Early Birds, October 19, 2023

Dan Kennelly - attended Mike Mikkelson’s son’s wedding. Football coach officiated.

Business at Trans Am Pipe is steady but not overly busy. Companies coming in to do audits, preparing for bigger clients coming up from the US next month.

Brett Bain - opened with thanks to Reid for conversation and advice.

OSI attended the Conference Alberta technology at a rink where all attendees and vendors stood on an inch of rubber over the ice sheet. It was F-F-F-FREEZING!

OSI had the pleasure of paying $2k for an 8 X10 booth.

Overall, Brett said it was a good event, but OSI left with a slightly sour impression of educators. They all seem “…eager to feed at the trough of the fastest fish.”

In the end, OSI is going to follow the money. They’re planning on doing more work with First Nations.

Rob Beasant - first Birds in a while, because he’s been helping his daughter get ready to go compete in Europe skiing at the international level. Working to get to the Italian Olympics. She’s been rehabbing from a discouraging injury earlier this year that’s healed well and her mindset is very positive.

As for the real estate market - Calgary is the exception to the rule of weakened markets. That being said, Rob’s group is starting to notice some weakness. For example, not as many multiple offers on places unless they’re properly priced.

Another important note: 20% of buyers are failing on qualifying. Rob is optimistic that interest rates are going to come down. Some “experts” are predicting 3% by the end of 2024.

$600k and less is still doing really well. Above that things are slowing down.

Condos are still on fire.

Don Davis - chimed in after that and said his daughter echoed Rob’s comment on condos.

Don’s brother’s been staying with Pat and Don for two weeks. He’ll “really miss him when they leave tomorrow.” (The “sarcastacid” didn’t hurt the table at Inglewood. Much.)

Don quickly tipped the hat to Bruce Roblin and his business, White’s Flowers. They’d received a stunning bouquet that was a work of art and lasted a long time.

Don ended with  a question for Sean - but before that another Davis culinary pick: Guy’s bakery and cafe in Cochrane - recommended. Good food and prices.

Sean Baylis answered the question from Don regarding Gibson energy saying succinctly that they’re not RBC’s best pick. One of the issues there is activist meddling.

Jim Bladon - Ivor strong bridge construction coming around Deerfoot and Bow Bottom Trail. It’s going to be “fugly.” (My interpretation of Jim’s comments, not a quote)

On finance, interest rate hikes are definitely having an impact. One of the reasons 20% of people are failing to qualify for mortgages is that the stress test rate is now 8%! 

Jim noted banks shedding 2-3% of staff.  One of the contributing factors there is federal pressure to reduce fees. There’s a moratorium on the staffing questions with Servus and Connect First, but in 2024 after the vote, there will be redundancies that will need to be addressed.

Tony Fisher - provided a quick bulletin from the CFIB: they figured that as much as 60% of outstanding CEBA loans may not be repaid.

Insurance companies provide Business Interruption insurance are looking for very advanced forecasts including admin and other fees. It’s a lot more work, time-consuming work,  to get one of those policies put in place.

Tony wrapped with a semi-sarcastic question to the group. SML struggles with sales with high-end homes. The owners will spend a not inconsiderable sum on every type of wood known to man throughout the house, but then….buy laminate pool tables. Really?!!

Reid Colbran - happy to be at Birds for the first time in a while. Life’s been busy and career is evolving again. 

On the personal front, their family bought a second house. A 1970s house. It’s, um, a project. Yeah, that’s it, a “project.” Among other things to arrive with the house: the mortgage payment doubled but they didn’t get double the space.

At work, Reid’s back to a leading broker position. That comes with the attendant pressure but he’s looking forward to getting back out there after being in the associate position.

Reid offered a bit of an information bulletin as well: Alberta auto insurance rates are the highest in the country. Twenty percent of insurance fees go to lawyers. Legal industry is working on increasing claims which is driving costs up.

Garry Friedrichsen - opened with the fact that his brother-in-law runs a small IT firm in town. Had an accountability session as part of his involvement with the Calgary Executive Association. It’s part of a larger international body.

