Toronto Stocks plunge sharply in panic selloff
· TSX -813.97pts to 10,900 down nearly 7% to its lowest level in more than 2 years, battered by concerns over the outlook for fertilizer producers and a drop in oil and gold prices.
The plunge in shares of big fertilizer producers came amid worries that the U.S. credit crisis could hamper farmers' ability to get cash for next year's planting season. It marked the latest in a series of shock waves emanating from Wall Street's turmoil and the related slowdown in the global economy
· Dow -348.22pts.
· Dollar -1.56c to $92.60US.
· Oil -4.56 to $93.97US per barrel
· Gold -41.70 to $839US per ounce
Bailout hopes rise as more 'no' votes switch
By Julie Hirschfeld Davis, The Associated Press WASHINGTON - A wave of converts from the U.S. House of Representatives jumped aboard the $700 billion financial industry bailout Thursday on the eve of a make-or-break second vote, as lawmakers responded to an awakening among voters to the pain ahead of them if stability is not restored to the tottering economy.
Republicans and Democrats alike said appeals from credit-starved small businessmen and the Senate's addition of $110 billion in tax breaks had persuaded them to drop their opposition.
Wells Fargo to buy Wachovia
Jaime Sturgeon, Financial Post Wells Fargo & Co. said Friday that it would purchase Wachovia Corp. in an all stock transaction for US$15.1-billion and issue up to US$20-billion in stock to pay for the transaction. The combined company will have 10,761 retail locations, US$258-billion in mutual fund assets and US$1.42-trillion in net assets.
The deal, which is free and clear of federal oversight, is for Wachovia's entire business. It breaks up a Washington-brokered offer from Citigroup to acquire the regional bank's retail operations for US$2.2-bilion on Monday.
Friday, October 3, 2008
Thursday, October 2, 2008
Financial Update
America stares recession in the face
Alia McMullen, Financial Post A "catastrophic" drop in U.S. manufacturing activity in September left no doubt in the minds of stunned economists Wednesday that the U.S. recession had well and truly arrived, and it could be severe.
The sharp contraction in activity was the starkest example yet that the credit crisis was having a devastating effect on business amid other evidence that limited access to credit and high debt financing costs were killing merger and acquisition activity and potentially damaging company profits. Mike Englund, chief economist at Action Economics in Boulder, Colo., said the figures reinforced his view that the National Bureau of Economic Research would eventually deem all of 2008 as a period of recession.
· TSX -38.39pts
· Dow -19.59pts. a disappointing economic report on the manufacturing sector and more troubles in the battered auto industry, weighed on the markets most of Wednesday, suggesting the United States has slipped into a recession that could last some time
· Dollar +.19c to $94.16US.
· Oil -2.11 to $98.53US per barrel
· Gold +$6.50 to $880.70US per ounce
More voices join chorus calling for rate cuts
Julian Beltrame The Canadian Press OTTAWA
The Bank of Canada is being urged to jump into the fray of the financial market meltdown by aggressively cutting interest rates.
The tight credit environment, due to upheaval in the U.S. financial industry, has fundamentally altered the outlook for both the global and Canadian economies, analysts say.
They add that the key issue now is not whether Canada's central bank should lower rates, but if it should take the rare step of acting before its scheduled announcement date of Oct. 21.
It's been nearly half a year since the Bank of Canada adjusted its overnight lending rate, which has been set at three per cent since April 22, when it made an aggressive half-point cut.
"I think under normal circumstances, if we didn't have the political (election campaign) and we didn't have this bailout package going through the U.S. Congress, we might be in a situation where the central banks would already be cutting now,'' said Douglas Porter, deputy chief economist for BMO Capital Markets.
In the U.S., a $700-billion financial rescue plan was approved by the Senate last night and expected to go to the House for approval before week's end.
The vast majority of economists backed Bank of Canada governor Mark Carney last month when he held firm on interest rates, although Scotiabank's Derek Holt called for a half-point cut.
Regardless of the relative health of auto industry sales in Canada, the downturn south of the border is worrisome for Ontario-based car, truck and parts makers that export most of their volume across the border to the United States.
Economists are expecting to see real blood on the floor tomorrow when the next U.S. employment report is released, forecasting upward of 150,000 job losses for September.
A big danger, say economists, is that lenders may be so spooked that they totally freeze credit, depriving businesses of funds needed to carry on operations or expand, and also depriving consumers of loans for such things as mortgages or cars.
In a speech last week, Carney warned that Canada would be impacted by a U.S. slump, particularly the auto and forestry sectors that depend on exporting to American consumers
Alia McMullen, Financial Post A "catastrophic" drop in U.S. manufacturing activity in September left no doubt in the minds of stunned economists Wednesday that the U.S. recession had well and truly arrived, and it could be severe.
