Financial Update for March 11, 2009

Stock markets make triple-digit gains as bank and insurer investors rejoice

· TSX+313.37 Stock markets surged on a huge runup in bank and insurance shares after American financial-services giant Citigroup Inc. said it was profitable in the first two months of this year. It was the biggest gain this year for the benchmark Canadian index.
· DOW +379.44 Traders were also encouraged as Federal Reserve chairman Ben Bernanke outlined measures to prevent another financial crisis. These would include legislation to handle the failure of a huge financial institution in an orderly way, along with tighter supervision of risk at companies regarded as too big to be allowed to fail.
· Dollar +.83c to 77.81USD. The U.S. dollar eased in general and the loonie benefited as Singapore's government investment council released a statement favouring investing in Canada
· Oil -$1.36 to $45.71US per barrel. Crude oil, gasoline and other fuel prices tumbled after the U.S. government again lowered its forecast for global energy demand and said average oil prices for this year will likely be below current levels.
· Gold -22.10 to $895.90 USD per ounce
· Canadian 5 yr bond yields +.05bps to 1.91
· http://www.financialpost.com/markets/market_data/money-yields-can_us.html

The 5 year bond yield is 1.91, up 0.05 from yesterday. Four weeks ago it was 2.12.

Canada to emerge from global crisis before others and stronger than before: Harper
Allison Jones, The Canadian Press BRAMPTON, Ont. - Canada will emerge from the global recession before any other country and in a stronger economic position than ever, Prime Minister Stephen Harper said Tuesday as his government aggressively moved to sell its fiscal plan.

The rosy picture Harper painted of the ability to not only recover but profit from the worldwide crisis came as he dispatched two of his top lieutenants to deliver variations of the same message: the Conservative stimulus package will put the country on the right track and the opposition must support it.

The notion that the opposition was stalling economic recovery raised the ire of Liberal Leader Michael Ignatieff, who said the party is doing everything it can to help get the money out the door.

Harper, in his address to a business crowd in Brampton, Ont., noted that "Canada was the last advanced country to fall into this recession."

"We will make sure its effects here are the least severe, and we will come out of this faster than anyone and stronger than ever."

The crisis, ultimately, is an "opportunity to position ourselves so that when the recovery comes, we're among the first to catch the wave."

While Harper placed Canada at the forefront of economic relief, he also said our fortunes depend on those of the United States.

"We will not turn the corner on this global recession until the American financial sector is fixed," he said.

Across town, Industry Minister Tony Clement echoed that sentiment following a speech to the C.D. Howe Institute which focused - like his boss's address - on the government's plan to navigate the crisis.

Only American consumers can save the flattened auto industry from extinction, he said.

In Ottawa, Finance Minister Jim Flaherty delivered the hard-sell as he demanded that the Liberal-dominated Senate pass his budget bill and its $40-billion stimulus package.

The simultaneous sorties by the prime minister and his two most senior economic ministers in three different locations represent an aggressive shift into selling the economic plan.

Harper's own MPs have complained privately that there has been too much gloom and not enough reassurance about Canada's economic future in the six weeks since the budget was delivered.

The prime minister took on a more prominent role after the Jan. 27 federal budget and has been visiting various pockets of the country to make stimulus-funding announcements.

He spent this past weekend at his official residence typing away at Tuesday's 3,300-word address - one of the rare occasions when Harper has written a speech from start to finish.

In his speech, Harper suggested that the opposition is standing in the way of the fiscal rescue plan - pointing to the proposed $3-billion fund aimed at quickly stimulating the economy.

The Liberals have said they won't support it without having some idea how the money would be spent.

"We cannot have the opposition in Parliament replacing bureaucratic red tape with political red tape," Harper said.

Liberal Leader Michael Ignatieff said he found Harper's comments laughable.

"It's a comic spectacle but it's a spectacle of misrepresentation," he said after Question Period in Ottawa.

"We passed the budget last week. Did anybody notice? We passed the budget... We have done everything we can to get the money out the door quickly.

"There will be literally no delay, repeat, no delay from the Liberal Party of Canada in getting needed, needed stimulus to Canadians."

At least one economist agreed with Harper's assertion that Canada is in a better position to weather the economic crisis and will not be hit as hard as other nations.

Still, TD chief economist Don Drummond said he was "less certain about the bit that we will recover faster."

Canada's economy is inextricably linked to the global economy through our exports to the United States and it's hard to imagine Canada recovering faster, Drummond said.

"In our forecast we have the recoveries occurring simultaneously."

TD has predicted Canada's economic troubles will ease at the end of the year, but Drummond said that may change.

"We will be putting out our forecast on the 12th and we go through five key assumptions that one has to make, but if any of those don't get fulfilled then I think it's going to get delayed beyond that."