Canadian households devote an astronomical amount of income just to carry their debt payments. Data from the Bank of International Settlements (BIS) shows Canadian households have a very high debt service ratio (DSR). The ratio dropped in Q4 2020 slightly, but it’s still much higher than any other G7 country. Not even the US housing bubble reached this level in 2008.
Canadians Spend 12.4% Of Their Income On Debt Payments
Canadians spend an astronomical share of their income on debt payments. The household DSR reached 12.4% in Q4 2020, down from 13.5% in 2019. It dropped, but this was entirely due to the fact interest costs have fallen. Household credit growth is still booming, and at a much faster rate than income.
Canadian Debt Payments Dwarf The US… Even In 2008
Contrasting with our neighbors to the South, we can see their DSR isn’t even close to Canada. US households had a DSR of 7.6% in Q4 2020, down from 7.9% in the same quarter a year before. They spend a third less of their income on servicing debt…read more.
Forgive me if you have heard this term before: “transitory,” meaning inflation is supposedly temporary.
Year-over-year, when you look at the base effect on prices, it makes sense to be patient. During the height of the pandemic, gas prices hit lows of around 60 cents a litre. Because no one was driving and oil prices were way below current levels. So, naturally, gas prices are higher now. This is just one example of why year-over-year comparisons don’t always work in highly volatile components.
However, inflation is currently a hot topic for investors, economists and politicians in the midst of the federal election campaign. Prices have been going higher and compromising the discretionary income of Canadians…read more.
By now it’s clear to all that Robinhood will take from the rich … what happens after that remains unclear, but retail investors will now have a chance to decide on their own as the disruptive zero-fee trading app prepares to go public.
Robinhood, the most popular trading app, especially among novice and young traders, said it will trade on the Nasdaq under the symbol HOOD.
With an initial offering price ranging between $38 and $42 per share, Robinhood is expected to reach up to a $32 billion valuation, which would make it worth more than two-thirds of companies on the S&P 500.
According to its amended prospectus, the company plans to sell 52.4 million shares in the IPO, with founders Vladimir Tenev and Baiju Bhatt selling another 2.6 million shares in the deal. After the IPO closes, they will still own 7.9% each.
Robinhood has been targeting an IPO since at least last year, but it’s been a bumpy road pot-holed with regulatory inquiries, including a hearing convened by the House Financial Services Committee.
Robinhood was last valued at $11.7 billion in its private fundraising round in September. In February, the company announced that it had raised a further $3.4 billion in a funding round… Read more.
Canadians have an epic pile of savings accumulating, but it’s not as big as most economists think. Oxford Economics‘ Tony Stillo took a deep dive into the household savings rate this week. The firm found the gross numbers exaggerate the total that can actually be used. Further, wealthier households represent more than half of the savings accumulation. In the end, only 13% of the epic pile is forecast to actually be used in the near future. Talk about a letdown.
Canadian Household Accumulated $184 Billion
Canadian households accumulated a big pile of savings since the pandemic started. The firm estimates $184 billion in gross excess savings from Q1 2020 to Q1 2021. The second quarter of this year should add even more, due to the third-wave lockdowns. It may sound like a lot, and you may have heard the “revenge spending” narrative. However, it may not be so impressive.
Only $100 Billion Of Those Savings Are Liquid
First off, the liquid excess savings are much smaller than the gross excess savings. Only $100 billion are actually liquid, by the firm’s estimate. Their analysis shows households used $22 billion in capital to reduce their debt. Another $62 billion has already gone to housing and equities.
Wealthier Households Represent More Than Half Of The Savings
Wealthier households represent most of the savings, which means less will be spent. Stillo’s team estimates over half of the savings are from the top two income quintiles. It’s a big detail since wealthier households have a lower marginal propensity to consume. In plain English, the households with savings already have few buying restraints. Additional cash only provides a minimal influence to increase consumption…read more.
As many people contemplate a future in which they don’t need to commute to offices, the idea of working less altogether also has its appeal.
Now, research out of Iceland has found that working fewer hours for the same pay led to improved well-being among workers, with no loss in productivity. In fact, in some places, workers were more productive after cutting back their hours.
Granted, Iceland is tiny. Its entire workforce amounts to about 200,000 people. But 86% of Iceland’s working population has moved to shorter hours or has the right to negotiate such a schedule, according to a report by the Association for Democracy and Sustainability and the think tank Autonomy. This follows two successful trials, involving 2,500 workers, that the report called “a major success.”
The trials were conducted from 2015 to 2019. Workers went from a 40-hour weekly schedule to 35- or 36-hour weekly schedules without a reduction in pay. The trials were launched after agitation from labor unions and grassroots organizations that pointed to Iceland’s low rankings among its Nordic neighbors when it comes to work-life balance.
Workers across a variety of public- and private-sector jobs participated in the trials. They included people working in day cares, assisted living facilities, hospitals, museums, police stations and Reykjavik government offices…read more.
Retail investors will have their say on the stock market this year, and the recent GameStop and AMC Entertainment stock squeezes were only the beginning.
According to JPMorgan’s global markets strategist, Nikolaos Panigirtzoglou, retail investors have invested nearly $500 billion into equity funds this year…Click for full article.