Economy resilient, Flaherty declares
The Canadian Press Finance Minister Jim Flaherty says the Canadian economy is facing a variety of economic challenges, but has so far remained resilient. "Certainly there has been a psychological effect of the recession in the U.S. housing sector, but keep in mind Canadian projections are on the positive side of the ledger,'' he told the Economic Club of Toronto yesterday. Flaherty acknowledged that Canadians face rising costs, including food prices and higher airline fees tied to fuel. But, Canada hasn't seen the same type of inflationary impact that other countries have experienced
· TSX jumped +144.88 to a new record high
· Dow +130.43
· Dollar continued upwards +.12c to $ $99.56
· Oil -$1.73 to $124.23US per barrel
· Gold -$.80US to $883.70US
Bond Rates: <http://www.bankofcanada.ca/en/rates/bonds.html> http://www.bankofcanada.ca/en/rates/bonds.html
TSX soars to new record thanks to RIM, EnCana
David Friend The Canadian Press
Two of Canada's most valuable companies have helped lift the Toronto stock market above its previous record high, set 10 months ago just before the credit crunch took the life out of many investments.
But some economists suggest the gains could wash away in the foreseeable future.
Both Research In Motion, the maker of the famed BlackBerry portable device, and oil and gas giant EnCana Corp. drove the market skyward yesterday. The two stocks were heavily traded, with RIM shares up eight per cent and EnCana ahead six per cent. Both stock jumps were motivated by corporate announcements, with EnCana saying it will divide itself into two companies, one focused on the oilsands and another concentrating on natural gas.
RIM investors gave its stock a boost after the company unveiled the new BlackBerry Bold smartphone, which has a wider array of functions aimed at the business market.
The two companies' combined weight pushed the TSX at the end of the day to 14,666.07, above a high of 14,625.76 set last July.
It was the third attempt the Toronto stock market has made at returning to the heights it left when the U.S. subprime mortgage mess surfaced. Last Thursday, the TSX just missed the benchmark despite a record-high closing price for crude oil.
The increase will likely evaporate somewhat if the two companies can't sustain their charge as the week progresses, said Fred Ketchen, a manager of equity trading at Scotia Capital. "We're going to give back some of these gains somewhere along the way,'' Ketchen said. "But if I keep looking out, I don't see the demand for energy backing off any time soon.''
Much of the momentum has been caused by strength in resource stocks, which represent about one-third of the market capitalization of the TSX. The energy sector has climbed 40 per cent since January while the price for crude oil rose above $125 US.
Tuesday, May 13, 2008
Monday, May 12, 2008
Financial Update
· TSX fell -86.80 as profit-taking cooled the energy sector even though oil prices hit
another record high
· Dow -120.90
· Dollar recovered over a full cent +1.12c to $ $99.44
· Oil continues upward +$2.27 to $125.96US per barrel breaking new records daily
· Gold recovered another+$3.90US to $884.50US
Bond Rates: <http://www.bankofcanada.ca/en/rates/bonds.html> http://www.bankofcanada.ca/en/rates/bonds.html
TSX could break out into record territory this week; then what?
By Malcolm Morrison, The Canadian Press
TORONTO - The Toronto stock market is poised to break through its old closing high set last July during the week as commodity stocks, particularly oil, run ahead.
As it was the TSX came within a whisker of moving past the 14,625.76 level last Thursday thanks to yet another in a string of record high closes for crude.
The market then pulled back Friday, at the end of a week of sharp gains, largely fuelled by energy stocks, that saw the TSX up 1.77 per cent for the week.
Breaking past that July record represents a stunning 20 per cent surge in the index since hitting its most recent low Jan. 21 - but some analysts are uncomfortable with how narrowly based the advance has been.
"Obviously it's being supported by the resource sector yet again, which is basically the story for the past three or four years," said Andrew Pyle, investment adviser at Scotia McLeod in Peterborough, Ont.
"I mean, if you look at the divergence between the S&P 500 and the TSX, that gap has widened and widened in relation to the strength we've seen in resources and obviously that's what's pulling the TSX higher now."
