Monday, May 5, 2008
Financial Update
Interest rates set to climb back, taking resource stocks with them
· TSX +214.47 finished the week much stronger
· Dow +48.20
· Dollar -1.18c to $ $98.11US
· Oil -$0.94 to $112.56US per barrel
· Gold -13.90US to $848.90US
Bond Rates: http://www.bankofcanada.ca/en/rates/bonds.html
TORONTO, May 5 /CNW/ - CIBC (CM: TSX; NYSE) - "Unrelenting pressure" on food and energy prices will reverse the direction of interest rates in the next 12 months, and lift energy and materials stocks to new record highs, notes a CIBC World Markets report.
"While the bank of Canada may still have one more (rate) cut up its sleeve, markets will be surprised at how rapidly the Bank is compelled to take back those easings," says Jeff Rubin, Chief Strategist and Chief Economist at CIBC World Markets in his monthly Canadian Portfolio Strategy Outlook report.
"We expect to see at least 100 basis points of tightening" by the end of next year.
Because rising interest rates make bond yields less attractive, Mr. Rubin is paring back the bond weighting in his model portfolio to "neutral" from "overweight". That frees up funds to take a slightly overweight stance in equities, with emphasis on energy and materials stocks.
Mr. Rubin's increased weighting in energy stocks reflects supply struggles and surging demand that he predicts will push oil to US$130 a barrel and natural gas to US$13 per Mn BTUs in 2009.
"We remain wary of near-term market volatility. But the strength of the resource market, particularly energy, and a gradual recovery in the U.S.
economy should see the TSX justify our equity weighting," says Mr. Rubin.
Mr. Rubin's "overweight" stance in materials is tied to the strength of emerging markets where infrastructure developments are driving demand for metals and other resources, and rising income levels and meat consumption are pushing up global agricultural prices.
"An expected return to a global supply deficit in 2009 has led us to upgrade our forecast for copper prices," says Mr. Rubin. "In comparison to the other metals, the golds haven't shone of late. But the pullback there should prove temporary, given the prospect for further dollar weakness and continuing inflation jitters, fuelled by rising oil and food prices.
"Agricultural commodity and chemical producers, along with purveyors of needed infrastructure or crop improvements like irrigation and biotech firms offer the greatest potential positive leverage to global food supply troubles.
Profits in the agricultural chemicals sector are expected to nearly triple this year."
While those sectors are winners, Mr. Rubin says companies that "rely heavily on grain, oil, or other commodities as inputs face increasing costs and thus weaker profits." As a result, he has cut a half percentage point of weighting in the consumer staples group, which includes both food retailers and processors.
He has also shed weight in the utilities sectors where dividend yields are likely to prove less attractive in a rising interest rate environment. "In addition, rising carbon abatement costs could also reduce future profit growth, especially for coal-dependent power generators."
Mr. Rubin's end of 2009 forecast of 16,200 for the TSX, versus 1,475 for the S&P 500, points to the globally leveraged Canadian market continuing to outperform the S&P 500 for at least another year, aided by continuing strength in energy and materials stocks.
"We now expect TSX earnings to rise by an above-trend 16 per cent this year. That should easily surpass the consensus estimate of a 10 per cent rise in S&P 500 earnings, marking the fourth consecutive year of better earnings growth north of the border.
"Beyond the positive effect of triple-digit crude, US$4/lb copper and US$1,000/tonne potash on the energy and materials groups, profit expectations have also been upgraded for info tech and more modestly for key industrial producers like the rails. Alternatively, financial sector earnings are expected to fall modestly for the first time since 2002. That compares with expectations just three months ago for a near-double-digit gain for the sector.
The complete CIBC World Markets report is available at:
http://research.cibcwm.com/economic_public/download/psmay08.pdf
Thursday, May 1, 2008
Financial Update
Stock markets rack up solid advance as US Fed decreases overnight rate by 25 bps
· TSX +109.94 recovering nearly half of Tuesdays slide
· Dow -11.81 despite data showing the U.S. economy still registering some growth during
the first quarter while GM handed in a quarterly loss that was less than expected. ($3.3b)
The Fed's failure to deliver an unequivocal statement that the worst was over for the economy
caused investors to sell their best performers.
