Sober Look's Blog

Analyst

Sober Look is a no-hype financial markets/macro blog that typically relies on data analysis, primary sources, and original materials. We keep it concise, to the point, with no self-promoting nonsense, and no long-winded opinions. If you are looking for Armageddon predictions or conspiracy theories, you will be thoroughly disappointed. Topics include financial markets, global economy, asset management, risk management, derivatives, regulation, and policy, particularly as it pertains to capital markets.

Gold Is Spiking – Here’s Why

Some people say that gold is dead. They point to deflationary pressures and a bear market that started back in September of 2011. The bulls have been wrong for years; however, that may be about to change. At present, there are multiple...

US Consumer Is the Last Defense Against Strong Dollar Drag on the Economy

We continue to receive questions about the impact of the recent dollar strengthening on the US economy. The most immediate impact of course is on trade, which has created an immediate drag on the GDP growth.

Big, Bad China – What You Need to Know

It seems like every day we are inundated with news out of China. Investors are already concerned. The offshore renminbi (CNH) is more international than the onshore one (CNY), which is tightly managed by the government. As such...

6 Reasons Why the Market Is Out of Step With the Fed on Rates

As discussed previously, the markets have completely discounted the stellar US payrolls report when projecting the Fed's policy path in 2016. Futures-implied probability of 4 rate hikes (or higher) is only 6.5%. Why is the market so "dovish" relative to the FOMC?

Negative Interest Rates for Canada?

In his December 8th speech, the Governor of the Bank of Canada, Stephen Poloz introduced the possibility of negative interests as a policy tool. He was adamant that the Bank was not embarking upon this policy, rather it was exploring the implications of using such an unconventional policy...

A Contrarian Perspective on the Short Euro Trade

As the euro continues to drift lower, it has become the accepted wisdom that we are headed for parity with the dollar. Indeed it is widely expected that the ECB will expand its securities buying program in size, duration and scope (the ECB has been exploring buying municipal bonds for example).

Canada’s Growth Potential: Tempering Our Expectations

How fast can the Canadian economy grow? What can Canadians expect now that commodity prices have plunged and the country is running a trade deficit? These questions take on greater significance with the shift in political power to the Liberals who campaigned on growth through...

The Possibility of a 2015 Rate Hike in the US Should Not Be Ignored

Futures-implied probability of a 2015 rate hike in the United States remains below 40%. Some market participants have all but dismissed this possibility as they look at weak global growth as well as soft inflation...

Canada and the Oil Price Shock

Canada is no stranger in dealing with oil price collapses. The sharp fall in the price of crude in 2014 is not unprecedented. Over the past 30 years, there have been five major declines in the price of crude that have hit world...

Canada Joins the Currency Wars

Devaluation is now the preferred tool to reinvigorate slowing economy. On a traded-weighted basis, the US dollar is at its highest level in over a decade. Resource-based countries have seen their currencies tumble...

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