Trade Wars?

  • Posted by
  • on October 21st, 2007

So the Canadian dollar has shot WAYYYY past par this week to $1.03 plus cents. It has careened out of control now that it has entered ‘no man’s land’ which has been well documented as a trend on this blog.

It is fun to be right and catch a trend. This one has seemed too easy, but if you print something as fast as we have printed US Dollars, it is not possible that it will hold value over time.

That time is now. I talk enough to Canadian businesses owners and concerns are at Code Red.

If you are a Canadian or European not in super luxury exporting, you are fu@#cked this year. Even if you hedged the last 20 percent fast US dollar move, as a Canadian or European exporter what do you do this year when you can’t compete? If I am a US importer collecting bids in US Dollars, I could give a crap about your currency issues. I want the best price. You are going to have thousands of businesses missing their numbers this year. Now don’t get me wrong. There are thousands of businesses that will surface over time from this currency swing and places like Calgary (that’s Canada :) ) have been booming as oil booms, but major shocks and surprises come from huge moves like this as businesses do not adjust fast enough and the stock market hates surprises.

We had the first market warning shot this August with our credit crunch. The market has behaved awesome shrugging it off and chugging to more all-time highs. BUT, tops take time to form, lot’s of time. I am not close to price stops on my stocks so I may be facing a large drawdown if we get a trickle down.

Trade Wars scare me the most. I can’t imagine this scares George Jr. based on his rhetoric of war and enemies.

Time will tell.

Other things remain perfectly in balance. The Phoenix Suns are running and gunning, the Arizona Cardinals are back losing and I am headed back outside now as it’s 80 degrees and perfect in Phoenix. That’s now 82 in Canadian degrees :) . I am worried about this heat exchange come next summer.

PS – Don’t say you were not warned:

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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