BOC WALLETS PLUS

Prices for air transportation rose 6.4% month over month in June, following a 0.8% decline in May.” Travellers across the country faced higher prices for accommodation (+49.7%) compared with June 2021 (…). “The easing of public health measures and the increase in tourism which followed has led to higher demand for travel-related services.

To that point, the official Statistics Canada release highlights the challenges that North American central banks confront. As a result, investors misunderstand the amount of demand that’s driving inflation. For context, this is 288% more than Q4 2019 (pre-COVID-19).

households have nearly $3.89 trillion in their checking accounts.

consumers flush with cash and a red hot labor market helping to bloat their wallets, their propensity to spend keeps economic data elevated (.). For example, I’ve noted for some time that the U.S. However, investors’ faith in the narrative will likely lead to plenty of pain over the medium term. As such, when these issues are no longer present, inflation will normalize and the U.S. In a nutshell: COVID-19 restrictions, labor shortages, and manufacturing disruptions are the reasons for inflation’s reign. There is a misnomer in the financial markets that inflation is a supply-side phenomenon. 31 that the BoC and the Fed’s war on inflation would be one of attrition. As a result, demand has proven much stronger than central bankers expected, and I warned on Mar. Thus, while the Bank of Canada (BoC), like the Fed, often cites supply-chain disruptions and the Ukraine war as the reasons for inflation, the core CPI excludes the impact of food and energy prices. Moreover, with the liquidity drain still in the early innings, more pain should confront the PMs as central banks accelerate their war against inflation. Thus, while inflation rose sharply in 20, it’s no surprise that the GDXJ ETF collapsed. Therefore, while investors assumed that high inflation was bullish for the PMs (conventional wisdom), I warned on numerous occasions that unanchored inflation rattles the bond market and wakes up central banks. However, with the PMs stuck in medium-term downtrends, their final lows will likely materialize in the months ahead.įor example, the financial markets move in counterintuitive ways. Medium-Term Troubleīecause asset prices don’t move in a straight line, we expect the GDXJ ETF to muster a short-term relief rally. Furthermore, while positioning can still move lower, we’re in an area of extreme pessimism that often marks short-term turning points.Īs a result, since the GDXJ ETF is more correlated with the general stock market than its precious metals peers, a reversal of the pessimism is bullish for junior miners. If you analyze the right side of the chart, you can see that the lines are near or at two standard deviations below the average.

BOC WALLETS PLUS

To explain, the light and dark blue lines above track investors’ global equity positioning at the country and country plus U.S/Eurozone sector level.

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