· Dollar +.47c to $ $99.29US
· Oil -2.17 to $113.46US per barrel contributing to plummeting sales of sport utility vehicles and
pickups and GMs huge quarterly loss
· Gold -11.40US to $862.80US
Bond Rates: http://www.bankofcanada.ca/en/rates/bonds.html <http://www.bankofcanada.ca/en/rates/bonds.html>
“Wall Street believes this could well wrap up the Fed's rate cuts unless the economy threatens to fall into a worse slump than currently expected. Fed said it stood ready to “act as needed to promote sustainable economic growth and stability.” That phrase was seen as a signal that the Fed is as worried about weak growth as it is about the risk of higher inflation.”
Let the talk of Fixed Rate Mortgages begin again!!
________________________________
Fed cuts interest rates by a quarter point
MARTIN CRUTSINGER The Associated Press
April 30, 2008 at 2:37 PM EDT
WASHINGTON — The United States Federal Reserve has cut a key interest rate by a quarter-point, a smaller move than the aggressive easing it undertook earlier this year.
The Fed action, announced Wednesday after a two-day regular meeting, pushed the federal funds rate down to 2 per cent, its lowest level since late 2004. It marked the seventh consecutive rate cut by the central bank since it began easing credit conditions last September to combat the growing threat of a recession brought on by a deep housing slump and credit crisis.
The rate cut will mean lower borrowing costs throughout the economy as banks reduce their prime lending rate, the benchmark for millions of consumer and business loans.
The Fed move was in line with expectations.
The Fed devoted portions of its statement to both the threats of weakness and the threats that inflation could pose, likely reflecting the debate inside the central bank.
There were two dissents from the move, with both Richard Fisher, president of the Dallas regional Fed bank, and Charles Plosser, head of the Philadelphia Fed, arguing that the central bank should make no change in rates.
The central bank is walking a tightrope, trying to jump-start economic growth while also confronting the risk that if it overdoes the credit easing it could make inflation worse down the road.
Many economists believe the country has fallen into a recession. However, the government reported Wednesday that the overall economy, as measured by the gross domestic product, managed to eke out a 0.6 per cent growth rate in the January-March quarter, barely in positive territory.
On the overall economy, Fed Chairman Ben Bernanke and his colleagues said in their statement explaining the decision that “economic activity remains weak” with subdued spending by businesses and households.
“Financial markets remain under considerable stress and tight credit conditions and deepening housing contractions are likely to weigh on economic growth over the next few quarters,” the Fed officials said.
While saying the central bank expected inflation to moderate in coming months, the Fed statement said that “uncertainty about the inflation outlook remains high,” adding that it would be necessary to “continue to monitor inflation developments carefully.”
The quarter-point move followed a string of more aggressive rate cuts ranging from a half-point to three-fourths-point in the first three months of this year as the central bank was battling to stabilize financial markets roiled by multibillion-dollar losses caused by rising mortgage defaults.
That turmoil claimed its biggest victim on March 16 when Bear Stearns came to the brink of bankruptcy and the Fed stepped forward with a $30-billion (U.S.) line of credit to facilitate a sale of the country's fifth largest investment bank to JP Morgan Chase.
However, credit markets, while not back to normal, have stabilized and many analysts believe the worst may be over — although they caution that this forecast could prove too optimistic if the housing slump deepens further, causing even more mortgage defaults than now expected.
Before the Fed made its first rate cut in September, the funds rate had stood at 5.25 per cent.
While many economists believe the country is in a recession, the expectation is that it will be a short one ending this summer. If that turns out to be correct, the Fed may hold rates steady for the rest of this year with the next move being a rate increase some time next year when the economy is on sounder footing.
