Red Alert: Canada’s deterioration exactly like England’s

Posted by Greg Weldon - Weldon's Money Monitor

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Ed Note: Michael Campbell calls Greg Weldon – “The One Analyst other Analysts can’t Wait to Read.”

Our research indicates that the phrase “like two peas in a pod” was first used, in literary form, within the 1580 publication of “Euphues and his England” to describe the “Twins of Hippocrates” …

… “Wherin I am not unlike unto the unskillful Painter, who having drawen the Twinnes of Hippocrates, who were as lyke as one pease is to an other” 

Appropriate, even in the  ‘old-school’  Tudor ‘script’ … that this phrase originates in the UK, giving us a segue to our macro-theme for the day, derived from data released in the last twenty-four hours in “England”, and, in Canada … where the macro-peas look eerily similar.  (article written Sept. 11th)

Indeed, RECORD TRADE DEFICITS in both countries. 


In this vein, on the back of this specific macro-data, England and Canada are “as lyke as one pease is to an other.” 

They are … two peas in a pod.

We shine the spotlight on the following features:

…. Canada posts RECORD trade deficit in July, as Exports fall, and Imports rise

….. UK posts RECORD trade deficit in July, as Exports fall, and Imports rise

… Canada posts DEFLATION in Average Home Price during August

…. UK posts DEFLATION in Average Home Price during August

…. UK and Canadian Deficit-to-GDP Ratios exceed (-) 3%

…. UK and Canadian short-term interest rates on the rise

…. UK and Canadian currencies continue to be debased, relative to Gold

…. Silver breaking out, priced in both British Pounds and Canadian Dollars.

Indeed, Canada and the UK are ‘like two peas in a pod’ this week, from the macro perspective.

We note that Exports to the US account for a massive majority of total Exports from Canada, pegged at 74% … and … that the single-month decline in Exports to the US, at C$ 545 million, accounted for 227% of the total July monthly decline (ie: Exports to non-US countries rose). With that in mind we observe the chart below revealing the decline in Canada‟s Export during July, with the downturn taking place following text-book 38% retracement to the upside, amid a rally that failed just shy of the 5-Year Average (which continues to trend to the downside, directionally).


“Two-peas-in-a-pod … the UK and Canada … as it also applies to the data released this week for Average Home Prices, with BOTH countries posting an intensified near-term deflation dynamic.”

“Like two-peas-in-a-pod … both Canada and the UK are “at war” with downward spiraling fiscal deficits.”

“With deflation still lurking as the “bigger” risk … we think global Central Banks, including the Bank of Canada and the Bank of England, will continue to promote and pursue “easy money” policies, regardless of the fiscal dynamic.”

We remain bullish on several commodities and the Agricultural sector in general via the ETF markets.

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