• TSX -69.91 A combination of earnings disappointments, poor U.S. economic data and a rising greenback pushed the Toronto stock market lower. Nine of the index's 10 main groups declined.
• DOW -115.70 Soft quarterly results from big U.S. and Canadian companies, ongoing concern about the uneven U.S. economic recovery, and fiscal worries in Greece all contributed to negative investor sentiment
• Dollar -.13c to 93.79cUS The U.S. dollar gained strength as investors sought safety after Standard & Poor's said it no longer considered Britain among the "most stable and low-risk" banking systems.
• Oil -$.03 to $73.60US per barrel.
• Gold $-.90 to $1,083.60USD per ounce
Bernanke wins second term in 2nd closest vote ever for a Fed chief after bitter opposition
By Jeannine Aversa, Jim Kuhnhenn, The Associated Press
WASHINGTON - Embattled Federal Reserve Chairman Ben Bernanke won confirmation for a second term Thursday, but only by the closest vote ever for the crucial post and after withering criticism from lawmakers for bailing out Wall Street while other Americans suffered in recession.
The Senate confirmed Bernanke for a new four-year term by a 70-30 vote, a seemingly solid majority but 14 votes worse than the closest previous vote for a Fed chairman.
President Barack Obama hailed the Senate's action and praised Bernanke's "wisdom and steady leadership."
The battle over Bernanke's confirmation has been a test of central bank independence, a crucial element if the Fed is to carry out unpopular but economically essential policies. Its decisions on interest rates can have immense consequences, from the success or failure of the largest companies to the typical home-buyer's ability to get an affordable loan to the price of cereal at the grocery or gas at the corner station.
Created by Congress in 1913 after a series of bank panics, the Federal Reserve is an independent agency, supposedly outside politics, but its chairman is typically assailed by lawmakers and others when the economy falls and jobless ranks lengthen.
CNW
Ontario economy to grow faster than national average for the first time in eight years
Economy at risk from overvalued Canadian dollar and slower U.S. growth
TORONTO, Jan. 28 /CNW/ - Ontario's economy will outpace the national average in 2010 but remains at risk to a high Canadian dollar, weak U.S. growth and high provincial deficits, finds a new report from CIBC World Markets Inc.
"For Ontario, 2009 was a year to forget," says Warren Lovely, senior economist in CIBC's latest Economic Insights report. "But Ontario outpaced the national average by a significant margin in (the third quarter of 2009), and with momentum carried into the first half of this year, Ontario's full-year growth rate should exceed the national average for the first time in eight years.
"It was once the case that Ontario outperformed in expansion, at least until the Canadian dollar began its trend appreciation. Since that time, Ontario has lagged the national average. This year's growth rate captures comparisons to depressed levels of activity in 2009. That's particularly true in manufacturing, where shipments slumped and factory job losses lopped more than 1.5 per cent off total employment. Once an inventory restocking has run its course, growth could be harder to sustain."
Mr. Lovely expects GDP growth in the province to climb 2.4 per cent in 2010 and 2.8 per cent in 2011, once again falling behind the national average of 3.0 per cent. He adds that the factory sector must contend with an overvalued exchange rate. Lower U.S. costs and heightened competition from emerging Asia pose a threat to Ontario, North America's largest auto producer. And as a net-energy importer, higher oil and gas prices won't do producers any favours and future years will also feel the drag from government belt tightening.
However, he notes a harmonized sales tax, alongside cuts to corporate taxes, will boost competitiveness and help lure jobs. A focus on emerging sectors, such as green power, also looks to pay dividends. Growth in Canada's banking sector stands to benefit Ontario disproportionately.
The report finds that the economic recovery will not be even across the country. On the back of strong oil, potash, agriculture and uranium sectors, Saskatchewan is expected to lead economic growth in the country in 2010 with GDP up 3.0 per cent. Solid job prospects will continue to spur in-migration, with population growth stronger than at any time in the past 30 years.
The B.C. economy will be the second strongest in 2010 with 2.8 per cent growth on the basis of strength in the resource sector. The province will also see a broadening and deepening of its export base, with expanded transportation infrastructure allowing the province to lever its Gateway to Asia status. Mr. Lovely does not see the end of Olympics spending as a significant drag and notes that the adoption of a harmonized sales tax should boost investment and spur productivity growth.
Newfoundland and Labrador is forecast to see a big rebound this year with its GDP climbing 2.6 per cent as output recovers from production difficulties that plagued 2009. The economy also benefits from strong consumer spending and business investment. Barring disruptions, growth in 2011 should strengthen further to 3.3 per cent, with large energy projects having the potential to deliver strong growth longer-term.
A newfound availability of cost-effective inputs, alongside a recovery in commodity prices, is sparking re-investment in Alberta. But a still-tentative consumer suggests that the province will be slower to re-accelerate in 2010 seeing GDP growth at 2.4 per cent for the year, same as Ontario. However, by 2011 growth is expected to reach 4.2 per cent, tops in the country, just ahead of Saskatchewan.
Manitoba escaped the recession relatively unscathed, tabling a fourth straight year of above-average growth in 2009. With less ground to be made up, growth should run just in line with the national average in 2010 at 2.3 per cent, climbing to 3.1 per cent in 2011.
Recent outperformance in Québec and the Maritimes likely won't be repeated, with solid, if unspectacular gains due in 2010-11.
Real GDP Performance
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CIBC Forecasts
Y/Y % Actual --------------------------------------------
2008 2009 2010 2011
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BC 0.0 -2.2 2.8 3.4
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Alta 0.0 -2.6 2.4 4.2
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Sask 4.2 -1.7 3.0 4.1
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Man 2.0 -0.2 2.3 3.1
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Ont -0.5 -3.5 2.4 2.8
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Qué 1.0 -1.4 2.2 2.7
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NB 0.0 -0.7 2.2 2.8
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NS 2.2 -0.4 2.1 2.6
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PEI 0.5 -0.5 1.8 2.4
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N&L 0.5 -3.5 2.6 3.3
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CDA 0.4 -2.5 2.3 3.0
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U.S. 0.4 -2.5 2.8 2.4
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Source: CIBC, Statistics Canada
Friday, January 29, 2010
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