Friday, 13 January 2017

Canadian Horror Story: Trump's Border Tax

Toyota Motor said will build a new plant in Baja, Mexico, to build Corolla cars for U.S. NO WAY! Build plant in U.S. or pay big border tax. (@realDonaldTrump)

With this tweet on January 5, President-elect Donald Trump got the attention of not only of Toyota and Mexico, but also a few astute Canadians. The realization began to dawn on them that Trump's promise to "Rip up NAFTA" was not the only threat to jobs and investment in Canada. Some may have even realized that the "big border tax", if adopted, could turn out to be a bigger concern than a renegotiation of NAFTA, which the Trudeau government was already contemplating.

One of these astute Canadians, Daniel Schwanen, international trade specialist and Vice-President of Research at the C.D. Howe Institute, when questioned about the border tax by the Globe and Mail, said: 
On its face, this proposal is devastating. This could really hurt trade and millions of workers in Canada.

How Did Trump Dream Up the Border Tax?

The so-called border tax is not a trade policy. It is a part of a sweeping corporate tax reform that did not originate with Donald Trump, but with Paul Ryan, the Republican Speaker of the US House of Representatives and Kevin Brady, Chair of the House Ways and Means Committee, as unveiled in their “A Better Way” plan last June. As pointed out by Dylan Mathews on, the Ryan-Brady plan,    
includes a big cut in the tax rate, from 35 percent to 20 percent. But it also includes some huge changes in the way the corporate tax works... They want to make it impossible for companies to deduct interest payments on loans... They want to make big capital investments totally deductible in the year they’re made rather than “depreciable” over time... But perhaps most dramatically of all, they want to allow companies to totally exclude revenue from exports when calculating their tax burden, and to ban them from deducting the cost of imports they purchase. 

Think of how this change would affect US companies that purchase imported goods from Canada (or elsewhere) either as inputs to their own production or for final sales to US consumers. Currently, such imports are a deductible business expense when calculating US corporate taxes. Under the Ryan-Brady plan, the cost of imported goods would not be deductible. The cost of inputs purchased from US domestic companies would be deductible from US corporate tax, providing a huge cost advantage to sourcing inputs from within the United States rather than from abroad. On balance, the result of the corporate tax reform would be equivalent to imposing a 20% tariff on imports from Canada (and other countries). 

Now think of how the change would affect US companies that export to Canada where they compete with Canadian companies. The US companies would no longer have to pay any corporate tax on their export revenues. As a result, US companies would either see a large increase in their profit margins on exports or they could cut their prices, thereby forcing Canadian companies to do the same. But Canadian companies would still have to pay Canadian corporate taxes on their revenues.

This would be a horror story for Canada (and Mexico and other major US trading partners). The table below shows Canada's exports to and imports from the United States.

Based on 2015 data, the latest year available, the border tax would be assessed on C$367 billion of Canadian exports to the US.  Canada's export-oriented industries  energy, motor vehicles and parts, minerals and metals, and forest products  would be placed at a big competitive disadvantage relative to US-based competitors. At the same time, C$285 billion of US exports to Canada would not be subject to US corporate tax. Canada’s import competing industries – food products, machinery and equipment and other consumer goods – would face much stiffer competition from US exporters that would not have to pay corporate tax.

How US Economists View the Border Tax

Such sweeping US tax changes may seem radical, but they have support from respectable US economists including Alan Auerback of Berkeley, who has long been a proponent of the border tax, and Martin Feldstein of Harvard, who wrote in an op-ed piece endorsing the idea in the Wall Street Journal on January 5, the same day Trump tweeted about the border tax.

Feldstein explains the new border tax with some simple examples. Here is one, with my additions to make the consequences clear for Canada shown in brackets:

A U.S. importer that pays $100 to import a product [from Canada] can, if there is no border tax adjustment, sell that product to a U.S. retail customer for $100. But with the border tax adjustment, the $100 import cost is not deductible from the corporate tax base. The price to the U.S. retail buyer would have to be $125, of which $25 would go toward the 20% tax... This calculation makes it look as if the border tax adjustment causes the U.S. consumer to pay 25% more for [imports from Canada]. But the price changes that I have described would never happen in practice because the [US] dollar's international value would automatically rise by enough to eliminate the increased cost of imports... With a 20% corporate tax rate, that means that the value of the [US] dollar must rise by 25%. [This means that the US dollar would have to rise to 1.67 Canadian dollars from 1.33 currently, meaning that the Canadian dollar would need to drop to 60 US cents]. The rise of the dollar relative to foreign currencies means that the real purchasing power of foreigners declines to the extent that they import products from the United States or sell products to the U.S.

