Do Canadian Stocks Follow U.S Stocks? Because The U.S Stock Market is Crashing? Buy, Sell or Hold? – May 18, 2022,
As a Canadian, my view on the U.S Stock market is that Obama made it more important than it needed to be. The 44th U.S President obviously bought and paid for, bailed out Wall Street when he didn’t have to. What Barack Obama did as the 44th President, the 45th President made even worse. The President I thought would engage in Austerity Measures Donald Trump spent more money than Barack Obama did, what Donald Trump got correct however was he cut back on regulations on the overall economy which fought off inflation.
The 46th U.S President Joe Biden is all sorts of stupid, he’s not only spending, but he’s also regulating and because Donald Trump and Brack Obama bailed out Main Street and Wall Street, Joe Biden assumed he would bail out everything he could, while simultaneously regulating the U.S economy into oblivion. Joe Biden and his administration are utterly stupid that the UNITED STATES now has SHORTAGES of not only labor but if actually stuff.
Donald Trump’s strategy with his tariff policies has been replaced with a Left-wing idiot with no economic strategy about him. The only thing Joe Biden has going for him AT THE MOMENT is that the world is not ready to dump the U.S dollar. You have to remember everything including Canadian stocks revolves around how things are priced in U.S dollars.
I like to argue, how to value Bitcoin without the U.S dollar? The answer is YOU CAN’T even the world dissolved into a Gold Standard that would actually equate to FORCED AUSTERITY measures. Bitcoin has no history of government restraint on the Private Sector. If you think market participants are cut throat during a fiat money era, you’d be shocked to see the world under a Gold Standard in which every time the government prints money there are SERIOUS consequences.
There is now welfare state under a Gold Standard, you spend what you can pay back at a MARKET rate. Under a Gold Standard if your profit margin is too large competitors will eat away at your market share. This brings EFFICIENCY to the market place but it also means lazy people can’t even use the State to get an upper hand on the working classes.
Canada has been dissolving into a Service Sector economy at a rapid pace, which signals to me that the Canadian dollar is becoming WORTHLESS, deflation in Canada the way I see it, is consumer price inflation. As long as Justin Trudeau is the Prime Minister of Canada and shrinking the size of government is OFF the table, the DOMESTIC purchasing power of the Canadian dollar is coming down.
The Toronto Stock Exchange, Canadian assets in value, the valuable assets in Canada I expect them to go up in Canadian dollar terms for the foreseeable future. I see this happening even if a wave of bankruptcies occurs, even if the Foreign exchange value of the Canadian dollar goes up or down, why do I see this? Because the cost of doing business in Canada is more expensive in EVERY SINGLE Canadian province and it’s not coming down anytime soon.
Now, if the stocks and other prices crash in Canada, as I’ve been predicting for some time now, I genuinely see the potential for NEGATIVE INTEREST RATES coming to Canada. Fixed costs are what they are, because Canada has all sorts of EXISTING price controls, regardless of what happens to asset prices, costs will be the same in Canadian dollar terms, so what I’m getting at here, is that the Canadian economy more so than the U.S economy is DEPENDENT ON STIMULUS spending!
One of the craziest things to look at in Canada is our government spending and debt which is low in comparison to other developed nations, why is that? Well, Canada utilizes Crown Corporations in a manner not common in most developed nations. Recently New Zealand filed a lawsuit against Canada, which revolves around The Canadian Dairy Commission (CDC) which is a crown corporation, that DOES NOT show up as a debt to the Canadian government. The Canadian government has gotten Canadian consumers to finance their crown corporations, with PRICE CONTROLS and these schemes have been operational for decades now.
Canada’s private sector is actually in more debt than Canada’s government, which should give you an insight as to why I see NEGATIVE INTEREST rates being an inevitability. It’s important to remember that the Government doesn’t make anything, it distorts market pricing. The CDC as described in this post because it has no competition to worry about, charges Canadians a price that allows it to be PROFITABLE.
This is an incorrect market signal being sent throughout the Canadian economy, Which forces Canadians to pay higher prices for things. Now, as these prices rise, do you think they’re going to come back down again? I’ll answer that question with a question, when is the last time you seen the minimum wage come down? When’s the last time you saw rent controls lower the price of housing?
All price controls do is create inefficiencies and shortages. Now I personally don’t see calls for austerity measures in Canada, meaning that the market will soon begin to set NEW prices, to adjust to the new normal, unfortunately, that new normal will likely be more expensive than it is now, because, inflation has been running rampant above 5% for almost a year now.
Now oil plays a huge factor in all of this, but let’s say the price of oil comes down? Do the new price of wages come down? or do companies have to fire and or restructure? All of this equates to stimulus spending, and for myself, I deem it wise, to purchase stocks and other assets that I feel comfortable hoarding in the event of a MARKET CRASH! Because a market crash, in Canada for me does not mean I want to be in Canadian dollars, I personally think the assets I hold DURING A DEFLATIONARY CRASH will be more valuable than the Canadian dollar.
On the flip side, the U.S government has no control over the Europ dollar, whatever happens in the U.S is mostly a U.S problem, the U.S dollar on the other hand regardless of how it’s being traded on the forex markets, for the foreseeable future appears to be the currency you want to hoard. Could a world war change all of this? Sure it can, but all bets are off if there’s a world war.
Buy, Sell or hold? Buy valuable assets and hold onto them! Sell the trash and hoard the cash until opportunity knocks! When people start going bankrupt there will be a lot of buying opportunities.
If the economy is deflating, I personally think the Canadian government(including the central bank) will do everything in its power to provide liquidity to the markets even if that means mailing checks in the mail and adopting a NEGATIVE INTEREST RATE policy.
In America, a lot of U.S States have ALREADY started shrinking government, the U.S is an election away from a rip-roaring economy. Canada has transfer payments, any gains seen in the Canadian economy for the foreseeable future will be shared equally amongst solvent and INSOLVENT provinces. Canada’s share the pain economy has higher COSTS written all over it.
Interesting times ahead!