Monday, March 9, 2009

Crazy and confused!! Snow in March and the CAD $


This will be a crazy day and you know it when you wake up in the morning of March and find yourself in midst of a snow storm. On my way to work, there was a Fed-Ex truck stuck to a pole, cars slipping along and a lineup that seems to move stationary. Somehow, I managed to make it to the office.

Call me confused as oil is up and over $47 but the Canadian Dollar is falling and once again testing its resistance at a four year high of $1.3064. I doubt that today’s news of lesser housing starts in February weakened the Canadian Dollar to such extent. After failing to break the resistance the fourth time since October 2008, the Canadian Dollar has climbed back to $1.2930 and trying to break the support.

This will be a busy week of Canadian economic data with substantial volatility for the Canadian Dollar. The Net Change in Employment report coming out on Friday will likely be the key to turn the tides in either direction. Fourth quarter GDP results showed a near-universal contraction in major sectors of the Canadian economy signifying further employment and real estate market deterioration. Combined with clear downtrends in domestic consumer spending, these effects will continue to weigh on Canadian labor markets through the foreseeable future.

However, I remain confident that with the promise of a coming hyper-inflation, the Canadian economy which is heavily reliant on commodities will get a major boost. The only question is when.

Warren Buffett predicted there will be a sharp inflation quick to follow this recession. I think he will probably be right with the US extravagantly printing money for futile bailouts. Normally, it would make sense to anticipate and prepare for the hyper-inflation but this has become quite a dilemma for the governments.

Pick your poison - Stagflation or Hyper-inflation.

Well, if stagflation does not kill the global economy, hyper-inflation should finish the job nicely.

It is a crazy world. You better get used to it.
I took the silver lining from the clouds.

I drank from the other half of the cup.

I stole the light from the end of the tunnel.

2 comments:

Mewer said...

drive carefully yo...has "safe" come back?

Poeticcrap said...

Yes, its back finally.