Central Bank Expected to Lower Interest Rates 150 basis points to 2 percent by July

That would be three consecutive rate decreases of 50 bps beginning April 22nd. June 10th and July 15th are the next announcements.

· TSX +159.03 (Reuters) The Toronto Stock Exchange had an afternoon rally to help the TSX finish the day with triple-digit gains, despite declines in gold and mining stocks. The biggest drop was in MacDonald Dettwiler and Associates shares following the government's unprecedented move to block the sale of its satellite unit to rocket-maker Alliant Techsystems .

· Dow + 54.72 Wall Street investors shrugged off weak earnings reports to focus on optimism at major discount retailers. Wal-Mart Stores Inc. and Costco Wholesale Corp. reported sharp increases and indicated they expect sales to keep rising.

· Dollar -.01c to $ $98.15US

· Oil -$0.76 to close at $110.11 US per barrel Gold -5.30to $928.38US

Bond Rates: http://www.bankofcanada.ca/en/rates/bonds.html <http://www.bankofcanada.ca/en/rates/bonds.html>

April 10 (Bloomberg) -- Canada's February trade surplus <http://www.bloomberg.com/apps/quote?ticker=CATBTOTB%3AIND> widened to the largest in nine months, led by increased exports of passenger cars and energy. The surplus widened to C$4.94 billion from a revised C$2.78 billion in January, Statistics Canada said <http://www.statcan.ca/Daily/English/080410/d080410a.htm> today in Ottawa. Exports rose 3.8 percent, the fastest in 11 months, as energy <http://www.bloomberg.com/apps/quote?ticker=CATBNRGX%3AIND> sales abroad rose to a record.

Canada, the world's eighth-biggest economy, is benefiting from high demand <http://www.bloomberg.com/apps/quote?ticker=CMCIPI3M%3AIND> for commodities such as oil and metals, helping the country ride out a slump in manufacturing. Still, the outlook for exports is likely to worsen in future months as the U.S. economic slowdown crimps demand for Canadian products, said Jacqui Douglas <http://search.bloomberg.com/search?q=Jacqui+Douglas&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1> , an economist at TD Securities in Toronto.

``I don't think the Bank of Canada is expecting this to continue,'' Douglas said of the widening surplus. ``The risk is that exports turn down sharply over the next few months.'' The central bank cut interest rates by half a point for the first time since 2001 on March 4, citing ``intensifying'' signs of a decline in exports on slower demand from the U.S. and the high Canadian currency.

TD Securities, a division of Toronto-Dominion Bank, expects the central bank to lower interest rates 150 basis points to 2 percent by July, starting with a 50 basis point reduction at the next announcement on April 22.

ABCP investors say they were duped, defrauded by financial community

Julian Beltrame, The Canadian Press

OTTAWA - The breakdown of the $32-billion asset-backed commercial paper system amounted to criminal fraud on "duped" innocent investors that no-one in Canada appears prepared to investigate or prosecute, a House of Commons committee was told Thursday.

"It's a free ride in Canada for financial crime," said Larry Elford, a former Alberta financial adviser who now heads an investment advocacy group.

"The law simply does not apply to the financial industry."

In the first public hearing on the financial markets crisis that unfolded from the U.S. subprime meltdown last summer, the House finance committee heard a litany of horror stories from investors unwittingly caught up in the secretive, arcane world of high finance.

Speaking in Toronto, Finance Minister Jim Flaherty said the commercial paper fiasco was more evidence that Canada's system of independent provincial and territorial regulators, such as the Ontario Securities Commission, does not work.

"We have 13 securities regulators in Canada, which, quite frankly, makes no sense and makes for a great deal of inefficiency," he said. "This another reason why we need to move forward with a national securities regulator in Canada."

But while several financial analysts at the committee hearings also said a national regulator would help, they cautioned that the new oversight body should be mandated to look after only the interests of investors.

"The current financial regulatory system is broken and offers no protection to Canadian investors," said Diane Urquhart, a Toronto-area independent financial analyst.

Elford said current provincial regulators have a conflict of interest and too close ties with the financial industry.

"They not only fail to protect consumers, but they give Canadians a false sense of security," said Elford. "We are sitting ducks. If one finds a law being broken, there is simply no police agency to call that does not have a conflict of interest."

Investors who say they have hundreds of thousands of dollars in savings in jeopardy told the legislators they were "duped" by financial institutions that advertised their investment vehicles as safe, and that they have lost faith in the regulatory bodies.

One Victoria investor, Wynne Miles, 58, who described herself as self-employed and with no pension, had placed her life savings in what she supposed were government treasury bills, only to find out in July they had been transferred into non-bank ABCP without her knowledge.

And retired Alberta farmer Murray Candlish told a similar story about how his $350,000 in savings was invested in a triple-A rated trust he was assured was as secure as the Canadian banking system.

"Now our dreams are slowly disappearing as the value of our investment erodes," Candlish told the committee.

The first-person testimonials held MPs from all four parties in thrall for most of the two hours and surprised some, who said they assumed investors knew what they were getting into.

"It's been like a red light going on for us," said Bloc Quebecois MP Paul Crete.

Crete said the finance committee has made the ABCP matter a priority for future hearings, which will begin after investors vote on a plan to settle issue on April 25.

