The brokerage industry will soon say the recent drop in share prices are over and it will be time to buy.  They will say this like they always do during a market correction. They are correct if they can call the bottom, but it is pure luck when they do. If they do not say this the public will not buy, which means the brokers will make no money. 

There are numerous reasons to be nervous. One is the destructive Green movement killing profits and disposable income, the necessity of all economies. There is the war in Ukraine that can very easily expand to other parts of Europe.  We also have way too many choices of investment classes such as crypto’s and NFT’s backed by nothing but promotion.  There is zero investor protection in these markets because the lack of government oversight and no central exchange, making it impossible to get an accurate price. Real Estate prices are also a major concern.

Greens believe business must pay for everything wrong with the environment, even though there is very little, if anything at all. Businesses have always financed R&D.  It is profitable for them.  If they are not doing it themselves, they are paying universities and other companies to do it. Since Industrialization, businesses are the ones making the strides in cleaner technology and efficiencies. We should be allowing them to continue at a proper pace under realistic government expectations, just like past.

Greens cannot wrap their brains around all business costs are passed onto the consumer via pricing. Without doing so they would go broke.   This is why the Greens and Ottawa are a main contributor to high inflation.   All the unnecessary added costs they demand from corporations and taxpayers are a failure. It is shrinking disposable income and does nothing to lower carbon creation or CO2 levels in the atmosphere, nor will it ever.  It is natural for CO2 to increase and decrease over time. If Africa and Asia continue to increase their GDP and standard of living, the level of carbon creation will continue to grow. It will take a severe decline in global population, and for the economy to come to a standstill for this to occur.  At which point, everyone’s priority will be to keep food on the table. 

Ice cores provide enough evidence to prove that the level of carbon has lagged temperature over the last 800 years (the same length of time it has taken the ocean to warm). This means industrialization has done very little, if anything at all, to the level of CO2 today. Ice cores also prove that we are not in unchartered territory when one looks back at the history of the earth. There has been a tremendous amount of warming and cooling cycles. We are currently in the tail end of a cooling period, so warming should not be a surprise.  If anything, the current level of Co2 is too low by historical standards.  

From the business donating to the cause, to the organizations that promote the agenda, the Green       movement is self-serving and harmful to our standard of living. Rather than go after the biggest polluters like India and China, they come after us, the country with the largest number of trees on the planet and one of the lowest emissions out of any industrialized nation. Trudeau loves it.

Nobody is listening to Putin.  He has stated numerous times that he intends to restore the old Soviet Union.  If he succeeds in capturing more of Ukraine, he will use a false negotiation to restock their weak military.  Sadly, leaders are doing very little to help Ukraine, thereby aiding Russia. He could have been stopped in his tracks before he invaded, but there was not an effort from any country. They are still not doing anything meaningful to stop him. 

It is a unique period in history because China and Russia have a seat on the UN Council. Both countries do not care about human rights, yet they have veto rights on issues brought to the UN.  Until these two countries are booted from their seats, the organization will be pointless.  Countries, including Canada, should withdraw from the UN, but we won’t because our Dear Great Leader loves the photo ops with world leaders (corrupt or not) and has openly stated he respects China’s method of rule.  

It is estimated that $3t was wiped out of existence in the crypto market last month.  This has been one of the world’s biggest cons.  Tokens are backed by someone’s word.  Some say their token is backed by U.S. dollars.  These are called stablecoins and last month the stablecoin Lana fell from $1 to 3 cents. So much for stability! Some crypto platforms are experiencing a cash crunch and cannot return investors money because there are no buyers of the crypto. None of this is covered by laws to protect the public.   Fools and their money are soon separated. 

Housing markets are either overvalued or in bubble territory.  Not because incomes rose, but because interest rates fell. The price increases have occurred for so long that Canadians believe that prices never drop.   Unfortunately, prices today are slipping and will continue for many months to come.  We expect the average house price in Canada to slide to between three- and four-times household income, or under $500,000.  The average household income in Canada today is around $120,000.  

