Features
It was just one year ago that Rabbi Matthew Leibl entertained a Rady JCC audience with “Oy to the World!”
This article first appeared in the Dec. 23, 2019 issue of The Jewish Post & News. It’s hard to believe, but it was only a year ago that Rabbi Matthew Leibl entertained a packed room of mostly seniors in the Adult Lounge of the Asper Campus with a medley of famous xmas songs – all written by Jewish composers.
By BERNIE BELLAN
Rabbi Matthew Leibl is not your usual rabbi – but he sure can command a room.
With all his considerable talents – as a clever and always witty speaker, as a terrific keyboardist and pleasant singer, and with a range of interests from that go anywhere from Jewish scholarship to sports, Rabbi Matthew can both entertain – and educate, often simultaneously.
It came as no surprise, therefore, that on Tuesday, December 10, 2019, the adult lounge of the Asper Campus was packed – entirely with older adults mind you, who were there to hear Rabbi Matthew give a presentation that was titled “Oy to the World: The Jewish Contribution to Christmas”. (The name of the event itself was a pretty good clue that this was not going to be your typical “drash”.)
It turns out that Rabbi Matthew did do his research for what was to follow. He unveiled a seamless narrative, mixing well-known Christmas songs with stories about their composers, combining everything into a narrative that demonstrated how so many Jews have influenced our modern attitudes to Christmas.
Of course, nothing that Rabbi Matthew does is predictable, so when he greeted the audience with the first few lines of “It’s beginning to look a lot like Christmas”, I would dare say that most of us there were expecting him to reveal that well-known song was written by a Jew.
Aha – gotcha! It was written by Meredith Wilson – most famous undoubtedly for having written “The Music Man” – or, as Rabbi Matthew announced to the audience: “not a Jew”.
The tone was set, therefore, for what would turn out to be an evening of surprises, in which Rabbi Matthew would sing a well-known Christmas song, and then follow the song with what was almost always an unexpected story, either about how the song was written, or about how it came to be universally popular (often when the composer himself thought it would be a flop).
But first, Rabbi Matthew told another funny story about how, as a child, he misinterpreted the name of a well-known Christmas carol: “Hark, the Herald Angels Sing”. To his mind, Rabbi Matthew said, he thought it was a song about his “Zaida Harold” (the late Harold Pollock) – “Hark, the ‘Harold” Angels Sing”.
At that point, Rabbi Matthew launched into playing – and singing, words to a song that just didn’t seem familiar. Here’s what he sang:
The sun is shining, the grass is green
The orange and palm trees sway
There’s never been such a day
In Beverly Hills, L.A
But it’s December the twenty-fourth
And I am longing to be up North
Can you guess that those are the words in the introduction to “I’m Dreaming of a White Christmas”? As Rabbi Matthew explained it, however, we never actually hear the introduction to the song on any of its many recordings – and the image that introduction evokes is hardly one of a “white Christmas”. In fact, time and time again, as we were to learn, songs that have come to conjure up images of snow-lined streets, fireplaces blazing, and other such stereotypical Christmas images, were actually composed in Los Angeles – often during heat waves when various composers were all trying to cool themselves off by imagining cold winter scenes!
In any event, “White Christmas” was composed by Irving Berlin – born Israel Isidore Beilin in 1888 in Russia. A prodigy at an early age, Berlin’s first big hit was “Alexander’s Ragtime Band”. Berlin is considered one of the greatest American songwriters of all time. With so many hits to his name, it’s hard to realize they were all written by the same person. For instance, Berlin also wrote “God Bless America” (in 1938), which was a way for him to show his appreciation for the country that had taken in his family.
“White Christmas”, as Rabbi Matthew told the audience, was originally written in 1940 for the movie, “Holiday Inn”, which wasn’t released until 1942. (The introduction was scrapped when it was sung in the movie.)
The song, however, sung by Bing Crosby, was first played on the radio on Christmas day, 1941. It became an immediate sensation – and the Bing Crosby version went on to sell over 50 million copies, making it the best-selling Christmas single of all time. (Altogether, various different recordings of the song have sold over 100 million copies.)
