Video: Where to camp out in a cyclical slowdown and what AI will do to the economy

I spoke with Andy Bell at BNNBloomberg yesterday in a wide-ranging interview about the state of global markets and what’s coming in a cyclical slowdown. I also got to touch on the disruption coming from AI and why central bankers are wrong about inflation.

Some highlights:

• Canadian Dollar and Interest Rates:

  • “Canada is a country that’s built really on housing and immigration, and those two legs of Canadian growth are in deep trouble at the moment.”
  • To that point, today TREB revealed Toronto home sales last month were the lowest of any June since 2000
  • “If the Bank of Canada has the wisdom to see the cyclical slowdown hitting Canada and the rest of the world right now, they’ll start cutting rates aggressively.”
  • “It’s a matter of taking your medicine now and accepting some currency weakness, and then hoping for economic strength later in the decade.”

• Challenges for the Canadian Economy:

  • “There’s not a lot working right now in the Canadian economy. We’ve seen enough numbers now to recognize that inflation isn’t going to be a problem for long.”
  • “It’s not a good time to be investing in Canada or to be a Canadian company.”

• Japanese Yen Intervention:

  • “Their currency chief came out and spent about $60 billion to prop up the currency. The market basically shrugged it off and went to a new 30-year low.”
  • “The market’s going to continue to buy dips in dollar-yen or sell the yen on any kind of rally until we see a reversal in the global trade.”

• British Pound and UK Elections:

  • “The next trade on Britain is that it’s somewhat of an island of stability. Yes, we’re about to have a big change to Labour…but they’re not promising anything in the way of corporate tax hikes or anything business-unfriendly.”
  • “There could be some upside on that, but the problem is it’s not a very dynamic economy.”

• European Political and Economic Challenges:

  • “It’s going to be election after election in Europe right now because the winds of change are blowing. It’s really difficult to see how it unfolds in a way that’s really coherent.”
  • “We have continued infighting, no coherent energy strategy, no coherent growth strategy, or regulation strategy. It just makes it very difficult to buy the euro.”

• AI and Deflation:

  • “AI will be a major deflationary force. The next thing AI is coming for is heavy industry…It’s tremendously deflationary as workers are flushed out of the workforce.”
  • “We’re headed to something like 20% unemployment. The idea that we’re in some sort of new era of inflation because we have a little bit less globalization, I think, is completely wrong.”

This article was written by Adam Button at www.forexlive.com.