Currently most governments are the biggest risk to the economy. They are led by morons who choose not to plan or prevent, in favour of band aids at the expense of taxpayers.  Until this issue is resolved, the global economy will do nothing, at best, and all asset prices will adjust accordingly.

Today your financial goals are to eliminate debt, preserve capital and save for coming deals.  Invest only in insured one-year GICs and Canadian dividend paying blue-chip shares that yield between 4-and-6%. Some of these can be found in our recommendations in our newsletter.  Do not speculate for months to come.  Every asset class is going to be weak due to higher interest rates (we predict 5 increases by the end of next year).  There are going to be few buyers around for many investment classes.  This alone is the death of any market. Be cautious. 

“In my life, I try and avoid things that are stupid and evil and make me look bad in comparison to somebody else – and bitcoin does all three. In the first place, it’s stupid because it’s still likely to go to zero. It’s evil because it undermines the Federal Reserve System ... and third, it makes us look foolish compared to the Communist leader in China. He was smart enough to ban bitcoin in China.”

 ...Charles Munger, Berkshire Hathaway

Bitcoin is up over 6000% since 2015.  These gains are based on nothing but hype. There are no assets backing it and it does not generate cashflow.  As of June 14^th, the value of Bitcoin has lost 41% over the past year.  When the market started correcting last month, it was estimated billions (some say the total is close to $1t U.S.) of dollars were wiped out within hours. This correction continues and has resulted in a handful of dealers refusing to trade the coin because they do not have the funds to pay those who want to cash-out.  This means the buyers have disappeared and indicates a larger correction is on its way.  Unfortunately, we will never really know the true extent of the problem because there is no central exchange.

Most people refer to cryptos as currencies.  They are far from one.  Currencies accommodate trade and cryptos do the opposite. El Salvador is the only country to accept Bitcoin as a currency. All those locals who bought on this news lost 60% over the following few weeks, which means the holder’s purchasing power collapsed.  

What differentiates a currency from a crypto?  Currencies are backed by a government and usually trade within a tiny range against the major currencies on any given day. This low trading range allows for payment terms over years.  Without this low spread there would be little commerce because business could not price their goods or services in the future. For example, a developer will often make contracts with firms for their services a few months out, sometimes even years. Now assume that the two companies agreed one year ago to a price of a job beginning today for 1 Bitcoin. The party offering the goods or services would have taken a triple digit hit to their revenue under this contract.  This forward planning requires a stable mean of exchange which cryptos do not offer.  

Cryptos trade 24 hours a day around the world and are volatile. On May 20^th I checked the price of Bitcoin at 6:30 a.m. and it was up $1,000.  By 10:30 a.m. it had dropped $4,000 and ended the day down $800.   This is gambling, not investing.  At least with a regulated stock exchange they can stop trading when the market falls by 5% during the day.  Crypto tokens are given a free reign for the promoters to do as they want.  In other words, there is zero protection for investors.

There are roughly 50 real currencies backed by governments around the world. A year ago, it was believed there were around 11,000 different crypto currencies backed by hype. If this is near accurate, then there are more crypto currencies floating around the world than companies listed on all stock exchanges.  This is most likely true because any person can make their own and set up a trading platform.

Cryptos are pushed by a promoter.  Some of them claim their crypto currency is backed by the U.S. dollar.  How is this even possible? It is a misleading statement because what they mean to say is that their coin is priced in the currency.   A while back the American SEC demanded proof of the amount of currency a coin operator bragged about backing his brand of crypto. He could not produce one dollar.  Hopefully this crook will be charged with fraud.  At least listed companies have some form of assets which are verified by accountants and reported to the various security commissions. 

Most crypto enthusiasts believe cryptos are free from government scrutiny.  This is also not true. Revenue services across the world can legally demand any person or business to provide their crypto trading history. Plus, governments have top programmers that can hack into a crypto network to do their own homework. It is mostly scammers that want to be paid with Bitcoin. If they demand cash, governments will force the banks involved to report the transaction.   If they are paid in Bitcoin, they are transferred many times around the world making it harder (not impossible) to trace.   