Feldstein explained his view that the US dollar would strengthen quickly to offset the impact of higher import prices for US consumers at this link on Bloomberg TV. You can judge for yourself whether you believe exchange rates would move as Marty asserts. He also asserted that the border tax would raise US$120 billion per year relative to the current corporate tax with the tax burden being borne by US trade partners.  

Not all US economists support the border tax idea. Lawrence Summers, former Treasury Secretary in the Clinton Administration and therefore not likely to have may sway with Trump, wrote this in an op-ed in the Washington Post on January 9:

[T]he tax change would likely harm the global economy in ways that reverberate back to the United States. It would be seen by other countries and the World Trade Organization as a protectionist act that violates U.S. treaty obligations. While proponents argue that such an approach should be legal because it would be like a value-added tax, the WTO has been clear that income taxes cannot discriminate to favor exports. While the WTO process would grind on, protectionist responses by others would be licensed immediately. Moreover, proponents of the plan anticipate a rise in the dollar by an amount equal to the 15 to 20 percent tax rate. This would do huge damage to dollar debtors all over the world and provoke financial crises in some emerging markets. Because U.S. foreign assets are mostly held in foreign currencies whereas debts are largely in dollars, U.S. losses with even a partial appreciation would be in the trillions.

What Could Canada Do?

Trump's apparent adoption of the border tax as a tailor-made solution to his election promises to Make America Great Again and to bring back manufacturing jobs to the United States should be the top concern for Canada's new Foreign Affairs Minister Chrystia Freeland and for Finance Minister Bill Morneau. Prime Minister Justin Trudeau, who is busy right now engaging with ordinary Canadians in coffee shops across the country, needs to be briefed.

It is less clear what Canada could do about it, if President Trump and the Republican Congress get on board with the border tax. During the Nixon Administration, when the US slapped on a (short-lived) 10% import surcharge, the Pierre Trudeau government sent its envoys to Washington to seek an exemption, but none was given. Obtaining an exemption from a US corporate tax reform would be a tall order even for a government on good terms with the US Administration. Presumably, Canada would need to adopt a similar corporate tax framework to that of the US and seek to have Canadian produced goods treated the same as US produced goods for corporate tax purposes in both countries. That would take a lot of doing.

Another alternative would be to join together with other US trade partners and challenge the border tax at the World Trade Organization. As Larry Summers points out, while the WTO process grinds on, disruption of trade with the US would be severe and retaliation by some US trade partners would be likely.

A final alternative would be to grin and bear it and accede to Marty Feldstein's solution of letting the Canadian dollar weaken about 20% further against the US dollar to keep our exports from getting priced out of the US market. This would mean a further large hit to Canadian's purchasing power and tacit agreement by Canadians to bear part the cost of reducing the US fiscal deficit.

Monday, 9 January 2017

Global ETF Portfolios: 2016 Returns for Canadian Investors

Last year I started my annual review of portfolio returns by saying; “2015 was a lousy year for Canadian investors”. Well, 2016 was a turnaround year as the Canadian dollar strengthened modestly and Canadian equities rebounded strongly.

A stay-at-home 60/40 investor who invested 60% of their funds in a Canadian stock ETF (XIU), 30% in a Canadian bond ETF (XBB), and 10% in a Canadian real return bond ETF (XRB) had a 2016 total return (including reinvested dividend and interest payments) of 13.9% in Canadian dollars, a dramatic improvement from the 3.1% loss generated by the same portfolio in 2015. The Canadian dollar strengthened 2.8% against the US dollar, so the all Canadian 60/40 Portfolio had a 2016 total return of 17.2% in US dollar terms, a substantial recovery from the 19% loss in USD terms in 2015.

The focus of this blog is on generating good returns by taking reasonable risk in easily accessible global (including Canadian) ETFs. To assist in this endeavor, we track various portfolios made up of different combinations of Canadian and global ETFs. This allows us to monitor how the performance of the ETFs and the movement of foreign exchange rates affects the total returns and the volatility of portfolios. 

