Yesterday I spoke with Andy Bell of BNN Bloomberg about a wide range of topics, including the state of global markets and what will happen if the economic cycle slows. We also touched on AI-driven disruption and why central banks are wrong about inflation.
Some highlights:
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Canadian Dollar and Interest Rates:
- “Canada is a country built on housing and immigration, and these two pillars of Canadian growth are currently in serious trouble.”
- On that note, TREB revealed today that Toronto home sales last month were the lowest for the month of June since 2000.
- “If the Bank of Canada is smart enough to sense the economic cyclical slowdown that is currently hitting Canada and the rest of the world, they will begin to aggressively lower interest rates.”
- “All we can do now is take our medicine, accept the weak currency and hope that the economy will be stronger in 10 years' time.”
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Challenges for the Canadian economy:
- “There's not much going on in the Canadian economy right now. We already have enough numbers to know that inflation is not going to be a persistent problem.”
- “It's not a good time to invest in Canada or to be a Canadian company.”
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Yen Intervention:
- “Their currency chief announced that they'd spent about $60 billion to prop up the currency. The markets basically ignored it and it fell to a 30-year low.”
- “Until global trade reverses, the market will continue to buy the dollar/yen when it dips or sell the yen when it rises.”
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British Pound and UK Elections:
- “The next trade-off on the UK is that the UK is something of an island of stability. Yes, big changes are coming to the Labour Party, but they're not promising higher corporation tax or anti-business policies.”
- “There could be some positives in that regard, but the problem is the economy is not as hot.”
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European political and economic challenges:
- “There are winds of change blowing in Europe right now, so election after election is going to happen, and it's very hard to predict how that's going to play out in a really coherent way.”
- “We're in a state of internal conflict, we don't have a coherent energy strategy, we don't have a coherent growth strategy, we don't have a coherent regulatory strategy. It's making it very difficult to buy euros.”
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AI and Deflation:
- “AI is going to be a huge deflationary force. The next big thing it's going to target is heavy industry. It's going to be a huge deflationary force because it's going to push workers out of the workforce.”
- “Unemployment is heading towards about 20 percent. The idea that we're entering a new era of inflation because globalization has retreated a little bit is completely wrong.”