All crypto is essentially worthless. It also does nothing for the economy.  If anything, it hinders it by diverting cash from the banking system and by wiping out people’s savings.  Singapore, China, and a handful of other countries have made all crypto illegal, as they should be. They are a pyramid scheme. Stay away from this market. If you are active in it, cash out. The decline has started and has much further to fall.

It must be driving Justin, Jagmeet and our Environmental Extremist Minister nuts that Tesla increased their prices in Canada, again. Last year was the cost of the vehicle. In April it was announced customers had to pay for their charging pack and their street charging rates were going up.  On the same day Statistics Canada announced oil, natural gas, coal, and refined petroleum exports totaled a record C$150 billion over the past 12 months. While this is due in large part to higher commodity prices, volumes have increased.  They could climb higher if the Liberals allowed for it, but they won’t because of climate change. The three must be cringing that the demand for our resources is growing. It will continue to grow now that Russian oil is banned in many countries.

A cure for climate change is supposedly the EV.  We believe this is not feasible. How can it be when the price of manufacturing is climbing with the price of lithium and other metals (the price of lithium is up 400% from a year ago)?   This technology makes up roughly 3% of the automobile market, is growing at a snail’s pace and is already disrupting the commodity market. Imagine what will happen if there is a switch from the ICE. Ottawa is already subsidizing EV purchases to the tune of $5,000.  This will have to increase to around $15,000 to support demand if prices continue to climb. This cannot last. I am certain that money would serve ALL Canadians better invested in healthcare.    

Another hit for all purchasers will be taxes.  Governments rely on gas taxes.  If Ottawa finally succeeds in ending fossil fuels, they will have to find another source for the lost revenue.  This will come from electricity. Like the EV subsidy which only benefits those who can afford cars and neglects those who cannot, a tax on electricity is also unfair because it will also tax those who do not have a car. These pending taxes will make the EV and Canada even less competitive.

Gas and diesel make up a large chunk of the oil industry’s revenues. If demand for these two get decimated, the price of everything will have to increase because oil by-products will always be needed for our everyday life.  Things such as plastics, jet fuel, tires, medicine, asphalt, and carbon fibre for EV’s and wind turbines, to name a few, all are made from oil. The list is endless. It is the price of these products that will absorb the lost revenue from gas and diesel. Without doing so will leave the industry bankrupt.  I am certain that in an EV world we will learn that gas and diesel helped limit inflation.  The whole system is flawed.   

Not one Green knows what level of Co2 we are striving for or why the gas is bad.  We know it is consumed by plants which then creates oxygen.  How is oxygen bad? Growing up, we were taught the climate changed indefinitely. It was also taught that Co2 was necessary for life.  Today, people are acting as if the world only started warming with the invention of the automobile and Co2 is a villain. This is not correct. The earth has been warming for 10,000 years, since the peak of the last ice age, and the world benefits from higher Co2. At 150ppm of Co2, life on earth begins to die. In a greenhouse filled with 1000ppm, plant life flourishes and those inside do not become ill. Today we are at 440ppm and it took thousands of years to get here. We have a long way to go before Co2 becomes an issue. If it ever will.  

Greens love to use any change in weather as the beginning of the end. They blame the flooding of flood plains on climate change even though it is natural. They love to say the wildfires across the globe, which tend to occur in between every glacial period, are due to climate change. Clearly a warming climate increases the risk of fires, but the problem is most fires we hear of are near civilization and are the fault of humans. All it takes is a cigarette or a piece of glass with the sun hitting it perfectly to start a fire. Climate scare aside, you will never hear a climate alarmist say that a wildfire is a necessary and natural process that helps replenish our forests.

