Episode 106 Transcript – Bank of Canada’s promise

Hello there! You’ve got Jessi Johnson live. It’s 11:40pm on a Tuesday night. I am still working in my office. I really have no life. I’ve been out of the loop for a little while. I’ve expanded. I released my own brokerage firm. I now have the capacity to bring on other brokers and teach them how to do marketing, etc. I apologize that I’ve been out of the video blog world for about 2 1/2 months. I’ve also been having some video editing problems with my PC. I am in the process of upgrading to a Mac. Enough of that, I’m not going to bore you. I’m exhausted as you can probably tell by my eyes. My point of the day today is, I don’t want to be known as someone who predicts but, the Bank of Canada made a “promise” about one month ago saying that they would not increase the Bank of Canada’s interest rate which of course, their overnight rate affects prime. They said, “For one year we promise the rates will not go up.” I thought to myself that that was a pretty ballsy move to actually state that with inflation at .03 negative as opposed to positive and the economy not seeing any drastic forms of relief, OK, maybe that’s a possibility. Here’s my prediction for you. The Canadian dollar right now, being the end of July, is actually at a ten month high. The bond yields are through the roof again in comparison to recent times. They’re up to 2.67 which may not mean much to you but that will affect the 5 year rates. When you’ve got the Canadian dollar as high as it is and it’s probably only going to go higher from this point, you’ve got the American dollar de-valuing, deflating itself, diluting itself like no tomorrow with this excess government spending being the epitome of inflation. When the American dollar drops a lot of time what happens is the Canadian dollar goes up. Looks great for the economy, horrific for our exports. What happens when the Canadian dollar increases? Well, what happens is they will increase the overnight lending rate to compensate for the increased Canadian dollar. That being said I will be very surprised if they continue to keep their current promise up until June 2010. That’s all I have to say. You can reach me, Jessi Johnson at www.jessijohnson.ca. Remember to own your life. Good night. Bye.