Category Archives: Economics & Fundamentals

A Look at Why The Federal Reserve is Bad for America

Last week we looked at the meaning behind the flattening yield curve. Despite the fact that the Federal Open Market Committee (FOMC) raised rates last week and was more hawkish than expected, longer-term bond yields actually declined versus the conventional wisdom that tightening Fed policy

Chinese Credit Risk Rising

The bull market from 2003 to 2007 was led by dramatic growth in US housing and dramatic growth in China. The Chinese boom drove the demand for commodities and was the major catalyst in the previous cycle. A few weeks ago, Google (GOOGL Alphabet) surpassed

The Canadian Dollar May Be Close to a Bottom

The last time our three key Canadian dollar indicators lined up like this, the Canadian dollar rallied from 67 cents to 80 cents in early 2016. The most stable longer-term driver of the Canadian-U.S. Dollar exchange rate is the interest rate differential between short-term bond

What are the Most Important Considerations When Investing Globally?

We get many questions on foreign currency hedging. When investing globally in developed markets, currency is often the most important consideration in the difference in returns. With the French election uncertainty mostly behind us and most strategists suggesting Europe is getting stronger, what is the

The Liquidity Trap: Can Interest Rates Normalize?

The Federal Open Market Committee (FOMC) meets this week and word is they will begin planning how to reduce the balance sheet. Yellen has long said the Fed has a plan to do this. At a high level, the US economy has been growing at

The Economic Impact of a U.S. Government Shutdown

The government shutdown. It’s happened before – a lot! In 1995-96, the government was shut down for one month. The Congressional Budget Office estimated it cost the US economy about 0.5 per cent of its GDP that quarter. So, from a major economic perspective it’s

Should You Have Long Bonds in Your Portfolio?

From a yield perspective, long U.S. treasuries (TLT) yield about 2.8 per cent and long Canadas yield about 2.00 per cent (ZFL). This compares to a less than two-per-cent yield for the U.S. equity (ZUE) market and a 2.7 per cent yield for the S&P

Assessing the French Election Risk to Markets

The French elections have the potential to really shake the Trump rally. Those that say we should ignore it because it would be little more than a ‘Brexit’ result where markets dipped for a few days, then rallied strong, are naive. If France leaves the