The energy sector has roared ahead 40 per cent since January while the base metals sector jumped 29 per cent as crude oil jumped from about US$90 a barrel to the US$125 mark.
The gold sector hasn't done so well, down about four per cent as bullion slipped away from the US$1,000 an ounce level.
This is the third time the TSX has tried to break above that 14,626 level and Pyle thinks this will be equally unsuccessful since "there is no underlying fundamental reason for the TSX to break above a new record high."
In fact, he said "there are a lot of reasons for this index to buckle and to experience a sharp pullback like we have seen in the past."
For one thing, he points to weakening economic conditions which should curb oil prices.
"Things work for the lag," he said.
"Oil at $120 doesn't show up tomorrow morning in terms of European Gross Domestic Product numbers, it'll show up in the summer, in July and August and demand factors alone will be enough to pull oil back."
But Pyle also pointed to a healthier U.S. dollar, which has been mending in particular since the U.S. Federal Reserve signalled last month that the long string of interest rate cuts are over.
"And I think if people start to really accept that the U.S. dollar recovery is real - it might be very slow - that to me is the death knell for commodities near term," he said.
"Near term, if the dollar recovery is perceived as real, I think commodities have to fall back here and when I look at the TSX again, it's very thinly based and I would say right now there's a lot more risk to the TSX today at these levels than there was last year when we were looking at record highs in July."
At least at that point, most sectors were participating in the run up.
A notable exception to the charge ahead this time has been the financial sector, up only about six per cent since late January. Share prices in banks really only started to improve after mid-March when JPMorgan Chase picked up rival investment bank Bear Stearns, with the backing of the U.S. Federal Reserve.
"But even if financials hold ground here, and we get this split, financials doing OK, resources falling back, there's not enough weight in financials to keep this index from falling back," said Pyle.
"There's not going to be enough support... to push this index far into new record territory in my opinion."
Pyle's advice to investors if the TSX can't stage a convincing breakthrough past the 14,626 level is beware.
"I think you have to seriously look at a more defensive position going into the summer because you could be looking at a 10 per cent correction in the index."
In the meantime, "don't be greedy. If you're up, this has been great, look at a nice move of 2,000 points on the TSX, that's helped people a lot. Don't blow it. Don't have that in vain, take some of it off the table."
another record high
· Dow -120.90
· Dollar recovered over a full cent +1.12c to $ $99.44
· Oil continues upward +$2.27 to $125.96US per barrel breaking new records daily
· Gold recovered another+$3.90US to $884.50US
Bond Rates: <http://www.bankofcanada.ca/en/rates/bonds.html> http://www.bankofcanada.ca/en/rates/bonds.html
TSX could break out into record territory this week; then what?
By Malcolm Morrison, The Canadian Press
TORONTO - The Toronto stock market is poised to break through its old closing high set last July during the week as commodity stocks, particularly oil, run ahead.
As it was the TSX came within a whisker of moving past the 14,625.76 level last Thursday thanks to yet another in a string of record high closes for crude.
The market then pulled back Friday, at the end of a week of sharp gains, largely fuelled by energy stocks, that saw the TSX up 1.77 per cent for the week.
Breaking past that July record represents a stunning 20 per cent surge in the index since hitting its most recent low Jan. 21 - but some analysts are uncomfortable with how narrowly based the advance has been.
"Obviously it's being supported by the resource sector yet again, which is basically the story for the past three or four years," said Andrew Pyle, investment adviser at Scotia McLeod in Peterborough, Ont.
"I mean, if you look at the divergence between the S&P 500 and the TSX, that gap has widened and widened in relation to the strength we've seen in resources and obviously that's what's pulling the TSX higher now."
The energy sector has roared ahead 40 per cent since January while the base metals sector jumped 29 per cent as crude oil jumped from about US$90 a barrel to the US$125 mark.
The gold sector hasn't done so well, down about four per cent as bullion slipped away from the US$1,000 an ounce level.
This is the third time the TSX has tried to break above that 14,626 level and Pyle thinks this will be equally unsuccessful since "there is no underlying fundamental reason for the TSX to break above a new record high."
