Ok so its not like they get it right all the time, Goldman told investors that the Euro was going back up to 1.41 to the USD, instead it has dropped like a stone (now 1.34:1). But JPM's missive does point to a real issue for investors that have been using commodities as a store of wealth. The world is bulging with inventory, and once the infamous "Chinese Pig Farmers" start selling their copper -- all bets are off for commodities.
This has a dramatic impact on Canada, already the flight to the USD is "hurting" the loonie -- not so long ago the CAD was above parity against the USD, now it trades around 0.94: 1 against a very strong USD (its strong against all currency -- back to 1997 level actually). Which is another reason for commodity weakness since a vast majority of commodities are priced in USD.
The impact on Canada is certain to be hard; first exports will drop (as will productivity -- since the price is part of the equation). Already I was tempted to "predict" that the CAD could drop as low as 0.92:1 from the 0.96:1 level today. Things could change, China could decide that 5.5% inflation is not that bad after all (unlikely) and that what they want is even more industrial production -- just don't have enough idle capacity yet (and more empty apartments). I don't buy it, China will not ride to the rescue, simply because Chinese are students of history, and through the ages Chinese governments have fallen because of high inflation -- moreover, the Chinese authority know they have one of the world's most unbalanced economy --more industrial production is not the solution.
So back to Canada, the health of our economy is driven by the health of the rest of the word -- its not doing so great right now.