Financial Update

Panic hammers markets- suffers a dead cat bounce "It's a wait-and-see kind of game, and extreme volatility ... and I mean extreme," said Lex Kerkovius, senior research analyst at McLean & Partners Wealth Management in Calgary.
· TSX -572.93pts to 10,230 Stocks fell hard right off the open (initially down -1200 pts)as the emergency rescue of two big European banks and a move by several European governments to guarantee bank deposits ignited fears of a global recession- its biggest intraday % loss since the market crash of October 1987 and its biggest point loss ever (Reuters)
· Dow -369.88pts. A seemingly endless parade of bleak U.S. economic data also served to push New York markets lower. The Dow Jones lost 817.75 points over the week
· Dollar -1.48c to $90.98US.
· Oil -$6.07 to $87.81US per barrel
· Gold +33.80 to $862.70US per ounce

Big 5 foresee little growth

Different from a ‘typical recession,’ Canadian economists say

By David Frieson

Economists from Canada's Big Five banks expect little or no growth in the near future, warning yesterday that the domestic economy's current gloom will deepen into something worse than a recession.

The word "recession'' wouldn't describe the deep structural problems affecting everything from the U.S. housing sector to the Canadian oil industry, said Bank of Nova Scotia chief economist Warren Jestin.

"You have to invent a new word to describe what we're in now,'' he said after the banks presented their perspectives at the Economic Club.

"It's being driven through the financial markets into the real economy. All of those things suggest that it's entirely different than what you might expect from a typical recession.''

In their most recent economics forecast, Scotiabank economists predict recessions for both the U.S. and Canada, economic slides that will require central bankers in both countries to cut interest rates by at least a full percentage point.

All agree that a slide in commodity prices bodes ill for the Canadian economy, which is heavily dependent on the production and export of oil and gas, metals and minerals.

Drops in oil and metals prices have hit the already teetering Toronto Stock Exchange hard.
Yesterday it took an agonizing 1,200-point fall before recovering somewhat to sit around 700 points in the red as oil dropped to trade around the $90 US mark.

And Bank of Montreal economist Doug Porter said prices will continue to take a beating over the next year, dragging Western Canada's formerly booming economy in particular down with them.
"You're going to be seeing Western Canada come back down to the rest of us with a thud, especially if commodity prices keep doing what they've done in the last three months,'' he said.
"It's almost as if the markets are pricing in a much harder landing for commodity prices. I think that's reasonable if you don't get some thawing in the credit markets relatively soon.''

Porter said the direction of Canada's economy depends on whether the financial-sector troubles in the United States start to settle down.

The Canadian Press