Author: Suzanne Steel

The Big Mac index says the loonie is trading above fair value with the U.S. dollar, while the Chinese yuan is far below where it should be.

The index is the brainchild of the Economist magazine. It works by comparing the price of a Big Mac at McDonald’s outlets around the world and translating those prices into U.S. dollars at current exchange rates.

The index is based on the notion that the price of a standardized item such as the Big Mac should be similar everywhere. If a Big Mac in Taiwan sells above what it would cost in Toronto or Tulsa or Torquay at current exchange rates, that’s a sign that the Taiwanese dollar may be overvalued. If Big Macs are unusually cheap, the opposite holds true.

According to the latest Big Mac index, unveiled Wednesday, the Chinese yuan is trading 49% below fair value with the U.S. dollar. That could be construed as evidence that China is manipulating its currency—but the Russian ruble and Mexican peso are also heavily undervalued according to the index and neither country has yet been accused of fiddling with its exchange rate.

Which currencies are overvalued? The Norwegian kroner and the Swiss franc are fetching far more than they’re worth, according to the Big Mac index. The euro also looks pricey. And so does the loonie, which the Economist figures is about 13% above fair value.

Freelance business journalist Ian McGugan blogs for the Financial Post. 

By Ian McGugan

Nobody know who’s going to win the smartphone war, but one way to bet on the growth of smartphones in general is to invest in so-called tower stocks. These represent the unglamorous folks who build, operate and lease the communications towers that relay data and voice signals from one cellphone to another. As cellphone usage rises, and as cellphones become smarter and more complex, the need for communications towers keeps growing.

Many of these stocks have been on a tear. American Tower Corp. (AMT), SBA Communications (SBAC) and Crown Castle (CCI) have all soared in recent months despite their small to nonexistent current earnings. Some smart folks think they have even more room to grow. Goldman Sachs has raised price targets on all the big tower companies and placed both SBA and Crown Castle on its list of conviction buys. Many hedge funds are loading up as well, according to the Market Folly blog. The signal that’s clearly being transmitted is one of growing interest.

Freelance business journalist Ian McGugan blogs for the Financial Post.