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Showing posts from April, 2017

NAFTA: Its been 23 years; time for a divorce?

NOTE:  In the hours following this announcement, Trump announced that he's changed his mind -- for now.  If I were Canada and Mexico, I would start investigating the availability of Wheat & other grains from Brazil..

Well it looks like Trump is getting ready to kill NAFTA. Since he's probably not aware of the full ramifications of the agreement it will come and bite him in the ass, but for now he sounds tough. He's even claimed that its at the urging of Mexico and Canada that he's about to "try" to kill NAFTA.

Should NAFTA survive?  The short answer is yes it has been good for all three trading partners, in fact it has been very very good for the US.  However, and as usual, its the squeaky wheel that gets the notice.  For most US companies (and consumers) trade with Mexico or Canada has been good, but not for dairy farmers who feel that Canada is an unexplored opportunity -- they are right, but the introduction of of more American milk will kill Canada…

Canada, really a trade war with Canada...who saw that coming?

Soft Lumber
The soft lumber thing has been going on for years -- it actually goes back to the 1980s -- so a long long time.  In 2004, the world court sided with Canada, that in fact there was no specific advantage to Canadian timber producers, nevertheless the Americans keep on feeling shortchanged and Trump (it could have been Obama too) decided to side with the American producers instead of the American consumer, and impose stiff tariffs.  Its happened before and will happen again.  Obviously, the problem right now is that many posts, in the department of exterior, remain unfilled.  It is hard to have a conversation with the appropriate level when that job has not been filed.  As it stands, so far trump has nominated 23 of more than 470 politically sensitive jobs within the US government.  That could also be part of the problem, like Mexico, Canada has no real interlocutor.
So the US is planning to impose a 20-28% duty on Canadian timber, certain that the American companies are happ…

Valuation & Location, location, location the future of suburbia

The old adage that in real estate location, location, location are the only true valuable elements in buying a home.  Years ago now, I was an owner of a house in Montreal, top of the mountain twenty yards from the vaunted "Westmount"  -- the view from the house was spectacular and an anomaly in the neighborhood, insofar as every single house but ours, was a multi-million affaire -- everyday the street was full of painters, landscapers and general maintenance people, who were seining that every aspect of every house was at all time prefect...

Our house was less than that, we both worked for a living (granted so did a lot of my neighbors) but our house was ordinary in an extraordinary area.  For me it was a house, yes a nice house, but it was just a house!

When time came to sell the house we had more than a 100visits!  Which is a lot I assure you, we had one "open house" event and more than 30 people came to see the house.  The biggest complaint we got was the they d…

Why Trumpcare failed?

Although the GOP (or at least its associated think tanks) is deeply associated with Obamacare (think of Massachusetts) I suspect that the real issue in the debate about health care is far more phylosphical than most people understand:

The GOP is fundamentally against a government provided healthcare system and will try everything to stop it, its not a question of social good, or of equality is a question that the government should not be involved in healthcare at all.

The Freedom Caucus at least is honest -- it would prefer the government have no role in healthcare at all, in fact, corporation that have deduction for healthcare -- should face the fact that these deduction (for taxes) should disappear!

This is not about making society better or more efficient (you would think it would be in the end) its about philosophy and how the role of the government should be limited to inter-state commerce and defense.  Aside from that nothing.

As for the states, they are sovereign entities; and …

Brexit: It continues to be interesting -- June 8 elections!

Wow, I mean Wow

Theresa May, the UK's prime minister has just announced that she will call an election on June 8th. A massive reversal from her past view that an election would be disruptive, it also gives here a mandate as prime minister -- a useful tool if you are to negotiate with Europe.

More important are the elections in France this weekend could be very very important: both the far right (National Front) and the far left (Socialists) are anti-Europe.  This could be one of those times when the choice is between two anti-Europe forces!

Europe would not survive -- to the pleasure of Trump and Putin.



Getting it right too soon -- as bad as getting it wrong!

In March 2014 I wrote:
The economics have changed the smart money has moved on.  So the markets are freaking out!  Moreover that's for the housing prices, considering the damage that Amazon is doing to the average mall (without generating any real profits) it amazes me how well commercial real estate income trust continue to perform.  I cannot remember the last time I bought goods in a store.  So the malls are dying and real estate is back in trouble.  However, this time around the guys suffering are hedge funds and their "rich" investors-- and not the banks.  My guess is that Congress will pass new "hedge fund saving legislation" very quickly.  After all, you got to support the guy who got you elected.
I wrote this three years ago, and although  today Malls are in real trouble, it took much much longer than anticipated to go from being a negative trend to a route.  On the bright side there is virtually no (economical) way these days to short REITs, but should y…

Trump: Don't believe a word he says

This is a man who said that:  Obama should not attack nations, on any condition, without the approval of Congress, and that Syria is a quagmire from which there is no escape.  Finally, the poison gas attack of last week was Obama's fault.

Yesterday Trump bombarder Syrian with  29 59 cruise missiles!

Trump is a dangerous man, what he says on Tuesday has no consequence on Wednesday.

To have a situation so dire in the White House there is no precedent, there was no good reason to bomb Syrian, there is no goal there is only a petty man-child who wants to bomb shit.  The state department knew nothing of this, there are no system in place. Congress (Democrats) applauded the bombing -- but that was as stupid.  You just don't bomb for the fun of it, there as to be a specific objective -- and I mean a geopolitical one (not just "bombing shit").

It would seem that Trump's honey moon with the Alt-right is coming to a close, of course there are still lots of bozos who "…

Indicator of decline: Auto loan sector

Did you know that between 2010 and today, the percentage of car buyers (leased vehicles) that have a FICO score of 550 or less has risen from 5% of all leased automobiles to nearly 33%.

Investors, in the hunt for yield, have bought the idea that sub-prime auto loans were a good idea because the yields were so much better than the prime stuff.  Who does this sound familiar?  It sounds familiar because it's exactly what brought the 2008 financial crisis -- granted there it was exotic securities but they were based on the same flawed logic, that sub-prime borrowers would, in general pay their leases -- because they need them (the cars that is)!
In terms of size, its still "manageable"  at US$ 200 billion (yeah yeah) its still not that much, but it could still hurt, if 20% of those borrower default -- and this is not an unreasonable number, if you consider that's mostly junk credit (30% to 40% default is not unusual -- check Moody's default rates)

However, the proble…