Financial Update

· TSX +219.38pts (Reuters) powered to its second triple-digit gain in a row as major banks climbed after releasing results that were not as bad as some analysts feared.
· Dow +212.67pts also showed very strong gains due to the unexpectedly robust economic data and decline in oil prices
· Dollar -.46c to $95.07US due to a drop in oil prices after the International Energy Agency pledged to dip into emergency stockpiles if Tropical Storm Gustav disrupted U.S. oil production. The Loonie has been linked increasingly to oil prices as Canada's importance as an energy producer has grown. Another factor was growing expectations that the Bank of Canada would have to cut its key lending rate to shore up softening economic growth
· Oil -$2.56 to $115.59US per barrel -3rd day of gains as Tropical Storm Gustav was expected to intensify into a hurricane that could threaten U.S. oil and natural gas production in the Gulf of Mexico.
· Gold +3.20 to $837.20US per ounce

Harper doesn't rule out recession

Globe and Mail Report on Business

INUVIK — Prime Minister Stephen Harper, who is expected to call an election as early as next week, did not rule out the possibility the Canadian economy may have slipped into recession but said Thursday that if so it would only be in a technical sense.

Mr. Harper was speaking on the eve of the release of second quarter GDP data, which will show whether Canada has had negative growth for two successive quarters – the most popular technical definition of a recession.

Most analysts expect slightly positive second-quarter growth after the first quarter's annualized reading of -0.3 per cent, but many say there is a risk it could be negative.

“People talk about a technical recession. Even if that's true, I don't think it's a real recession,” Mr. Harper told a news conference in the Arctic town of Inuvik, without confirming whether growth did in fact come in negative for two quarters.

“Somebody said a recession is when people start losing their jobs, and when your neighbour loses his job. There are job losses, but overall employment is pretty stable,” Mr. Harper said.

The economy remains strong and while employment numbers have softened they remained very high, he said.

Sensitive to the political ramifications if there is a recession, Mr. Harper said: “Look, I'm not trying to sugarcoat this. I said a year ago, and I said as we moved into the new year, that 2008 would be a year of significantly slower economic growth, because of the circumstances we have in the global economy and in the American economy.”

But he added: “At the same time I believe the fundamentals of Canada are strong, will get us through this [slow] growth, and if we make the right policy choices we will actually emerge from it with a very strong economy.”

He said it was not a time to go back to policies in the style of former Liberal Prime Minister Pierre Trudeau and impose taxes.

This was a reference to the Liberal Party's current proposal to introduce a carbon tax to fight climate change and offset it with income tax cuts and help for the poor.

Conservative sources have said that Harper would like to trigger an election next week, before Parliament returns from its summer recess on Sept. 15.

Statistics Canada will release the gross domestic product data on Friday at 8:30 a.m. EDT

Financial Update

· TSX +231.58pts (Reuters) as the key resource and financial sectors were lifted by commodity prices and a rally by Canadian banks. All the major banks rose as the heavy hitters release their quarterly results this week, culminating in reports from 3 institutions, including Royal Bank of Canada , which rose 2.7%
· Dow +89.64pts
· Dollar +.15c to $95.53US
· Oil +$1.88to $118.15US per barrel -3rd day of gains as Tropical Storm Gustav was expected to intensify into a hurricane that could threaten U.S. oil and natural gas production in the Gulf of Mexico.
· Gold +5.90to $834.00US per ounce

Often a mortgage originator with integrity and honesty, will question the need to verify documents that seem legitimate. Please see article below from the National Post which emphasizes the severity of fraud in our industry and the amount of damage just two people can cause.

Two charged in $30-million real estate fraud

VANCOUVER -- A marathon investigation into one of the biggest financial frauds in B.C. history has led to multiple criminal charges being filed against former Vancouver lawyer Martin Wirick and Vancouver real-estate developer Tarsem Singh Gill.

Both men were arrested Tuesday after a six-year investigation.

Messrs. Wirick and Gill are charged with two counts of fraud and theft against 77 different homeowners, and two counts of fraud and theft against lenders in 30 different loan transactions. Mr. Wirick is also charged with two counts of uttering false documents and Mr. Gill with one count of possession of stolen property.

The total amount of money alleged to have been unlawfully taken from homeowners and lenders exceeds $30-million.

Three Fannie Mae execs out

NEW YORK (Reuters) - Fannie Mae the biggest U.S. mortgage finance company, on Wednesday announced a shake-up of top executives, including the exit of its chief financial officer, in an effort to better implement a plan to preserve capital and cut losses.

Fannie Mae announced management changes amid a storm of controversy over its ability to survive a wave of mortgage defaults that have caused four straight quarters of losses and recent speculation a government bail-out was near. But the board is "firmly committed" to Chief Executive Officer Daniel Mudd, Chairman Stephen Ashley said in a statement .

Stephen Swad, who was CFO since early 2007 and helped Fannie return to timely filing of financial statements following a major accounting scandal, was replaced by Fannie Mae Controller David Hisey, the company said. Peter Niculescu, head of capital markets, will replace Robert Levin as chief business officer. Fannie Mae's chief risk officer, Enrico Dallavecchia, will also leave.

The changes "signal they are trying to correct some problems," said David Dreman, chairman of Jersey City, New Jersey-based Dreman Value Management, LLC, a Fannie Mae and Freddie Mac shareholder. "When you change risk management people, it has to be viewed as recognizing problems, so it is mildly positive."

Financial Update

· TSX +10.11pts (Reuters)
· Dow +26.62pts
· Dollar +.22c to $95.38US
· Oil +$1.16to $116.17US per barrel
· Gold +2.40to $828.10US per ounce

Articles on the front page of the Globe and Mail -Report on Business August 27, 2008 confirm financial market worries over anticipated poor quarterly results.

CIBC takes $885-million hit

Canadian Imperial Bank of Commerce, the third big bank to report its third-quarter earnings, said Wednesday that it earned $71-million, down from $835-million a year ago, as it took a hit of more than $880-million relating to risky securities. CIBC is the Canadian bank that's been hardest hit by the U.S. subprime mortgage crisis, because of its large exposure to securities tied to subprime housing. The exposure caused it to take a $2.48-billion writedown in the previous quarter

BMO burned by subprime mortgage exposure Bank of Montreal has been dragged further into the subprime mortgage crisis, putting aside hundreds of millions of dollars for troubled loans tied to the U.S. real estate sector.

At the same time, BMO continues to be tripped up by a variety of complicated investment products, demonstrating that financial markets continue to sour.

Chief executive officer Bill Downe – who was cautiously optimistic earlier this year that things might get better – said Tuesday that the challenging times aren't going to let up soon. With the U.S. economy continuing to slow, “falling house prices, rising unemployment, tightening credit standards and high gasoline and grocery bills are all expected to depress consumer spending,” he said. “In particular, house prices will continue to decrease until the large inventory of unsold houses is absorbed.” BMO’s profit fell by 21%.