"My question: How would the Canadian Banks do in a deflationary environment? Does anyone know or have an opinion? RR"
Excellent question. I don't know but that never stops me from giving an opinion. We're never going to see stable flation, "flatflation", change is just the way things are. The recent Asian action looks like deflation on the way, but with today's US dip, I would bet dollars (C$ :) to doughnuts that Greenspan and Martin (Canadian Finance Minister) pump in some liquidity, that's what AG did Oct 20/87.
The C banks are often measured in relation to long bond yield, and current wisdom is that as governments reduce deficits, the demand for bonds will exceed the supply, yields will fall and make the banks look attractive by comparison. But I wonder....radical changes in flation bring loan losses, like Russ says. Personally, in deflation I like cash, the opposite of inflation where you handle it like a toxic substance.
I don't do or know anything fancy, just long-holding of stock or cash, and today I didn't spend any cash, nothing was cheap enough, .....yet. CWB appeals at 15, CM at 33, a few others, like TD, in the same proportion to their tops. But not much, cash just feels too good, it's best to keep an open mind and a mostly-closed wallet right now, imho...
.......... cheers ............ marcos
PS... I recommend the BWDIKer cult. Reverend Bill Hueb from the Kahuna thread is our fearless leader. The basics tenets are; "I know nothing for sure, and I'm fairly sure no one else does either". ;-) |