· TSX +109.94 recovering nearly half of Tuesdays slide
· Dow -11.81 despite data showing the U.S. economy still registering some growth during
the first quarter while GM handed in a quarterly loss that was less than expected. ($3.3b)
The Fed's failure to deliver an unequivocal statement that the worst was over for the economy
caused investors to sell their best performers.
· Dollar +.47c to $ $99.29US
· Oil -2.17 to $113.46US per barrel contributing to plummeting sales of sport utility vehicles and
pickups and GMs huge quarterly loss
· Gold -11.40US to $862.80US
Bond Rates: http://www.bankofcanada.ca/en/rates/bonds.html <http://www.bankofcanada.ca/en/rates/bonds.html>
“Wall Street believes this could well wrap up the Fed's rate cuts unless the economy threatens to fall into a worse slump than currently expected. Fed said it stood ready to “act as needed to promote sustainable economic growth and stability.” That phrase was seen as a signal that the Fed is as worried about weak growth as it is about the risk of higher inflation.”
Let the talk of Fixed Rate Mortgages begin again!!
________________________________
Fed cuts interest rates by a quarter point
MARTIN CRUTSINGER The Associated Press
April 30, 2008 at 2:37 PM EDT
WASHINGTON — The United States Federal Reserve has cut a key interest rate by a quarter-point, a smaller move than the aggressive easing it undertook earlier this year.
The Fed action, announced Wednesday after a two-day regular meeting, pushed the federal funds rate down to 2 per cent, its lowest level since late 2004. It marked the seventh consecutive rate cut by the central bank since it began easing credit conditions last September to combat the growing threat of a recession brought on by a deep housing slump and credit crisis.
The rate cut will mean lower borrowing costs throughout the economy as banks reduce their prime lending rate, the benchmark for millions of consumer and business loans.
The Fed move was in line with expectations.
The Fed devoted portions of its statement to both the threats of weakness and the threats that inflation could pose, likely reflecting the debate inside the central bank.
There were two dissents from the move, with both Richard Fisher, president of the Dallas regional Fed bank, and Charles Plosser, head of the Philadelphia Fed, arguing that the central bank should make no change in rates.
The central bank is walking a tightrope, trying to jump-start economic growth while also confronting the risk that if it overdoes the credit easing it could make inflation worse down the road.
Many economists believe the country has fallen into a recession. However, the government reported Wednesday that the overall economy, as measured by the gross domestic product, managed to eke out a 0.6 per cent growth rate in the January-March quarter, barely in positive territory.
On the overall economy, Fed Chairman Ben Bernanke and his colleagues said in their statement explaining the decision that “economic activity remains weak” with subdued spending by businesses and households.
“Financial markets remain under considerable stress and tight credit conditions and deepening housing contractions are likely to weigh on economic growth over the next few quarters,” the Fed officials said.
While saying the central bank expected inflation to moderate in coming months, the Fed statement said that “uncertainty about the inflation outlook remains high,” adding that it would be necessary to “continue to monitor inflation developments carefully.”
The quarter-point move followed a string of more aggressive rate cuts ranging from a half-point to three-fourths-point in the first three months of this year as the central bank was battling to stabilize financial markets roiled by multibillion-dollar losses caused by rising mortgage defaults.
That turmoil claimed its biggest victim on March 16 when Bear Stearns came to the brink of bankruptcy and the Fed stepped forward with a $30-billion (U.S.) line of credit to facilitate a sale of the country's fifth largest investment bank to JP Morgan Chase.
However, credit markets, while not back to normal, have stabilized and many analysts believe the worst may be over — although they caution that this forecast could prove too optimistic if the housing slump deepens further, causing even more mortgage defaults than now expected.
Before the Fed made its first rate cut in September, the funds rate had stood at 5.25 per cent.
While many economists believe the country is in a recession, the expectation is that it will be a short one ending this summer. If that turns out to be correct, the Fed may hold rates steady for the rest of this year with the next move being a rate increase some time next year when the economy is on sounder footing.