The sharp contraction in activity was the starkest example yet that the credit crisis was having a devastating effect on business amid other evidence that limited access to credit and high debt financing costs were killing merger and acquisition activity and potentially damaging company profits. Mike Englund, chief economist at Action Economics in Boulder, Colo., said the figures reinforced his view that the National Bureau of Economic Research would eventually deem all of 2008 as a period of recession.
· TSX -38.39pts
· Dow -19.59pts. a disappointing economic report on the manufacturing sector and more troubles in the battered auto industry, weighed on the markets most of Wednesday, suggesting the United States has slipped into a recession that could last some time
· Dollar +.19c to $94.16US.
· Oil -2.11 to $98.53US per barrel
· Gold +$6.50 to $880.70US per ounce
More voices join chorus calling for rate cuts
Julian Beltrame The Canadian Press OTTAWA
The Bank of Canada is being urged to jump into the fray of the financial market meltdown by aggressively cutting interest rates.
The tight credit environment, due to upheaval in the U.S. financial industry, has fundamentally altered the outlook for both the global and Canadian economies, analysts say.
They add that the key issue now is not whether Canada's central bank should lower rates, but if it should take the rare step of acting before its scheduled announcement date of Oct. 21.
It's been nearly half a year since the Bank of Canada adjusted its overnight lending rate, which has been set at three per cent since April 22, when it made an aggressive half-point cut.
"I think under normal circumstances, if we didn't have the political (election campaign) and we didn't have this bailout package going through the U.S. Congress, we might be in a situation where the central banks would already be cutting now,'' said Douglas Porter, deputy chief economist for BMO Capital Markets.
In the U.S., a $700-billion financial rescue plan was approved by the Senate last night and expected to go to the House for approval before week's end.
The vast majority of economists backed Bank of Canada governor Mark Carney last month when he held firm on interest rates, although Scotiabank's Derek Holt called for a half-point cut.
Regardless of the relative health of auto industry sales in Canada, the downturn south of the border is worrisome for Ontario-based car, truck and parts makers that export most of their volume across the border to the United States.
Economists are expecting to see real blood on the floor tomorrow when the next U.S. employment report is released, forecasting upward of 150,000 job losses for September.
A big danger, say economists, is that lenders may be so spooked that they totally freeze credit, depriving businesses of funds needed to carry on operations or expand, and also depriving consumers of loans for such things as mortgages or cars.
In a speech last week, Carney warned that Canada would be impacted by a U.S. slump, particularly the auto and forestry sectors that depend on exporting to American consumers
Wednesday, October 1, 2008
Financial Update
To quote the infamous Bette Davis, … "hang on to your hats, boys, it’s going to be a bumpy ride."
· TSX +467.83ptssome of the bounce is attributed to bargain hunters rushing in for quality stocks, and also to buying associated with fund managers rebalancing their portfolios ahead of the end of the quarter
· Dow +485.21pts. U.S. stocks also reversed course sharply, as the Dow Jones industrial average leaped 4.68%
· Dollar -1.82c to $93.97US.
· Oil +4.27 to $100.64US per barrel with a growing consensus among investors that the U.S. Congress will resurrect a failed financial bailout plan. The Senate is set to vote Wednesday on a $700-billion US financial bailout plan that was narrowly defeated Monday in the House of Representatives.
· Gold -$14.00 to $874.20US per ounce Gold retreated sharply as a rally in stocks and a higher dollar erased the previous session's gains, but gold should rise in the near term because of its safe-haven appeal amid financial turmoil, traders said.
September, 2008: 30 days that rocked the world "Now what?" asked Carl Weinberg, chief economist at High Frequency Economics. "Analysis eludes us. We have no prior experience to fall back on that might possibly help us frame the consequences of Congress's inaction on either the economy or financial markets."
What's the best strategy as mortgage rates rise?
ROB CARRICK
Globe and Mail Update
September 30, 2008 at 12:15 PM EDT
The credit crunch has hit home with yet another move by the big banks to jack up the cost of mortgages.
Mortgage brokers report that the big banks and other lenders have stopped offering variable-rate mortgages with a discount off the prime rate.
It was common in the first half of 2007 to get a variable-rate mortgage at prime minus a full percentage point, said Jim Tourloukis of Advent Mortgages in Markham, Ont. Since then, the discount had gradually fallen to 0.4 of a percentage point as of last week.
“As of yesterday, virtually everybody was offering variable-rate mortgages at prime,” Mr. Tourloukis said. “In other words, no more discounting.”
Forced to pay more to raise the money they lend out to customers, the banks have set fixed mortgage rates far higher than they would be under normal circumstances. Now, variable-rate mortgages have been affected as well. What's the right strategy for borrowers?
Your choices: a variable-rate mortgage at 4.75 per cent, which is the current prime rate at all major lenders, or a discounted five-year mortgage at rates in the low 5-per-cent range.
