Page 62 - Canadian Industry Online

CANADIAN INDUSTRY ONLINE - OCTOBER 2015 PEERING THROUGH THE ECONOMIC CRYSTAL BALL: MARKET VOLATILITY, A LOW LOONIE AND YOUR BUSINESSC/O 20/20 magazine, Canadian Manufac- turers & Exporters’ magazineWITH THE RECENT global market turmoil sending shockwaves through economies allover the world, 20/20 sat down with Jay Myers to get his take on what the future has in store for Canadian manu- facturers and exportersWhat’s the impact on Cana- dian companies as a result of the re- cent market turmoil, spurred on by China? Should they be concerned in the long term?All this volatility in the financial markets right now is all the more rea- son for companies to be very careful about hedging their bets and find- ing insurance products that will help them mitigate risk — it makes the job of EDC and other agencies like it very important.My hope is that volatility is not going to affect the risk assessment that EDC has of major markets in places such as China, Asia, Brazil, Africa or Europe, because they are still very im- portant markets for Canadian export- ers and manufacturers.The inconsistencies in the econo- my recently has really underlined the concern I have in terms of the response to the global recession of 2008 and 2009. The response of Central Banks and particularly the FED has always been to pump more money into the economy.What we’ve seen is that money going into the economy but not show- ing up as consumer price inflation, price inflation of goods and services, but as is inflation of financial assets: stocks, bonds, property and commodi- ties. Over the past several years asset bubbles have appeared in various mar- kets, first of all in the US dollar market, in China in the stock market and prop- erty markets there, which has now blown off in major correction. There is a real dislocation that has taken place between asset values and the under- lining economy that they should be reflecting, which creates totally mixed messages.So the idea that the US economy is recovering, which should mean that not only that the FED has unwound its quantitative easing, but is now look- ing at increasing interest rates when that news comes into the market it drives stock markets down, but what it should be is a signal that earnings per- formance is expected to pick up so the way the stock market should work is that this should be positive news rath- er than negative news and the fact that62