GlobeInvestor by way of Abnormal ReturnsRising commodity prices, a strong economy and buckling U.S. dollar are the main factors behind those gains. Lately though, it's unclear how much is also being driven by sheer market speculators. While the Canadian economy remains on solid footing, some question whether the currency's 5-per-cent gain in the past month alone is really justified.
"External demand for Canadian goods and services appears to be slowing and commodity prices have weakened since mid-July [despite the rise in crude oil prices]," noted Ted Carmichael, chief economist at JP Morgan Canada. Bank of Canada
Governor David Dodge has said that speculative gains in the currency would cause "monetary policy to be more stimulative than it otherwise would have been" — in other words, lower interest rates.
"The appropriate Bank of Canada response, as laid out by Governor Dodge in his 2005 speech, would be to lower the policy rate to take some of the upward pressure off the Canadian dollar," Mr. Carmichael said.
Listening to some of the popular commentary, you would think that this was the apocalypse, and that it's time to bust out the jerry cans and the tinfoil hats. Come on, this is hardly unprecedented. I mean, look at the chart:
As far as some people are concerned, you'd think that high oil, spiralling debt and creeping inflation had never happened before.
Basic economics and physics: what goes up must come down. While I typically refrain from making public comments about personal finance (but not always) , I think that now is a great time to do two things: top up your US$ bank account, and buy yourself something nice from an U.S. online retailer.
**The content contained in this blog represents the opinions of Mr. Distad. This commentary may contain forward looking statements and definetely contains sarcasm and rude sentiments. This commentary in no way constitutes a solicitation of business or investment advice. If you're looking for stock picks from me, look somewhere else. Really, what were you thinking? If you came here because you were trolling Google looking for someone to help you get rich in only twenty minutes a month, you need to seriously re-evaluate your worldview. This blog is intended solely for the entertainment of the reader, and the author, and not neccessarily in that order. Sphere: Related Content
1 comment:
All very true, Lee.
Never the less, we can't ignore the psychological impact of a Canadian dollar at parity with the US greenback. It has been a generation since this last happened. As one of my favourite Profs said, "Only three things matter. Context. Context. Context."
The last time the Canadian dollar was equal to the US dollar -
- it was not a "loonie".
- there was no MTV.
- there were no commercial cellular phone networks in North America.
- Prince Charles was single.
- most of the members of The Tragically Hip were too young to drink legally - and hadn't even met each other.
- Lloyd Robertson's hair was a "natural" colour.
- other than family and friends no one had heard of Johnny Depp.
- the phrase "30 second sound byte" did not yet exist.
- Oprah was unknown and only middle-class.
- the Berlin Wall was still the icon of the political reality in Eastern Europe and the Soviet Bloc.
- the Toronto Blue Jays were in their first season.
- it had already been a decade since the last time the Leafs won the Cup.
- no one had a debit card.
While I would never suggest that someone such as yourself, who can dead lift the weights you can, may be approaching entering the "old fart's club" like I already have - according to some - I think we have to realize that for a huge number of people the Canadian economy has crossed over onto uncharted ground, despite the fact that we can remember "the day when".
Like it or not, we now live in a society where the majority of people have the attention span of an over caffeinated squirrel with ADHD. And when our politicians, economists and cultural pundits are part of that group then I say it's time to listen to Bette Davis - "Buckle up kiddies. It's going to be a bumpy ride."
Shalom
*and HANG ON*
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