"We have to have people from banks, regulators, others who can tell us why this crisis is there and what are the solutions to this problem."

Thursday's witnesses, who included investors and investment experts, had no trouble pinpointing the problem.

Even now, they said, the system is protecting itself, citing Tuesday's proposed "relief plan" by Canaccord Capital Inc. (TSX: CCI.TO <http://ca.finance.yahoo.com/q?s=CCI.TO> ) to repurchase up to $138 million of the debt held by 1,430 of its individual clients holding less than $1 million in the investment.

Miles points out that investor acceptance comes with strings. "The requirement that we waive our rights to sue is unacceptable," she said. "I feel as if I am being offered an ultimatum and that makes me very angry. We have been wronged." She said she will reject the offer if she was forced to waive her rights.

Some of the witnesses said that the system is so broken that eight months after the commercial paper was frozen, some Canadians still don't know that part of their investments may be in ABCP.

Liberal finance critic John McCallum, a former chief economist with the Royal Bank, said the allegations need to be investigated, but he was not prepared apportion blame at this time.

"I can't stand here today and say who's to blame, but we have heard disturbing allegations about regulators who may be in the pockets of the regulated," he said. "We need to find out what went wrong in this particular disaster and what we can do to make sure that future crises are less likely to happen."

Financial Update

Market sentiment was shaken by a report from the International Monetary Fund that forecast write-down losses related to the credit crisis could reach $945 billion.

· TSX -17.48 (Reuters) The Toronto Stock Exchange's main index snapped its six-day
winning streak and closed slightly lower on Tuesday, hurt by softer commodities and
recurrent worries over the impact of the U.S. economic slowdown.
· Dow -35.99
· Dollar -.39c to $ $98.69US
· Oil -$0.59 to close at $108.50 US per barrel Retail gasoline prices pulled back slightly
from record levels yesterday and gave some consumers a small break, but a new
government forecast said gas could reach as high as $4 US a gallon in the United States
during the summer driving season
· Gold -8.70 to $914US Shares of gold producers lost 1.7 percent as the price of bullion was
stung by profit-taking. Barrick Gold was among the day's biggest weighted decliners

Bond Rates: http://www.bankofcanada.ca/en/rates/bonds.html


Mortgage crisis 'in final innings,' CEO predicts
MARY ALTAFFER, THE ASSOCIATED PRESS

Joe Bel Bruno The Associated PressMorgan Stanley chief executive John Mack said yesterday that Wall Street is facing the most difficult conditions that he has seen in 40 years, but he feels the global credit crisis might be "in the final innings.''

Mack, who easily won re-election to Morgan Stanley's board along with 10 other directors, said at the investment bank's annual meeting that he still plans to "go slow'' because of the market's turbulence. The bank wrote down billions of dollars worth of securities linked to risky subprime mortgages and other debt since last year.

"We're keeping powder dry,'' he said. "We feel the risks on the market, the run on Bear Stearns, and we think it is important to have very liquid positions and we're working toward that.''

He expects more bad news will come out as the world's banks recover from the subprime mortgage crisis, particularly from "overseas and some small retail banks in this country.''

However, Mack said he thinks the market is turning and that could provide opportunity.
In fact, Mack said that Morgan Stanley is seeing opportunities in the same mortgage market that caused Wall Street's pain this year.

"I don't know if this is the bottom or close to the bottom, but at some point it will be wise to invest there,'' he said.

Mack faced a tough test at this year's annual meeting after three pension funds aligned themselves against the nomination of Morgan Stanley's slate of directors. However, all secured easy re-election, according to preliminary tallies.

Bill Patterson, executive director of CtW Investment Group, said more is needed to ensure Morgan Stanley and other banks don't take excessive risks.

Financial Update

· TSX +76.82 (Reuters) - The Toronto stock market ended the day higher, but well off earlier gains, as mining and metals stocks held investors attention

· Dow +3.01 New York reacted to a potential US$5-billion injection for mortgage lender
Washington Mutual Inc logging triple-digit gains near midday before sliding to end relatively
flat.

· Dollar -.39c to $ $98.69US

· Oil +$2.86 to close at $109.09US per barrel · Gold +13.70 to $922.70US

Bond Rates: http://www.bankofcanada.ca/en/rates/bonds.html <http://www.bankofcanada.ca/en/rates/bonds.html>
<http://www.bankofcanada.ca/en/rates/bonds.html>

Statistics Canada reported that building permits slid for a fourth straight month, falling one per cent in February due to collapsing non-residential construction plans in Ontario.

Financial Post
U.S. home-funding company Fannie Mae to require minimum credit score for loans

Fannie Mae has told lenders that it will require a minimum credit score for the loans it buys, tightening mortgage standards to protect itself from record foreclosures sweeping the country. Lawmakers have been pressuring the largest U.S. home-funding company, along with its rival Freddie Mac, to more aggressively buy home loans in a bid to lower mortgage rates and prop up housing. However, the two government-chartered companies are battling their own problems as home loans sour. In response to soaring mortgage defaults, they are increasing fees, restricting the loans they purchase and trying to preserve and raise capital. The latest steps are part of amended underwriting practices for loans Fannie Mae buys, aimed at adjusting prices to reflect heightened housing market risk and protecting the company's capital.Close

<http://www.nationalpost.com/todays_paper/story.html?id=418691#close>

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