The lower variable rate means you'll save money in the near term, but it also opens you up to the risk that rising interest rates will boost your borrowing costs somewhere down the line.
“If I'm the average Joe, I would be taking the five-year rate right now because I don't know what's going on out there and I don't want to risk my house,” Mr. Tourloukis said. “I don't think rates are going to go up, but I don't want to worry about it.”
Mr. Tourloukis said about 90 per cent of his clients were going with variable-rate mortgages prior to this week, and he expects the same big majority to swing over to fixed-rate mortgages going forward.
The problem with fixed-rate mortgages – almost everyone picks the five-year term – is that you'll have to work hard to get a good deal. Posted five-year rates at major lenders are around 7.2 per cent, and some banks are posting “special” discounted rates of 6.14 per cent on their websites.
However, Mr. Tourloukis said he was able to get five-year mortgages as low as 4.99 per cent. Alternative banks and credit unions have been offering rates as low as 4.99 to 5.45 per cent.
Brian Matthey, a mortgage broker in Kingston, Ont., said five-year mortgages would be going for about 4.35 per cent today under normal circumstances in financial markets. He stressed the importance of shopping around for a mortgage right now and not settling for whatever discount your bank is willing to dole out.
“The banks are going to freewheel as they need to in terms of what they offer their clients,” Mr. Matthey said.
· TSX +467.83ptssome of the bounce is attributed to bargain hunters rushing in for quality stocks, and also to buying associated with fund managers rebalancing their portfolios ahead of the end of the quarter
· Dow +485.21pts. U.S. stocks also reversed course sharply, as the Dow Jones industrial average leaped 4.68%
· Dollar -1.82c to $93.97US.
· Oil +4.27 to $100.64US per barrel with a growing consensus among investors that the U.S. Congress will resurrect a failed financial bailout plan. The Senate is set to vote Wednesday on a $700-billion US financial bailout plan that was narrowly defeated Monday in the House of Representatives.
· Gold -$14.00 to $874.20US per ounce Gold retreated sharply as a rally in stocks and a higher dollar erased the previous session's gains, but gold should rise in the near term because of its safe-haven appeal amid financial turmoil, traders said.
September, 2008: 30 days that rocked the world "Now what?" asked Carl Weinberg, chief economist at High Frequency Economics. "Analysis eludes us. We have no prior experience to fall back on that might possibly help us frame the consequences of Congress's inaction on either the economy or financial markets."
What's the best strategy as mortgage rates rise?
ROB CARRICK
Globe and Mail Update
September 30, 2008 at 12:15 PM EDT
The credit crunch has hit home with yet another move by the big banks to jack up the cost of mortgages.
Mortgage brokers report that the big banks and other lenders have stopped offering variable-rate mortgages with a discount off the prime rate.
It was common in the first half of 2007 to get a variable-rate mortgage at prime minus a full percentage point, said Jim Tourloukis of Advent Mortgages in Markham, Ont. Since then, the discount had gradually fallen to 0.4 of a percentage point as of last week.
“As of yesterday, virtually everybody was offering variable-rate mortgages at prime,” Mr. Tourloukis said. “In other words, no more discounting.”
Forced to pay more to raise the money they lend out to customers, the banks have set fixed mortgage rates far higher than they would be under normal circumstances. Now, variable-rate mortgages have been affected as well. What's the right strategy for borrowers?
Your choices: a variable-rate mortgage at 4.75 per cent, which is the current prime rate at all major lenders, or a discounted five-year mortgage at rates in the low 5-per-cent range.
The lower variable rate means you'll save money in the near term, but it also opens you up to the risk that rising interest rates will boost your borrowing costs somewhere down the line.
“If I'm the average Joe, I would be taking the five-year rate right now because I don't know what's going on out there and I don't want to risk my house,” Mr. Tourloukis said. “I don't think rates are going to go up, but I don't want to worry about it.”
Mr. Tourloukis said about 90 per cent of his clients were going with variable-rate mortgages prior to this week, and he expects the same big majority to swing over to fixed-rate mortgages going forward.
The problem with fixed-rate mortgages – almost everyone picks the five-year term – is that you'll have to work hard to get a good deal. Posted five-year rates at major lenders are around 7.2 per cent, and some banks are posting “special” discounted rates of 6.14 per cent on their websites.
However, Mr. Tourloukis said he was able to get five-year mortgages as low as 4.99 per cent. Alternative banks and credit unions have been offering rates as low as 4.99 to 5.45 per cent.
Brian Matthey, a mortgage broker in Kingston, Ont., said five-year mortgages would be going for about 4.35 per cent today under normal circumstances in financial markets. He stressed the importance of shopping around for a mortgage right now and not settling for whatever discount your bank is willing to dole out.
“The banks are going to freewheel as they need to in terms of what they offer their clients,” Mr. Matthey said.
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