The Best Two Ways to Play Canada’s Economy, Currency And Natural Resources

Tony Daltorio, Investment U Research

A vast amount of natural resources. A love of hockey. A penchant for bacon. And liberal use of the word “eh.”

All are associated with Canada, of course. But America’s neighbor to the north boasts another fine trait: an efficiently run economy.

You see, although Canada borders the United States, it takes a completely different approach towards economic policy.

That showed strongly just recently when America stoked protectionist fears by slapping stiff duties on tire imports from China. Yet days later, Canada unveiled plans for a significant move in the opposite direction. Canada aims to abolish all remaining tariffs on imported machinery and equipment used by domestic manufacturers, saving Canadian manufacturers C$250-300 million a year.

And while the United States dithers over

The U.S. stock market has run up magnificently in the last six months. The U.S. economy has begun to recover, but its performance has fallen short of expectations.

And with good reason. The United States has a bigger and more-troubled financial sector than most countries. It also has a bigger overhang from the housing bubble, has a bigger balance-of-payments deficit and has a budget deficit that’s fat enough to stall the recovery.

It would be nice to have an economic recovery to invest in that didn’t have all of these problems.

Truth be told, such an investment play does exist. What’s more, the market I have in mind is advanced enough for us to invest in it without having to go through all the rigmarole of American Depository Receipt (ADR) investing. Nor will you have to make a potentially risky foray out onto some foreign stock exchange to buy the

If you’re bullish on stocks, you should be shopping abroad.

THE DOLLAR CONTINUES to be yin to the stock market’s yang.

As the perception that the worst of the economic and financial crisis has passed bolsters equities, the greenback is giving back its gains.

The dollar’s declines are being blamed by the sado-monetarists (to steal once again a terrific turn of phrase from John Liscio, our late friend and colleague at Barron’s) on the aggressive expansion of liquidity by the Federal Reserve.

And, indeed, the U.S. Dollar Index, which measures the greenback’s value against a basket of America’s major trading partners, broke below its 200-day moving a couple of weeks ago (”Green Shoots — Bad for Greenbacks,” May 7.) The further drop in the U.S. Dollar Index to below 82 essentially puts it back to where it started the year……

……For broad exposure to

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