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As if we needed a new proof that the North American economy is slowing

In a country that has more than 100 million employed (and I mean America here), that each month 100,000 jobs are created or that none are created is almost immaterial.  Think about it, its a statistical aberration, its a 4th decimal rounding error!  What it is important is the trend indicator, the reality of America is that this non-recession since the summer of 2009 has been one of the weakest in terms of job creation.  The only thing that has been growing are profits (and executive pay).  Overall with the other ISM numbers that have been coming out of the woodwork for the past few weeks, there is no doubt that North American's economy is in a rough spot.  Personally I don't see how QE3 will help, the impact of QE2 has been muted (and expensive). But that's my opinion and its worth... not much.  However, it seems to me that repeating actions that have produced no results is in the hope this time it will be different is a form of madness (see cartoon below).




As usual my focus is Canada.  Our Q2 GDP performance was slightly negative.  Going forward, I would suggest that in the short term we are going to see weakness in the oil demand (Europe is also going trough a rough spot right now -- although that's been more of a Greek tragedy!). For Canada we should expect continued poor results in exports and merchant trade, the CAD should also weaken, after it is a petro currency.  My guess is that by Christmas we should be looking at the CAD at sub-parity with the USD as the positive funds flow of the past 36 months begin to reverse.  The fact that Canadian interest rates are about to fall, that the currency will weaken and that liquidity in the Canadian markets is an issue (both corp bonds and equity).  I suspect that the Bank of Canada's concern over these excessive flow from foreign investors is about to reverse itself... I could also be excessively pessimistic.

Like Australia, Canada is a second derivative country -- we are not the source of demand for good, or even for manufacturing goods (on a global scale), but we provide the building blocks for economics prosperity.  The world is in a very slow growth phase!  Brazil just cut interest rate (no economist saw that one coming) China's investment strategy is starting to show massive problems (high speed train anyone, excess steel, or concrete, empty cities...).  With luck the G7 world is looking at very low growth 1-1.5% at worse stagnation.

Aside from all that have an excellent labor day weekend.  The weather up here in Canada has been simply divine all summer, one of those summers that will go down in the books as a high vintage.  Maybe its global warming, maybe its just good luck. 
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