Wednesday, April 30, 2008
Financial Update
Slide in metals, oil sends TSX plunging 260 points;NY mixed on economic news
· TSX -260.25 (Reuters) - Toronto's main stock market index remained weak on Tuesday
amid falling gold and energy prices
· Dow -39.81
· Dollar +.07c to $ $98.82US
· Oil -3.12 to $115.63US per barrel
· Gold -18.70US to $874.20US
Bond Rates: http://www.bankofcanada.ca/en/rates/bonds.html <http://www.bankofcanada.ca/en/rates/bonds.html>
By Malcolm Morrison, The Canadian Press- The Toronto stock tumbled more than 250 points Tuesday as both oil and gold registered steep declines a day before the U.S. Federal Reserve is widely expected to announce a quarter-point cut in its key funds rate. Analysts suggested that it's the prospect of a break in rate cuts that punished commodities, since the parade of rate declines since last year has also helped weaken the American dollar and push up the prices of oil and metals.
"If we get an indication from the Fed that after tomorrow, that's it, then there's not necessarily that U.S. dollar weakness stimulus consistently coming out of each Fed meeting," said Gareth Watson, Canadian equity adviser at Scotia Capital. "With the Fed decision.... it could very well be people pre-emptively saying well, made some money, let's take it off the table no matter what happens."
The have-not province?
Equalization payments for Ontario by '09, bank says April 30, 2008 Keith Leslie The Canadian Press
With soaring energy prices changing the landscape of the Canadian economy, analysts warned yesterday that Ontario could soon qualify for equalization payments while Newfoundland and Labrador is poised to shed its have-not status.
The latest report from TD Bank Financial Group said Ontario is set to become a have-not province that would qualify for equalization payments by 2010 -- and perhaps even as early as next year.
That dire prediction came on the same day the Newfoundland budget forecast a $544-million surplus. The province is poised to get off equalization next year for the first time since joining Confederation. The boon comes largely through record oil prices.
It's no coincidence that Ontario's recent slippage in terms of a relative standard of living "occurred in lockstep'' with the high dollar, soaring energy rates, and high commodity prices, the TD report said. The fall, so far, is more a story of booming economic strength in the energy-rich western provinces than it is about a poor performance in Ontario, said TD chief economist Don Drummond.
"That was a fairly minor factor, in fact, when you go through the calculations,'' Drummond said. "It was basically the western provinces, in particular Alberta, have been earning so much resource royalties, and that interacted with the change in the formula that was made last year.''
Falling to have-not status is an important psychological barrier for Canada's largest province, Drummond added.
"It gives the signal that Ontario is not the mighty king of the economy anymore,'' he said. "It's one of the weaker partners, but again it's not so much Ontario's being weak as the other provinces are really roaring along.''
The equalization formula, which aims to smooth out regional disparities, sees provinces deemed to have a less-than-average ability to generate tax revenue get cash transfers from the federal government. Ottawa has a constitutional responsibility to help provinces deliver similar social services at comparable tax rates.
The formula was changed recently from a five-province standard to a 10-province standard, which brought oil-rich Alberta into the calculations and automatically raised the economic performance bar for all provincial economies, Drummond said.
"High oil prices, of course, hurt Ontario because it's an oil importer, and the high oil prices have pulled up the Canadian dollar, which has been the weakness for Ontario manufacturers,'' he said.
"If we look for a common culprit, certainly the oil prices stand out.''
Federal Finance Minister Jim Flaherty raised the ire of many provincial politicians when he said recently that Ontario was on its way to have-not status. Yesterday, he rejected Ontario's claims that it's the equalization funding formula that's flawed and not the province's corporate tax policies. "What we have to do as governments is to stop blaming, you know, people that do economic calculations and instead say what can we do as a government to encourage economic growth in our jurisdiction,'' Flaherty said in Ottawa.
