Yesterday, when looking at the exposure of the Canadian banking sector to energy, we found something disturbing: according to an RBC analysis, local banks were woefully underreserved.
It all started in mid/late 2014, when the first whispers of a Fed rate hike emerged, which in turn led to relentless increase in the value of the US dollar and the plunge in the price of oil and all commodities, unleashing the worst commodity bear market in history.
The immediate implication of these two concurrent events was missed by most, although we wrote about it and previewed the implications in November of that year in "How The Petrodollar Quietly Died, And Nobody Noticed."
I received an e-mail from a friend who is a Harvard graduate and an orthodox Catholic. He takes exception to R.R. Reno’s column on meritocracy, which I cited favorably today. I can’t reproduce his letter verbatim here, because he wants to protect his privacy. But I have edited it to his satisfaction, and present this version with his approval:
With China offline for the rest of the week, global markets have found a new Asian bogeyman in the face of Japan which as reported last night saw its markets crash, and the Yen soar, showing that less than 2 weeks after the BOJ unveiled NIRP, yet another central bank has lost control.