Briefing highlights
- What lurks in 2017?
- NAFTA negotiators meet again
- Swedish court acquits Bombardier employee
- Global markets mixed so far
- Investors await Fed minutes
- Loonie at about 80 cents
Unlucky 7s
David Rosenberg wonders what might lurk in the final quarter, given what he dubs the 'unlucky sevens' of the past.
Those would be the 1977 correction, the stock market crash of 1987, the Asian crisis of 1997, and, of course, the beginning of the meltdown in 2007.
"Well, we have three months left in the year before we see if the streak of years ending with 7 proves to be a disaster or not," said Mr. Rosenberg, chief economist at Gluskin Sheff + Associates.
"So far, the biggest correction we have endured was the grand total of 2.8 per cent, and daily and weekly swings have been amazingly small," he added in a recent report.
"Total calm."
Well, 1967 was the Summer of Love, not just for the kids in Golden Gate Park but also for the folks on Wall Street.
A 15-per-cent gain in stock prices may have been groovy, but many of us were listening to Sgt. Pepper or The Doors at the time, rather than following the fortunes of the Dow Jones industrial average, though Abbie Hoffman and his fellow protesters did shower the NYSE trading floor with dollar bills.
And that's where the love ended, paving the way for Mr. Rosenberg's unlucky sevens.
1977: Rapid-fire rate increases by the Federal Reserve sent stocks tumbling in what would be a correction to the tune of 16 per cent.
1987: The market crash of October: "But this wasn't apparent through most of the winter, spring and summer that year as the market was hitting fresh highs almost daily (and the movie Wall Street was released).
1997: The Asian crisis began, then "steamrolling" into the collapse of huge fund manager Long-Term Capital Management and then, in 1998, Russia's default.
2007: Still a little fresh in our minds? The housing and credit "bubble" popped, leading to what would become a full-scale global rout in 2008. At the time, "many pundits were fooled and thought all we would get was a 'soft landing' (mostly everyone was still drinking from the punch bowl leading up to the October peak).
As Mr. Rosenberg put it, "not that I'm superstitious, as much as that we still have three months to go!"
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NAFTA in spotlight
The North American free-trade agreement is back in the spotlight, with Prime Minister Justin Trudeau in Washington and hundreds of negotiators sitting down for Round 4.
This comes as President Donald Trump again threatens to pull out of the pact, as The Globe and Mail's Laura Stone and Adrian Morrow report.
"As the negotiations proceed, the issues covered are becoming more contentious (the less contentious issues have been quickly dealt with) and these talks will start to touch on difficult issues such as rules of origin and Trump's 'sunset clause,' which would see the whole NAFTA agreement re-examined every five years," said Adam Cole, Royal Bank of Canada's chief currency strategist in London.
"As the negotiations get more difficult, expect to hear more speculation of failure being a real possibility."
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Markets mixed
Global markets are mixed so far as investors await more detail of the last Federal Reserve meeting.
Tokyo's Nikkei gained 0.3 per cent to hit its highest level in about two decades, while Hong Kong's Hang Seng lost 0.5 per cent and the Shanghai composite rose 0.2 per cent.
In Europe, London's FTSE 100 and the Paris CAC 40 were down by between 0.1 and 0.2 per cent by about 4:05 a.m. ET, with Germany's DAX up 0.1 per cent.
New York futures were down, and the Canadian dollar was at just about 80 cents (U.S.).
Markets will be watching this afternoon as the U.S. central bank releases the minutes of its last meeting. Watching, too, no doubt, for the latest developments in Washington.
"The U.S. dollar lacks a clear direction against the G10 majors, after President Donald Trump's quarrel with the senator Bob Corker raised doubts on the feasibility of the tax reforms again," said Ipek Ozkardeskaya, senior market analyst at London Capital Group.
"Divisions within the Republicans seems to be a similar story to the health care bill and controversies could result in more disappointment for the Trump administration," she added.
As for the minutes of the Federal Open Market Committee, the central bank's policy-making group, Ms. Ozkardeskaya noted that "the Fed hawks came back in charge of the market after the FOMC hinted at its additional rate hike intentions this year at the latest meeting. Investors will be looking for more rate hike hints."
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