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MillerTime GFG · 10-18-2022, 10:03 AM

I had the absolute privilege of listening to Benjamin Tal speak yesterday at the National Mortgage Broker conference. He's the Deputy Chief Economist for CIBC, and one of the most respected economists in the country. Guy is brilliant, and a good speaker too.

Highlights:
- "If you give the BoC 2 options - recession vs. inflation, they will choose recession every time"
- Expect a 50bps increase to 3.75% this month, and potentially another 25bps later this year before leveling off, which he does expect to be the case.
- He believes BoC will be overshooting the increases with the next two, "but show me a Central Banker that has the guts to pump the brakes while inflation is still peaking." Thinks anything over 3.75% overnight rate is overshooting

- 55-60% of inflation is caused by supply chain, which is starting to show real signs of improvement/softening
- Wage inflation a real area of focus. Low paying jobs showed the most significant job loss through Covid. Lots of people used this time to change industries completely. It's taking time to get and train new employees
- While low paying job loss was so significant, those entering the job market are more highly educated, with higher salary expectation, so there is a gap here. Most retirees are low paying jobs as well. "Low pay job inflation" --> pressure is coming from the bottom

- 400,000 immigrants to Canada in 2021. This is 6x that of the US. 70% of those were already in Canada. This means the Government is encouraging those on student VISAs just to stay, and get their PR
- Lots of immigrants, but not enough homes, and building costs are going up

- Down payment gifts and co-signing were at all time highs during Covid
- This I found the most interesting of his entire presentation: The BoC will stop before the Fed. We have more household debt than the US, to the point where a 1% increase here would be the equivalent of a 2% increase in the US.

- He is in frequent meetings with the BoC and straight up told them "not to overshoot". Again believes they'll stop at 4%, but they will not be cutting rates in 2023.
- Rates will come down in 2024, but with the new norm for the overnight rate being 2.75-3%, whereas it was 1.75% pre-covid

Other info I learned from another speaker:
- 6% of ARMs (adjustable rate mortgages) have converted to fixed in the last 6 months. Surprisingly low, BUT, this is almost double the statistical average of 3-4%

10-18-2022, 10:03 AM	#544
MillerTime GFG First Line Centre Join Date: Feb 2010 Location: Mckenzie Towne Exp:	I had the absolute privilege of listening to Benjamin Tal speak yesterday at the National Mortgage Broker conference. He's the Deputy Chief Economist for CIBC, and one of the most respected economists in the country. Guy is brilliant, and a good speaker too. Highlights: - "If you give the BoC 2 options - recession vs. inflation, they will choose recession every time" - Expect a 50bps increase to 3.75% this month, and potentially another 25bps later this year before leveling off, which he does expect to be the case. - He believes BoC will be overshooting the increases with the next two, "but show me a Central Banker that has the guts to pump the brakes while inflation is still peaking." Thinks anything over 3.75% overnight rate is overshooting - 55-60% of inflation is caused by supply chain, which is starting to show real signs of improvement/softening - Wage inflation a real area of focus. Low paying jobs showed the most significant job loss through Covid. Lots of people used this time to change industries completely. It's taking time to get and train new employees - While low paying job loss was so significant, those entering the job market are more highly educated, with higher salary expectation, so there is a gap here. Most retirees are low paying jobs as well. "Low pay job inflation" --> pressure is coming from the bottom - 400,000 immigrants to Canada in 2021. This is 6x that of the US. 70% of those were already in Canada. This means the Government is encouraging those on student VISAs just to stay, and get their PR - Lots of immigrants, but not enough homes, and building costs are going up - Down payment gifts and co-signing were at all time highs during Covid - This I found the most interesting of his entire presentation: The BoC will stop before the Fed. We have more household debt than the US, to the point where a 1% increase here would be the equivalent of a 2% increase in the US. - He is in frequent meetings with the BoC and straight up told them "not to overshoot". Again believes they'll stop at 4%, but they will not be cutting rates in 2023. - Rates will come down in 2024, but with the new norm for the overnight rate being 2.75-3%, whereas it was 1.75% pre-covid Other info I learned from another speaker: - 6% of ARMs (adjustable rate mortgages) have converted to fixed in the last 6 months. Surprisingly low, BUT, this is almost double the statistical average of 3-4% Last edited by MillerTime GFG; 10-18-2022 at 10:06 AM.