Monday Morning Round-Up

Here are some stories we're watching as we get ready for the week ahead.

Stagflation concerns in the U.S. could spill over into Canada
Stagflation is something that the United States last dealt with in the 1970's and might be making a comeback. Stagflation occurs when inflation rises and economic growth is flat or sluggish. In the 70's it was a perfect storm of high unemployment, lowered income, rising prices and soaring interest rates that brought on stagflation, and a similar recipe of factors is beginning to brew.

"It's not that we're less bullish on the (energy stocks) that we were previously bullish on," he said. (Jeff Rubin, CIBC)

"In fact, we're probably even more bullish on that. It's just that there's going to be a lot more casualties from $150 oil in the economy and on the market. ... Will you be continuing to pay $3.25 for a doubleshot latte at Starbucks? There's a whole lot of things that get affected by this."

Full article: Canadian Press

Who's zooming who? Are speculators driving up oil prices, or is short supply to blame?
Everywhere you turn someone has a different theory about what is really pushing oil prices higher. While many blame speculative trading activity, it may very well come down to a basic supply/demand problem. For those who subscribe to the 'peak oil theory', rising oil prices was inevitable.

"Some people blame speculation for oil price rise. If it is speculation, when the oil price is too high, the people with oil will drown the speculators. It is just a stupid accusation that speculators are behind the oil rally," he said.

He asked: "If people have oil, do you think speculators could have driven the prices too high like this?" "No. People are spreading all speculative stories that speculation is driving up oil prices. That is not correct," the legendary commodities investor and author of such celebrated books such as Hot Commodities and A Bull in China, said.

He said the truth of the matter is that there is so much shortage of oil in the world. "The shortage of oil in physical market is higher than in the futures market. That is the reason for the high crude oil prices," he said.

Full article: Oil speculators are getting killed: Jim Rogers

Canadian jobs and housing market lose ground in June
For the first time in 2008 we lost jobs. Combined with a weakening housing market, both of those factors could signal a sluggish finish to the year. However, Canada's growing trade surplus should continue to be a nice cushion that softens economic blows felt on other fronts.

“The slow slackening in the labour market may start to take some of the steam out of wages, which would be a moderate relief to the Bank of Canada's inflation concerns," - Douglas Porter, BMO

Full article: Ottawa Citizen

TAGS: Economy, Housing, Inflation, Jobs, Oil, Stagflation, Usa

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