. You know, the stock market's always forward-looking. That's what they say. Well, you know.

To some degree, for sure. But I'm beginning to think that maybe the markets are not worried about inflation so much anymore. But now they're wondering if there's going to be a growth slowdown. You know, is the consumer going to spend less or the company is going to earn more and so on? So I think maybe that's let's say if it's not center stage, it's it's coming on board.

Well, certainly the crude market sort of indicated that. They thought demand is going to go down. So you got crude prices down, you know, especially when you compare it to what we had in September.

Yeah, we're at 95 bucks on WTI in the middle of September. I think we traded below $73 this week on the lows. It seems like it is a demand story as opposed to a supply story. We've had cutbacks in production. I mean, I think the market had started to come down and then we had the attacks in Israel gave the market a bit of an uptick. That's the WTI market. But as it...

maybe became more apparent that there wasn't going to be a disruption of flow out of the Middle East. The down leg in WTI continued. And I think it's been very much a story about demand or the anticipation that demand isn't going to be as strong as we thought earlier this year. Do you have any takeaway about the impact on the bond market? As you say, you see, we got this initial reaction and thing cooled down a little bit. What about your take on, you know, like the 10-year bond, for example?

The yield on the 10-year bond was trading at a 16-year high late October, mid-October. People had been buying it. It's like, man, this is a bargain. We've been down three years in a row. This has got to be the point to step in. The Federal Reserve is going to have to stop raising rates. The economy is going to go into recession. There's all this thinking about it. Maybe they're just a bargain that people were stepping into the bond market because

But I think the big worry has been, and when you get right down to the simple facts here,

The bond market's looking ahead to, even if we go into a recession, which normally would create sort of a knee-jerk buying of bonds, that's likely just to increase government deficit spending. And you say, so who's going to buy all these bonds and at what price are they going to buy them? So the bond market, yes, it rallied on the CPI number. And it's definitely, we're about a half a point lower interest rate wise. In other words, instead of being at 5%, we're at four and a half on the 10-year now.

But I think the bond market feels like it's still struggling here because of that worry of supply coming from the government. I want to finish with this, because you said struggling. It reminds me of looking at the action of the Canadian dollar. What did you make of that? Because it certainly didn't rally strong coming out of that Consumer Price Index report.

Yeah, I mean, I said the U.S. dollar had its biggest down day in a year since November CPI of 2022. Following that CPI report on Tuesday, the euro had its biggest up day in a year. Everything was up except the Canada. I mean, it was up a few ticks, but I'm looking and I thought,

Hmm, that's interesting. You know, just as a trader, you go, well, let's see, I wonder why that is. And then of course, I'm looking at the crude oil and it's trading down that day. And I had to get short just to be, when you see like the runt at the back of the herd, that's the one you want to go after. You don't go after the strongest one at the front. And the next day, you know, Canada did roll over here as WTI sold off really hard. Most of the time, Mike,

The Canadian dollar goes up or down against the U.S. dollar more on what's going on in the States rather than what's going on in Canada. That's just the facts of life.

But from time to time, when there's something that's very Canada specific, like falling crude oil and fossil fuels, that's crude oil and natural gas put together are by far and away Canada's largest dollar volume exports. And those prices are going down. People go, hey, you know, Canada may be in trouble. And there's more to it than that. I think the past couple of weeks we've talked about, you know, what's going to break Canada.

from all of the tightening we've had by the different central banks. And I proposed it might be Canada. Canadians are way more in debt than Americans. Our real estate market's way higher and so on. And of course, we've got the shorter maturity on our mortgages. So I thought Canada is kind of vulnerable here. And obviously, the way Canadian dollar's going, I'm not the only one that thinks that way.

Well, and again, just a reminder, you know, people don't think of it in this way on a constant basis. But when I see that dollar down, I know I just got poorer. That's because, of course, my assets, you know, on an international basis are down versus the U.S. I know that our imports are getting more expensive. You know, Q NDP leader Jagmeet Singh saying, gee, I wonder why prices are up. Oh, it's greed. No, how about the Canadian dollar plays a role because we import a lot of that stuff.

