DC Lite #295

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1. Capital spending plans. "Since the presidential election, small, medium, and large US enterprises alike have been saying they plan to expand their capacity sharply. We expect they will also boost both productivity and employment. Animal spirits are back."

2. CAD/USD vs. oil. "CAD/USD is pressing against a decade-long support zone, hovering around a key level that triggered strong reversals in 2016 and 2020. What makes this even more significant is CAD’s close correlation with commodities—especially oil and metals—due to Canada’s heavy exposure to natural resources."

3. Central banks vs. gold. "Global reserve allocations to gold have doubled over the past 10 years, and this is likely to be an ongoing trend given concerns around US fiscal sustainability and geopolitics (sanctions risk)."

4. Sector derby. "There has been significant rotation happening beneath the surface of the markets. Tech is the only sector down year-to-date, while every other sector has climbed—some quite substantially already. This is just the beginning of major market rebalancing in my view."

5. Sector ETF flows. "The most important stat we can tell you about recent sector ETF flows is that despite ongoing relative deterioration, Tech ETF inflows still led the pack in January. It’s a reflection that the ‘buy the dip’ mentality still exists for Tech."