Since we began monitoring these portfolios at the end of 2011, we have found that the Global ETF portfolios have all vastly outperformed a simple stay-at-home portfolio. In 2016, we saw a reversal of this trend.

Global Market ETFs: Performance for 2016

In 2016, with the CAD appreciating almost 3% against USD and 8% against EUR, the best global ETF returns for Canadian investors were in Canadian equities and US small cap equities. The worst returns were in Eurozone bonds and equities and US Treasury bonds. The chart below shows 2016 returns, including reinvested dividends, in CAD terms, for the ETFs tracked in this blog. The returns are shown for the full year (green bars) and for the period following the election of Donald Trump as President in October (blue bars).

Global ETF returns varied widely across the different asset classes in 2016. In CAD terms, 15 of 19 ETFs posted gains, while just 4 posted losses. 

The best gains were in the Canadian equity ETF (XIU) which returned a robust 21.2%. The US Small Cap Equity ETF (IWM) was second best, returning 18.2% in CAD terms, followed by the US High Yield Bond ETF (HYG), which returned 10.3% in CAD. Other decent gainers included the S&P500 ETF (SPY), the Emerging Market Equity ETF (EEM), the commodity ETF (GSG), and Emerging Market Bonds, both USD-denominated (EMB) and local currency denominated (EMLC). 

The worst performers were the Non-US Government Bond ETF (BWX), the Long-term (10-20yr) US Treasury Bond (TLH), Eurozone Equities (FEZ), and Japanese Equities (EWJ).

Global ETF Portfolio Performance for 2016

In 2016, the global ETF portfolios tracked in this blog posted decent returns in CAD terms when USD currency exposure was left unhedged and stronger returns when USD exposure was hedged. In a November 2014 post we explained why we prefer to leave USD currency exposure unhedged in our ETF portfolios.

A simple Canada only 60% equity/40% Bond Portfolio returned 13.9%, as mentioned at the top of this post. Among the global ETF portfolios that we track, the Global 60% Equity/40% Bond ETF Portfolio (including both Canadian and global equity and bond ETFs) returned 6.0% in CAD terms when USD exposure was left unhedged, but 7.7% if the USD exposure was hedged. A less volatile portfolio for cautious investors, the Global 45/25/30, comprised of 45% global equities, 25% government and corporate bonds and 30% cash, gained 7.4% if unhedged, and 8.8% if USD hedged.

Risk balanced portfolios performed similarly in 2016 if unhedged. A Global Levered Risk Balanced (RB) Portfolio, which uses leverage to balance the expected risk contribution from the Global Market ETFs, gained a 6.1% in CAD terms if USD-unhedged, but had a strong return of 10.9% if USD-hedged. An Unlevered Global Risk Balanced (RB) Portfolio, which has less exposure to government bonds, inflation-linked bonds and commodities but more exposure to corporate credit, returned 7.4% if USD-unhedged, but 9.8% if USD-hedged.

Four Key Events of 2016

In my view, there were four key policy events that left a mark on Canadian portfolio returns in 2016. The first was the Bank of Canada's decision not to cut the policy rate in January. The second was the US Fed's decision to delay its decision to hike the US policy rate until December. The third was the Brexit vote. The fourth was the unexpected election of Donald Trump. The impact of each of these four events can be seen in the chart below which tracks weekly portfolio returns over the course of 2016. 

The Bank of Canada's decision not to validate market expectations which leaned toward a January rate cut, provided a boost for the Canadian dollar but weakened returns on unhedged global portfolios. The Fed’s decision to delay hiking the US policy rate in response to weak first half real GDP growth kept the Canadian dollar on a strengthening path until mid-May, when the Fort McMurray forest fires caused a stumble in Canadian growth and a weakening of CAD. The Brexit vote on June 23 triggered a brief pullback in global equity markets and, combined with the introduction of negative policy rates in the Eurozone and Japan, saw global bond yields fall to their low for the year. This combination saw a period of outperformance by risk balanced portfolios with heavier allocations to fixed income.  

The US election (along with a strengthening in global economic data) triggered a US-led rally in equity markets. US equity ETFs, especially the Small Cap ETF (IWM), performed best after the election, along with the commodity ETF. The US dollar gained ground against all currencies, including the Canadian dollar. Bonds sold off sharply everywhere. As a result, equity-heavy (and bond-light) portfolios performed best in the post-election period.