Not only is “White Christmas” a song that tugged at the heartstrings at a time when America had just been plunged into what would become the second most costly war (in terms of lives lost) after the American Civil War, as Rabbi Matthew explained, it also set two other precedents: It was the first commercial success for a Christmas song and it was the first-ever secular Christmas song.
The song also set the pattern for future composers to follow, in terms of its beat which, as Rabbi Matthew noted, was “A,A,B,A”. “The time repeats, but the words change,” Rabbi Matthew explained.
Having begun with what is undoubtedly the most successful Christmas song of all time, Rabbi Matthew then took a step back in time to play another song that wasn’t really a Christmas song in the sense that it doesn’t mention the name “Christmas” at all, but nonetheless has come to be associated with the Christmas season: “Walking in a Winter Wonderland”, music by Felix Bernard, and written in 1934.
“The words to the song are terrible,” Rabbi Matthew suggested. He gave as an example these lines:
“He’ll say ‘are you married?’, we’ll say ‘no, man’‘
But you can do the job when you’re in town’ “
Moving back to the 1940s again – which turned out to be a most productive decade when it came to composing great Christmas songs, Rabbi Matthew sang “I’ll be home for Christmas”, released in 1943, music by Walter Kent (a.k.a. Walter Kaufman). The song was also first recorded by Bing Crosby.
As with “White Christmas”, this song captured the mood of America, with its famous final line “I’ll be home, if only in my dreams.” At the time, while America was fully at war with Japan in the Pacific, hundreds of thousands of American soldiers were also in England preparing for what would turn out to be D-day the next year.
As it was, there was also quite a bit of controversy attached to “I’ll be home for Christmas”, as another composer, by the name of “Buck Ram” (whose name I can’t help but think would be great for a male porn star), claimed he had met Walter Kent and lyricist Kim Gannon at a bar, where he had given them a copy of the song. His name was eventually added to the record label as a co-writer and he received royalties.
The next song on Rabbi Leibl’s list was “Chestnuts Roasting on an Open Fire” (or as it is actually titled, “The Christmas Song”), music by Mel Tormé (whose name was really Tormé!). As I noted at the beginning of this article, this was one of those songs written in L.A. during a torrid summer heat wave.
Rabbi Leibl quoted Mel Tormé as having said this about his song: “It was not one of my favourites, but it was my annuity!” The song is also noteworthy for being the first song ever to drop the name “Santa Claus” into it. (Boy, you have to wonder what Christmas would be like if so many Jews hadn’t fashioned its modern-day image.)
Keeping with the theme of heat waves, the next song was also written in the same 1945 heat wave that engulfed Los Angeles: “Let it Snow”, lyrics by Sammy Cahn, music by Jule Styne.
Here are some comments made by Rabbi Leibl about the song: They (the composers) were trying to think cool thoughts…there’s no mention of Christmas…the song appears at the end of “Die Hard” – one of the two greatest Christmas movies ever made (the other being “Home Alone”). You can kind of get a sense of the era in which Rabbi Leibl grew up by his loving references to the 1980s.
As with every other song he played during the evening, the next one was accompanied by a very amusing anecdote.
The song was “City Sidewalks, Silver Bells” – written in 1951 by Jay Livingston (
born Jay Levison) (music) and Ray Evans (lyrics) – both Jewish. The duo also went on to write “Que Sera Sera” – which is probably the first song I myself ever remember from a movie.
“Silver Bells” was originally called “Tinkle Bells”, Rabbi Matthew explained, but when Jay Livingston went home to his wife and told her that he and Evans had composed a song called “Tinkle Bells”, her reactions was: “Are you crazy? Do you know what ‘tinkle’ means?” (Actually, a reference to Wikipedia expands upon Rabbi Matthew’s story. Apparently, Jay Livingston didn’t know what his wife was talking about: “Of course, Jay and Ray had never heard it used in that way. ‘Tinkle’ (for ‘pee’) is a woman’s term. As Jay said in the act that they used to do, ‘When I was a boy, I said “Pee-pee”. Come to think of it, I STILL say “Pee-pee’”, only more frequently’.”
In any event, the song title was changed to “Silver Bells” – and although it was first sung by William Frawley (who went on to play Fred Mertz in “I Love Lucy”), it was made famous when it was recorded by Bing Crosby in 1950.
