Video: Where to camp out in a cyclical slowdown and what AI will do to the economy

July 04, 2024 at 06:24PM
I spoke with Andy Bell at BNNBloomberg yesterday in a wide-ranging interview about the state of global markets and what’s coming in a cyclical slowdown. I also got to touch on the disruption coming from AI and why central bankers are wrong about inflation.

Some highlights:

Canadian Dollar and Interest Rates:

“Canada is a country that’s built really on housing and immigration, and those two legs of Canadian growth are in deep trouble at the moment.”

To that point, today TREB revealed Toronto home sales last month were the lowest of any June since 2000

“If the Bank of Canada has the wisdom to see the cyclical slowdown hitting Canada and the rest of the world right now, they’ll start cutting rates aggressively.”

“It’s a matter of taking your medicine now and accepting some currency weakness, and then hoping for economic strength later in the decade.”

Challenges for the Canadian Economy:

“There’s not a lot working right now in the Canadian economy. We’ve seen enough numbers now to recognize that inflation isn’t going to be a problem for long.”

“It’s not a good time to be investing in Canada or to be a Canadian company.”

Japanese Yen Intervention:

“Their currency chief came out and spent about $60 billion to prop up the currency. The market basically shrugged it off and went to a new 30-year low.”

“The market’s going to continue to buy dips in dollar-yen or sell the yen on any kind of rally until we see a reversal in the global trade.”

British Pound and UK Elections:

“The next trade on Britain is that it’s somewhat of an island of stability. Yes, we’re about to have a big change to Labour…but they’re not promising anything in the way of corporate tax hikes or anything business-unfriendly.”

“There could be some upside on that, but the problem is it’s not a very dynamic economy.”

European Political and Economic Challenges:

“It’s going to be election after election in Europe right now because the winds of change are blowing. It’s really difficult to see how it unfolds in a way that’s really coherent.”

“We have continued infighting, no coherent energy strategy, no coherent growth strategy, or regulation strategy. It just makes it very difficult to buy the euro.”

AI and Deflation:

“AI will be a major deflationary force. The next thing AI is coming for is heavy industry…It’s tremendously deflationary as workers are flushed out of the workforce.”

“We’re headed to something like 20% unemployment. The idea that we’re in some sort of new era of inflation because we have a little bit less globalization, I think, is completely wrong.”

This article was written by Adam Button at www.forexlive.com.