IWM - Diving Loonie And Treasury Spreads Warn Of Recession

• Oil price shocks become deflationary because they trigger demand destruction and economic contraction, especially when the shock coincides with a leap in the cost of food, shelter, and other staples.
• The Canadian Petrodollar has been diving against the greenback over the last year, even as oil prices have soared–another signal for economic pessimism.
• As in the 2000 and 2008 cycles, the Canadian stock market’s concentration in fossil fuel (12%) and financial companies (32%) has allowed it (-1.5% since November 2021) to hold up better than U.S. markets so far.

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