"I've been urging Premier McGuinty and his government to reduce the tax burden on businesses in Ontario because they're shouldering the heaviest tax burden in Canada.''
Liberal critics said yesterday that Flaherty was turning into "an economic hazard'' for Canadian workers with his repeated attacks on the Ontario government.
Ontario's Progressive Conservatives blamed the Liberal government's high corporate taxes for driving the province towards have-not status.
"Premier, you've taken Ontario from a province that gives a hand up to one that will soon be taking handouts from the rest of Canada,'' said acting Opposition Leader Bob Runciman.
But Premier Dalton McGuinty wasn't prepared to accept blame for Ontario's woes, telling the legislature the TD report also noted the province sends $20 billion more to the federal government every year than it receives in transfers and services.
"How is it that we can be a have-not province if we're sending $20 billion annually to the rest of the country?'' McGuinty asked the legislature. "I think that tells us something about the (equalization) formula.''
The TD report said Ontario's gross domestic product per capita fell steadily for five years, from seven per cent above the national average in 2002 to two per cent below the average in 2007, and warned the situation isn't expected to improve in the short term.
Nagging credit woes trigger Bank of Canada moves Louise Egan, Reuters Published: Tuesday, April 29, 2008 OTTAWA -- The Bank of Canada has injected $5.5 billion in overnight money markets in four days and renewed a term liquidity agreement in a sign the market doesn't believe the credit crunch is waning. "They're injecting liquidity into a market that is not convinced that the credit crisis is fully over with," said Derek Holt, vice-president of economics at Scotia Capital.
The central bank bought $1.71-billion worth of securities in the market on Tuesday for resale on Wednesday, its fourth straight intervention to nudge the overnight interest rate closer to its target of 3%. The market rate is slightly higher at about 3.09%. The volume of the so-called SPRA transaction was bigger than any done at the height of the global credit squeeze last August and the biggest since Oct. 31, 2006, according to data on the central bank's Web site.
U.S. foreclosures jump 112%, with no end in sight Lynn Adler, Reuters Published: Tuesday, April 29, 2008 Financial Post
BloombergOne in every 54 Nevada households got a foreclosure filing in the first quarter, while California had the second-highest rate of filings among states with one in every 78 households.
NEW YORK -- Home foreclosure filings in the United States jumped 23% in the first quarter from the prior quarter, and more than doubled from a year earlier, as more overextended borrowers failed to make timely payments, real estate data firm RealtyTrac said on Tuesday.
One of every 194 households received a notice of default, auction sale or bank repossession between January and March, for the seventh straight quarter of rising foreclosure activity, RealtyTrac said.
Foreclosure filings were far-reaching, rising on an annual basis in 46 states and in 90 of the 100 largest metropolitan areas, to a total of 649,917 properties. The first quarter filings surged 112% from the same period last year.
"In most of the states with the highest levels of foreclosure activity, we're still seeing the fallout from overheated home prices and people overextending themselves with risky loans to try to buy those properties," Rick Sharga, vice president of marketing at RealtyTrac, in Irvine, California, said in an interview.
"I'm more convinced that we haven't seen the peak of foreclosure activity yet, and the wave probably won't crest until late third or fourth quarter of 2008," he added.
Nevada, California, Arizona and Florida had the highest foreclosure rates among states during the quarter.
A buying frenzy by speculative investors had sharply inflated home prices in all of those states before a slide into one of the worst housing markets in a century began in 2006.
These states are now inundated with unsold homes, many valued less than the size of the mortgage. The oversupply is pressing prices down, forcing some owners to walk away and escalating pressure to foreclose.
Many homeowners, particularly those with adjustable-rate subprime mortgages, are struggling to make payments that have skyrocketed when the loans reset.
One in every 54 Nevada households got a foreclosure filing in the first quarter, up 137% from a year earlier.
California had the second-highest rate of filings among states with one in every 78 households, soaring by nearly 213% above the same period last year.