Looking Ahead (Through the Fog) 

As we enter 2017, the most interesting question, in my mind, is whether the all-Canada 60/40 ETF portfolio will continue to outperform the unhedged global ETF portfolios as it did in 2016. As the chart below shows, the 2016 outperformance was the first since we started tracking these portfolios at the end of 2011. 

Even taking 2016 into account, the Canada 60/40 portfolio has returned 6.3% per annum over the past five years, badly trailing the global portfolios, which have all returned between 9.6% and 10.2% per annum. A C$100 investment in the Canada 60/40 ETF portfolio at the end of 2011 would have risen in value to C$137 by the end of 2016, compared with C$158-163 for the four global ETF portfolios we track.

The answer to the question will be determined largely by the behaviour of commodity prices, the Bank of Canada and the Canadian dollar. Consensus expectations look for commodity prices to firm modestly, for the Bank of Canada to remain on hold even as the Fed hikes its policy rate by 75 basis points and for the Canadian dollar to weaken moderately against the USD. The consensus does not unambiguously favor either the all-Canada or the global portfolios. The best plan seems to be to wait, to watch and to react as economic and policy uncertainty gives way to more clarity.        

Tuesday, 3 January 2017

2017 Economic Outlook: Consensus and Other Views

It's time to look ahead to global macro prospects for 2017. I have posted similar outlooks for the past three years and followed up at the end of each year with an assessment of those forecasts. I assemble consensus views for the year ahead on global growth, inflation, interest rate and exchange rate outlooks which are presumably already built into market prices. The consensus view, as Howard Marks says, is "usually unhelpful at best and wrong at worst". What will move markets in 2017 is not the current consensus forecast, but the ways in which actual economic developments diverge from that consensus.

The big surprises of 2016 – Brexit, the impeachment of President Dilma Roussef in Brazil, and the election of Donald Trump as President – will have significant economic impacts in 2017 and beyond. 

The US equity market, as well as those of several other countries, has responded positively to Trump’s election. Investors have essentially placed bets that Trump’s early moves will focus on reducing taxes and regulations and that his campaign rhetoric about ripping up trade deals and deporting millions of illegal immigrants will proceed with caution.

Many high profile economists – Krugman, Roach, and Rosenberg – are warning of much more pessimistic outcomes (some of these views seem quite partisan). Some warnings take Trump’s election rhetoric on trade and immigration at face value. Others are based on the notion that Congress will not actually implement many of Trump's election promises.

Despite the market’s optimistic response and the aforementioned economists’ warnings, economic the consensus forecast has barely changed since before the US election. I do not think that means the election outcome will have little effect on economic and financial market performance in 2017 and beyond. I think it means that forecasters are a bit like deer in the headlights, not knowing yet which way to jump. The consensus remains unchanged as some forecasters shade their views in favor of the market’s optimism and others shade theirs in favor of the more pessimistic view. As I said in my review of 2016 forecasts last month, “2017 will undoubtedly once again see some large consensus forecast misses, as new surprises arise. As an era of rising asset values supercharged by ever-easier unconventional monetary policies seems to be coming to an end, the scope for new surprises to cause dramatic market moves has perhaps never been higher”.

With the foregoing in mind, here is what the consensus view is telling us about 2017:

  • Global real GDP growth is expected to be modestly stronger than 2016;
  • Global inflation is expected to be higher than in 2016;
  • The Fed is expected to hike the Fed Funds rate by 75 basis points, while other DM central banks are mostly expected to hold their policy rates steady and some EM central banks are expected to lower rates;
  • In the DM, 10-year government bond yields are expected to rise in the US, UK and Eurozone, but be little changed in Japan, Canada and Australia; In the EM, 10-year yields are expected to rise modestly in Brazil, Russia and Korea, but to fall in India, China and Mexico.
  • After strengthening against most of the currencies we track in 2016, the US dollar is expected to turn in a more mixed performance. Views of individual currency forecasters for 2017 exhibit much more dispersion than forecasts for other economic variables, but when averaged into a consensus view, most currencies are expected to move less than 2% against the USD. This seems like a very unlikely outcome. But for what it’s worth, the USD is expected to strengthen by the end of 2016 against RBL, BRL, CNY and CAD and to weaken against GBP, EUR, JPY, AUD, and MXN.
  • After strong performances in 2016, equity strategists tell us that US and Canadian stock markets are expected to post more modest gains of about 6% and 4%, respectively.