Sorry, I had to digress there. My apologies. There's only so much economic ignorance can be thrown at me at one time before I say something. And I've really been patient on that guy. At any rate, Vic, there's much to talk about. One thing we know for the Outlook Conference, it ain't going to be dull. We're not living in dull times. I am so looking forward to the World Outlook Conference this year. I mean, I love the guys that you bring together. We all have a chance to visit with each other, but I'm really looking forward to it.

Well, it'll be terrific. In the meantime, let me remind people to go to VictorAdair.com, A-D-A-I-R, VictorAdair.ca. Because I like to get everything wrong. Let me just repeat that, VictorAdair.ca. Go to it. He puts up his charts every week and analysis with it, very valuable stuff. Vic, have a great week. Thanks, Mike. You too.

Time now for this week's Goofy Award. You know, I was going to give it to the Goofy to the sleaze bucket of the week, Min Doan. He's a chief federal technology officer who was in charge of what we now know as a $54 million RiveCan app. That whole debacle. Who under testimony at the Commons Government Operations Committee gave his rendition of what app?

ArriveCan who? Especially when it came to testimony regarding the $8.9 million ArriveCan contract that was awarded without tender to GC Strategies of Woodlawn, Ontario. That's a two-man company operating from a private home. Evidence shows that the company pocketed an undisclosed commission worth 30%. That's $2.7 million and it's for doing next to nothing. $2.7 million.

for doing nothing more than assigning all the work to subcontractors. But then, as Blacklock's reporter notes, this week we got the latest report from the procurement ombudsman, Alexander Jeglik.

who found that complaints of sweetheart contracting were now common. You know the old friends, supporters, and donors club? That's what he's talking about. He stated in quotes, this year stakeholders contacted my office 30 times with concerns about the behavior of federal officials being inconsistent with the values and ethics code for the public sector. I mean, no parliamentary committee to date, by the way, has invested COVID spending.

and the contracting by lobbyists. Liberal and Bloc Quebec MPs at the Commons Ethics Committee made sure that that was rejected any thought of an independent investigation into COVID spending that went into government friendly contractors, or maybe donors is a more accurate description. No surprise, they don't want anyone investigating the $237.4 million sole contract for ventilators

unlicensed at the time, to Liberal MP Frank Bayliss. Bayliss Medical Company. They got the money. Never used those ventilators. $237.4 million for nothing. Spartan Bioscience Inc., a now bankrupt test kit supplier, provided a $149 million contract after, in their words, a couple of good meetings in the Prime Minister's office. Though its kits failed clinical trials. I mean, you can't make this stuff up.

I mean, the prime minister, one of his favorites, SNC-Lavalin Group, received a $150 million contract for field hospitals. Only problem is that no health manager had requested them.

As BlackRock's report points out, an additional spot audit done by the procurement ombudsman found that more than a tenth of 17,000 COVID contracts approved by the Department of Health failed to comply with the rules. That's over 1,700 contracts.

contracts. The Interest Commissioner notes that there are no rules regarding government contracts for friends. There are for family in the conflict of interest code, but not for friends. And the liberal government has not been shy about, well, patronizing friends, let's just say, with our tax dollars. And we're talking huge amounts of money, by the way. I'll finish with that. Keep in mind, over a half trillion, $508

billion dollars were spent during the pandemic, including serves a great example. Supposed to cost 24 billion, ended up costing 82 billion. Maybe no surprise given the government knew within weeks that there was no, there was a huge financial fraud problem, but did nothing about it. Tens of billions in pandemic spending and no further investigation was undertaken. The ArriveCat app, it just seems like par for the course.

That's all the time we have today, by the way. And again, one final reminder, go to Mike's MoneyTalks.ca, go to MoneyTalks tweets on Twitter, or go to Michael Campbell's

Money Talks on Facebook. That's a mouthful, all of them. But I get to include so many facts, so much research that you're not seeing anywhere else. It helps you be fully informed. Have your own opinion, but at least know what the facts are. Plus a reminder that you can go to Mike's Money Talks.ca and get your tickets for the World Outlook Conference. I feel that it's going to be here before I know it, and I'm looking forward to it. In the meantime, I hope you have a terrific week.

Bye.