"The really insidious part is that, particularly if you're in a market with a glut of inventory, as more properties go through foreclosure ... they add properties on the market that are effectively going to be coming in with distress pricing, which makes it even worse," Sharga said.
Georgia, Michigan, Ohio, Massachusetts and Connecticut were the other states with the top 10 foreclosure filings.
Poor underlying economic conditions drove foreclosure filings higher in Michigan and Ohio, according to RealtyTrac.
The share of vacant U.S. homes grew to a record high in the first quarter, the government reported on Monday, as homeowners struggled to find buyers and foreclosures escalated.
The percentage of owner-occupied homes sitting empty rose to 2.9%, the third straight monthly rise, for a total of 18.6 million vacancies, U.S. Census Bureau data showed.
With prices seen falling further at a time when there is an overabundant supply, some government mortgage relief programs may not preclude foreclosures from mounting.
Philadelphia, Pennsylvania, for example, has adopted a program that delays foreclosure proceedings on owner-occupied properties until owners have met directly with lenders to attempt a loan workout plan, James J. Saccacio, chief executive officer of RealtyTrac, said in a press release.
"While we're hopeful that programs like those in Philadelphia will have a positive long-term impact, they could be simply deferring another flood of foreclosures," extending the time it takes for housing to recover, he said.
Metro areas in California and Florida had 13 of the 20 cities with the highest foreclosure filing rates. Stockton and Riverside-San Bernardino in California had the top two spots.
One in every 30 households in Stockton got a foreclosure filing during the quarter, 6.6 times the national average.
Las Vegas had the third-highest foreclosure filing rate among metro areas, at one in every 44 households. The rate was up 1% in the quarter, and 134% from the first quarter of last year.
Close <http://www.financialpost.com/story.html?id=480152#close>
Presented by
<http://ad.ca.doubleclick.net/click%3Bh=v8/36b2/3/0/%2a/m%3B195142712%3B0-0%3B0%3B20453370%3B21-88/31%3B25384927/25402784/1%3B%3B~aopt%3D2/2/ff/0%3B~sscs%3D%3fhttp:/www.nationalpost.com/np_network/index.html>
· TSX -260.25 (Reuters) - Toronto's main stock market index remained weak on Tuesday
amid falling gold and energy prices
· Dow -39.81
· Dollar +.07c to $ $98.82US
· Oil -3.12 to $115.63US per barrel
· Gold -18.70US to $874.20US
Bond Rates: http://www.bankofcanada.ca/en/rates/bonds.html <http://www.bankofcanada.ca/en/rates/bonds.html>
By Malcolm Morrison, The Canadian Press- The Toronto stock tumbled more than 250 points Tuesday as both oil and gold registered steep declines a day before the U.S. Federal Reserve is widely expected to announce a quarter-point cut in its key funds rate. Analysts suggested that it's the prospect of a break in rate cuts that punished commodities, since the parade of rate declines since last year has also helped weaken the American dollar and push up the prices of oil and metals.
"If we get an indication from the Fed that after tomorrow, that's it, then there's not necessarily that U.S. dollar weakness stimulus consistently coming out of each Fed meeting," said Gareth Watson, Canadian equity adviser at Scotia Capital. "With the Fed decision.... it could very well be people pre-emptively saying well, made some money, let's take it off the table no matter what happens."
The have-not province?
Equalization payments for Ontario by '09, bank says April 30, 2008 Keith Leslie The Canadian Press
With soaring energy prices changing the landscape of the Canadian economy, analysts warned yesterday that Ontario could soon qualify for equalization payments while Newfoundland and Labrador is poised to shed its have-not status.
The latest report from TD Bank Financial Group said Ontario is set to become a have-not province that would qualify for equalization payments by 2010 -- and perhaps even as early as next year.
That dire prediction came on the same day the Newfoundland budget forecast a $544-million surplus. The province is poised to get off equalization next year for the first time since joining Confederation. The boon comes largely through record oil prices.