This year’s growth forecasts are notably more conservative than last year’s, as economists belatedly turn more cautious after several years of growth disappointing to the downside. Inflation once again is expected to move higher but, with the exception of the Fed, central banks are not expected to respond to higher inflation by tightening policy. 

Global Real GDP Growth Forecasts

Last year at this time, global growth was expected by the IMF to pick up to 3.5% in 2016 from 3.1% in 2015. Economists at five large global commercial bank expected a more modest acceleration to 3.4%. Instead, global growth is now estimated to have slowed to 3.0% in 2016.

This year, forecasters tell us once again that global growth will pick up in 2017 to 3.4% (IMF October forecast), or to 3.3% (OECD November forecast and the December average of global commercial bank forecasts).

Real GDP growth in 2017 is expected to be stronger in many economies, but with the notable exceptions of the Eurozone, UK, China, Korea and Mexico. Economies with the largest forecast growth pickups include India (7.3% in 2017 vs 6.7% in 2016), Canada (1.8% vs 1.3%), US (2.0% vs 1.6%), Japan (1.3% vs 1.0%), and Australia (2.7% vs 2.4%),. 

While global growth is expected to be stronger in 2017, an important divergence between DM and EM growth performance is expected to continue. EM growth is consistently higher than DM growth, but the important divergence is that, for a third consecutive year, DM economies (with the exception of the UK) are expected to grow at or above their trend rate of growth, while most EM economies (with the exception of India) are expected to grow below their trend rate. In the chart below, the blue bars show the 2017 consensus growth forecast versus the OECD estimate of the trend growth rate for each economy.

In 2017 the Eurozone and Japan are expected to grow at an above trend pace, while the UK – dealing with Brexit uncertainty – is expected to grow well below trend. In contrast, four of the larger EM economies are expected to grow well below trend: Mexico (1.0% below trend), Russia (0.9% below trend), Brazil (0.7% below trend) and China (0.5% below trend). 

In the chart above, the red bars show the latest OECD composite leading indicators (CLIs) versus trend for each of the economies. Unlike in the past two years, these CLIs generally support stronger 2017 growth than economists are forecasting, with a few exceptions.

In the DM economies, the leading indicators suggest that growth could surprise on the strong side in the Eurozone and Canada but on the downside in the US and Japan. In the EM economies, CLIs suggest that growth could be stronger than expected in Brazil, India, Russia and Korea but weaker than expected in China.

Global Inflation Forecasts

Global inflation has consistently fallen short of expectations since 2013. This occurred in spite of unprecedented efforts by central banks to fight disinflation.

A year ago, global inflation for the entire set of world economies was expected by the IMF to move up to 3.5% by the end of 2016 from 2.9% at the end of 2015. By October 2015, the IMF had cut its year-end 2016 global inflation forecast to 3.2%. Meanwhile, a year ago, global commercial bank economists expected weighted average inflation for 12 major economies we track to move up to 2.3% in 4Q16 from 2.0% in 4Q15. Instead, inflation for these countries remained flat at 2.0% in 4Q16. For 2017, the Bloomberg consensus of economists forecasts that weighted average inflation for the 12 countries will rise to 2.5% in 4Q17. The IMF and the OECD expect a slightly bigger acceleration for the 12 countries to 2.6%.

These forecasts, most of them made between mid-November and early-December, may already subject to upward revision. Crude oil prices ranged from $45 to $49 per barrel during the period these forecasts. Since then, in the wake of the December OPEC meeting, the price has risen to $54/bbl in late December and looks likely to maintain the higher price into early 2017.

In all of the DM economies we track, inflation is expected to rise. In EM economies the picture is more mixed, with inflation expected to fall in Brazil and Russia, where currencies have strengthened markedly over the past year. In Mexico and China, where currencies have weakened, inflation is expected to rise. Considerable slack remains in the global economy, especially in EM economies. But wage growth is picking up in some countries. Commodity prices are rising. Inflation expectations are rising.

Non-Consensus Views

As already mentioned, some economists, who are not part of the consensus, have a much darker view of 2016 prospects. Paul Krugman and Stephen Roach warn that Trump will set off trade wars with China, Mexico and other US trade partners. Krugman says, “Will this cause a global recession? Probably not … What the coming trade war will do is cause a lot of disruption … and quite a few American manufacturing operations would end up being big losers.”

