Rahul's Café Canadian

Thursday, 6 October 2016

Diwali Dinner Party - 08-Oct-2016 (Indo-Candians Group) - Newcomers to Canada

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Please use this page, only if you're a newcomer to Canada (less than 1 year in Canada)

Cost of Dinner for Newcomers to Canada & their families :

Saturday, 20 August 2016

Diwali Dinner Party - 08-Oct-2016 (Indo-Candians Group)

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Cost of Dinner for Members & Guests Book a Table for 10 people (sponsorer) + Banner + web promotion :

Diwali Dinner Party - 08-Oct-2016 (Indo-Candians Group)

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Cost of Dinner for Members & Guests Book a Table for 10 people :

Diwali Dinner Party - 08-Oct-2016 (Indo-Candians Group)

Please Choose the options below for making the Payment :

Cost of Dinner for Members & Guests :

Wednesday, 6 January 2016

2016 - a look down at the abyss / the roller coaster ride

Hello Friends,
We're here in 2016.
I have been thinking about posting an update to my blog this year, about the expectations for the new year, & thinking hard to write positive things in this negative environment. Most of the fundamentals are negative. So it's a challenge to find the positives.

Lets first go back & read the post for last year & see how much matched & what was accurate : Rahul's Blog report 2015
After you've read that. Here's my report for 2016 :

These are probably the things that will happen in 2016 (in no particular order) :
* 5 year mortgage rates may rise 1-2% during the year.
* Property prices face a slight correction, following the rising mortgage rates.
* TSX looses 10-20 % value, but recovers most of it due to the rising commodity prices.
* Gold / Silver prices make remarkable recovery more than 20% for the year.
* The Canadian Dollar slides below 70 cents briefly for the first time since more than 10 years, however recovers, once commodities start to post recovery.
* The Oil patch (US & Canada) lays off 100k workers, as unprofitable oil wells close down.
* A "black swan" event - unexpected events that lead to conflict.
* In a world full of uncertainties, Canada emerges as a magnet for net foreign investments, in residential properties & farmland in the prairies.
* Food prices rise by more than 20%. Many parts of the world face food shortages.
* New Immigrants flock to Canada. Prairies become the new frontier. Farming becomes big enterprise & Canada's biggest export promise & potential for the future....

I want to leave this page on a positive note.

The age of Paper & intangible assets is soon coming going to an end.
Hard assets will stand the test of time, even if during the short term - if their values decline, they will eventually hold their value over time & will be the assets of choice, where paper money will flood into as a sense of security.

Best Regards,
--

Rahul Vashisht
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Questions from Sanjay (answered below):

* Property prices face a slight correction, following the rising mortgage rates.
How much correction you think will be in housing market?10-20?
A recent report plugged in the numbers & indicated that for every 1% rise in 5 year mortgage rates - detached home values can decline by about $100k in the 416 area code (Toronto metro) & 604 area code (Vancouver metro).
These 2 markets have detached home values priced over $1 million, so that would mean a 5-10% decline in values for every 1% increase in 5 year mortgage rates in the city.
The price drops will be to a lesser extent in the suburbs and small towns in the countryside.
The reason for that is people in the cities are carrying a higher proportion of debt & lots of monthly payments on other things, such as personal loans, auto loans, personal lines of credit & HELOCs used mostly for home renovations or money used up just for keeping up with the expensive lifestyles..

* TSX looses 10-20 % value, but recovers most of it due to the rising commodity prices.
If TSX goes down when will it rebound? Third quarter?
The market has to have a "puking out" moment before recovery. If that does not happen, then the recovery is longer. This happens every time. It's like a drunk man, recovering from a bad hang-over. That's when the speculative money runs away. These days Money & Capital move global boundaries in a flash without much hindrance & so something that happens in China, has an impact on the TSX & DOW the next day.
With all things being as they are, I'm assuming the "puking" moment is coming soon & recovery starts in the 3rd or the 4th quarter of this year.

* The Canadian Dollar slides below 70 cents briefly for the first time since more than 10 years, however recovers, once
commodities start to post recovery.
Dollar slide- where you think it will go?

I think 65 cents and then it will move between 65-70

Yes, 65 cents (1 USD = 1.5 CAD) looks very real & not very far away. The long term trend will be 75 cents for the next 1-2 years. It also depends on how well the American economy performs.

* A "black swan" event - unexpected events that lead to conflict.
Black swan event?! - due to geopolitical u certainty all around, we r not far from it!
This may the big surprise. There's too many factors - we just hope Canada remains unaffected.

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Questions from Sikandar (answered below):

My concern is about the rising mortgage interest rates for the homes in future. If the interest rates goes up, many of the home owners will not afford to pay their mortgage payments and may sell their homes or lenders might acquire them for default payments. My question, for example the home price was say $1 million and the same amount of mortgage (ignoring the down payment), and due to mortgage interest rate hike that causes market correction and the price goes down to say $700,000. On default payment, the bank will acquire this property and sale it for $700,000. What about the balance loan of $300,000? In Canada unlike the US, the owner has to still pay this balance amount $300,000 right?

curious to know..