Based on Justin’s train of thought, the biggest threat to our environment should be China.  When completed by the end of this decade, the country will have 4,705 coal fired power plants running.  This means Canada will receive their pollution via the Tradewinds for the next 50 years, at least. There is not one Green who criticizes China for their increasing use of coal.  Soon, China, Russia, and India will be responsible for roughly 65% of the world’s emissions, yet the Greens will continue to state Canada is the worst, at 1.5%.  

Our current rulers will never understand that the most effective way to make environmental improvements is to allow industry to be profitable and place reasonable restrictions that allow them to research and finance environmental efficiencies themselves. Canada’s oil companies have lowered their carbon footprint annually for decades and will be able to hit “net-zero” far faster than similar companies in other nations and most Canadians. But I am sure that Trudeau will classify all of this as either dis-or-misinformation if he gets Bill C-11 passed.

Honesty is the first casualty of a bad budget, and this was not a good one.  Ottawa told all Canadians this budget would allow the country to prosper. It proves they have no idea what is broken in Canada, nor how to fix it.  Throwing band aids here and there solves nothing.

The most serious problems facing the country are the destruction of our medical system and the military.  Across Canada there is an acute shortage of all medical professionals and hospital beds which the budget offers no improvement.   

The military is a mess because of decades of a lack of investment.  Just about all military equipment is too old and falling apart.  Plus, there is no effort to add personnel as there is a shortage of trained people. Ottawa decided to give the military an extra $8b over the next 12 months.  The only problem is they have not decided on how to spend it.  The simplest solution is to talk to the military and ask what they need. Unfortunately, this would be too complicated for the bureaucracy

We are told there is a shortage of homes.  This is nonsense.  The problem is that investment and recreational properties make up the largest number of sales. Investment will be leaving the market because price increases are over. Given how many were purchased for investment, and this market depends on capital gains, there will be an increase in supply. A lower immigration rate would result in huge surplus of homes as well.

The biggest waste of money is the amounts dedicated to EVs.  If EV’s are the future, then why is Ottawa paying large subsidies to the industry? Governments are the only ones investing in EV. For example, Ottawa is taking $69 from every living Canadian to give to General Motors for 2 EV plants in Ontario.  Where is GM’s investment? Good for GM though, when the EV fails, the car companies will be left with up-to-date manufacturing facilities that can easily be retooled to an ICE. As well, Ottawa is going to spend $500m on recharging stations.  If these stations are so efficient and profitable than why are governments and Tesla the only ones building them? 

The government is also bribing buyers by large subsidies.  Not one government has the money to pay for them and the subsidy is very unfair.  In this case, it only benefits those who can afford cars and neglects to help those who cannot.   Expect subsides to near $15,000 per EV because the metals used in making the batteries are soaring in price. Lithium and nickel are up over 400% and 200%, respectively, in just over a year. 

Our useless Environmental Extremist Minister is calling for a bigger increase in carbon taxes which solves zero and makes Canadian manufacturing less competitive. This tax should be axed. Since it came into effect CO2 increased every year, naturally.  Mother Nature and the sun will continue to warm and cool the earth no matter what we do. Current warming will reverse itself when the earth begins another cooling period, which will occur.  This has occurred numerous times throughout the history of the planet.  Today we are technically in the tail end of an ice-age, so the increase in temperature and CO2 is expected.

Fortunately, Ottawa will soon be forced to act as a real government, not just a toy for Justin, who promises everything and delivers next to nothing.  For the first time he will have to support the energy sector.  Without Ottawa acting in the best interest for all Canadians we can expect $3 a litre for our gasoline.  It will be the fault of Ottawa because they have done everything possible to shut down our energy sector.  Ottawa needs the tax revenue from a robust energy sector as well.

Ms. Freeland has no idea on taxation.  She has not clued in that business never pays a cent of taxes.  She cannot figure out the citizen pays for them all through pricing of goods and services. Specifically, the new tax on the banks means every single Canadian will pay more for banking. Taxes are a cost of doing business which is paid for with your after-tax income.  When the cost of doing business increases, so do prices.    

