Features
A deep dive into the lives of some shadier members of our community
By BERNIE BELLAN A few weeks ago I was contacted by a publicist for a publishing company, who asked me whether I’d be interested in obtaining a copy of a new book, titled Jukebox Empire: The Mob and the Dark Side of the American Dream?
Here’s what that publicist wrote: “This fall, Rowman & Littlefield is publishing a true crime book focusing on one of the key figures in the story of organized crime in the 20th century – Jukebox Empire: The Mob and the Dark Side of the American Dream by David Rabinovitch (publishing October 15). Rabinovitch, an award-winning filmmaker from Morden, Manitoba, unravels the story of his uncle William “Wolfe” Rabin, which takes him from the Canadian prairies to Chicago in the 1940s and Rabin’s invention of a jukebox. This is the first book to expose how organized crime infiltrated the jukebox industry and it’s an untold piece of criminal, cultural, and musical history. Rabin was the son of Jewish immigrants.
“Caught between the Mob and the feds in a plot to save the casinos in Havana from Castro’s revolution, Wolfe Rabin pulled the biggest money-laundering scheme in history, but his hubris led to the conspiracy falling apart in a sensational trial. At a time when there was a jukebox in every restaurant, diner, bar, barracks, arcade, and canteen, Rabin’s trajectory from inventor to promoter to outlaw is set against the Mob’s growing influence of the jukebox industry. In a world of music, machines, and money, popular culture and organized crime collide in this true story of invention and greed. Rabinovitch pieces together the puzzle that begins in Chicago and spans the casinos of Havana and the financial giants of Europe, leading to what the FBI called “the biggest bank robbery in the world.”
“Rabinovitch is a winner of Emmy, Peabody, and Gemini awards. His significant films include the documentary Politics of Poison and the mini-series Secret Files of the Inquisition. Jukebox Empire is his first book.”
Of course, the moment I read that email I was interested in reading the book. Here we have some of the essential elements of a story that’s perfect for this paper: A crime story with a Jewish character at its centre – who comes from Morden, Manitoba no less!
I immediately thought of historian Allan Levine, who’s written extensively about Jewish characters with sordid backgrounds – especially in the bootlegging business, and contacted Allan to ask him whether he’d ever heard of this “Wolfe Rabin?”
Allan said he hadn’t previously, not that is, until he was contacted by the author, David Rabinovitch, who asked Allan for some help.
After I began to read the book, however, I was again contacted by the publicist, who asked me to withhold writing a review of the book until October, when the book will be released to the public.
But, to whet readers’ appetites even further, here are some endorsements David Rabinovitch has already received in advance of the book’s actual release to the public:
“A fast-paced, colorful romp through a slice of the twentieth century American underworld”
-David Kertzer, Pulitzer Prize winner
“Jukebox Empire reads like a novel but the characters and events are real and chilling.”
-Peter Edwards, co-author, The Encyclopedia of Canadian Organized Crime
“It has everything: action, incredible characters, suspense, humor. Can’t wait to see the movie.”
-Fred Fuchs, producer, The Godfather, Part III
“A compelling story of family and crime that touches on key events of U.S. history in the 1950s and 60s”
-Scott M. Deitche, author, Garden State Gangland
“An eye-opening, informative, and fascinating book. Jukebox Empire is must-read.”
-Antonio Nicaso, author, Made Men, The Dark Mafia, Angels Mobsters & Narco-Terrorists
“A delightfully entertaining story of jukeboxes, money laundering, and stolen bonds.”
-Alex Hortis, author, The Mob and the City
“A unique combination of family memoir and investigative journalism.”
-Gary Jenkins, producer/host, “Gangland Wire”
“A tour-de-force account of the Mob’s growing infiltration into legitimate American industry and how it affected one man who was obsessed with power and money at all costs.”
-Joe Saltzman, Prof. of Journalism, Annenberg School of Communication, University of Southern California
I also asked David Rabinovitch whether readers could order Jukebox Empire in advance, so that they could obtain a copy as soon as it’s released.
