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"Almost a 51st state, but with a much better currency and a much more prudent government and...
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Monday, April 23, 2012, 12:27 PM ET"Almost a 51st state, but with a much better currency and a much more prudent government and central bank," says David Rosenberg on growing client interest in investing in Canada. Rosenberg sees a series of rate hikes by the BoC while the Fed remains on hold - giving the country and the loonie an even greater yield advantage.
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- their banks are regulated more tightly than ours
- they have government-run healthcare that keeps the overall healthcare costs down and these costs are the major contributor to our future deficits in the US.
The Major differences are:
- Canada doesn't have such a bloated defense expenditure
- Canada doesn't have reserve currency status, which means it can't have such a terrible trade and budget deficit
These are the things that will bankrupt the US in the long run. The banks facilitate the problem and healthcare is just something people will look back on in a few years as the issue politicians used to distract people from the real problems.
long many Canadian equities for a long time!
Even the resource boom is under pressure as Asian markets for commodities softens.
Domestic housing and consumer debt markets are arguably excessively high but the Bank of Canada is reluctant to raise interest rates to slow these rises because of the issues earlier described.
This is not to suggest that serious trouble will ensue; only that the Canadian Dollar is unlikely to appreciate further over the next year or so and that Canadian equity markets are likely to trade within a narrow range for the next year or so.
Meanwhile housing prices continue to outperform wage and income growth by huge leaps.....