Bank of Canada: House price-to-income ratio outstrips norm by 35%

I have noted a number of times in the past that household debt levels in Canada have reached worrying levels. I am not the only one on to this. Canadian central bank head Mark Carney was in the news yesterday sounding the alarm on this as well. Mark Carney noted that Canadian household debt is being driven by a rise in house prices that has caused the house price/income ratio to now be 35% above the norm in Canada

Steve Keen on the Australian economy and housing bubbles in Australia, Canada, UK and Hong Kong

Good video with Steve Keen, the Australian economics professor with Max Keiser. Steve not only talks about the Australian economy and that country’s housing bubble but also about the bursting of housing bubbles in Canada, the UK and Hong Kong

Friday’s Thoughts and Seven Investment Themes

First, the trajectory of monetary policy in the US, Europe, China and Japan is in a more accommodative direction. Second, the underlying economies are showing preliminary signs of stabilizing. Third, the combination of easing monetary conditions and economic stabilization has boost demand for higher risk assets. In addition to major equity markets, emerging markets off to a strong start. Funds that exited the emerging markets in Q4 11 return. This has helped fueled currency and asset (bonds and stocks) appreciation

On Canadian and Australian bank risk

Banking sectors in both countries are highly concentrated. The top four banks in Australia account for about three quarters of the banking assets. The top six Canadian banks account for upwards of 90% of the Canadian banking assets. According to Fitch, the concentration and high profits of the banking sector is favorable to each as it provides a cushion against losses and need to pursue higher risk activity/lending.

Both Canada and Australia are experiencing over-valued housing markets. The IMF estimates Canadian house prices are about 10% risk while Australia is 10-15% over-valued

Seven Observations about Commitment of Traders in FX

The Commodity Futures Trading Commission requires futures traders to identify whether they have an underlying business interest (commercials) or if they don’t (non-commercials). Here are seven take-aways from the most recent report that covered the week through January 17th

Grokking the Canadian Dollar in Three Correlations

The brief study presented here shows that over the past 60 days, the Canadian dollar has been more correlated with the S&P 500 than most currencies we looked at, and is also highly correlated with the euro, though in line with most of the other major currencies. It correlation with crude oil is considerably weaker than with the S&P 500 or the euro, but is also in line with most of the other currencies we looked at

Chart of the Day: Developed economies’ debt levels by sector

This is a great chart below via the Wall Street Journal. It shows the total debt to GDP ratios for the largest developed economies in the world broken down into four sectors: households, non-financial corporations, financial institutions and government

On the IMF bailouts, Greek defaults and Canadian household debts

Below is the link to my latest appearance on BNN with Howard Green and Ryan Avent. Quick thoughts here

News Links: European and Chinese Manufacturing Stalls, as US Advances

ISM – ISM Report – November 2011 Manufacturing ISM Report On Business® "The PMI registered 52.7 percent, an increase of 1.9 percentage points from October’s reading of 50.8 percent, indicating expansion in the manufacturing sector for the 28th consecutive month. The New Orders Index increased 4.3 percentage points from October to 56.7 percent, reflecting the

Full Text: FRB Statement on Coordinated Central Bank Action on Currency Swaps

“The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank are today announcing coordinated actions to enhance their capacity to provide liquidity support to the global financial system. The purpose of these actions is to ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity. “

Video: My Blackberry is not working

Stuff like this is a very bad sign for Research in Motion as their share of the mobile handset market has plummeted to 9%. Shares are at a seven-year low

Constructive view of Canadian dollar

The US dollar fell to 4-year lows against the Canadian dollar late last month near CAD0.94. In the tumultuous markets in the first half of August, the US dollar rallied about 6.5% into August 9th to briefly poke through CAD1.0 for the first time since early Feb. With today’s weakness, the US dollar has surrendered a little more than a third of its rise