Brian Acker, president, CEO and chief investment strategist at Acker

FOCUS: North American large caps 

MARKET OUTLOOK:

For the last 10 years, I have been recommending U.S. dollar-dominated assets for Canadian investors. Over the last year and a bit, we have seen this recommendation pay off for investors. We still see upside momentum for the US dollar and will continue to recommend this position for the intermediate term.

From the screams and yells of the over-levered consumer and financial holes in federal and provincial budgets/balance sheets from substantial interest-rate increases over the last year have produced an environment where yield-curve-control (YCC) can be introduced. I suspect YCC will be implemented in much of the Western world within the next few quarters. What is YCC, you ask? Well, it’s a form of “quantitative Easing.” If interest rates do go above the prescribed interest rates on a selected maturity, the central bank will purchase “whatever bond dollar amounts” to ease interest rates back to prescribed levels. It will be up to each country's central bank on what year of issue and level of interest rate prescribed. For example, Japan is using YCC on its 10-year bond keeping interest rates locked at 0.50 per cent within acceptable bounds. Australia used YCC back in March 2020 during the pandemic.

I believe, if and when this policy is implemented this will have a positive impact on financial assets including housing and will put a temporary floor on all asset prices in a given country obviously including Canada.

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