Wednesday, September 21, 2011

Inventory Keeps going UP

Folks we are in for some interesting times.

We have been to the alter so many times, that it hardly seems like we can ever get some relief. However this year is different from last year, when inventory was dropping and we had one more boost up to new highs which kicked the air out of the prudent patient bears.

Why is it different now?

Well prices are a lot higher! And interest rates are a tad higher. And the world economy is starting to unravel, whereas everyone was pretty optimistic this time last year. The TSX is actually exactly where it was a year ago.

So what should we expect now? Lower prices that's what! Once again if Econ 101 is right, we have more inventory and lower sales, so prices should come under pressure, especially in the areas where MOI are very high like the FVREB (see last post)

Meanwhile the BOC is between a rock and a hard spot.

Rock= higher than expected inflation. An astounding 3.1% rate (while you get 1% on your hard earned and saving deposit accounts)

Hard spot = an unfolding banking crisis -Part 2 and Canada is wilting under lower commodity prices and the global slowdown.

So what is the BOC to do? Probably cut rates back to near zero again. The market already thinks so, by selling the CAD even more than the Euro.


  1. I put that post up too soon.

    The TSX is now below where it was a year ago.

    There is carnage on the markets. 3-4% drops in a day and note the huge currency moves. We have dropped 10 cents in about 6 weeks. Crazy!

  2. CAD was in a big carry trade same as MXN and BRL and others, and looks to be unwinding a bit. That's my read FWIW.

  3. Note recession article on MSN Money