Today, the Bank of Canada announced a 25bps cut in interest rates, marking the first easing since they began raising rates over two years ago. This decision aims to stimulate economic growth as inflation cools and the economy slows. For borrowers, this means lower costs on loans and mortgages, which could reinvigorate the housing market and improve affordability, particularly for first-time buyers. The Canadian dollar may weaken, benefiting exporters but raising the cost of imports. Bond markets are expected to react positively, with bond prices rising. This is welcome news considering the markets projecting fewer and fewer rate cuts since the beginning of the year.
Bonds may play a renewed role in portfolios – are you ready?
The Covid-19 pandemic disrupted the historically inverse correlation between stocks and bonds, leading to unprecedented fiscal and monetary stimuli that caused simultaneous rallies and subsequent busts in asset markets. This breakdown has highlighted liquidity as the key determinant of asset prices, creating volatility and challenging traditional 60/40 investment strategies. This article argues that portfolio managers must shift towards active, absolute return strategies to navigate the higher inflation and cost-of-capital environment, requiring more agile risk management and human judgment to manage diversified investments effectively.
Could a housing revolution transform Canadian cities?
This article explores how fourplexes could address Canada's housing crisis by providing a middle ground between large apartment buildings and single-family homes. Angela Jiang's positive experience moving from a high-rise to a fourplex underscores their benefits. The Canadian government is promoting fourplexes with funding, facing opposition from provinces preferring local control. Historical zoning in cities like Toronto favored single-family homes, but federal pressure is prompting change. Developers prefer larger projects, and financing remains a challenge, though architects advocate for creative, affordable designs. Despite these efforts, fourplex adoption has been slow.
How a Pioneering Blackjack Master Beats the Odds of Aging
Edward Thorp, renowned for his card-counting system in blackjack and a pioneering hedge fund track record, shares insights into managing risk, health, and longevity. Thorp's hedge funds delivered 20% annual returns for 30 years with minimal losses, showcasing his mastery of risk management. He emphasizes the importance of flexibility, a balanced diet, and critical thinking. While exercise is vital, he warns against overexertion and sun damage. Thorp's approach combines scientific analysis and proactive health measures, demonstrating how principles from finance and gambling can enhance life’s quality. For the full story, check out the complete article.
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Work Cited: Apollo Chief Economist, Bank of Canada