A better U.S. economy means a rising U.S. dollar and better equity markets, but the very rise in the greenback has historically spelled trouble for commodity prices. Even so, Stephane Marion, chief economist and strategist at National Bank Financial, is sticking to his guns, maintaining a preference for cyclicals.
"With recovery just beginning and policy still accommodative, a rise of the greenback does not exclude commodity price stability or even gains," he said in note to clients.
"Also, valuations of base metal stocks are still based on a fairly conservative commodity price deck for 2010."
Mr. Marion reiterated his TSX target of 12,700 by the end of this year. His S&P 500 forecast is 1,280.