Canada: Closest to normal?
While Canada might not carry the mantle of the lucky country, there is much to like. Growth has come back, the labour market is strong and wages are following. Even productivity is reasonable. The anomaly is that inflation remains too low. But all the classic conditions for an uptick in prices are there. In fact, if anywhere is close to returning to ‘pre-crisis normal’ it’s Canada. We would be short Canadian 10-year bonds. The Canadian dollar is cheap, but those NAFTA clouds leave us neutral for now.