It’s a mentoring body for businesses. A lot of networking and connection opportunities. Membership, beyond a separate initiation fee is $1800 a year, and the expectations of members are clearly outlined on their web site:https://www.calgaryexecutives.ca.

Don Doolan - is getting over COVID again. Different than last time. Sinus swelling, persistent cough (dry), especially at night.

It’s out there - a pilot friend of Don’s says if you travel you’re likely going to get it. Europe and Asia in particular.

Don doesn’t share Rob’s optimism about interest rates.  Feels there’s more blood to be spilled before things correct. 

As a former developer the talk of affordable housing drives him crazy. It’s simply not viable to develop more without more investment and commitment from all levels of government.

15-20 years ago, $15-$20k of a house went to the city in permits. It’s more now, and with interest rates adding to the cost, “affordable” housing is not “affordable” or profitable to develop - not even in the long-term.

Joel Shapiro - picked up a contract that included accountability meetings. He’s enjoying the experience.

He took a week off to take in all the information he could on the Israeli-Hamas war.

He offered up some interesting insights, many of which were summed up nicely in this related article on the Hub, forwarded to me by Andy Lockhart: https://thehub.ca/2023-10-21/the-decision-about-where-to-stand-on-the-israel-hamas-war-is-an-obvious-one/.

Joel’s addition to the article was: “Hamas does not represent all Palestinians. It’s a fanatical and authoritarian terror organization. Hamas does not want peace with Israel; it wants to conquer Israel. Hamas says “free Gaza” but their charter says, “kills Jews and destroy Israel.” Opposing Hamas is good for both the Jews and the Palestinians because it makes peace possible (difficult but at least possible). Listen to the Palestinians who are suffering—but not to Hamas. Hamas opposes peace and keeps starting wars that turn Gaza into a war zone.”

Ross Mikkelsen - is thinking of sending thank you letters to Quebec. Not.

His son is at McGill and although the tuition increase enacted by the Quebec government won’t affect him for various reasons, it’s still horrible. Ross summed it up this way: If his business was told to double their pricing BUT that the extra money won’t go to them, but to their competitors, he’d lose his marbles.

Brad Pachal - has water back. Basement cleaner locations, important to know.

Check insurance for an extension on seepage and underground.

Brad wrapped with a funny home hack for fireplace owners: dryer lint in old toilet paper tubes is great kindling. Who knew?!

Mike Boyles - was assisting a client that got on the wrong side of the CRA. They garnished their account. Mike’s company helped them file two years of taxes which led to some resolution around GST.

Mike also reported some well-known side effects of consuming too much wine. On his wife’s part in this case. He ended up going to a Doobie Brothers in concert  after his wife was “helped along” by two bottles of wine and bought tickets. 🤣

Sean Baylis - reported that RBC is taking lots of calls about the impact of the Israeli -Hamas conflict.

RBC’s take is that there’s always initial shock, but depending on the event, typically, rationality comes back after 6 months.

More important from a market perspective is what Jerome Powell is going to say. Interest rates up? Or down? Or steady with caveats?

On interest rates, RBC hews closer to the optimistic outlook rather than the pessimistic.

Unemployment is quite low in Canada and the US. As a result, RBC sees more normalization in the market with growth and consolidation like what happened after 2008-2009.

As investors, think long-term.  Always.

Sean is CALLING ALL GOLFERS - to the RBC event in South Carolina event after the masters. Reach out ASAP.

Sean left Birds and was off to Vegas - to see U 2 at Sphere. Then another golf event in Lost Wages.

Andy Lockhart - leans more to Don’s (and the other “experts”) more pessimistic perspective on interest rates. Lesson of history is that things will last longer and stay higher  than conventional wisdom.

Remedies for coming problems might include 99 year amortizations like they have in other locales, like Japan.

Andy’s currently working with volunteers who build things that aid disabled people, the Ability Workshop Society. He finds it very rewarding to be able to help. As an example, he told of a recent project to build a platform to lift a recliner to the same height as the wheelchair.