"It's better to have a measured, appropriately priced rate of interest. "When money is cheap and accessible, it's not always a good thing for the economy," he said. The crush of investors has led to a short squeeze as other institutional investors scramble to cover their positions.ĭodig said some asset valuations have been "stretched" thanks to stimulus measures, leading to some unintended consequences that could weigh on the economy. "That's why I'm hoping that we can get past this and the economy can normalize, which would also include normalized interest rates."Ĭompanies like BlackBerry, Express Inc., and GameStop – the last of which had sizable short interest tied to its stock prior to this week - have seen their shares skyrocket over the past few days as retail investors spurred by social media and message boards like Reddit plow heavily into those firms. "Will there be some unintended consequences at the fringes because of all of this? Is it a sign of frothiness? There's no doubt it is," Dodig said. However, he noted that much of that trade originated from cheap money that came from stimulus funding and low-interest rates.
is a sign of "frothiness" occurring in the fringes of the market.ĭodig said in an interview taped on Tuesday that the recent run-up has been caused by frenzied retail investors pouring into companies with significant short interest and is not having much of an effect on the bank. CIBC Chief Executive Officer Victor Dodig said that the recent rallies in shares of companies like BlackBerry Ltd.
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