Market Perspectives: There’s Still Hope for the Patient

Lyle Stein - November 19, 2014

If interest rates were an ECG of the economy, the Yield on Short-Term US Treasury Bills chart shown below might suggest distress. Since the financial meltdown of 2008-09, short-term interest rates in the US have flatlined, suggesting a code-blue for the US economy, and by inference, that of Canada as well. In fact, not since the pre-war environment have interest rates been so low for so long.

As the winds of deflation blew through markets in October, the Canadian market caught a severe cold. Our cyclical stocks, which contributed to the S&P/TSX being one of the world’s best performing markets in 2014, gave back much, if not all of their gains. While the strong US dollar bore much of the blame for the slide in commodity prices of oil, gold and certain base metals, when we examine the symptoms underneath the slide, we see a very different picture.


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