Boil, boil, toil and well, who knows

The unfortunate language of market madness combines “bubble” and “peak”. If a bubble is about to burst, though, wouldn’t it be “reaching its widest circumference,” or something along those lines? (No geometry critiques, please — it’s the reason I hated high school math.)

So with the C$, which definitely deserves the petrodollar nomiker again, at $1.10, and real estate agents paying minions to camp out to buy a condo at Kazazh Korner, and Canadians eschewing job-creating and sustaining local retailers in favour of  inflating U.S. retail sales– can the pop be far behind?

Let’s look at the dollar first. It reached its nadir in early 2002, at just over US$0.61. Crude oil traded at $20/bbl. Today, it reached US$1.10, and crude oil was at $97/bbl. How far can the loonie fall? That depends on how much of a fear premium you think is built into the price of oil.


“It only costs $55 to supply oil to the market,” said Badung Tariono, fund manager of ABN AMRO’s energy fund.

“I find a $5 to $10 premium on the production price due to geopolitical tensions, a cold winter or threats from OPEC acceptable, but that puts the fair value price at close to $60-65.”

One of the other factor’s in the loonie’s rise, of course, is the differential between our interest rates and the current U.S. rate. McGuinty today called for the Bank of Canada to lower interest rates for Ontario’s sake — a plea which seems uniquely designed to alienate Canada’s not-new government:

“Right now, by and large, we have an interest rate policy which is designed to cater to a super-heated petro-dollar originating from economic activity taking place in Alberta and Western Canada generally,” said McGuinty

Yeah, and? Your point?

Real estate? Bubble? Peak? Maybe in the condo market, where real estate agents are lining up over a week in advance to buy units in the new building at 1 Bloor St. East:

The sidewalk campout began Monday morning when ReMax real estate agent Hersh Litvack and Royal LePage agent Anna Cass sought to catch their rivals unawares by starting the expected queue at an unexpected time: eight days before the sales event.

In the meantime, cross-border shopping could mean poor retail sales on this side of the border. But not to worry — with every household newly equipped with the iPod nano video ($20 cheaper!) and a supply of inexpensive Harry Potter books, at least laid-off workers will be entertained in the dark days of 2008. And their self-righteousness at avoiding widespread price-gouging of our nefarious local retailers will keep them warm.