While the budget was not as bad as we expected, there was still no plan laid out. Ms. Freeland should have begun to build a rainy-day fund.  She should have cut the size of Ottawa by half. The current 39 cabinets are overlapping and accomplishing nothing.  Most countries run smoothly with only 10.  She should get rid of the useless carbon tax or call it was it is – a personal income tax. Because of this we rate the budget a failure. Justin as our leader is Canada’s number one problem.  Canada has so much potential and not one person in Ottawa wants to see the country prosper. This budget proves it.

It will be incredibly hard for stock markets to climb with interest rates. Some industries such as energy have a great future because of growing demand.  For the rest of 2022 we expect the TSX to be down between 5 and 10%.  This will be the best in the world as most exchanges are going to be down 25% or more.  We expect all the energy shares in our suggested portfolio to raise their dividends at least once more over the next 12 months.  As we have predicted in the past, dividend growth is, and will be for months to come, your main source of profits in the stock market. The next year or so are going to be tough.  Cash and the blue-chip shares should protect your wealth. 

“…I should end this brief appreciation of genius leadership by noting it has inspired other countries. Just today Ukraine has declared a 30-day state of emergency. This is the same length as ours, but in Ukraine’s situation it comes with a lesser threat. Just a massing of Russian soldiers on the border threatening armed invasion. It’s not like some insidious workers are parking their trucks and setting up bouncy castles. Now that’s an emergency!”

…Rex Murphy, National Post, 02/25

Professional protesting in Canada became a big industry pretty much when Trudeau came to power. Over the last 6 years there have been numerous protests. Many involved blocking roads, the railways, and work sites. Some were for social concerns.  Axe wielding environmental extremists destroyed a pipeline camp during the Ottawa protests. Many protestors have ended up in court but face no consequences when they disobey court orders. This is a signal to all professional protesters that they will have a free reign to stop the actions of businesses and in some cases governments.

Some of those scary truckers lost their trucks, had their bank accounts frozen, put in jail, and threatened to never be able to have a passport again. While it must have been annoying for the residences of the wealthy and autocrats in their downtown Ottawa neighbourhood, it is to be expected now and then in the capital city of any country.  Not according to Trudeau though, unless it is about climate change.   

The Ottawa protest was big news around the world. The President of El Salvador was recorded laughing at Canada for how Trudeau handled it. This was true for many major broadcasters from other countries. So many world leaders wonder what is wrong with us.  Especially since we have the potential to be one of the planet’s wealthiest countries because of our resources.

Whenever a leader decides to bend the rules to fit their needs like Trudeau does again and again, democracy becomes at risk and a decline in the standard of living followed.  Canada today is on the slippery slope of losing its democracy. We must change our attitude and get responsible people running the country. Justin is so out-of-touch with the real world it is mind boggling and scary.

Today the immediate threat to Canada is if Justin decides to prorogue Parliament again. He has said he wants to be PM for life. He believes he is the smartest person in the land when he is an expert on nothing. If he does pull this gimmick again and no one stops him, Canada will be in deep trouble. You think the Convoy to Ottawa was bad, the proroguing of Parliament will bring out violent protests from coast to coast and military use will not be ruled out.  Without all rules of law being followed the same way, democracy will disappear. Canada desperately needs new people who truly care for our country.

Because of both political risks and higher interest rates, we feel deflation will occur by late spring and those with debt will feel severe financial pain. Consumer spending for the last half of 2022 will be weak because of this. Deflation will first appear in the real estate market because interest rates are rising and there is way too much investment in the market. Crypto’s have already started to collapse. Bitcoin alone has lost over $1t in value over the past 3 months and it is believed the rest of the crypto market has lost another $1.5t.   Plus, how many investors have already been wiped out?  This means less money available for consumer spending and investment.

With the price of oil soaring and interest rates beginning to climb, we must suggest you raise your cash weighting to 40% from 30%.  Both will delay the global economy from recovery by a few months.