In fact, he said "there are a lot of reasons for this index to buckle and to experience a sharp pullback like we have seen in the past."
For one thing, he points to weakening economic conditions which should curb oil prices.
"Things work for the lag," he said.
"Oil at $120 doesn't show up tomorrow morning in terms of European Gross Domestic Product numbers, it'll show up in the summer, in July and August and demand factors alone will be enough to pull oil back."
But Pyle also pointed to a healthier U.S. dollar, which has been mending in particular since the U.S. Federal Reserve signalled last month that the long string of interest rate cuts are over.
"And I think if people start to really accept that the U.S. dollar recovery is real - it might be very slow - that to me is the death knell for commodities near term," he said.
"Near term, if the dollar recovery is perceived as real, I think commodities have to fall back here and when I look at the TSX again, it's very thinly based and I would say right now there's a lot more risk to the TSX today at these levels than there was last year when we were looking at record highs in July."
At least at that point, most sectors were participating in the run up.
A notable exception to the charge ahead this time has been the financial sector, up only about six per cent since late January. Share prices in banks really only started to improve after mid-March when JPMorgan Chase picked up rival investment bank Bear Stearns, with the backing of the U.S. Federal Reserve.
"But even if financials hold ground here, and we get this split, financials doing OK, resources falling back, there's not enough weight in financials to keep this index from falling back," said Pyle.
"There's not going to be enough support... to push this index far into new record territory in my opinion."
Pyle's advice to investors if the TSX can't stage a convincing breakthrough past the 14,626 level is beware.
"I think you have to seriously look at a more defensive position going into the summer because you could be looking at a 10 per cent correction in the index."
In the meantime, "don't be greedy. If you're up, this has been great, look at a nice move of 2,000 points on the TSX, that's helped people a lot. Don't blow it. Don't have that in vain, take some of it off the table."
Friday, May 9, 2008
Financial Update
Canadians need to know more about finances says Flaherty
· TSX surged +236.46 to 14,606 to finish close to a record high set last July
· Dow +52.43
· Dollar down almost a full cent-.98c to $ $98.32
· Oil continues upward +$.16 to $123.69US per barrel breaking new records
· Gold recovered+$10.90US to $882.10US
Bond Rates: http://www.bankofcanada.ca/en/rates/bonds.html
Eric Beauchesne, Canwest News Service Published: Thursday, May 08, 2008
OTTAWA -- Canadians need to know more about how to handle their personal finances, Finance Minister Jim Flaherty said Thursday in a speech in Washington, in which he linked the global financial crisis to a need for increased financial literacy among households.
Mr. Flaherty also said that he plans to introduce new regulations this spring for certain "complex" debt securities.
"There are many causes to the financial turmoil and financial literacy is certainly one aspect,"
Mr. Flaherty told an International Conference on Financial Education, the theme of which was Taking Financial Literacy to the Next Level: Important Challenges and Promising Solutions.
"Something that is an obvious benefit to society - the ability of citizens to own their own home has -- through improper disclosure and complex investments -- led to global financial turmoil," he said in a reference to the subprime crisis in the United States.
That crisis, which erupted last summer, resulted in part from households being encouraged by lenders to take on mortgages they couldn't afford, and then those lenders in turn bundling those mortgages into complex securities, billions of dollars of which were sold to financial institutions around the world, some of which in turn sold them to individual investors.
"Clearly, some of the flaws of our financial system have bubbled to the surface," Mr. Flaherty said in the text of his speech, which was closed to the media.
"We are today witnessing the consequences of a lack of disclosure and awareness," he said. "The recent volatility underscores the importance of investors understanding exactly what they are buying."
Mr. Flaherty said the new regulations would focus on debt securities called principal-protected notes that guarantee the invested principal.
"As these products grew more varied and complex, it became clear that the old disclosure rules were no longer adequate," Mr. Flaherty said.
Canada is also tightening its oversight of the financial services industry after the banks lost billions of dollars on investments in asset-backed commercial paper when the market in this country for $32-billion of the subprime tainted securities collapsed last summer.
