Historically, property assessments in North America lag changes in market prices. As a result, I found it a little surprising that property assessments for Vancouver housings have actually fallen a little on average. That doesn’t seem to square with what the realtor industry has been telling us.

The most likely culprit is that most of the eye-boggling price increases that we hear about are at the very top end of the market. And, there may be a disproportionate amount of activity at the high end as this is where a great deal of the investments are made by foreign buyers.

The calculations in the table above use all properties in the city, not just those that are being bought and sold. Because all properties are being included, the slower market in the middle- to low-end influence the results. This flatter-performing section of the market is likely de-emphasized by an industry that has a clear interest in seeing prices go up.

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Richardson GMP Limited, Member Canadian Investor Protection Fund.

Richardson is a trade-mark of James Richardson & Sons, Limited. GMP is a registered trade-mark of GMP Securities L.P. Both used under license by Richardson GMP Limited.

Here they are: the most important charts of the year. 

We asked our favorite portfolio managers, strategists, analysts, and economists across the Street for the charts that they deem the most important right now, and this is what they sent us.

Much of the focus is on the 10-year Treasury yield — where does it go, and what is the read-across for other financial markets around the globe? Many are focused on the stock market as well, the consensus being that indices will rise to new highs again in 2014.

But there are a lot of other things going on as well.

Click on HERE or on the image below for a larger image & a pathway to the other 27 charts: 

The S&P 500 has now trended over its 10-month moving average for 2 years and volatility recently hit its 2013 low. Investors have tuned Jeremy Siegel in and Jeremy Grantham out. However, along with optimism and a fair amount of market expansion, there has been little “real” earnings growth.

When discussing the market’s value based on things like earnings — I admit to being a bit of a wet blanket. Back in August of 2012, when Istarted a series looking at the market valuation using the S&P 500 (SPY) and focusing on Shiller’s Cyclically Adjusted Price-to-Earnings (CAPE), I felt that earnings had been running above trend and that reversion to the mean would bring earnings back to its long-term path. At that time I made what seemed to be a straightforward argument:

• Recent earnings are significantly above the long-term earnings trend (year 1926 to present). Therefore expect future projected earnings to slow more than market participants expect.
• Based on a slowing earnings environment and a recent market multiple of 15.6X, the current market valuation (in August 2012) looked fair-to-overvalued.

With the market being up 31% over that time period and operating earnings per share up only 3.6% (including share buybacks and inflation), being right on a slowing earnings front hasn’t mattered nor dampened market enthusiasm. The rest of this note will dive into those earnings and whether current expectations are rational.

….continue reading HERE

2013 was a year in which lots of imbalances built up but none blew up. The US and Japan continued to monetize their debt, in the process cheapening the dollar and sending the yen to five-year lows versus the euro. China allowed its debt to soar with only the hint of a (quickly-addressed) credit crunch at year-end. The big banks got even bigger, while reporting record profits and paying record fines for the crimes that produced those profits. And asset markets ranging from equities to high-end real estate to rare art took off into the stratosphere.

Virtually all of this felt great for the participants and led many to conclude that the world’s problems were being solved. Instead, 2014 is likely to be a year in which at least some – and maybe all – of the above trends hit a wall. It’s hard to know which will hit first, but a pretty good bet is that the strong euro (the flip side of a weakening dollar and yen) sends mismanaged countries like France and Italy back into crisis. So let’s start there.

The basic premise of the currency war theme is that when a country takes on too much debt it eventually realizes that the only way out of its dilemma is to cheapen its currency to gain a trade advantage and make its debts less burdensome. This works for a while but since the cheap-currency benefits come at the expense of trading partners, the latter eventually retaliate with inflation of their own, putting the first country back in its original box.

In 2013 the US and especially Japan cheapened their currencies versus the euro, which was supported by the European Central Bank’s relative reluctance to monetize the eurozone’s debt. The following chart shows the euro over the past six months:

“Euro rises to more than 2-year high vs. dollar; yen falls “

The euro jumped to its strongest level against the dollar in more than two years on Friday as banks adjusted positions for the year end, while the yen hit five-year lows for a second straight session.

….continue reading HERE