Reitmans Ord Shs V.RET

Wholesale and Retail trade jobs

[Torontojay]

Canada added only 100 jobs for the month of December. They lost 23,500 full time jobs and replaced them with 23,600 part time jobs. I am not surprised as Canada has been in a recession for at least the second half of the year. I would not be surprised to see some negative prints in the months ahead. 

Wholesale and retail trade which is highly sensitive to interest rates shed a total of 20,600 jobs. Productivity has declined for the last 6 quarters which is a horrendous outcome for Canada. No matter which way you wish to spin the narrative, it's not looking good. 

https://globalnews.ca/news/10205704/statistics-canada-jobs-report-dec-2023/amp/

[savyinvestor333]

It's great to be cautious but if you have been on the sidelines the last 3 months you would already  have lost out on a roughly 10 to 15% gain from the markets. How long have you been predicting we are heading or already in a recession? You must surely be 100% in cash by now. Just my personal situation but I am hitting new all time highs in most accounts. 5 year returns are well over 100%

[Torontojay]

Hi Savy. Before covid there was an acronym called Tina which implied that "there is no alternative" and we should buy stocks and ignore other asset classes because they are even worse. Today, there is an alternative to stocks in a higher interest rate environment. Just to put things into perspective, the yield on a t-bill is higher than the earnings yield on the S&P 500.  A

[savyinvestor333]

Good Advice but if rates fall over the next year your T bills renew at lower rates. For example if you Buy TRP or BCE right now and lock in a 7% dividend yield and the rates drop as predicted you still have a 7% yield next year plus no doubt a capital Gain to boot.

[TheCount11]

"Wholesale and retail trade which is highly sensitive to interest rates shed a total of 20,600 jobs. Productivity has declined for the last 6 quarters which is a horrendous outcome for Canada. No matter which way you wish to spin the narrative, it's not looking good." There are a couple of ways to interpret this.  It seems like there are a few big points you are hitting. 1

[flamingogold]

This is exactly what Tiff wants and expectations of a 1/4 pt rate drop by the Spring just increased. No skull crushing recession, only those that were on the verge of personal bk anyway are feeling the pain.

[Torontojay]

Nobody really knows how bad this recession will be. A number of coincident economic indicators confirm that the recession has already landed in Canada. It's unclear how long and deep it will be. Interest rate cuts coincide with an increase in the unemployment rate which has already risen 90 basis points from trough levels. This has never occurred outside of a recession in Canadian history

[savyinvestor333]

and what happens after the recession? An expansion!  We will be fine. Any chance you can find 1 piece of good news?

[Torontojay]

I don't sugar coat things like many do.  The macro data is telling me that Q4 is not going to be a blow out quarter by Reitmans and that the next bull market has not arrived yet.   

[savyinvestor333]

We don't need a blowout quarter for one thing. There are many catalysts that could innite the stock. Wall street is forward looking you have to look out 6 months for the bull market not wait until it has arrived GO RET.A

[Torontojay]

This is where you make no sense. Are you saying earnings 6 months out is going to look good? There is approximately 1.2 million households that have to renew their mortgages in Canada. Where is this money going to come from to support a retail clothing store?  A recession is necessary to weed out all the malinvestments from this country before Canada can prosper again. We are a long time

[savyinvestor333]

Take a look at this chart of 5 year mortgage rates. You can see that people renewing thier 5 year mortgages this year will have a new rate is only around 1% higher than 2018 rates. Quit with the sky is falling.  https://wowa.ca/canada-mortgage-rates-history

[Torontojay]

The average mortgage interest expense has increased by over 30 % according to our very own StatsCanada which publishes these numbers. Mortgage payments have increased by well over $1k per month which is significant to the average family. The fact that you do not understand this means you are hopeless.  I guess the Florida life is treating you pretty good? Maybe you should step in the shoes

[savyinvestor333]

I have 2 children with mortgages one in the Toronto market. I advised them both to take 5 year fixed. they both renew in around 2 -3 years. Rates will probably be somewhere close to their last renewal rate within 1 or 2%. The ones in trouble are the ones that chose floartng rate unfixed mortgages.and are mortgaged to the max. Pretty well the same thing as buying stocks uo to your margin limit and

[flamingogold]

The majority of those mortgage resets will occur in 2025. We could easily see a full 1% drop in rates by then. Wages are growing, it won't be as skull crushing as many think

[flamingogold]

Comparisng post covid to other historical data that was not created as a result of once in a century event may flawed. Covid and beyond has created many "firsts" which in hindsight may be considered anomalies. The book is not written yet.

[flamingogold]

Let me rephrase as my orignial post missed some text... Comparing post-covid data to other historical data that was not a result of a once-in-a-century event may be flawed. Covid and beyond has created many "firsts" which in hindsight may be considered anomalies. The book out on this is not yet written.

[Torontojay]

Let me summarize what I think you are saying.  This time may be different? :) 

[flamingogold]

You will eventually be right. Bears have been wrong for 2 years now and will need to wait longer still.

[Torontojay]

I would say Canada is already in one but the US still has some legs left. I'll explain why the lags are a bit longer this time.  The housing market in the US is in better shape with about 50% of households only paying a mortgage rate of 4.% or less. In addition, during covid, many homeowners refinanced at historical low interest rates which give them protection for a very long time. Up to

[savyinvestor333]

The problem with relating this to any idividual stock price is that you don't know what is already priced in. We could have a terrible recession and any particular stock could increase or decrease with no correlation to the economy. Seems to me Reitman's has already priced in a Big recession. If it doesn't happen we are Golden if it does it is possible that we have no downside. It;s

[Torontojay]

Btw, I own shares in Reitmans.  I've been building up a cash pile for over the last year. T-bills is a great place to be because I'm getting paid to wait until I see economic indicators point in the right direction. We all do things differently. This is how I manage risk.