David responded: The book “is available for pre-order online through the website www.jukeboxempire.com (Chapters Indigo in Canada) or readers should request it at their favourite bookstore.”
All this got me to thinking: Over the years, we’ve published quite a few stories about Jews with mob connections, and some of those individuals came from Winnipeg. Perhaps the story that elicited the most interest was one we published in 2015 by Martin Zeilig about a character by the name of Al Smiley. (You can still find that story on our website’s online archive. Just search for “Al Smiley.” in the “search archive” button on jewishpostandnews.ca)
Smiley, it turns out, was best friends with Bugsy Siegel (whose real name was Benjamin – and who hated being called “Bugsy.”) In fact, Smiley was sitting right beside Siegel – on his living room couch in his Las Vegas home, when Siegel was shot and killed by a Mafia hitman.
That story led to another story about a mobster with a Winnipeg connection who, it turns out, was actually related to me in a very distant way, someone by the name of Harry Altman.
In 2020 I wrote about someone by the name of John Novick in an article I wrote about the children of Jewish mobsters. In that same article I referenced Myer Lansky and his daughter, Sylvia, who was the subject of one of the greatest interviews Anna Maria Tremonti ever conducted when she was host of CBC’s “The Current.” (You can still listen to that interview on the CBC website.)
Finally, a few years back I happened to attend a Fringe show which was titled “Davey the Punk.” The creator of that show – and its sole performer, was singer Bob Bossin (who was a member of a well-known group called “String Band.”) The show was about Bob’s father, Davey Bossin who, while not a “made man” per se (Mafia parlance for someone who is accepted into the Mafia), but who was very “connected” and about whose background Bob Bossin knew nothing until years after his father had died.
What’s my obsession with mobsters, you might ask? Well, I don’t think I’m much different than a great many others when I say that I’m both fascinated and repelled by all these figures – and the fact they’re all Jewish only adds to my interest.
But, it got me to thinking – once again: Where are the stories about Winnipeg Jewish hoodlums from the North End? Even in Russ Gourluck’s masterful history of Winnipeg’s North End, The Mosaic Village, he only mentions two shady characters: Stanley Zedd, a well-known operator of gambling establishments, especially the Margaret Rose Tea Room on Osborne, and Bll Wolchuk, a major bootlegger in the 1920s.
So – to find out more about Jewish hoodlums of a bygone era, I turned to my most trusted source on the subject: Ernie Chisick, whom I first met at the Y reunion in 2019.
For those who don’t know Ernie – he is a raconteur of the first order and his own brushes with the law when he was younger only add to his mystique.
I sat down with Ernie one recent evening and asked him to repeat some of the fabulous stories he’s told me over the years about colourful North End characters with whom he crossed paths over the years. I was especially keen on hearing Ernie recite some of the nicknames of guys with whom he associated when he was younger.
The problem is, as Ernie explained, some of those individuals are still alive and, even if they’re not, they have kids and grandkids, so referring to them by their full names might not even be embarrassing, it might be potentially lethal for me!
I have attempted to reach out to one character in particular who, as Ernie described him, probably knows more about Jewish hoodlums… and criminals, from the North End of the 40s and 50s than anyone else alive, but even if that guy does get back to me, I rather doubt he’s going to want to see his name end up in the Jewish paper in Winnipeg. (I’m hoping that he will respond to my message and I’ll promise him full anonymity if he’s prepared to talk about his former friends – who weren’t quite boy scouts.)
Ernie though, has too many good stories not to at least refer to some of them here. He told me about a gambling club on Selkirk Avenue between Salter and Powers that was run by an individual who was known as “Montreal…..” (Again, I’m leaving out the surname because it’s a name that would be familiar to at least some readers.)
According to Ernie, that club had a lookout by the name of “Srulik Flaxman.” When Srulik would spot a cop coming, he would shout to the guys who were in the back room: “Watch out – it’s the football shoes kimmen!” (Why he referred to cops as “football shoes,” Ernie didn’t know.)
