Economic Overviews

As NAFTA negotiations linger on, let's step back and see what Trump's threats are all about.

Would you have appreciated a single number that could have given you a clear and unmistakable warning before the tech stock bubble collapsed? How about an unequivocal mathematical warning in 2006 that major financial trouble was on the way, well before the problems of 2007 and 2008? Well, while these warnings (called yield curve inversions) are quite uncommon, having occurred only three times in the last 35 years- followed relatively quickly by a recession - but are back in the news again, because we just may be nearing another inversion.

The crossing of the 50-day moving average below the 200-day moving average has been long used a signal of trend change and...is known as the "death cross" and such death crosses are popping up in a large number of assets including, gold, silver, copper, bitcoin, China's stocks, Germany's DAX, Emerging Market stocks, bonds, and FX and, perhaps most ominously, the Global Most Systemically Import Banks (G-SIBs).

Canada is not backing down from the trade fight started by Donald Trump imposing tariffs on $12.6 billion worth of U.S. products - the same value as Trump’s controversial steel and aluminum tariffs on Canada, Mexico, and the European Union - on July 1. Here is Canada’s list of 229 products that will be affected.

June's ISM Manufacturing Report reading surged to 60.2 from last month’s reading of 58.7 which was well ahead of consensus expectations and was tied for the second highest reading of the current expansion.

Investors are gradually becoming more anxious about trends and various political decisions. Tariffs are part of this anxiety. Interest rates are part of this anxiety. A possible market correction is also part of this anxiety. This current emotion of anxiety could turn into concern which could, in time, turn into fear.

Successfully predict the start of the next recession, plus or minus a few months, and you stand to make a lot of money. Not only can you reposition your portfolio towards bonds and cash – typically the best place to be during periods of economic malaise – but you can also sell your stocks at or near the market’s peak. If your primary objective is to invest in sync with the primary trend of the market (which typically follows the economic business cycle), then predicting the onset of a recession is your most important task.

What rankles Canadians the most is the total mischaracterization of the trade relationship and the complete denial by the Trump Administration as to the facts of the bilateral relationship. Let’s look at the overall situation and then some specific sectors that have been singled out in the cross-border trade disputes.

We believe what we believe will make us rich, what feeds our euphoric confidence that the bubble-music will never stop and our credulity that bubbles which we know will pop will not pop until we've safely cashed out.

Beneath the surface signals of an eternally rising stock market and expanding GDP, we all sense something is deeply, systemically wrong with the U.S. economy. These nine structural dynamics generate secondary dynamics, all of which are toxic to social mobility, sustainable prosperity, accountability, and democracy: