· TSX +72.97(Reuters) as energy issues gained on stronger oil prices and financials got a boost from smaller-than-expected drop in quarterly profit at Toronto-Dominion Bank .
· DOW-80.05
· Dollar -.72c to 79.71USD
· Oil +$2.54 to $42.50US per barrel.
· Gold -$3.40 to $965.70 USD per ounce
· Canadian 5 yr bond yields +.08bps to 2.11
· http://www.financialpost.com/markets/market_data/money-yields-can_us.html
Associated Press DETROIT - General Motors Corp. says it lost US$9.6 billion in the fourth quarter and burned through $6.2 billion in cash as it sought government help to avoid running out of cash.
America's biggest domestic automaker lost $30.9 billion for all of 2008 as it struggled against a U.S. sales slump and a global recession.
GM has received $13.4 billion in federal loans and its executives are in Washington, D.C., Thursday to talk to the Obama administration about the company's request for up to $30 billion.
First-time homebuyers could lead real estate rebound
Kristine Owram The Canadian Press
Lower home prices and shifting demographics mean first-time buyers could lead a rebound in Canada's real estate market, experts said yesterday at a real estate conference in Toronto.
Phil Soper, president and chief executive of Brookfield Real Estate Services, said rookies are the largest category of buyers in the real estate market, accounting for close to 70 per cent of all transactions at the height of the housing boom.
However, they've been scared away in droves by the economic downturn, which was led in part by record foreclosure rates in the United States as homeowners defaulted on their mortgage debt.
Such a lack of first-time buyers can grind the real estate market to a halt, Soper told Scotiabank's annual real estate outlook conference.
"When new buyers stop entering the market, it's like sand in the gears,'' he said.
Although Canada has managed to duck the severity of the housing crisis in the U.S., the 10-year boom that saw housing prices soar, particularly in the western provinces, ended abruptly last year.
Canadian housing starts -- the number of new residential construction projects -- were down to 211,056 in 2008, about eight per cent lower than an average of almost 230,000 in the period from 2004 to 2007. Resale activity fell by 17 per cent in 2008 while home prices dipped by one per cent, according to Scotiabank.
Things seem to have worsened dramatically in January, with housing starts falling to an eight-year low of 153,500 annualized units and home prices down 11 per cent year-over-year.
And the bank predicted the decline will continue through 2009, with housing starts forecast to fall to around 155,000 units, another 15 to 20 per cent decline in the number of resales and a 10 per cent drop in prices.
But Adrienne Warren, a senior economist and real estate specialist at Scotiabank, said this points to a buyers' market.
"Certainly the softening we've seen in prices, the increase in listings, is giving first-time buyers more choice,'' Warren said.
Thursday, February 26, 2009
Wednesday, February 25, 2009
Financial Update for Feb. 25, 2009
Markets recover from multi-year lows to close sharply higher
· TSX +211.66(Reuters) Buyers were encouraged by an assessment from U.S. Federal Reserve chair Ben Bernanke that "there is a reasonable prospect'' the recession will end this year and that big US banks won’t be nationalized
· DOW +236.16
· Dollar +.51c to 80.43USD helped by a rebound in North American equity markets and higher prices for oil, a key Canadian export.
· Oil +$1.52 to $39.96US per barrel.
· Gold -$25.50 to $969.10 USD per ounce
· Canadian 5 yr bond yields +.03bps to 2.03
· http://www.financialpost.com/markets/market_data/money-yields-can_us.html
Economy shrinking but end to recession in sight, Fed chair says
Jeannine Aversa The Associated Press
WASHINGTON The U.S. economy is suffering a "severe contraction,'' Federal Reserve Chair Ben Bernanke told Congress yesterday. But he planted a glimmer of hope that the recession might end this year if the government managed to prop up the shaky banking system, and Wall Street rallied.
Bernanke said the economy is likely to keep shrinking in the first six months of this year after posting its worst slide in a quarter-century at the end of 2008.
Bernanke said he hoped the recession will end this year, but that there were significant risks to that forecast.
Any economic turnaround will hinge on the success of the Fed and the Obama administration in getting credit and financial markets to operate more normally again.
"Only if that is the case, in my view there is a reasonable prospect that the current recession will end in 2009 and that 2010 will be a year of recovery,'' Bernanke told the U.S. Senate Banking Committee.
Among the risks to any recovery are if economic and financial troubles in other countries turn out to be worse than anticipated, which would hurt U.S. exports and further aggravate already fragile financial conditions in the United States.
Another concern is that the Fed and other Washington policy-makers won't be able to break a vicious cycle where disappearing jobs, tanking home values and shrinking nest eggs are forcing consumers to cut back sharply, worsening the economy's tailspin. In turn, battered companies lay off more people and cut back in other ways.
"To break that adverse feedback loop, it is essential that we continue to complement fiscal stimulus with strong government action to stabilize financial institutions and financial markets,'' Bernanke said.
In an effort to revive the economy, the Fed has slashed a key interest rate to an all-time low and Obama recently signed a $787-billion stimulus package of increased government spending and tax cuts.
In addition, Treasury Secretary Timothy Geithner has revamped a controversial $700 billion bank bailout program to include steps to partner with the private sector to buy rotten assets held by banks as well as expand government ownership stakes in them -- all with the hopes of freeing up lending. The Obama administration also will spend $75 billion to stem home foreclosures.
Those and other bold steps -- including a soon-to-be-operational program to boost the availability of consumer loans -- for autos, education, credit cards and other things -- should over time provide relief and promote an economic recovery, Bernanke said. That program is "about to open,'' he told lawmakers, without providing an exact date.
Sen. Christopher Dodd, D-Conn., chair of the panel, and other senators suggested expanding that program overseen by the Fed and Treasury, to help squeezed local governments.
Radical actions by the government since last fall when the financial crisis intensified have relieved some credit and financial strains, Bernanke said.
"Nevertheless, despite these favourable developments, significant stresses persist in many markets,'' he said.
Although Bernanke didn't mention any financial institutions by name, Citigroup Inc. -- the industry's troubled titan -- apparently is in line for additional government help.
Critics worry the Fed's actions have the potential to put ever-more taxpayers' dollars at risk and encourage "moral hazard,'' where companies feel more comfortable making high-stakes gambles because the government will rescue them.
Stress tests on the nation's biggest banks, which regulators will start conducting today, are designed to give regulators a better idea of how much additional capital and the type needed for banks to lend if the crisis were to grow worse than anticipated, Bernanke said. Regulators will assess banks' capital needs over a two-year horizon.
The nation's unemployment rate is now at 7.6 per cent, the highest in more than 16 years, and it will climb higher -- even in the best-case scenario that an economic recovery happens next year.
The Fed expects the jobless rate to rise to close to nine per cent this year, and probably remain above normal levels of around five per cent into 2011. The recession, which started in December 2007, already has killed a net total of 3.6 million jobs.
Fed policy-makers think that a "full recovery'' of the economy is likely to take more than two or three years, Bernanke said.
To brace the economy, many analysts predict the Fed will leave its key rate at record lows through the rest of this year.
· TSX +211.66(Reuters) Buyers were encouraged by an assessment from U.S. Federal Reserve chair Ben Bernanke that "there is a reasonable prospect'' the recession will end this year and that big US banks won’t be nationalized
· DOW +236.16
· Dollar +.51c to 80.43USD helped by a rebound in North American equity markets and higher prices for oil, a key Canadian export.
· Oil +$1.52 to $39.96US per barrel.
· Gold -$25.50 to $969.10 USD per ounce
· Canadian 5 yr bond yields +.03bps to 2.03
· http://www.financialpost.com/markets/market_data/money-yields-can_us.html
Economy shrinking but end to recession in sight, Fed chair says
Jeannine Aversa The Associated Press
WASHINGTON The U.S. economy is suffering a "severe contraction,'' Federal Reserve Chair Ben Bernanke told Congress yesterday. But he planted a glimmer of hope that the recession might end this year if the government managed to prop up the shaky banking system, and Wall Street rallied.
Bernanke said the economy is likely to keep shrinking in the first six months of this year after posting its worst slide in a quarter-century at the end of 2008.
Bernanke said he hoped the recession will end this year, but that there were significant risks to that forecast.
Any economic turnaround will hinge on the success of the Fed and the Obama administration in getting credit and financial markets to operate more normally again.
"Only if that is the case, in my view there is a reasonable prospect that the current recession will end in 2009 and that 2010 will be a year of recovery,'' Bernanke told the U.S. Senate Banking Committee.
Among the risks to any recovery are if economic and financial troubles in other countries turn out to be worse than anticipated, which would hurt U.S. exports and further aggravate already fragile financial conditions in the United States.
Another concern is that the Fed and other Washington policy-makers won't be able to break a vicious cycle where disappearing jobs, tanking home values and shrinking nest eggs are forcing consumers to cut back sharply, worsening the economy's tailspin. In turn, battered companies lay off more people and cut back in other ways.
"To break that adverse feedback loop, it is essential that we continue to complement fiscal stimulus with strong government action to stabilize financial institutions and financial markets,'' Bernanke said.
In an effort to revive the economy, the Fed has slashed a key interest rate to an all-time low and Obama recently signed a $787-billion stimulus package of increased government spending and tax cuts.
In addition, Treasury Secretary Timothy Geithner has revamped a controversial $700 billion bank bailout program to include steps to partner with the private sector to buy rotten assets held by banks as well as expand government ownership stakes in them -- all with the hopes of freeing up lending. The Obama administration also will spend $75 billion to stem home foreclosures.
Those and other bold steps -- including a soon-to-be-operational program to boost the availability of consumer loans -- for autos, education, credit cards and other things -- should over time provide relief and promote an economic recovery, Bernanke said. That program is "about to open,'' he told lawmakers, without providing an exact date.
Sen. Christopher Dodd, D-Conn., chair of the panel, and other senators suggested expanding that program overseen by the Fed and Treasury, to help squeezed local governments.
Radical actions by the government since last fall when the financial crisis intensified have relieved some credit and financial strains, Bernanke said.
"Nevertheless, despite these favourable developments, significant stresses persist in many markets,'' he said.
Although Bernanke didn't mention any financial institutions by name, Citigroup Inc. -- the industry's troubled titan -- apparently is in line for additional government help.
Critics worry the Fed's actions have the potential to put ever-more taxpayers' dollars at risk and encourage "moral hazard,'' where companies feel more comfortable making high-stakes gambles because the government will rescue them.
Stress tests on the nation's biggest banks, which regulators will start conducting today, are designed to give regulators a better idea of how much additional capital and the type needed for banks to lend if the crisis were to grow worse than anticipated, Bernanke said. Regulators will assess banks' capital needs over a two-year horizon.
The nation's unemployment rate is now at 7.6 per cent, the highest in more than 16 years, and it will climb higher -- even in the best-case scenario that an economic recovery happens next year.
The Fed expects the jobless rate to rise to close to nine per cent this year, and probably remain above normal levels of around five per cent into 2011. The recession, which started in December 2007, already has killed a net total of 3.6 million jobs.
Fed policy-makers think that a "full recovery'' of the economy is likely to take more than two or three years, Bernanke said.
To brace the economy, many analysts predict the Fed will leave its key rate at record lows through the rest of this year.
Tuesday, February 24, 2009
Financial Update for Feb. 24, 2009
TSX hits lowest point in 5 years
· TSX-302.32 to 7,647.67 (Reuters) to its lowest closing level in more than 5 years, hit by lower commodity prices, weak economic data and nagging concerns about U.S. banks.
· DOW -250.89 to 7,111.78 Lingering uncertainty about the U.S. government actions to shore up beleaguered banks rattled equities in the US causing the DOW to trade at its lowest level in 10 years
· Dollar -.12c to 79.92USD
· Oil -$1.69 to $38.44US per barrel.
· Gold -$7.20 to $994.60 USD per ounce The slide in oil prices followed weak Canadian retail sales data for December
· Canadian 5 yr bond yields -.05bps to 2.00
· http://www.financialpost.com/markets/market_data/money-yields-can_us.html
Made-in-Canada recession: retail sales plunge shows problems not all from afar
By Julian Beltrame, The Canadian Press
OTTAWA - The Canadian economy took a beating in December, with retail sales plunging a Scrooge-like 5.4 per cent, the largest such fall in 15 years, as consumers stayed away from stores and auto dealerships during the traditional high-spending month.
Retail figures released Monday by Statistics Canada suggest that weak consumer spending and a sagging housing market are adding to an already battered export sector to drag the economy more deeply into recession.
'We can't just point our finger at the U.S. and the rest of the world and say, 'There's our problem,"' noted economist Douglas Porter of BMO Capital Markets.
'We've also seen a deep drop in domestic indicators as well, like housing and now consumer spending."
The latest retail number may also go a long way toward dispelling the notion that Canada's economy is far healthier than that of the U.S., the so-called epicentre of the global crisis.
Economists are now unanimous in predicting Canada's gross domestic product will come in weaker than America's for all of 2008 when the fourth-quarter gross domestic product figures are released next Monday.
They predict fourth-quarter GDP in Canada shrank between three and four per cent, about the same as the 3.8 per cent contraction south of the border and far worse than the Bank of Canada's recent prediction of negative 2.3 per cent growth.
The two economies don't appear to be far apart for 2009, either.
A new survey of U.S. economists forecasts the U.S. economy will shrink a further 1.9 per cent this year, within the range of the more pessimistic projections for the Canadian economy.
'In terms of GDP growth, Canada did worse (last year), but in terms of employment growth we surpassed the U.S.," said Paul Ferley, assistant chief economist with the Royal Bank. He noted, however, that the loss of 129,000 jobs in January points to a worsening jobs picture in Canada as well.
Ferley and many other economists still see Canada doing slightly better this year, largely because of stronger financial markets and expectations that commodity prices, particularly that of oil, will recover somewhat.
But Merrill Lynch Canada chief economist David Wolf says those advantages may be overestimated, noting that although the crisis began in the U.S., countries such as Japan are already far deeper in the hole. The United States, he says, is further ahead of Canada in making adjustments to the recession and has taken more aggressive stimulus measures.
'Canada's financial markets are clearly in better shape but it's not going to matter much if no one wants to borrow or lend," Wolf said.
In a speech in Toronto, Bank of Canada senior deputy governor Paul Jenkins said getting credit markets working is the key to returning economies back to growth.
'Stabilization of the global financial system is a precondition for economic recovery globally and in Canada," he said in notes of his speech released by the central bank.
Later in the day, the central bank took the extraordinary step of agreeing to accept riskier securities like corporate bonds as collateral in an effort to make it easier for cash-strapped businesses to obtain loans.
The next move by the bank to spur lending will likely come on March 3, when many economists predict governor Mark Carney will slash short-term interest rates another half-point, bringing the bank's overnight rate to an historic 0.5 per cent.
If there was any good news on the horizon, it came from a Harris-Decima poll which showed consumer confidence in Canada reviving slightly.
The January poll showed 27 per cent of respondents expecting they'll be better off a year from now, an increase from the 20 per cent who were optimistic in December.
But if there is growing consumer confidence, it hasn't translated into behaviour yet and for good reasons, said Porter.
'There's no question the actual job losses we've seen and the actual wealth hit we've seen from the decline in equity markets is playing a role," he said. "It's more than just a confidence matter."
The retail sales decline in December was widespread, although the automotive sector suffered the most with sales crashing 12.7 per cent. Statistics Canada says three-quarters of the December retail decline was rooted in automotive, without which retail sales fell 1.8 per cent.
In non-automotive retailing, the largest decline in December was in building and outdoor home supplies, where retail sales fell 5.6 per cent.
Meanwhile, sales at gasoline stations fell 11.7 per cent in December, and have dropped 28.8 per cent since last September. That reflects a sharp decline in prices at the pump since last summer, but also the impact of a struggling economy on consumer driving habits as well as reduced business demand for gasoline for the industrial and trucking sectors.
Significant monthly decreases were also registered in sectors traditionally associated with holiday shopping. Sales in the clothing and accessories stores fell 3.7 per cent, furniture, home furnishings and electronics stores and miscellaneous retailers dropped two per cent, general merchandise stores fell 0.4 per cent.
· TSX-302.32 to 7,647.67 (Reuters) to its lowest closing level in more than 5 years, hit by lower commodity prices, weak economic data and nagging concerns about U.S. banks.
· DOW -250.89 to 7,111.78 Lingering uncertainty about the U.S. government actions to shore up beleaguered banks rattled equities in the US causing the DOW to trade at its lowest level in 10 years
· Dollar -.12c to 79.92USD
· Oil -$1.69 to $38.44US per barrel.
· Gold -$7.20 to $994.60 USD per ounce The slide in oil prices followed weak Canadian retail sales data for December
· Canadian 5 yr bond yields -.05bps to 2.00
· http://www.financialpost.com/markets/market_data/money-yields-can_us.html
Made-in-Canada recession: retail sales plunge shows problems not all from afar
By Julian Beltrame, The Canadian Press
OTTAWA - The Canadian economy took a beating in December, with retail sales plunging a Scrooge-like 5.4 per cent, the largest such fall in 15 years, as consumers stayed away from stores and auto dealerships during the traditional high-spending month.
Retail figures released Monday by Statistics Canada suggest that weak consumer spending and a sagging housing market are adding to an already battered export sector to drag the economy more deeply into recession.
'We can't just point our finger at the U.S. and the rest of the world and say, 'There's our problem,"' noted economist Douglas Porter of BMO Capital Markets.
'We've also seen a deep drop in domestic indicators as well, like housing and now consumer spending."
The latest retail number may also go a long way toward dispelling the notion that Canada's economy is far healthier than that of the U.S., the so-called epicentre of the global crisis.
Economists are now unanimous in predicting Canada's gross domestic product will come in weaker than America's for all of 2008 when the fourth-quarter gross domestic product figures are released next Monday.
They predict fourth-quarter GDP in Canada shrank between three and four per cent, about the same as the 3.8 per cent contraction south of the border and far worse than the Bank of Canada's recent prediction of negative 2.3 per cent growth.
The two economies don't appear to be far apart for 2009, either.
A new survey of U.S. economists forecasts the U.S. economy will shrink a further 1.9 per cent this year, within the range of the more pessimistic projections for the Canadian economy.
'In terms of GDP growth, Canada did worse (last year), but in terms of employment growth we surpassed the U.S.," said Paul Ferley, assistant chief economist with the Royal Bank. He noted, however, that the loss of 129,000 jobs in January points to a worsening jobs picture in Canada as well.
Ferley and many other economists still see Canada doing slightly better this year, largely because of stronger financial markets and expectations that commodity prices, particularly that of oil, will recover somewhat.
But Merrill Lynch Canada chief economist David Wolf says those advantages may be overestimated, noting that although the crisis began in the U.S., countries such as Japan are already far deeper in the hole. The United States, he says, is further ahead of Canada in making adjustments to the recession and has taken more aggressive stimulus measures.
'Canada's financial markets are clearly in better shape but it's not going to matter much if no one wants to borrow or lend," Wolf said.
In a speech in Toronto, Bank of Canada senior deputy governor Paul Jenkins said getting credit markets working is the key to returning economies back to growth.
'Stabilization of the global financial system is a precondition for economic recovery globally and in Canada," he said in notes of his speech released by the central bank.
Later in the day, the central bank took the extraordinary step of agreeing to accept riskier securities like corporate bonds as collateral in an effort to make it easier for cash-strapped businesses to obtain loans.
The next move by the bank to spur lending will likely come on March 3, when many economists predict governor Mark Carney will slash short-term interest rates another half-point, bringing the bank's overnight rate to an historic 0.5 per cent.
If there was any good news on the horizon, it came from a Harris-Decima poll which showed consumer confidence in Canada reviving slightly.
The January poll showed 27 per cent of respondents expecting they'll be better off a year from now, an increase from the 20 per cent who were optimistic in December.
But if there is growing consumer confidence, it hasn't translated into behaviour yet and for good reasons, said Porter.
'There's no question the actual job losses we've seen and the actual wealth hit we've seen from the decline in equity markets is playing a role," he said. "It's more than just a confidence matter."
The retail sales decline in December was widespread, although the automotive sector suffered the most with sales crashing 12.7 per cent. Statistics Canada says three-quarters of the December retail decline was rooted in automotive, without which retail sales fell 1.8 per cent.
In non-automotive retailing, the largest decline in December was in building and outdoor home supplies, where retail sales fell 5.6 per cent.
Meanwhile, sales at gasoline stations fell 11.7 per cent in December, and have dropped 28.8 per cent since last September. That reflects a sharp decline in prices at the pump since last summer, but also the impact of a struggling economy on consumer driving habits as well as reduced business demand for gasoline for the industrial and trucking sectors.
Significant monthly decreases were also registered in sectors traditionally associated with holiday shopping. Sales in the clothing and accessories stores fell 3.7 per cent, furniture, home furnishings and electronics stores and miscellaneous retailers dropped two per cent, general merchandise stores fell 0.4 per cent.
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