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"Almost a 51st state, but with a much better currency and a much more prudent government and...

"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.
Comments (6)
  • Canada is different from US in many ways but two are quite important for the fiscal and financial health of the country:
    - 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.
    23 Apr 2012, 12:35 PM Reply Like
  • Those are minor differences.

     

    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.
    23 Apr 2012, 12:46 PM Reply Like
  • Wouldn't that be the 58th state? Our geographically impaired president told us there are already 57, so it must be true.
    23 Apr 2012, 12:35 PM Reply Like
  • thank God Canada is not the 51st state! (or the 58th)

     

    long many Canadian equities for a long time!
    23 Apr 2012, 01:15 PM Reply Like
  • Canada will continue to do fine in the middle to long term but I question David Rosenberg's advice timing. Canada is currently suffering significant regional imbalances in economic development which breed an uptick in inter-regional political tensions. Ontario and Quebec, which form Canada's industrial and population heartland, are experiencing lagging economic growth which is causing their Provincial governments major fiscal problems. This is a classic case of 'Dutch Disease' (i.e. a booming resource sector retarding the economic progress of other segments of the economy by causing economic bottlenecks and excessive currency exchange rate appreciation).

     

    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.
    23 Apr 2012, 03:16 PM Reply Like
  • Everyone I know says the best place to invest is Canada. I don't see anyone bearish on Canada. I only see research papers indicating that Canada has the perfect economy.

     

    Meanwhile housing prices continue to outperform wage and income growth by huge leaps.....
    23 Apr 2012, 05:52 PM Reply Like
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