It's no coincidence that Ontario's recent slippage in terms of a relative standard of living "occurred in lockstep'' with the high dollar, soaring energy rates, and high commodity prices, the TD report said. The fall, so far, is more a story of booming economic strength in the energy-rich western provinces than it is about a poor performance in Ontario, said TD chief economist Don Drummond.
"That was a fairly minor factor, in fact, when you go through the calculations,'' Drummond said. "It was basically the western provinces, in particular Alberta, have been earning so much resource royalties, and that interacted with the change in the formula that was made last year.''
Falling to have-not status is an important psychological barrier for Canada's largest province, Drummond added.
"It gives the signal that Ontario is not the mighty king of the economy anymore,'' he said. "It's one of the weaker partners, but again it's not so much Ontario's being weak as the other provinces are really roaring along.''
The equalization formula, which aims to smooth out regional disparities, sees provinces deemed to have a less-than-average ability to generate tax revenue get cash transfers from the federal government. Ottawa has a constitutional responsibility to help provinces deliver similar social services at comparable tax rates.
The formula was changed recently from a five-province standard to a 10-province standard, which brought oil-rich Alberta into the calculations and automatically raised the economic performance bar for all provincial economies, Drummond said.
"High oil prices, of course, hurt Ontario because it's an oil importer, and the high oil prices have pulled up the Canadian dollar, which has been the weakness for Ontario manufacturers,'' he said.
"If we look for a common culprit, certainly the oil prices stand out.''
Federal Finance Minister Jim Flaherty raised the ire of many provincial politicians when he said recently that Ontario was on its way to have-not status. Yesterday, he rejected Ontario's claims that it's the equalization funding formula that's flawed and not the province's corporate tax policies. "What we have to do as governments is to stop blaming, you know, people that do economic calculations and instead say what can we do as a government to encourage economic growth in our jurisdiction,'' Flaherty said in Ottawa.
"I've been urging Premier McGuinty and his government to reduce the tax burden on businesses in Ontario because they're shouldering the heaviest tax burden in Canada.''
Liberal critics said yesterday that Flaherty was turning into "an economic hazard'' for Canadian workers with his repeated attacks on the Ontario government.
Ontario's Progressive Conservatives blamed the Liberal government's high corporate taxes for driving the province towards have-not status.
"Premier, you've taken Ontario from a province that gives a hand up to one that will soon be taking handouts from the rest of Canada,'' said acting Opposition Leader Bob Runciman.
But Premier Dalton McGuinty wasn't prepared to accept blame for Ontario's woes, telling the legislature the TD report also noted the province sends $20 billion more to the federal government every year than it receives in transfers and services.
"How is it that we can be a have-not province if we're sending $20 billion annually to the rest of the country?'' McGuinty asked the legislature. "I think that tells us something about the (equalization) formula.''
The TD report said Ontario's gross domestic product per capita fell steadily for five years, from seven per cent above the national average in 2002 to two per cent below the average in 2007, and warned the situation isn't expected to improve in the short term.
Nagging credit woes trigger Bank of Canada moves Louise Egan, Reuters Published: Tuesday, April 29, 2008 OTTAWA -- The Bank of Canada has injected $5.5 billion in overnight money markets in four days and renewed a term liquidity agreement in a sign the market doesn't believe the credit crunch is waning. "They're injecting liquidity into a market that is not convinced that the credit crisis is fully over with," said Derek Holt, vice-president of economics at Scotia Capital.
The central bank bought $1.71-billion worth of securities in the market on Tuesday for resale on Wednesday, its fourth straight intervention to nudge the overnight interest rate closer to its target of 3%. The market rate is slightly higher at about 3.09%. The volume of the so-called SPRA transaction was bigger than any done at the height of the global credit squeeze last August and the biggest since Oct. 31, 2006, according to data on the central bank's Web site.
U.S. foreclosures jump 112%, with no end in sight Lynn Adler, Reuters Published: Tuesday, April 29, 2008 Financial Post
BloombergOne in every 54 Nevada households got a foreclosure filing in the first quarter, while California had the second-highest rate of filings among states with one in every 78 households.
