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Futures are higher this morning and yields are lower following a large slug of economic data, and the results were mixed relative to expectations. Retail Sales came in significantly weaker than expected across the board while Import Prices were higher than expected. Jobless claims were mixed relative to expectations with initial claims coming in lower than expected while continuing claims were modestly higher than expected. Finally, both the Empire and Philly Fed regional manufacturing reports were better than expected. The Philly reading wasn’t only better than expected, but it was also positive for the first time since August. Net net, the data was skewed to the weak side, and with that, the 10-year US Treasury yield is back down to 4.20% and has erased most of its gain following Tuesday’s higher-than-expected CPI.

As weak as the US data was, the headlines this morning are all about how the Japanese and UK economies both entered recessions in Q4 with back-to-back negative quarters of GDP. This continues a trend where economists keep talking about how resilient the US economy has been in avoiding a recession while other large economies around the world have. Keep in mind, though, that if they used the same definition of recession for the US that they do for the rest of the world (back-to-back quarters of negative GDP), the US economy already had its recession in the first half of 2022!

The red maple-leaf Canadian flag is one of the most recognizable national symbols in the world. However, we were surprised this morning to learn that it has been the national flag of our neighbor up north for less than 60 years as it was only adopted 59 years ago today on 2/15/1965. What may not surprise you is that the process of adopting a national flag in Canada was a forty-year process that began in 1925. Whether you’re talking about tax legislation, foreign aid, hold time on a call to the IRS, or adopting a national flag, when any government gets involved, get comfortable.

Regarding Canada, we discussed the outperformance of the US relative to the rest of the world in yesterday’s Chart of the Day, and Canada has been no exception on a short or long-term basis. The chart below shows the relative strength of Canada versus the US since the red maple leaf flag was first adopted in 1965. While Canadian stocks outperformed the US up until 1980, it was all downhill from around 1980 through 2000. From roughly 2000 through 2010, Canada rallied relative to the US as oil and other commodities rallied, but since the end of the financial crisis, Canadian stocks have done nothing but trade lower on a relative basis, and just this week hit a record low. While the chart below doesn’t include dividends, on a total returns basis, the S&P/TSX Composite has had an annualized return of roughly 7% since February 1964 versus the S&P 500’s annualized gain of around 10.25%.

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