You are right. If property values drop below the mortgage amount owed to the Bank, it's termed as an under water mortgage. If you're unable to meet 3 consecutive mortgage payments, the FI (financial Institution) can start foreclosure proceeding to seize the property back & put it back on the market to recover the loan. Most Canadian provinces have laws for "recourse" mortgages, where even if you walk away from the foreclosed property, the FI still has the right to recover the remaining owed balance + legal fees from you. Bankruptcy is the only option left for the homeowner, in those circumstances. Saskatchewan is the only province that allows homeowners to walk away, with "no recourse".

Many of the US states (39 of them) have laws similar to Canada - they do not allow you to walk away from your mortgage, with "no recourse".

That's why a mortgage is also termed as a "mortgage prison". You are bound by the terms & conditions, until you pay it off. Many people are stuck with big mortgage loans & forced to keep servicing the payments, even if it becomes difficult to make monthly payments, its like a "white elephant". Walking away from an underwater mortgage is also not an option for many Canadians, because the FI hounds you down for the remaining money & can even garnish your savings & wages.

Bankruptcy is also not great escape, because it adversely effects your credit for the next 7 - 10 years & also effects your career prospects. Many jobs require disclose of bankruptcy. If you are applying for a new job - most white collar jobs in Canada require a credit check & a previous bankruptcy will surely diminish your chances, at-least for the next 7 years or so.

some interesting facts about under water mortgages 2015 - Of nearly 46.3 million mortgaged residential properties in the United States at the end of the third quarter of 2015, approximately 4.1 million (10.4%) had a mortgage amount greater than the value of the property.

http://247wallst.com/housing/2015/12/15/nevada-florida-arizona-claim-most-underwater-mortgages/

Also read : Garth Turner : http://www.greaterfool.ca/2014/06/30/mortgage-prison/

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Disclaimer : This is not investment advice. Its for educational purposes only.
I'm only providing news & information for the sake of general awareness.
Do your own due diligence before investing.
I'm not liable for any of your investing decisions.

Tuesday, 3 November 2015

Canadian Economy : The looming collapse / Advantage to the Emerging Markets

Hello Friends,
I'm on track with my 2015 year predictions on the looming collapse of the Canadian economy.
Please review my blog - Dec-2014 : Rahul's Cafe Canadian

We are looking for a number of signs / indications that resemble a slow motion train wreck.
These are the leading indicators, not in any particular order, as I have discussed before :
1. Collapse in the support prices of the metals, minerals, petroleum & gas.
2. Layoffs in the resources industry aggregating to about 100k workers or more in a short time frame of about 2 years.
3. Collapse / devalue in the exchange rate of the Canadian Dollar vs the US Dollar to about 30% or more during the last 1 year.
4. Decline in the TSX stock market from its all time high in aug-2014 of 15,625 about 1 year ago, about a 12% decline so far. This trend will continue as most blue chip companies post results of falling sales and adopt cost cutting measures.
5. Household debt is at all time high with consumers piling on more unsecured debt as consumers are encouraged by low rates of interest and low monthly payments.
6. Housing Sector has had a mini correction in Alberta due to the large layoffs over there. Home prices are strong in the GTA and Greater Vancouver area, there is a lot of new immigrant first home buys, which are driving the market prices in these areas, however once the impact of layoffs and weaker economy become apparent, this market may start to cool down in the next 1-2 years as well.

Money & Capital are very liquid & in this day & age will move international borders to seek the best returns. Canada is not the "flavour of the month" anymore.
Take a look at the news items, its scary, but that's the hard reality:

Money is flooding out of Canada at the fastest pace in the developed world

Financial Post - ‎Nov 2, 2015‎

Money is flooding out of Canada at the fastest pace in the developed world as the nation's decade-long oil boom comes to an end and little else looks ready to take the industry's place as an economic driver. Canada's basic balance — a measure of ...

Money Flooding Out of Canada at Fastest Pace in Developed World

Bloomberg - ‎Nov 1, 2015‎

More recent data on where companies and mutual-fund investors are putting their money show the trend extended into the second half of the year, suggesting demand for the Canadian dollar and the country's assets is still ebbing. The currency is already ...

Investors abandoning Canadian assets

Advisor.ca - ‎56 minutes ago‎

As the oil boom comes to an end, “money is flooding out of Canada at the fastest pace in the developed world,” reports Bloomberg. This is evident, Bloomberg adds, if you look at Canada's basic balance, which it explains as a measure of national ...

Money Flows Out Of Canada At Top Speed As Manufacturing Hits Record Low

Huffington Post Canada‎ - 23 hours ago

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India & the Emerging Markets

As previously discussed in my blog before : India Passes China to Become Fastest-Growing Economy - 2015 trends // Proof of India's rise again...
India is selling like "hot cakes" & will continue to be the "flavour of the month" for the next 5 years.
Everyone is lining up to put their money in where they can have maximum sustained growth for the next 5-10 years.
Canadian Pension Funds are also heading towards India for a higher growth.
If you have a defined benefit pension plan with your company, don't be surprised, if its already invested in India or planning to start investing there now.
Take a look at these news items :