Here’s another story Ernie tells – about a character who went by the name “One-eyed Connolly.”
“They’re playing cards,” Ernie says, “and Connolly says he’s got to take a piss.” But before he gets up to go to the bathroom, he leaves his cards on the table, then takes out his glass eye, puts it on the table, and says to the eye: “Watch them guys; they’re all a bunch of thieves!” Apparently that so unnerved the other players, they sat there frozen in their seats, afraid of that well-known Jewish superstition: “the evil eye.” (But Connolly wasn’t Jewish. Can a non-Jew threaten someone Jewish with the “evil eye?” There’s a Saturday morning sermon for you, all you rabbis and would-be rabbis out there.)
With reference to Stanley Zedd and the Margaret Rose Tea Room, Ernie says that his father, Charlie, once said to him, “Take this to the Rosie (the nickname for the Osborne Tea Room) and ask for Stanley Zedd.” Charlie handed Ernie a paper bag (which, Ernie now says, unbeknownst to him at the time, contained betting slips. Ernie claims he was only an innocent 16-year-old. not yet wise in the ways of the world. Anyway, the statute of limitations protects him now.)
So, Ernie drove to the Tea Room and announced, when he walked into the room, “I have something for Stanley from Charlie.”
He was ushered into the back room where Stanley Zedd held court. “He was very nice to me and told me my father was an honourable man,” Ernie recalls.
Another time, Ernie says, he got a phone call from his father in the middle of the night.
“Charlie,” Ernie asked (Ernie says he always called his father by his first name), “what is it?”
“I’m in jail,” Charlie responded. (He didn’t say why.)
“In the morning,” Charlie continued, “give Roland Penner a phone call.” (Roland Penner would go on to become Manitoba’s attorney general, but at the time he was in partnership with Joe Zuken in the firm, Zuken and Penner.)
“So, I phoned Roland Penner’s office in the morning. I told his secretary who I was and she put me through immediately to Roland Penner.”
“Roland says to me, ‘You heard from your dad? The mounties made a raid in the middle of the night. Eighteen guys (from different cities) were charged with conspiracy to commit bookmaking.’”
“Roland says: ‘I’ve got something for you.’ “ He explained that the mounties took Charlie out in the middle of the night and it was quite cold.
“Your father wanted me to give you his gloves,” Penner continues.
“I put them on,” Ernie says, “and I feel a lump in one of the gloves. They were betting slips that could have been used as evidence in court.’
(Did Penner know that, I wonder? Ernie says he doesn’t know.)
“All the guys were taken to a lock-up in Calgary. Harry Walsh represented the three Winnipeggers,” Ernie continues.
“My dad explained that the Jewish boys were able to get kosher food to eat because one of the mounties was Jewish and he brought them deli.”
The Grey Cup was being held that week, Ernie says. “Charlie said he made $10,000 taking bets on the game” – while he was in jail.
Eventually, when the accused were brought to trial, they were all acquitted, Ernie explains.
“Walsh said they weren’t betting with each other; they weren’t in business together.” As a result, the conspiracy charge didn’t hold up, Ernie says. (If they had simply been charged with bookmaking, then the likelihood is that at least some of them, including Charlie, would have been found guilty.)
I don’t necessarily approve of Charlie’s behaviour. Rather, the stories about the less savoury aspects of Jewish lives don’t usually receive much attention in North American Jewish newspapers. (Some Israeli newspapers, in contrast, are not at all reluctant to publish extensive investigative pieces about the Israeli underword.)Yet, there are so many colourful stories to tell I thought I’d deviate from the Gerry Posner and Myron Love types of stories that extol the virtues of individuals who have led honest, hardworking lives to write about other less honourable fellows who, as the late Harvey Rosen used to say are “of the Hebraic persuasion.”
