Nov 24, 2016
BNN's Daily Chase: Rising mortgage rates spell trouble for Canadians, the business of ‘Narconomics'
By Andrew Bell
Die Fahrbahn ist ein graues Band
Weisse Streifen, gruener Rand
Jetzt schalten wir ja das Radio an
Aus dem Lautsprecher klingt es dann:
Wir fah'rn auf der Autobahn...
(The driving strip is a grey track
White stripes, green edge
We are switching the radio on
From the speaker it sounds:
We are driving on the Autobahn)
-- "Autobahn," Kraftwerk (1974)
On this day in 1973, Germany imposed a speed limit on the Autobahn highway system to save fuel amid the early-1970s oil crisis. The restriction lasted four months.
CANADIANS NOT EQUIPPED TO DEAL WITH RISING MORTGAGE COSTS
The velocity we’re watching today on BNN is the upward trajectory of the housing market and the financial pressure it has put on households. A Manulife Bank of Canada survey indicates that more than a third of Canadians would have difficulty making regular payments soon after the main breadwinner lost a job and 16 per cent would struggle with any increase in their current mortgage payment. At 10:10 a.m. ET, we’ll be joined by Manulife Bank CEO Rick Lunny.
INVESTING IN THE DRUG BUSINESS
As Canada moves toward legalizing for-fun marijuana, investors are weighing the prospect of investing in the drug business. We get global perspective on the illegal trade in psychoactives at 11:30 a.m. ET from Tom Wainwright, author of “Narconomics: How to Run a Drug Cartel.” He’s billed as “your intrepid guide to the most exotic and brutal industry on earth.”
The former Mexico correspondent for The Economist says the drug gangs use business techniques similar to those of big-box stores and they’re not averse to marketing gimmicks. Blue meth crystals? Just food colouring. And we’re hoping to hear more about Starboy, “the millionaire New Zealand pill-maker.”
Wainwright says controlled legalization may beat attempted eradication: "I think the choice we face really is between a world where drugs are controlled by governments and prescribed by pharmacists and doctors, and a world where they're dealt by the mafia, and given that choice, I think the former sounds more appealing."
MORE FROM BNN ADVISOR
When to put real estate into a client’s portfolio
Diversification techniques to generate retirement income
Paying too much in fees for an overly-diversified portfolio
THE BOND MARKET UNDER TRUMP
The bond market has dropped since Donald Trump’s election win (accompanied by congressional success for his Republican colleagues) as investors wager that more inflation looms. But at 10:35 a.m. ET, we’ll get a bullish call on fixed income from Hank Cunningham, strategist at Odlum Brown, who says the bond market has been hugely oversold.
Trump’s plan to give corporations a tax break on repatriated funds “will create jobs, but far more— and more likely— ones for financial engineers rather than real ones,” Reuters says. “The U.S. overseas funds that do find their way home in reaction to any holiday or tax rate reduction will mostly be used to boost financial engineering schemes like share buybacks, rather than funding expanded capacity.”
Don’t miss the always-perceptive Lorne Steinberg, our guest on Market Call at 1 p.m. ET. He argues that aggressive share repurchases mean the “business is often damaged by such short-term decisions and the remaining investors are left holding the bag.”
Finally, today is celebrated as Evolution Day, to mark the publication of Charles Darwin’s “On the Origin of Species” in 1859.
Darwin’s achievement was monumental but he little suspected how the science of DNA has revealed that the boundary lines between species are blurrier than we might like to think. For example, “researchers at Stanford University suggest that as much as 30 per cent of the adaptions seen in our proteins since the split with chimpanzees millions of years ago could be a direct result of viral infections.”
As Gnarls Barkley put it: “You really think you're in control?”
Every morning Commodities host Andrew Bell writes a ‘chase note’ to BNN's editorial staff listing the stories and events that will be in the spotlight that day. Have it delivered to your inbox before the trading day begins by heading to www.bnn.ca/subscribe.
