I think the biggest risk to Canadian equities (in 2006) is that we see a more aggressive spike higher in the Canadian dollar, which does put pressure on earnings and obviously competitiveness.

It's almost a naive assumption to make.

May delivered another dose of unexpected strength in Canadian job creation.

Monetary policy aimed at either fending off a low-probability occurrence of high core inflation or at curing a debt binge [in Canada] will run a greater risk of choking off consumption growth than in the U.S..

From a sector point of view, there would be very few 'safe' havens on the Canadian equity landscape if this scenario materialized.

It's a bit like closing your eyes and holding your breath waiting for a giant wave to crash down -- only to find that the wave has disappeared. There's a very similar correlation between what's going on now and what happened during the industrial revolution.