There’s still an assortment of problems to work out but at least people are talking about solutions, and just maybe they’ll have reason to feel a little better this Christmas season.

Based on economic indicators, and a sense that things might be getting better, the long term forecast looks a little bit more promising for our economy.  In the short term, this Christmas season might be just a little jollier.  I don’t know about you but it just feels a little different.  Let’s face, if we all believed that things were looking up we would all act accordingly, i.e. spending our hard earned money.  Consumer behavior is driven in large part by confidence.  The same obviously holds true in other parts of the world.  There’s still an assortment of problems to work out but at least people are talking about solutions, and just maybe they’ll have reason to feel a little better this Christmas season.

In terms of Canada, look at us puffing out collective chests.  The Canadian dollar is once again gaining ground.  It’s only been surpassed by the Yen and U.S. greenback.  From an export and manufacturing standpoint that doesn’t help us.  But it does reflect the confidence that investors have around the world as relates to Canada.  Investors are looking for financial certainty and manageable sovereign debt, and all of a sudden Canada becomes a darling.  That argument may fly in the face of rationalizing the strength of the U.S. Dollar, considering they have a $1.3 trillion budget shortfall, but it does demonstrate how desperate investors are to park their money in a safe place.  Everything that I read suggests foreign investors, especially European investors, will consider investing in Canada because of our stable government and banking system.  If ever we were going to have a majority government, and do away with the possibility of another early election, now is the time.  If we’re at risk based on what happens in Europe, according to conventional wisdom, then having an upside seems rather fitting.  Some might suggest our good fortune today is based on luck.  Let’s see, Canada’s budget deficit is 4.3% of our total output.    The U.S. deficit is 9.6% of their total output or $1.3 trillion.  That compares to our deficit this year of $31 billion, which the government plans to eliminate by 2015.  The definition of luck is when preparation meets opportunity.  The fact that our government is actually managing their affairs in a responsible manner hasn’t gone unnoticed by investors.

Another clear sign that things are looking up in this county is the posturing by our federal government.  Recently, the Finance Minister made a public statement that Europe will have to clean up its own mess and they should not expect other countries to bail them out.  Furthermore, word has it our PM whispered in President  O’-blah-ma’s ear that if he drags feet on the Alberta Keystone Pipeline, he has no qualms going westward, and filling container ships headed for China.  A little muscle flexing.  How un-Canadian…how cool is that?

Another reason to feel better about our situation here is because things appear to be getting just a little better south of the boarder.  The unemployment rate improved beyond expectations.  New jobs exceeded what analysts were predicting.  Americans spent a record amount of money on Black Friday, the Friday following US Thanksgiving, and Cyber Monday.  As the American consumer spends the ripple effect makes its way to Canada, as in 70% of our exports end up in the US.  Come on Americans, it’s time to stop saving all that money and do what you do best, spend.

If you really want to believe in Santa Claus, the Italian Government tabled an austerity budget this morning which was $30 billion less than what the German’s and French insisted upon.  I double checked, the Germans and the French told the Italians they could come in at ‘X’, and the Italians came in $30 billion less.  For sure I’m leaving milk and cookies out on Christmas Eve.

I just realized that I’ve used the word Christmas multiple times throughout this blog.   Am I allowed to do that?  Wait, it’s my blog…yes I can.  By the way, if over the Christmas season you want to say Happy Hanukkah or any other religious greeting to me, go ahead, I won’t be offended.

Until next time,

Cheers.