April 25, 2014

The Perspective – Spring 2014

Filed under: Uncategorized — MikeT @ 11:28 am

Winter, Snow, Polar Vortex, Frost Quake!  Raise your hand if you are one of the millions of people whose fingers are crossed that these words are a thing of the past.  If you feel like this winter was one of the worst you can remember, you’re probably right. A “misery index” released by meteorologists from the U.S. National Weather Service shows  that the winter of 2014 was indeed one of the most miserable on record.

However, one bright spot is that while we hibernated, Canada put forth a tremendous effort in the Sochi Winter Olympics, and while we didn’t surpass our Vancouver 2010 gold medal count, gold medals won in men’s and women’s hockey satisfied a nation’s expectations and hopes.

And now we can finally look forward to spring which has already brought the vernal equinox which is the day of the year when light and dark are balanced. True or not, it’s said that on this day you can balance an egg on its end.  Although we still have a little way to go to really enjoy the warmth and light that spring brings, we can begin to think about what we can do to renew ourselves and to better balance our lives.

While the first quarter of 2014 has seen political unrest in Eastern Europe between Russia and the Ukraine, a new Prime Minister in Italy and weak news about the state of China’s industrial production, the story of the first quarter has really been about balance.

Under the leadership of new Federal Reserve Chair Janet Yellen the US has continued to claw back their bond purchasing program known as “Quantitative Easing”. Designed to stimulate economic activity in the wake of the 2008 credit crisis, quantitative easing at its zenith called for the monthly purchase of $85 Billion of US bonds by the Central Bank. In December 2013 Ben Bernacke finally ended speculation about when the US Federal Reserve would begin to reduce Quantitative Easing when he announced his intention to reduce the amount of QE from $85 billion to $75 billion a month. Two federal reserve committee meetings later have seen the Fed continue along this course, tapering the purchase of Treasury bonds by a further $20 billion (down to $55 billion per month) and remain on course for a complete exit of Quantitative Easing by the end of the year.

The theme of balance was also echoed in Canada when Finance Minister Jim Flaherty delivered what will be his last budget in February. In this budget he promised to bring balance to federal spending in 2015. Perhaps it is this balance that will form part of Flaherty’s legacy as if budget 2014 projections prove true; there will be a surplus in Federal spending for the first time since the 2007/2008 fiscal year.

So while the winter of 2014 saw consumers retreat to their homes, where they cozied up to their television sets to cheer on their favorite athletes, the spring has finally sprung and consumers are expected to spend once again, thus helping the global economycontinue to grow at a slow yet steady pace.

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