We’ll have more about members of our community who had connections to activities that were not always on the right side of the law in our Aug. 16 issue. If you might have a story to add about a relative with a shady past that you might like to share, you can email us at jewishp@mymts.net
Features
Bias in America’s Colleges Produced Modern Anti-Zionism
By HENRY SREBRNIK Jon A. Shields, Yuval Avnur, and Stephanie Muravchik, professors at the Claremont Colleges in California, have just completed a study, “Closed Classrooms? An Analysis of College Syllabi on Contentious Issues,” published July 10, 2025, that draws on a database of millions of college syllabi to explore how professors teach three of the most contentious topics: racial bias in the criminal justice system, the Israel-Palestine conflict, and the ethics of abortion.
They used a unique database of college syllabi collected by the “Open Syllabus Project” (OSP). The OSP has amassed millions of syllabi from around the world primarily by scraping them from university websites. They date as far back as 2008, though a majority are from the last ten years. Most of the data comes from universities in the United States, Britain, Canada, and Australia.
“Since all these issues sharply divide scholars, we wanted to know whether students were expected to read a wide or narrow range of perspectives on them. We wondered how well professors are introducing students to the moral and political controversies that divide intellectuals and roil our democracy. Not well, as it turns out.”
In the summary of their findings, “Professors Need to Diversify What They Teach,” they report that they found a total lack of ideological diversity. “Across each issue we found that the academic norm is to shield students from some of our most important disagreements.”
Teaching of Israel and Palestine is, perhaps no surprise, totally lopsided, and we’ve seen the consequences since October 7, 2023. Staunchly anti-Zionist texts — those that question the moral legitimacy of the Israeli state — are commonly assigned. Rashid Khalidi, the retired professor of Modern Arab Studies at Columbia, is the most popular author on this topic in the database. A Palestinian American and adviser to the Palestine Liberation Organization delegation in the 1990s, Khalidi places the blame on Israel for failing to resolve the conflict and sees the country’s existence as a consequence of settler-colonialism.
The problem is not the teaching of Khalidi itself, as some on the American right might insist. To the contrary, it is important for students to encounter voices like Khalidi’s. The problem is who he is usually taught with. Generally, Khalidi is taught with other critics of Israel, such as Charles D. Smith, Ilan Pappé, and James Gelvin.
Not only is Khalidi’s work rarely assigned alongside prominent critics, those critics seem to hardly get taught at all. They include Israel: A Concise History of a Nation Reborn by Daniel Gordis, a professor at Shalem College in Israel. Gordis’s book appears only 22 times in the syllabus database. Another example is the work of Efraim Karsh, a prominent historian. His widely cited classic, Fabricating Israeli History, appears just 24 times.
For most students, though, any exposure to the conflict begins and ends with Edward Said’s Orientalism, first published in 1978. Said is the intellectual godfather of so many of today’s scholars of the Middle East, thanks in no small part to this classic book. Said was a Palestinian-American academic, literary critic, and political activist from a prominent Christian family. Educated at Princeton and Harvard Universities, two of America’s most distinguished centres of higher learning, he taught at Columbia University, another Ivy League institution, until his death in 2003.
Said was no crude antisemite. His writings were aimed at academics and intellectuals and he has, in my opinion, done more damage to the Jewish people than anyone else after 1945. Said claimed to be the first scholar to “culturally and politically” identify “wholeheartedly with the Arabs.” But he was also a political activist for the Palestinian movement opposing the existence of Israel.
Said warned PLO leader Yasir Arafat that if the conflict remained local, they’d lose. Join “the universal political struggle against colonialism and imperialism,” with the Palestinians as freedom fighters paralleling “Vietnam, Algeria, Cuba, and black Africa,” he advised.
(In this he was not the first, though. Fayez Sayegh, a Syrian intellectual who departed for the United States and completed his Ph.D. at Georgetown University in 1949, preceded him. Also an academic, his 1965 monograph Zionist Colonialism in Palestine stands as the first intellectual articulation of Zionism as a settler colonial enterprise, arguing that the analytical frameworks applied to Vietnam and Algeria apply equally to Palestine. The treatise situated Zionism within European colonialism while presenting it as uniquely pernicious.)
