We’re 11 days away from the federal election, and during the lead up there has been a ton of time spent of the issue of the economy. Which party’s economic plan will bring the most benefit to Canada? While those questions are important, what impact is the election having on the financial markets?
Can the changes in the financial market be pinned solely on the election?
For that answer, Simi spoke with Jeffrey Sandler, portfolio manager at Raymond James. According to Jeffrey, the election campaign is impacting the markets, but that is not the sole reason for the changes.
“There has been a lot of attention in the last 10 days … on Canada. Our dollar picked up strength… and that’s foreign accounts buying it.”
Jeffrey told Simi that the added strength of the Canadian dollar is due to a simultaneous increase in the purchase of the major blue chip components of our stock market.
“Anything that non-Canadian accounts can recognize as Canadian… they buy them. I saw those jumping a little bit in the last four to five days. I think it’s all connected to a little bit of a better feeling towards the commodity complex… I think the world is getting tired of selling everything down to zero in the commodity complex.”
Jeffrey stated that crude oil is doing better and, despite a precipitous fall for the past 18 months, the raw materials area appears to be stabilizing.
But the election has to have some impact, right?
According to Jeffrey, the Canadian federal election is garnering a lot of interest in financial circles and he says that many research houses put out scenarios based on an NDP win, a Conservative win, or a Liberal win. Within these projections they detail what interest rates will do, what the federal deficit will do, and what will happen to the Canadian dollar.
“What is true right now is that the global perception of the commodity markets is better, and that Canada, unlike other jurisdictions… did not tie its entire export business to another economy. So, we don’t have that concentration in our customer base, so we’re really looked at as a more stable economy. Our dollar is doing better as a result and people do not think it is the end of the world that we are going through a federal election…”
What are other countries saying about Canada during the federal election?
According to Jeffrey, there is a lot of positive talk when it comes to the topic of Canada.
“[Other countries think] ‘they’re still a very small population in a very big nation, and nation with a lot of resource value’. There’s a lot of money in the ground… in Canada.”
However, it’s not all positive.
Before we get too excited about our seemingly popular reputation abroad, Jeffrey told Simi that other countries are carefully watching Canada’s debt load, which is quite high. When pin-pointing a province with high debt load, Jeffrey highlighted the province of Ontario.
“Ontario… at the moment it’s all ‘Blue Jays! Blue Jays!’… when the smoke clears and we get down to what’s going on in the budget in that province right now, that’s disturbing because it’s such a large part… of the entire Canadian economy. If they put themselves up on the rocks… then that could bode very poorly for the rest of the country.
But what about British Columbia?
The news about Ontario isn’t good, but Jeffrey assured Simi that B.C. is looking good – economy wise.
“At the moment in B.C. we have a number of factors that are going to determine our economic future and the jobs picture… that are totally unrelated… to Ontario.”