NEW YORK -- Home foreclosure filings in the United States jumped 23% in the first quarter from the prior quarter, and more than doubled from a year earlier, as more overextended borrowers failed to make timely payments, real estate data firm RealtyTrac said on Tuesday.
One of every 194 households received a notice of default, auction sale or bank repossession between January and March, for the seventh straight quarter of rising foreclosure activity, RealtyTrac said.
Foreclosure filings were far-reaching, rising on an annual basis in 46 states and in 90 of the 100 largest metropolitan areas, to a total of 649,917 properties. The first quarter filings surged 112% from the same period last year.
"In most of the states with the highest levels of foreclosure activity, we're still seeing the fallout from overheated home prices and people overextending themselves with risky loans to try to buy those properties," Rick Sharga, vice president of marketing at RealtyTrac, in Irvine, California, said in an interview.
"I'm more convinced that we haven't seen the peak of foreclosure activity yet, and the wave probably won't crest until late third or fourth quarter of 2008," he added.
Nevada, California, Arizona and Florida had the highest foreclosure rates among states during the quarter.
A buying frenzy by speculative investors had sharply inflated home prices in all of those states before a slide into one of the worst housing markets in a century began in 2006.
These states are now inundated with unsold homes, many valued less than the size of the mortgage. The oversupply is pressing prices down, forcing some owners to walk away and escalating pressure to foreclose.
Many homeowners, particularly those with adjustable-rate subprime mortgages, are struggling to make payments that have skyrocketed when the loans reset.
One in every 54 Nevada households got a foreclosure filing in the first quarter, up 137% from a year earlier.
California had the second-highest rate of filings among states with one in every 78 households, soaring by nearly 213% above the same period last year.
"The really insidious part is that, particularly if you're in a market with a glut of inventory, as more properties go through foreclosure ... they add properties on the market that are effectively going to be coming in with distress pricing, which makes it even worse," Sharga said.
Georgia, Michigan, Ohio, Massachusetts and Connecticut were the other states with the top 10 foreclosure filings.
Poor underlying economic conditions drove foreclosure filings higher in Michigan and Ohio, according to RealtyTrac.
The share of vacant U.S. homes grew to a record high in the first quarter, the government reported on Monday, as homeowners struggled to find buyers and foreclosures escalated.
The percentage of owner-occupied homes sitting empty rose to 2.9%, the third straight monthly rise, for a total of 18.6 million vacancies, U.S. Census Bureau data showed.
With prices seen falling further at a time when there is an overabundant supply, some government mortgage relief programs may not preclude foreclosures from mounting.
Philadelphia, Pennsylvania, for example, has adopted a program that delays foreclosure proceedings on owner-occupied properties until owners have met directly with lenders to attempt a loan workout plan, James J. Saccacio, chief executive officer of RealtyTrac, said in a press release.
"While we're hopeful that programs like those in Philadelphia will have a positive long-term impact, they could be simply deferring another flood of foreclosures," extending the time it takes for housing to recover, he said.
Metro areas in California and Florida had 13 of the 20 cities with the highest foreclosure filing rates. Stockton and Riverside-San Bernardino in California had the top two spots.
One in every 30 households in Stockton got a foreclosure filing during the quarter, 6.6 times the national average.
Las Vegas had the third-highest foreclosure filing rate among metro areas, at one in every 44 households. The rate was up 1% in the quarter, and 134% from the first quarter of last year.
Close <http://www.financialpost.com/story.html?id=480152#close>
Presented by
<http://ad.ca.doubleclick.net/click%3Bh=v8/36b2/3/0/%2a/m%3B195142712%3B0-0%3B0%3B20453370%3B21-88/31%3B25384927/25402784/1%3B%3B~aopt%3D2/2/ff/0%3B~sscs%3D%3fhttp:/www.nationalpost.com/np_network/index.html>
Subscribe to:
Posts (Atom)