Israel’s post–Six-Day War territorial expansion helped Said frame Israel as “an occupying power” in a 1979 manifesto titled The Question of Palestine. Alleging racial discrimination as the key motive was a means of transforming the “Zionist settler in Palestine” into an analogue of “white settlers in Africa.” That charge gained traction in a post-Sixties universe of civil rights, anti-imperialism, anti-colonialism, and Western self-abnegation. The work sought to turn the tables on the prevailing American understanding of Israel: It is not, in fact, an outpost of liberal democracy or refuge from antisemitism, but an instrument of white supremacy.
Orientalism popularized a framework through which today’s advocates on behalf of Palestinians understand their struggle against the state of Israel and the West generally. Said casts the Western world as the villains of history and peoples of the East as its noble victims.
The essence of the book, Said concluded, is the “ineradicable distinction between Western superiority and Oriental inferiority.” It falsely affirms “an absolute and systematic difference between the West, which is rational, developed, humane, superior, and the Orient, which is aberrant, undeveloped, inferior.”
So it was impossible to take Zionism seriously as one among the myriad nationalist movements that emerged in the nineteenth century, much less to see Israel itself as a land of refugees or the ancestral homeland of Jews. And, indeed, Said’s Orientalism singles out Israel for special rebuke, suggesting that the state could be justified only if one accepted the xenophobic ideology at the core of Western civilization. Israel’s defenders, particularly those who lament the lack of democracy in the Middle East and fault Arabs for their militancy, represent the “culmination of Orientalism.”
Said is widely acknowledged as the godfather of the emerging field of postcolonial studies, and his views have profoundly shaped the study of the Middle East. Said also inspired – and in some cases directly mentored – a generation of anti-Zionist U.S. scholars whose dominance in the academic study of the area is unquestionable today.
The political left that emerged trained itself to read every conflict as the aftershock of colonialism. The ideological narrative of oppression and resistance allowed even the jihadist to become a post-colonial rebel.
It’s hard to overstate the academic influence of Orientalism. The authors note that “As of this writing, it has been cited nearly 90 thousand times. It is also the 16th most assigned text in the OSP database, appearing in nearly 16 thousand courses.” Orientalism is among the most popular books assigned in the United States, showing up in nearly 4,000 courses in the syllabus database. Said’s work appears in 6,732 courses in U.S. colleges and universities.
But although it was a major source of controversy, both then and now, it is rarely assigned with any of the critics Said sparred with, like Bernard Lewis, Ian Buruma, or Samuel Huntington. Instead, it’s most often taught with books by fellow luminaries of the postmodern left, such as Frantz Fanon and Judith Butler.
All these ideas are now embedded into diversity, equity, and inclusion identity politics, and “humanitarian” outrage over supposed Israeli “settler-colonialism,” “genocide,” and “apartheid.”
The ground for the massive pro-Hamas college and university encampments, and attacks on Jewish students, was prepared decades ago. The long march of progressives through American institutions over the past decades has taken its toll on society.
Henry Srebrnik is a professor of political science at the University of Prince Edward Island.
Features
Exchange Rate Factors: What Global Events Mean for Savvy Investors
When Russia invaded Ukraine in 2022, it created ripples in all financial markets, including currency markets. The Euro weakened while the dollar surged and emerging market currencies wobbled. Global factors can quickly affect financial markets and shake established trends. Apart from such rare events, currencies tend to change their price because of interest rates, inflation, and overall investor confidence. For investors managing money abroad, understanding these movements is critical to avoid losses and mitigate risks.
Below, we will break down how global political, economic, and cultural events influence exchange rates, with insights for savvy investors.
Economic factors
There are several key exchange rate factors with a consistent history of shaking financial markets. These factors include inflation, interest rates, trade balances, employment rates, and so on. Since economic factors are shaping markets almost daily, we start with those.
