I wish this wasn’t true. I wish there was a nicer way of saying this. Alas, there is not.

Canadian consumers are suckers, willing to buy at any price.

How else can one explain the record quarter for new auto sales during the first quarter of 2008. Sales that had their biggest increase since 1998. That’s a freaking decade, people!

Sales of new passenger cars were up 17.8%, the largest increase since 1976.  That’s more than three freaking decades!

I don’t get it.

Canadian cars are expensive. No, that’s too nice, they’re a rip-off. Auto manufacturers are scamming the Canadians and they seem more than happy to go along with it.

How else can one explain these sales numbers?

The Canadian dollar has been near or above par with the US for over a year. Yet Canadian car prices are still more than 10, 20, even 30 percent more expensive than identical models south of the border. The only leverage Canadian consumers have to reduce this discrepancy is to buy used cars, or simply not buy at all.

However, going out like lemmings and buying new cars just because the dealer’s marketing campaign uses slogans like “Canadian Pricing” while giving you a 3% discount on price is just stupid.

Boo on you Canada, Boo on you.

Very busy on the desk today.

Just found an interesting article on foreclosures and the Condo market.

A couple of years ago I remember seeing a documentary on people waiting in line for days to buy Condos in Florida. It was absolute madness. It was the top of the market.

This article has me thinking that if I had the capital, maybe it would be a good idea to buy some prime real estate in a sunshine state. I could rent it out to vacationers and stay for free when I need a break from the cold. If only….

According to a new Bloomberg survey, the world wide CreditCrunch™ appears to be slowly fading away.

You might be wondering what the heck is this CreditCrunch? There has been a lot written on the subject, but not too much explained at a basic level. So here goes…..

The current issues with credit is that it has become more expensive. What does that mean? Well, essentially it means that the funding of lower credit investments have become more expensive. Why? Because people were afraid of risk and wanted only the safest investments. Treasury Bills (T-Bills).  Read the rest of this entry »

Ed Clark, CEO at Toronto Dominion Bank spoke at conference in New York today where he stated that the bank is assuming “dramatically lower” commodity prices in the long run.

If the world financial system is “over-inflating” prices as he put it, then we’re in a bubble. As bubbles don’t last forever, TD Bank is wise to begin planning for lower prices in order to protect itself from future losses.

His remarks are in stark contrast to the bullish predictions by market analysts who see prices going nowhere but up. If the head of a major international bank is weary of current prices, then maybe it’s time for you to review your portfolios…. Or maybe the analysts are right….What do you think? 

Quote of the day:

“[Citigroup] is so deep in a black hole that even renown physicist Stephen Hawking could not help the ailing company” - Banking analyst Meredith Whitney (via NY Post)

Ouch!

Some curious US economic numbers were released this morning. April’s retail sales fell 0.2%, however, when excluding auto sales the number becomes an increase of 0.5%, beating forecasts calling for a 0.2% rise.

The first curious observation is that retail sales were up, even with the recent drop in consumer confidence numbers. This can partly be explained by strong sales in defensive retailers like Wal-Mart and Costco that were reported for the same period.

The second curious observation is not that car sales dropped, as that has to be a no brainer given gas prices and the auto industry’s snail pace at responding to changing market conditions.  It is that sales at filling stations also dropped. One would think that it would be very difficult to produce lower sales when your product is in-elastic and at record prices. This has to be the most compelling evidence that people are changing their driving habits. Specifically, they are driving less. Car companies should take note, as less driving will undoubtedly lead to even lower sales.

This will be a slow week on the economic front, as the only economic data out of Canada today is the release of data on the price of new homes in March. Prices rose 0.2% compared to a month earlier, matching economists’ expectations.

Year over year, new home prices are up 6.1%, a healthy number, although the market is appearing to slow down a bit as the increase this year is slightly lower than last year’s.

Overall this is good news. Continued strong sales in new homes will encourage developers to begin new projects, employing laborers and strengthening the economy. Eventually we’ll meet a point where we’d expect to see a decrease in sale prices as inventories of new homes pass the number of people looking to purchase them. This is normal in a market economy and there is no evidence to suggest the type of collapse that happened south of the border.

When I first got interested in markets I thought technical analysis was a great tool. It was easy to learn, made logical sense and most importantly, appeared to work.

I was fooled by this cunning, seductive mistress. Technical analysis is the fools gold of finance. It is an illusion that is as real as Michael Jackson’s face. But to quote Levar Burton’s Reading Rainbow: “You don’t have to take my word for it”. Read the rest of this entry »

One of the classic indicators that determine if people believe they are in a recession is retail sales. This ties into consumer confidence and jobs data that help determine the health of the economy.

Today we learn that both Wal-Mart & Costco reported sales data that increased more than analysts estimated. How does this show that we’re in a recession? (or at least acting like we are)

When consumers believe that times are tough, they will make decisions that help them build an economic cushion. Luxury goods will be cut, frivolous spending reduced, and penny pinching will begin.

Where do consumers go to penny pinch? Wal-Mart & Costco!

These companies are often coined as defensive stocks because they tend to hold their own during economic downturns. People still need to consume, just at bargain prices.

So ultimately this shows that consumers are tightening their belts and therefore behaving as if times are tough. And that’s the bottom line, isn’t it? Do you need an economist of government official proclaim that you’re in a recession to feel it? No. All that maters is how you feel and currently, Americans clearly feel like they are.

Forget techincal or fundamental analysis. Forget digging through earnings reports, crunching numbers on “trends”, or shooting darts at a list. The easiest way to make money in the market is insider trading. Unless of course, you get caught.

This probe is being carried out jointly by both the Securities and Exchange Commission in the USA and the Ontario Securities Commission in Canada. They allege that a US based law firm that advised on 11 merger transactions over the past two years had a connection to a Toronto business consultant who profited $1.1 million through purchasing shares in the target companies before the mergers were made public.

Insider trading probably happens a lot more than the regulators want us to believe. It’s just so easy. There are usually dozens if not hundreds of people who have access to information that can materially affect how a stock performs. All it takes is a quick phone call to a broker or accomplice and bingo-bango, profit!

OK, I know I made it sounds a lot simpler than it truly is. Having worked in the industry I know what compliance departments focus on and how red flags can appear on your account. I’m not about to start disclosing that for obvious reasons. What I will say is that for all the accounts that are caught, there’s a good chance many get through undetected. Those are the people who are smart enough to fool the system and keep their mouth shut.