Radio Ralies & Reversals

Well the news today was China's reported November exports of $153 billion, a 34.9% increase year-over-year, while imports rose 37.7% to over $130 billion. Total trade was close to $284 billion, a record high, and China's November trade surplus of $22.9 billion is the second highest of the year. On the news, Asian stock indexes are down, along with energy and metals, as tighter monetary policy is expected.

Now in Canada, Bank of Canada Governor, Mark Carney, warned of rising debt levels, something I've talked about several times in the past year. Highlighting the type of ripple effect that helped turn the U.S. subprime mortgage crisis into a financial system meltdown and a global economic slump, the central bank said a decline in borrowers’ creditworthiness would “prompt a tightening of credit conditions that could trigger a mutually reinforcing deterioration of [economic] activity and financial stability.”

Equally troubling, the central bank said that with housing affordability on the decline and households “increasingly stretched” financially, “the probability of a negative shock to property prices has risen as well.”

Consequently, the report again identified Canadians’ unprecedented debt-to-income ratio – currently about 146 per cent – as the main domestic risk.That's worse than it was in the US back in 2006.

GB