Inflation and interest rates
Inflation and interest rates are closely connected as one can easily affect the other. When inflation rises, central banks step in and raise interest rates to reduce inflation, and when inflation is lower, central banks can lower interest rates to make borrowing money cheaper. As a result, investors closely monitor these two metrics to anticipate changes in interest rates. Higher inflation makes currencies weaker, and whenever banks change the rates, the changes are immediately reflected in global currency rates. In the United States, the Federal Reserve is the central bank that sets interest rates in the country.
Trade balances and economic growth
A country that exports more than it imports has a stronger demand for its currency. More demand equals a stronger currency. However, the Japanese yen was always weaker against the dollar because the BOJ of Japan tends to have super low rates near 0 to support its exporters. Economic growth also increases demand for local currency as more investors try to invest in the country’s economy. Long-term investors often track this data to detect early signs of any changes in currency strength.
Political and geopolitical factors
Elections, sanctions, and overall political stability are also crucial factors. If the country gets under sanctions, its economy crumbles and its currency becomes inflationary, losing its value quickly. Elections are also crucial for a currency’s strength. Geopolitical events can have a serious impact on the currency as well. The most obvious example is the 2016 Brexit events that made GBP lose its value rapidly and violently. Global conflicts, such as wars, can seriously impact global financial assets, especially currency markets. When tensions are high, safe-haven currencies like USD and CHF (Swiss Franc) become very popular among investors as they seek a safe place to protect their capital.
Cultural and social factors
People like tourists, workers, and diaspora communities can shape currencies as well. Tourism usually drives seasonal demand, and countries that are popular destinations during certain seasons experience their currency appreciation as demand spikes. The perception matters as countries seen as safe and opportunity-rich tend to attract more investors, solidifying their currency strength.
Technology and innovation
Technology is seriously affecting everything, especially the financial sector. Digital payment systems, blockchain technology, and fintech startups have made it easy and swift to move money around. Cryptos and stablecoins enable investors to protect their capital using stablecoins during volatile times. The latest trend among banks is to work on CBDCs, which signals a new era where national currencies are blended with technology and blockchain. Despite this, currencies, even in their crypto form, will continue to be influenced by all major factors mentioned above, and knowing how these factors impact your currency is key to keeping your capital safe from risks.
Practical lessons for savvy investors
So, what do all these factors teach us about global currency rates and investing strategies? The key lies in proper preparations and anticipation. Monitoring macro trends, policy announcements, and major geopolitical and political developments is critical.
Diversify
The number one method which is used by professional investors is diversification. This simply means to spread your risks across a basket of assets. By not investing all your capital in one instrument, you can mitigate risks. If one asset experiences a loss, other ones will counter it with returns. Building a diversified portfolio is key to properly diversifying. For example: divide your capital to buy stocks, commodities, currencies, and cryptos so that if one fails to perform, others will counter it. This ensures a stable income without unnecessary losses in the long run.
Hedge
Forex options and ETFs are great hedging assets. Forex options let investors lock in an exchange rate for a future date, which is very useful if you expect volatility but want stability. Currency ETFs, on the other hand, track specific currencies or a basket of currencies and allow easy trading or protection without trading forex directly, but they are still risky.
Monitor the economic calendar
Economic calendar is a free online tool that aggregates important macroeconomic news data such as interest rate decisions, CPI, inflation, employment rates, central bank announcements and speeches, and other crucial information. By monitoring them, investors can always know when important news data will be released, and they can postpone their investment decisions to avoid volatile times and only invest after the main trend is determined.
Features
The Canadian Dollar is on a slow decline. Should you save in euros or US dollars instead?
The Canadian dollar has been losing its value against the dollar this year. For Canadians, this raises a simple question: if your CAD is losing ground, is it better to move savings into euros or U.S. dollars, especially bonds, stocks, or a carry-trade strategy? Carry-trade strategy in this context means to borrow in CAD and invest it in the USA or the EU zone. This is a complex matter, and to understand where the CAD is, how attractive other currencies might be, we need to analyze these currencies more deeply. Below, we will walk you through the data, practical costs, and risks so you can reach a usable conclusion after reading this guide.
