Although it contains twenty three countries and dozens of possessions and territories, North America (the world’s third largest continent) is dominated by the big three: America, Canada, and Mexico. We know that the American markets have corrected about 11% so far, but have not come close to breaching their 2011 lows. With the worries in Europe and Asia, the thesis has been that capital was looking at U.S. stocks as a relative safe haven. As I wrote last night in this post, that might be the reasons for the recent weakness in multinational firms, while small-cap firms highly levered to the U.S. have been noticeably strong.
At any rate, when you compare the U.S. to Canada, you can clearly see (second chart, below) that the TSX has dramatically underperformed. Perhaps there might be a reversion to mean trade setting up here to go long Canada, but I have yet to see many divergences.
The real dark horse, though, continues to be Mexico, as I have been discussing in this tab over the past few years. The recent pullback in Mexico has seen stocks show relative performance to the U.S. markets, failing to correct 11%, let alone a full 10.
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absolutely the creepiest picture ever…
Chess, in terms of considering going long Canada, can you elaborate at all what you might be watching for ? I am presuming commodity pricing and trends are one consideration…thanks !
just a bunch of divergences in Canadian stocks starting outperform which would hint at a reversion
that gif is absolutely incredible