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David Rosenberg on 2014: Why it's going to feel like 10 years ago

These are stories Report on Business is following Thursday, Jan. 2, 2014.

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Rosenberg sees better times
Economist David Rosenberg expects a better 2014 than the "write-off for the economy" that was last year, though that doesn't necessarily translate to the markets.

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The chief economist at Gluskin Sheff + Associates believes 2014 will be a "surprise year" for the U.S. economy, similar to 1984, 1994 and 2004.

"In a nutshell, I feel like 2014 is going to feel a lot like 2004 and 1994 when the economy surprised to the high side after a prolonged period of unsatisfactory post-recession growth, as reparation of highly leveraged balance sheets delayed, but in the end did not derail, a vigorous expansion," he said of the U.S. economy.

"That by no means guarantees a stellar year for the markets because as we saw in 2013 with a softer year for the economy and as for the markets, multiple expansion premised on Fed-induced liquidity can act as a very powerful antidote," the chief economist at Mr. Rosenberg said in a recent 2014 forecast.

Mr. Rosenberg's main point for this year is that the economy is "not at all suffering from secular stagnation," but rather has gone through "a balance sheet adjustment process of epic proportions."

He cited the periods after the dot-com bust and the recession of the early 1990s, and how things improved.

"The consensus view heading into 2004 was that the economy was never going to recover – what a surprise it then was to see the opposite and the Fed embarking on a tightening program in June of that year," he said, referring to the tech meltdown that preceded it.

"Go back further to the banking sector financial repair that held back the recovery in 1992-93," he added.

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"Again, terms like 'structural headwinds,' 'jobless recovery' and 'credit crunch' abounded. Then look at what happened in 1994."

January blues
Some trivia today: The Canadian dollar has eroded during January in eight of the last 10 years.

The average decline, said chief currency strategist Camilla Sutton of Bank of Nova Scotia, has been 0.6 per cent.

There's no specific reason for that, she added, but this year it's in line with projections for a weaker loonie, as Canada's dollar coin in known, over the first six months.

TransCanada in solar deal
TransCanada Corp. is acquiring another solar power facility as part of the ongoing expansion of its presence in the renewable energy sector, The Globe and Mail's Bertrand Marotte reports.

Calgary-based TransCanada said today it has acquired Mississippi Mills in eastern Ontario from Canadian Solar Solutions Inc. The facility is a newly built 10-megawatt installation west of Ottawa.

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The deal is part of a previously announced agreement with Canadian Solar to buy a total of nine Ontario solar facilities as TransCanada expands its carbon-free portfolio while also pushing ahead with higher-profile projects such as the Keystone XL and Energy East oil pipelines

What's next for Marchionne?
Fiat's $4.35-billion (U.S.) deal for all of Chrysler solidifies Sergio Marchionne's reputation as the auto industry's top deal maker, our European correspondent Eric Reguly writes today.
The question is whether the Fiat chief stops with Chrysler. And the answer is probably not.

Fiat shares surged today after the New Year's Day agreement was announced.

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About the Author
Report on Business News Editor

Michael Babad is a Report on Business editor and co-author of three business books. He has been with Report on Business for several years, and has also been a reporter and editor at The Toronto Star, The Financial Post and United Press International. His articles have appeared in major newspapers around the world. More


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