Quick snapshot – What the markets say right now
Recently, the Canadian dollar has hit multi-month lows due to weaker oil prices and a post-Fed (U.S. Federal Reserve) market reaction (which raised the rates, making the CAD weaker against the dollar). Canada’s central bank has cut its policy rate to 2.25%, while the Fed’s fund rate remains notably higher at about 3.75-4%. The ECB (European Central Bank) main interest rates are lower than the Fed’s and near the low-to-mid 2% range. While the Euro currency to USD rates remain mostly predictable, due to higher US bond yield rates, the EUR remains stronger, still. The U.S. 10-year Treasuries are around 4.1%, Canada’s 10-year near 3.2%, and Germany’s 10-year around 2.7%, meaning that today the USD-denominated bonds have the highest nominal yield among the three. As a result, the dollar seems much more attractive when it comes to bond yields and stocks.
Bonds – Which currency is the best for fixed income?
The short answer is: USD bonds. When it comes to nominal yield alone, US bonds beat almost all other competitors. U.S. government bond yields (10-year) are noticeably higher than Canadian and German/Eurozone bond yields right now. As a result, US bond buyers have more income potential than Canada and the EU. Euro-area core yields are lower, meaning they are paying less than the USA.
However, nominal yield does not mean it is guaranteed real return, and metrics like inflation, currency rates, and hedging costs can impact potential returns directly. If you buy USD bonds but the dollar falls against the CAD, currency losses will most likely wipe out the higher yield rate. If the Fed lowers its rates, it will make the dollar weaker against the CAD and EUR.
Another challenge is that, if you live and spend in Canada, you are using CAD, and when exchanging it for dollars, you get exposed to foreign currency rate risks, which must not be underestimated.
Stocks – Euro or dollar?
Both the EUR and USD have their advantages. USD has strong liquidity and strong long-term performance, while EUR equities offer valuation opportunities and recent relative strength.
Why USD?
The U.S. market remains the most liquid stock market with strong earnings for many tech and large companies. This makes USD stocks very attractive for long-term-oriented investors. S&P has been rising historically, and even after crashes, it often recovers its value relatively quickly.
Why EUR?
European indexes have performed well this year and in many cases cost less than their U.S. counterparts. While cheaper does not always mean better, these indexes still have some growth potential. Some major banks in the EU zone, together with industries, have recovered strongly with a recent focus on military manufacturing, making many EU stocks very attractive, together with local indexes.
However, here is a caveat: if you are using CAD daily and it loses its value against the euro, the returns from euro holdings might shrink, exposing you to greater currency risks.
Carry-trade analysis – Is it viable to borrow CAD and invest it in USD or EUR?
The basic promise of carry-trade is simple yet powerful: you borrow cheaper currency and invest it in currencies with higher yields. In our case, is it lucrative to borrow in CAD and invest in either EUR or USD? To answer this question, we need to look at numbers. BoC policy rate is 2.25%, Fed funds from 3.75%, U.S 10-yr is 4.1%, Canada 10-yr is 3.2%. If we deduct Canadian rates from the U.S. rates, we get around 1.8% positive before costs. So, in theory, it could be lucrative to invest CAD in USD assets using a carry trade. Since the ECB has around 2%, it is not profitable to use a carry-trade strategy for the euro.
The bottom line
While the CAD has been weakening lately, it is still not cheap enough to naively invest in USD or EUR. However, if you want a pure yield and can tolerate foreign exchange rate risks, USD bonds are more attractive today. When it comes to stocks, USD equities provide stable and liquid markets. If you want valuation potential and diversification, then euro equities have become more attractive this year. When it comes to carry-trade strategies, the USD remains more lucrative than the euro, but on paper, traders and investors should evaluate all the risks and costs before investing in any currency.
In the end, Canadians who have CAD for their daily costs should be careful when trying to get exposure to other markets. US bonds, US stocks, US carry-trade, and EU stocks remain attractive choices for experienced investors.