Jan:
I think your call on the Fed and the TSE seem quite reasonable. I think will probably see 1/2 to 3/4 increase by the end of the summer.
Overall, I am quite happy with Greenspans performance and whatever he
does will keep the U.S. "goldilocks" economy running for years to come.
I think Canada will be fine this year, however next year with a new
Quebec election scheduled and referendum to follow, things could turn
very ugly quickly. If one thing the last election proved it is how
deeply polarized this country has become. You can cut a knife through the four electoral regions of the country. The next sitting in parliment is going to confrontational and divisive. It will surely
play into Bouchard's hand. He will be easily able to convince the
"soft seperatists", that no constitutional deal with Canada is
possible.
If Quebec does vote to seperate, how do you think the International
community will react? My guess is that both short and long term rates
would jump to the 10% range. The dollar would drop to about 67 cents.
The TSE would drop 30-40%. The international community does not like
uncertainty, exspecially within a country of such high net debt levels.
Concerning you point on the high weighing of resourse industries on the TSE, I think that resourse companies will have a smaller weighing in the future, however not by much. Lets face it, we are the world
leaders in mining and petroleum engineering. Canadian's are opening
up new mines and oil fields all over the world. This is something I
am deeply proud of. I will not let a rogue company like Bre-x, taint
my views on this sector. After saying this, I should also say I am
also proud of our high tech sector. Companies like Bombardier,
Northern Telcom and Newbridge are adding a wonderful new dimension to
our economy. However with technology changing so rapidly, I find its
very difficult to forcast future earnings here. Add to this some very
scary valuations for tech stocks and I am quite happy to invest in
more traditional industries. I think its easier to predict future
earnings and cashflow here. Besides everybody hates resource stocks
now and you can find good companies at fire sale prices.
Well that enough of my hot air for one day. Have a nice day.
David |
