Invest in Canada

The worst is behind us-Canadian Economy should improve

by investor on 11/04/09 at 1:58 pm

The reflation trade is on and that is good news for Canada, according to Gerry Brockelsby at Toronto-based Marquest Asset Management Inc.

Efforts by governments around the world have reached extreme levels, while some normal cyclical corrective forces are also coming into play, says the firm’s founding partner. While businesses continue to revise down their revenue projections, cut inventories and staff, and realign costs for a lower level of growth, he says it looks like the economy is not decelerating as fast as it was.

“What you’re seeing here is an escalation of policy to quite astounding levels. Our thinking is we’re finally at that stage where a lot of this stimulative policy initiative can start to bite.”

Brockelsby says Canada is in a good position to benefit from this because commodities should be one of the first areas to recover as all this money is put to work to stimulate the global economy.

“Only a year ago we were all talking about shortages of copper, oil and so on. That longer-term tight supply-demand situation has not gone away. When this market turns around and the economy starts to do better, the tightness for the commodity sector will come in very quickly.”

China is good at tying up supply when commodity markets are weak through building its strategic reserves and buying corporations. While this scenario is bullish for Canada and the loonie, he says, the limited amount of problems in the domestic financial sector also helps.

More..