There is more speculation about the loonie and the “lack of confidence” needed to send the loonie much above the greenback. This is nice phrasing. Confidence in the greenback is much needed for world trade, especially trade of oil, and as justification for keeping the US dollar as the currency of the world’s foreign cash reserves. What does it say to the world if the loonie soars higher than the de facto world currency? I’m not sure. But symbolically, it’s probably not what the greenback wants.
Apparently Canada is seeing its slowest economic growth in 16 years and there’s barely any inflation to speak of. I’m no economist, so this seems strange to me. The country is chock full of oil, gold, potash and nickel (Google “oil” and the third link is to Alberta’s Department of Energy) – I know that auto manufacturing has been hit hard, but how can economic growth be near null? Canada is selling as fast as it can to developers in China. They have to build a new, massive port on the Pacific just to ship out all the potash being ordered. The housing market has apparently cooled off, but in relative terms, this is nothing negative. Prices are still well up there. There are no foreclosures making the news up here. In fact, Toronto is currently North America’s hottest condo market.
On top of this, two of our provinces are debt-free (Alberta and Newfoundland) and you can bet Saskatchewan won’t be far behind.
The idea behind the current drop in oil prices is that consumers are finally cutting back on gas consumption leading into the summer period. The highest reported price I heard coming out of the U.S. was $4.15/gallon for regular (did you see higher? Let me know.). Additionally, and once again, “supply problems” are noted in Mexico and Nigeria as the cause for the high price of oil. You don’t see any media ever reporting on the deliberate inflation (dilution) of the US dollar, which many experts agree is the real cause for oil’s “price” rise (because oil is priced in US dollars, a drop in the dollar also looks like a rise in oil). A good blog for reading more about this situation is that run by Living Off Dividends – he’s got some good reporting on how oil, the world economy, and the US dollar are all interconnected.
In related news of interest, a Toyota dealer in my area has reportedly sold more Priuses in the last four months than it has in the last five years combined. Currently they won’t be able to get any more in until August!
As I was discussing with Living Off Dividends, these are all reasons why you should be looking at foreign stocks for investment. The Canadian and American economies are fairly correlated – less so with the recent resource boom, though – and you want to be in places that move against the North American economy. Just take it from Jim Rogers – he just left his Manhattan life and with his family moved to Singapore, where his daughter learns Mandarin and they have no more US investments to speak of.
