$ Canadian/US

[DOGS THAT BARK]

Kirk--See where Canadian $ surpassed U.S. today-

Have any input on impact of this weak U.S. $ on market--

Have read both pros and cons and am curious on your thoughts.

 

[selkirk]

DTB in Jan did not think the cdn. dollar would hit parity. however in the past month or two it seemed certain....maybe longer.

the cdn. dollar benefits with resources, however also the cdn. economy is strong (especially the west, BC, Alberta, Saskatchewan, and I guess Manitoba.....

the federal government just reported a surplus over 14Billion. they used to critisize the liberal govt. under Martin for huge surpluses...

the debt and one time was a huge problem and we may have been Argentina North. only history will tell us (maybe not) how close Canada came. I think it was very close.

however governments have paid down the debt, and the interest saved will go down to lower personal income taxes.... just a side note : wish both liberals and conservatives would cut taxes, they seem to increase spending more than cutting taxes........ what about 50/50.

anyways in Canada rates would have been raised if it was not for the housing problem, market problems in the US....have some bad paper in cdn. ...not as much.

David Dodge (Canada brilliant, brilliant, smart, great/okay he is probably the greatest central banker no one has heard of...... ) he has done a great job and is retiring after one term...seven years..... did I say GREAT. he shoud have been 10X.....

anyways he will probably hold rates on hold, so if the US drops rates the cdn. dollar may go higher..

also often these currencies often overshoot on the downside and the upside.
since Cdn. exports so much to the US 85%. there will be great pressure on manufactur...thought there would be more trouble at current rates.

the cdn. dollar may also go down if oil/resouces go down or correct.

cdn. investor should take this time to invest in US stocks and int. stocks that they cannot find in cdn. ie . health stocks, retail, ect.


not sure if the US fed shoud have dropped the rates 50 basis points. the rally has been great for my portfolio.... however long term will know the answer....

the number one job of a central bank is to fight inflation.

most nations cannot get rich by devaluing their currency.
the lower US dollar should be good for resources, and will bring higher inflation......of coarse that could be debated......


thanks
selkirk

 

[selkirk]

as for your question I think the markets will push higher, especially if it is believe the US fed will continue to drop rates....

not sure however their are on the correct coarse...time will tell.
inflation goes higher on the weaker US dollar and longer term that cannot be...good.

thanks
selkirk

 

[DOGS THAT BARK]

Thanks Kirk--
I am not big fan of gov intervention either--I think letting the weak sisters getting weeded out by their own faults is better in long term--then bailing them out.

--but will agree has been good for investors short term-

-I was really expecting a bounce back as market hit 14,000 barrier--doesn't look that way--yet.

 

[ssd]

USD already very weak - I do not see a FED cut in October - how weak are they going to allow the US - I think .50 was an effective cut however inflation now becomes a concern and as you say, they are SUPPOSED to fight inflation, not do bailouts. Anyway, another cut and inflation creeps higher. Do not think that is good but it is their call.
Europeans already crying about Euro being too high and it hurting them on the manufacturing end. Pretty sure Airbus is taking it in the pants on this as I believe they do all their contracts in USD?
G-7 meeting coming up and we'll see if they talk forex and rates.
Risk is bad in vogue with the carry trades going back up and the stocks following them. Personally, I do not believe we are out of the credit crunch and the subprime mess - think that will rear it's ugly head again soon......

Good luck

 

[selkirk]

good points made dtb and ssd.

the number one job of the central bank is to fight against inflation.

read an interesting article in cdn. the bank targets an inflation target of 2-3%. however if you assume a 2% inflation rate does not seem high however after David Dodge(did a great job) leaves the cdn. dollar will only be able to buy 85 cents.

with the North American populaton aging many will be on fixed pensions it is important that central banks do not except inflation.

3-4% is just to hgh going forward.

thanks
selkirk

 

[ssd]

I think Bank of America was supposed to announce financials yesterday and I haven't heard a <peep> from anyone - no one saying why they didn't and no one asking why they didn't - doesn't look good to me but perhaps I am off on my date.

.50 cut was supposed to help housing but yields have gone up - it hasn't helped the housing market. Middle America will feel the burden on this.

Read an article I will post if I can refind - UFO's are the new CDO's - Unidentified Financial Obligations - basically banks selling the debt back to themselves - they likened it to a home owner selling his home to a buyer who couldn't get financing. The seller ends up financing the sale - the house is sold but the seller still has no money from it. Just another way for the to hide the money and the losses in a paper trail