Market Musings

Posted by David Rosenberg - Gluskin Sheff

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In today’s issue of Breakfast with Dave

• Getting a grip on reality: double-dip risks in the U.S. have risen substantially in the past two months

• The case for bonds: in discussing the outlook for bonds, supply alone cannot be used to predict future price/yield; in our view, deflation has emerged as the primary trend and governments have few bullets left in the chamber to deal with it

• The bond cycle and deflation: while fiscal policy may have a 40% correlation with the direction of bond yields, inflation is twice as important

• Income is king: with corporate balance sheets in terrific shape in Canada and the U.S., the case for credit remains quite compelling

• A shift in G20 tone: A year ago, it was all about fiscal stimulus to bolster the global economy; now the focus is on fiscal stabilization

• Double dip, anyone? In the U.S., we are now seeing the consumer sputter and the housing sector is collapsing again

… it all HERE