Russell Napier sees a different problem with the consensus: 
The consensus may be bullish on the USD exchange rate and while consensus is regularly wrong, on this occasion it might be wrong because it is not bullish enough! 

Napier argues that “the USD has much, much further to rise” and that this will present a particularly difficult environment for China, which is also one of the major targets of Trump’s protectionist rhetoric. Rising US interest rates have spilled over globally and have aggravated China’s capital flight and accelerated the decline in China’s foreign exchange reserves. Napier suggests that it is “time for China to grow up and run an independent monetary policy choosing the appropriate price or supply or money without reference to the level of the exchange rate.” A strengthening USD and a depreciating CNY are “turning the deflationary screws on the global economy. It will likely be up to the Fed to stop the rise of the US dollar, but what ammunition is at its disposal, particularly if the President’s fiscal policy is indeed stoking domestic inflation?”

David Rosenberg graciously offered up a free year-end piece, which the Globe and Mail ran with the headline: "Forget inflation - here's what really will happen in 2017". The headline is a bit misleading because Rosenberg, quite reasonably, says “I actually find it senseless to provide a forecast for the entire year ahead at this time”. While declining to provide a forecast, Rosenberg is pretty sure about one thing: “I do have as strong view that inflation very much is going to be the non-event it has for the past several decades”. Rosenberg provides several good reasons why Trump’s platform will be disinflationary. Although bond yields will be volatile over the course of 2017, Rosenberg thinks that as inflation fears abate, the 10-year US Treasury yield will fall and "close the year around 2%", about 70 basis points lower than the consensus forecast. 

Another non-consensus view is that of Wall Street’s number one ranked strategist, Francois Trahan, Head of Portfolio Strategy at Cornerstone Macro. In this video Trahan goes against the consensus with a view that the equity bull market is almost over and it’s time to get defensive. He makes this argument partly on the assumption that Congress will not pass all of Trump’s pro-growth policies and their effect will be delayed but, more importantly, because US monetary policy is tightening, global financial conditions are tightening, and growth is about to slow significantly. He argues that macro policy forces already in the pipeline will outweigh anything Trump does in 2017 and the result will be lower US corporate earnings and a lower P/E ratio, so that the slowdown will have a disproportional impact of equity prices. Trahan expects US data to weaken in 1H17 after a burst of strength in late 2016. The result will be a significant correction and possibly a bear market in equities. I have to give Trahan credit; he has the conviction to go against the frozen Wall Street consensus.   

I'm not suggesting that we should toss out the consensus forecast; it provides a useful benchmark against which to measure the coming surprises of 2017. But, as with other non-consensus analysts, I am suggesting that once again we should apply a hefty discount rate to the consensus and consider the risks around a wide range of possible optimistic and pessimistic scenarios. 

Questions and Conclusions

2016 turned out to be another year in which global growth and inflation were both modestly disappointing and the political surprises were widely viewed in a negative light. Risk assets nevertheless performed very well. The legacy of the political surprises of 2016 is policy uncertainty for 2017. Some of the unanswered questions include: 

  • How will the UK and the EU handle Brexit? And will other EU countries follow the UK's lead? 
  • Which of Trump’s election promises will be implemented and when? 
  • How will US trading partners respond to Trump’s protectionism? 
  • How will global markets react and adjust to expected Fed tightening? 
  • Will the expected continued strengthening of the US dollar combined with below trend growth in China, Brazil and Russia create financial instability and continue to exert global deflationary pressures? 

At the moment, I would be quite suspicious of the advice being offered by many investment strategists. Those who have been long the growth trade and have benefited from the “Trump rally” in equity markets are suggesting stay with the trade in the near term but be flexible and prepared to exit should the recent optimism be blunted by disappointments. Those strategists who went into the US election in a defensive position and remain skeptical that Trump’s policies can “Make America Great Again” are suggesting maintaining larger than normal cash positions which may be deployed when risk assets correct sometime in 2017. 

In 2017, I’m afraid, we are on our own.
Ted Carmichael is Founding Partner of Ted Carmichael Global Macro. Previously, he held positions as Chief Canadian Economist with JP Morgan Canada and Managing Director, Global Macro Portfolio, OMERS Capital Markets.