Nightmare On Bay Street: 2024
It was a dark and stormy night...
The crack of the COVID bullwhip could still be heard and felt echoing down Bay Street.
Restaurants and clubs, once flourishing, now were boarding up the windows out of fear of what unpredictable event might befall them on this ominous night.
The bankers took shelter, hiding out from the spectre of high interest rates and an Initial Public Offering (IPO) famine.
The advisors went underground after neither bonds nor equities provided the protection they expected.
And the real estate agents, trudged the empty streets, knocking on doors, to see what unwitting souls might answer their siren song.
While the lingering devastation of a past pandemic continued its grasp on businesses and economies, a new threat has emerged, strangling the economy, only allowing it to have small gasps of air.
Everyone was hiding, waiting, taking whatever shelter they could find and afford. Waiting for the grimmest of all bankers to lessen their grip on the economy, lower rates, and allow the economy to have another breath of fresh air, hoping it to not be their last.
Indeed, the tight grip of interest rates and their chokehold on the economy was being loosened ever so slightly, slowly, slowly, slowly and maybe too slow to give its quarry a faint sense of hope, but not giving the economy enough of a chance to get back up on its feet.
There were signs of life, but they were fading. Gross Domestic Product (GDP) per capita was stagnating, affordability was declining, and moderating inflation provided no solace to everyone trying to weather the storm with already high prices, while taxes squeezed the remaining blood from the stones in its grasp, and sentiment was creaking to lows.
The grimmest of bankers feeds and thrives on a hobbled, slower economy…for now… hoping it then flourishes again and provides even more nourishment for the next time the economy lets its guard down.
If the long, cold hand of interest rates was not enough to worry about, housing prices were staying high alongside those rates, leaving unsuspecting younger generations with nowhere to hide and no houses to live in.
Meanwhile, infrastructure was crumbling, and storms were raging. The highways were underwater, the hospitals were full. Even if you had access to help, you couldn’t get to it for fear of your vehicle (if it hadn’t been stolen yet), or the subways being submerged, exposing you to the creatures of the deep, and worse yet, the higher insurance rates that go along with the smallest misstep.
But not all was a nightmare on this dark and stormy night…
There were rays of light emerging through the dark, roiling clouds. The power of Canadians who together have weathered worse storms, sheltered through colder winters, and endured longer nights were the source of the flash.
The entrepreneurs, and builders, waiting for their chance to charge through the darkness might be seeing their opening.
And all Canadians that continued to grind on and keep moving forward were doing just that, knowing that together, Bay Street, and Canada, could emerge from this darkest and stormiest of nights.
But… we weren’t through it yet. The demons still lurked around the corners, the monstrous banks still called the shots, and the grimmest of reapers still had its grip on the economy…for now.
While it was a dark and stormy night, Halloween was just one night, and it is always darkest before the dawn…we hope…
Happy Halloween!
Ryan Modesto, CFA is CEO of i2i Capital Management and 5i Research Inc.
He can be reached at ryanmodesto@5iresearch.ca