I spoke with Andy Bell at BNNBloomberg yesterday in a wide-ranging interview about the state of global markets and what's coming in a cyclical slowdown. I also got to touch on the disruption coming from AI and why central bankers are wrong about inflation.
Some highlights:
Canadian Dollar and Interest Rates:
- "Canada is a country that's built really on housing and immigration, and those two legs of Canadian growth are in deep trouble at the moment."
- To that point, today TREB revealed Toronto home sales last month were the lowest of any June since 2000
- "If the Bank of Canada has the wisdom to see the cyclical slowdown hitting Canada and the rest of the world right now, they'll start cutting rates aggressively."
- "It's a matter of taking your medicine now and accepting some currency weakness, and then hoping for economic strength later in the decade."
Challenges for the Canadian Economy:
- "There's not a lot working right now in the Canadian economy. We've seen enough numbers now to recognize that inflation isn't going to be a problem for long."
- "It's not a good time to be investing in Canada or to be a Canadian company."
Japanese Yen Intervention:
- "Their currency chief came out and spent about $60 billion to prop up the currency. The market basically shrugged it off and went to a new 30-year low."
- "The market's going to continue to buy dips in dollar-yen or sell the yen on any kind of rally until we see a reversal in the global trade."
British Pound and UK Elections:
- "The next trade on Britain is that it's somewhat of an island of stability. Yes, we're about to have a big change to Labour...but they're not promising anything in the way of corporate tax hikes or anything business-unfriendly."
- "There could be some upside on that, but the problem is it's not a very dynamic economy."
European Political and Economic Challenges:
- "It's going to be election after election in Europe right now because the winds of change are blowing. It's really difficult to see how it unfolds in a way that's really coherent."
- "We have continued infighting, no coherent energy strategy, no coherent growth strategy, or regulation strategy. It just makes it very difficult to buy the euro."
AI and Deflation:
- "AI will be a major deflationary force. The next thing AI is coming for is heavy industry...It's tremendously deflationary as workers are flushed out of the workforce."
- "We're headed to something like 20% unemployment. The idea that we're in some sort of new era of inflation because we have a little bit less globalization, I think, is completely wrong."