The Fed’s still have concerns about Europe and the impact it may have for the global economy, and Canada specifically.  Well they should, and it’s the Fed’s responsibility to worry about such issues.

It’s not sophisticated or scientific but it can’t hurt to keep our fingers crossed when it comes to the economy.  Markets rallied in a big way yesterday, due in part to a number of central banks around the world making moves to ensure liquidity, and it will be interesting to see if this is just another crest of a roller coaster ride the market has been on for some time now.  There was also encouraging news about the Canadian economy.

 As reported in the National Post, “The Canadian economy expanded in the third quarter at a 3.5 per cent annual pace, an export-driven rebound from an unexpected dip in the spring, Statistics Canada reported Wednesday. Economists had been expecting the economy to improve by a three per cent annual pace.  By way of comparison, the U.S. economy expanded at a two per cent pace over the same period.“

This was a pleasant surprise but as encouraging as the news was, the PM was only cautiously optimistic.  The Fed’s still have concerns about Europe and the impact it may have for the global economy, and Canada specifically.  Well they should, and it’s the Fed’s responsibility to worry about such issues.  But the cynic in me wonders if there’s more to the Fed’s messaging.  Firstly, are they aware of something we don’t know?  Secondly, if the Fed’s are only only cautiously optimistic is that an attempt to lower our expectations? That’s a win – win for the government.  If the global economy  goes to he’ll in a hand basket, which would impact us, they can say they’re all knowing.  If we’re not impacted by what’s happening in Europe, they can claim it was their prudent fiscal policies that sheltered Canada from the storm.  It’s kind of like environmental whacko’s.  It’s no longer global warming, it’s climate change.  This way they’re right if temperatures go up or down.  Hedging is not something that just banks do.

Predicting if the market rally or positive economic data in Canada is sustainable is fruitless. Keeping your fingers crossed may not work but it can’t hurt either.  Wouldn’t it be nice to have a little economic tranquility for some period of time?  All the Euro chatter is starting to give me a headache.

Until next time,
Cheers.