The continued fall in oil, and continued move towards “risk aversion” is reeking havoc on The Canadian Stock Exchanges.
The “TSX” – The Toronto Stock Exchange looks something like this:
TSX_2015
Safety can still be found in gold and silver related names as these companies will benefit from the “further move towards risk aversion” with the metals and miners “finally making their move”, but short of that – Canada along with several other “commodity related” countries is gonna get wacked along side risk in general.
As we now enter U.S earnings season, I imagine the vast number of companies “missing” and/or providing sizable reduced earnings forecasts will contribute even further, coupled with the fact that Central Banks are now pretty much out of the picture.
Perhaps we’ll finally see what these markets will do – when left to survive on their own.
Wait….that’s funny – markets left to survive on their own?? That amounts to a whole lot of arrows on charts…..pointing down.
Don’t you like short USD/CAD Kong? Wouldn’t it go against this? Looks like we’re going to break 1.20 soon.
Not a pair I choose to trade as…..you’ve got a pretty tricky cross current here in USD/CAD.
USD topping out is one thing…..but playing it against CAD in particular ( with continued weakness in oil ) is tough.
I’d need to see USD “really make the turn” then assess how USD/CAD reacts.
I would rather look to the E.U currencies vs USD for a clearer move.
Kong! Long time no talk man. I’ve been reading you on my RSS feed lately. So apologies for not dropping by the blog proper, to comment more… Happy new year!
Now, you know I’m a lowly equity investor. But as a fellow Canuck who’s been reading your blog (for almost a few years already!), I had the gaul to move the majority of my cash and assts into USD during early 2014. Cha-ching. Thanks man. It’ been a lot more fun than holding loonies. Am I right?
But lately, I’ve been reading your “short USD” posts. Yet I also recall you saying CAD is more of a “risk currency.” So what’s a guy North of the 49th parallel to do in a deflationary-slowing-global-growth environment?
For now I’m sitting tight. And might buy more USD with new cash on any meaningful pull backs from this run-up.
Thanks again for all your thoughts,
J
Hey Jworthy! Great hearing from you and glad to hear everything has been goin well for you.
The expected move lower in USD likely won’t affect you too much, as you are likely only considering exchanging your cash / assets for loonies so….as far as the currency pair USD/CAD goes I imagine you’ll be able to “slug it out” and see your USD denominations do fine come March / April.
If you are nimble and want to “bank your profits now” sure….then in turn you’ll have to “time” getting back to USD at some point a few months down the road.
Much larger moves will be realized in other currency pairs, so looking at USD/CAD in particular a “Pullback in USD” could amount to a 10-12% move lower over some months….and then of course several months to get back to where she is now.
If it’s just a cash transaction then I imagine taking profits now could easily have you sitting on your hands until mid 2015 but hey…thats with “real profits” not just numbers floating in “paper accounting”.
Let me know what you decide.
Thanks for your reply Kong.
Well, it looks like sitting in USD has been the right move for now. And for the meantime, I am happy to keep holding. Especially since basically all my earning power is in CAD.
However messed up the US might be, as long as oil is down here, CAD looks to be stuck. And as of yesterday apparently the Bank of Canada agrees.
Thanks again for your note and will look forward to your next musings.
got it all wrong, once again…