While government regulators and financial institutions trying to deal with the crisis have focused on the failure of financial institutions -- including credit rating agencies -- to understand what they were rating, buying and selling, Mr. Flaherty said that in today's world individuals also need to have a better understanding of the array of increasingly complex financial products available to them, ranging from bank accounts to credit cards to mortgages.
And he said that includes the worker setting up a bank account, the family trying to make ends meet while saving for a first home, the senior who - in a world of Internet banking and automated bank machines - is susceptible to scams and fraud, and the investor who should be aware of the risks, returns or benefits of compounding interest rates.
"The range of financial products on the market is rapidly expanding, and the complexity of such products can make it difficult for the average investor to fully understand the risks, the fees and the potential returns," he said.
Yet, he noted that financial literacy is seldom at the core of any school curriculum even though youth have more financial dealings than ever before, using debit and credit cards and online banking, and having cell phone contracts.
"The irony should not be lost on anyone ... ," he said, adding that financial literacy is an essential skill that should be developed early in life
· TSX surged +236.46 to 14,606 to finish close to a record high set last July
· Dow +52.43
· Dollar down almost a full cent-.98c to $ $98.32
· Oil continues upward +$.16 to $123.69US per barrel breaking new records
· Gold recovered+$10.90US to $882.10US
Bond Rates: http://www.bankofcanada.ca/en/rates/bonds.html
Eric Beauchesne, Canwest News Service Published: Thursday, May 08, 2008
OTTAWA -- Canadians need to know more about how to handle their personal finances, Finance Minister Jim Flaherty said Thursday in a speech in Washington, in which he linked the global financial crisis to a need for increased financial literacy among households.
Mr. Flaherty also said that he plans to introduce new regulations this spring for certain "complex" debt securities.
"There are many causes to the financial turmoil and financial literacy is certainly one aspect,"
Mr. Flaherty told an International Conference on Financial Education, the theme of which was Taking Financial Literacy to the Next Level: Important Challenges and Promising Solutions.
"Something that is an obvious benefit to society - the ability of citizens to own their own home has -- through improper disclosure and complex investments -- led to global financial turmoil," he said in a reference to the subprime crisis in the United States.
That crisis, which erupted last summer, resulted in part from households being encouraged by lenders to take on mortgages they couldn't afford, and then those lenders in turn bundling those mortgages into complex securities, billions of dollars of which were sold to financial institutions around the world, some of which in turn sold them to individual investors.
"Clearly, some of the flaws of our financial system have bubbled to the surface," Mr. Flaherty said in the text of his speech, which was closed to the media.
"We are today witnessing the consequences of a lack of disclosure and awareness," he said. "The recent volatility underscores the importance of investors understanding exactly what they are buying."
Mr. Flaherty said the new regulations would focus on debt securities called principal-protected notes that guarantee the invested principal.
"As these products grew more varied and complex, it became clear that the old disclosure rules were no longer adequate," Mr. Flaherty said.
Canada is also tightening its oversight of the financial services industry after the banks lost billions of dollars on investments in asset-backed commercial paper when the market in this country for $32-billion of the subprime tainted securities collapsed last summer.
While government regulators and financial institutions trying to deal with the crisis have focused on the failure of financial institutions -- including credit rating agencies -- to understand what they were rating, buying and selling, Mr. Flaherty said that in today's world individuals also need to have a better understanding of the array of increasingly complex financial products available to them, ranging from bank accounts to credit cards to mortgages.
And he said that includes the worker setting up a bank account, the family trying to make ends meet while saving for a first home, the senior who - in a world of Internet banking and automated bank machines - is susceptible to scams and fraud, and the investor who should be aware of the risks, returns or benefits of compounding interest rates.
"The range of financial products on the market is rapidly expanding, and the complexity of such products can make it difficult for the average investor to fully understand the risks, the fees and the potential returns," he said.
Yet, he noted that financial literacy is seldom at the core of any school curriculum even though youth have more financial dealings than ever before, using debit and credit cards and online banking, and having cell phone contracts.
"The irony should not be lost on anyone ... ," he said, adding that financial literacy is an essential skill that should be developed early in life
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