Financial Update for May 13, 2009

 TSX -16.44
 DOW +50.34
 Dollar +.28c to 86.06USD after Stats Canada reported the country's merchandise trade surplus increased to $1.1 billion in March from $26 m in February, as imports fell faster than exports.
 Oil +$.35 to $58.85US per barrel
 Gold +$10.40 to $923.90USD per ounce
 Canadian 5 yr bond yields +.03bps to 2.10-
 http://www.financialpost.com/markets/market-data/money-yields-can_us.html?tmp=yields-can_us

The yield, rate of return on your bond, can be read through a yield curve, which is the pattern of yields on bonds. This increase in bond yield is something to watch. If the bond yield continues to go up, the spread will continue to shrink and this could be a trigger for interest rates to rise

Info below is from the US, however still valuable and relative to issues of the day as to what is happening in other markets. We can learn from other markets and identify future trends for our market

Fed Chief Bernanke Defends Stress Tests of Major Banks

Wall Street Journal (05/12/09) P. A5; Derby, Michael S.

In a May 11 speech, Federal Reserve Chairman Ben Bernanke stood behind stress tests conducted on the nation's biggest banks, addressing criticism that they were too easy and understated banks' financial challenges. Bernanke acknowledged that predicting credit losses in the current economy is difficult but said the capital estimates are based on "pessimistic potential outlooks" and are therefore "appropriately conservative."

We're Dull, Small Banks Say, And Have Profit to Show for It

New York Times (05/12/09) P. A1; Segal, David

In recent months, community bankers have mounted PR campaigns to tout their fiscal health and to announce their rejection of Troubled Asset Relief Program funds.

Community banks hold less than 10 percent of the $13.8 trillion in bank assets nationwide, and their sound lending practices have shielded them from the worst of the recession and corresponding credit crunch. The 50 or so bank failures have been primarily clustered in states such as Californiaand Floridawhere the bursting housing bubble has had the greatest impact. In such states as Indiana where property values never skyrocketed, community banks have been on solid footing throughout the crisis.

U.S. Projects Aid Tally for Mortgage Giants

Washington Post (05/12/09) P. A16; Goldfarb, Zachary A.

Fannie Mae and Freddie Mac could need $92.2 billion more to cover their rising losses on mortgage-related investments, according to budget details from the Obamaadministration. The additional funds could raise the cost of taking over the mortgage finance giants to $171.1 billion for taxpayers. The budget report also discusses the potential fate of Fannie Mae and Freddie Mac, including a possible return to their previous status, but adds that the White House plans to work with Congress, regulatorsand the mortgage industry on a long-term role for the companies.