Forward to 1962 – and the Cuban Missile Crisis. (Where’s this going, you’re probably wondering?) Rabbi Leibl told a story about someone named Gloria Shayne who, when she was growing up, happened to live next door to a family by the name of Kennedy (as Gerry Posner would say, “as in John Fitzgerald Kennedy’ ”).
Gloria Shayne and her then-husband, Noël Regney, wrote the song, “Do You Hear What I Hear?” as a plea for peace. Something else that set this song apart from every other song Rabbi Leibl sang that evening, as he noted, was that it was the only one that mentioned the name “Christ”.
Many of you reading this might remember the “Andy Williams Show”, which was popular in the 1960s. But, did you know that the song “It’s the most Wonderful Time of the Year” was written for that show? It was written in 1963 by Sydney Pola (born Sidney Edward Pollacsek) and George Wyle (born Bernard Weissman, also famous for composing the theme song to “Gilligan’s Island”, a very important show for Rabbi Leibl’s parents’ generation). By the way, although I was taking copious notes during this very important lecture, I have had to resort to Googling a good portion of the information you’re reading here. I can’t imagine how much work Rabbi Matthew put into putting together his song list. He really should do his show again; I’m sure it would attract an even bigger audience next year.
Next, we were told we’re going to hear songs by “the greatest Christmas composer of all time!” But, what about all the songs we just heard? Who could top some of those songwriters?
It turned out that it was Johnny Marks. Here’s an excerpt from Wikipedia: John David Marks (November 10, 1909 – September 3, 1985) was an American songwriter. Although he was Jewish, he specialized in Christmas songs and wrote many holiday standards, including “Rudolph, the Red-Nosed Reindeer” (a hit for Gene Autry and others), “Rockin’ Around the Christmas Tree” (a hit for Brenda Lee), “A Holly Jolly Christmas” (recorded by the Quinto Sisters and later by Burl Ives)” and even more.
While Rabbi Leibl told one story after another about each of the above songs, he really outdid himself when he told the story how “Rudolph the Red-Nosed Reindeer” came into being. The story goes that Marx’s sister was married to a guy by the name of Robert Ray.
Ray was working for the department store Montgomery Ward, working as a low-level copywriter. Although Rabbi Leibl described what happened in great detail, it’s such a beautiful story that I thought I’d quote extensively from the Wikipedia article describing how the song came into being:
Sometime in the 1930s, May moved to Chicago and took a job as a low-paid in-house advertising copywriter for Montgomery Ward. In early 1939, May’s boss at Montgomery Ward asked him to write a “cheery” Christmas book for shoppers and suggested that an animal be the star of the book. Montgomery Ward had been buying and giving away coloring books for Christmas every year and it was decided that creating their own book would save money and be a nice good-will gesture.
May’s wife, Evelyn, had contracted cancer in 1937 and was quite ill as he started on the book in early 1939. May “drew on memories of his own painfully shy childhood when creating his Rudolph stories.” He decided on making a reindeer the central character of the book because his then four-year-old daughter, Barbara, loved the deer in the Chicago zoo. He ran verses and chapters of the Rudolph poem by Barbara to make sure they entertained children. The final version of the poem was first read to Barbara and his wife’s parents…
In 1948, May’s brother-in-law, Johnny Marks, wrote (words and music) an adaptation of Rudolph. Though the song was turned down by such popular vocalists as Bing Crosby and Dinah Shore, it was recorded by the singing cowboy Gene Autry. “Rudolph the Red-Nosed Reindeer” was released in 1949 and became a phenomenal success, selling more records than any other Christmas song, with the exception of “White Christmas”.
And with that, the entire audience joined in the singing of “Rudolph the Red-Nosed Reindeer.” All that was needed to cap off the evening was for everyone to adjourn to The Shanghai (which, alas, is no longer) – and which, Rabbi Leibl recalled, was where his family always used to go for Christmas.
Next on the list of off-beat stories for this paper: A scholarly dissertation on David Steinberg’s famous line that almost got him thrown off the Smothers Brothers Show for good: “Let’s put the ‘Ch’ back into Chanukah – and the ‘Christ’ back into Christmas.”
You can watch a compilation of Rabbi Matthew singing popular xmas songs here: https://www.youtube.com/watch?v=bWyZ1djqxaI
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.