Juggling Dynamite

“The U.S. economy may be hitting another “spring swoon,” the same way it has for the past several years. A slowdown from the economy’s already slow rate of growth would not be surprising given the impact of the “sequester” and tax increases that went into effect earlier this year. These moves trimmed government spending across the board and increased taxes on most Americans.

Not surprisingly, the sluggish economy has led to increased pessimism among American consumers. According to a new Associated Press-GfK poll, only one in four Americans expects their financial situation to improve over the next year. And only 46% of Americans now approve of President Barack Obama’s handling of the economy.”  See this direct link to a video discussion.

Canadian stocks are down about 2.5% on the week, 7% since March (and still 22% from their commodities bubble peak in June 2008). This is welcome progress back towards better investment value for the Canadian market. But buoyed by overbought interest sensitive sectors, at this point the TSX remains some 8% above key support around 11,000, and a full 25% above potential secular support in this down cycle.  We could easily witness a retracement of that magnitude in the months ahead as the weakening global economy gears down, Central Banks flounder and levered traders are forceably cashed out.

Chart source: Cory Venable, CMT, Venable Park Investment Counsel Inc.

Danielle was a guest today with Phil Mackesy on Talk Digital Network talking about recent developments in the world economy and markets. You can listen to an audio clip here.