What The Market is Under Appreciating (Guest: Ben Rabidoux)
Jun 15, 2024
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Ben Rabidoux from North Cove Advisors discusses US and Canadian housing markets, opportunities, and potential Big Short in Canada. They explore population growth challenges, risks in the real estate market, and impact of European elections. The podcast also covers market trends, technical analysis, bullish sentiment in copper, tactical bull trade in bonds, and market insights with a casual beer chat.
US and Canadian housing market differences discussed with a focus on vulnerabilities and opportunities.
Ben Rabatou's journey from teaching to North Cove Advisors highlighted, showcasing insightful analysis of Canadian real estate.
Risks in the Canadian mortgage market, including fraud and regulatory challenges, are pointed out.
Anticipation of Canadian dollar devaluation's impact on resource companies and inflationary pressures.
Post-credit cycle regulations may hinder profitability, especially in the mortgage sector.
Challenges faced by Canadian real estate and financial sectors hint at potential economic stress.
Deep dives
Differences in US and Canadian Housing Markets
The podcast discusses the contrasting aspects of the US and Canadian housing markets. It delves into the vulnerability of the Canadian market due to a highly leveraged economy facing interest rate hikes. The significant role of population growth and speculative mentality in Canadian real estate is highlighted.
Ben Rabatou's Background and Transition to North Cove Advisors
Ben Rabatou's journey from growing up in Stratford to studying human and environmental geography in North Bay is detailed. His trajectory involved teaching at Georgian College and eventually transitioning to North Cove Advisors after gaining attention from institutional investors for his insightful analysis of the Canadian housing market.
Challenges in the Canadian Mortgage Market and Potential Impact
The potential risks in the Canadian mortgage market, including mortgage document fraud and potential deficiencies in property appraisals, are highlighted. Future scenarios depict challenges for mortgage insurers, regulatory changes, and the potential impacts on the real estate sector.
Currency Devaluation and Resource Sector Opportunities
The discussion touches on the likelihood of Canadian dollar devaluation and its impact on the resource industry. The focus is on the positive implications for resource companies due to increased profitability from selling goods in US dollars while benefiting from lower Canadian costs.
Inflation Concerns and Implications for Investments
The anticipation of persistent inflation resulting from shifts towards de-globalization and reduced capex in commodity sectors is outlined. The absence of real return bonds issuance from the government hints at potential inflationary strategies, leading to a need for deleveraging in the economy.
Potential Regulatory Changes and Economic Adjustments
Expectations for post-credit cycle regulations, including restrictions on profitability, particularly in the mortgage sector, are addressed. Concerns about stricter regulations hindering financial activities post-crisis and curtailing growth prospects are highlighted.
Stress on Canadian Economy and Housing Market
The intricate challenges faced by the Canadian real estate market and financial sector are discussed, hinting at potential economic stress. The interplay of multiple factors such as mortgage fraud, regulatory changes, currency devaluation, and inflationary pressures point towards a complex scenario for the Canadian economy.
Insights on Canadian Culture and Favorites
Insightful and fun questions about Canadian favorites and cultural elements bring a personal touch to the podcast discussion. Themes include favorite music, hockey icons, and preferences for Tim Hortons coffee, reflecting aspects of Canadian identity and affinities.
Conclusion and Acknowledgements
The podcast episode concludes with a summary of the main topics discussed and expressions of gratitude between the host and guest. Contact information for further inquiries and exploration of detailed research offerings is provided for interested institutional clients.
Global Market Analysis
The podcast episode discusses the recent global market developments such as the reaction to economic releases like inflation numbers and job reports. The FOMC meeting is analyzed with a focus on inflation expectations and rate cut probabilities. Additionally, insights on the impact of the US dollar's movement on various markets, including European market charts and French stock performance, are examined.
Investment Strategies and Trade Recommendations
The episode delves into investment strategies and trade recommendations, highlighting the potential opportunities in various markets. Discussions revolve around potential trades in currencies like the Japanese Yen, bonds, copper, gold, and oil. The importance of tactical positioning and risk management in response to market dynamics is emphasized.
Market Sentiment and Speculative Trading
Market sentiment and speculative trading strategies are explored, focusing on the behavior of individual investors and influencers such as 'Roaring Kitty.' The dynamics of short-term speculation, sentiment shifts within markets, and potential risks associated with consensus market views are discussed in light of recent market developments.
This week Kevin and Patrick welcome to the show, Ben Rabidoux from North Cove Advisors. Kev & Ben have a fascinating discussion about the differences between US and Canadian housing markets, where the opportunities lie and whether the Big Short will finally work in Canada.
