Plan offers tax credit for home renovations
The Harper government has been floating the idea of a tax credit for home renovations - an idea that could deliver significant stimulus for Canada's residential construction industry in the Jan. 27 budget.
- TSX +191.25 to 8879.61
- DOW +12.35 to 8212.49
- Dollar 0.7988 USD
- Oil -1.42 to $35.40 per barrel.
- Gold -1.50 to $806.70 USD per ounce
- www.bankofcanada.ca/en/rates/bond-look.html Canadian bond prices
Next week’s outlook: The Bank of Canada meets on Tuesday January 20th and 3 key questions will be answered:
1. By how much will the BOC reduce their overnight target rate?
2. Will the Big Banks follow?
3. If so, by how much?
Plan offers tax credit for home renovations
Flaherty floats idea before meeting with premiers today
STEVEN CHASE AND BRIAN LAGHI
From Thursday's Globe and Mail
January 15, 2009 at 4:00 AM EST
OTTAWA — The Harper government has been floating the idea of a tax credit for home renovations - an idea that could deliver significant stimulus for Canada's residential construction industry in the Jan. 27 budget.
Deliberations continue as Canada's premiers meet today in Ottawa to put the final touches on a budget request for Prime Minister Stephen Harper - one that sources say will include more cash for employment training, more benefits for the jobless and extra funding for infrastructure.
Finance Minister Jim Flaherty, meanwhile, has been conducting his own consultation on the looming budget, expected to deliver up to $30-billion in stimulus to soften an economic downturn.
During a closed-door session in Montreal last week, Mr. Flaherty asked participants' opinion on a partly refundable tax credit for renovations. Some economists among the more than 20 attendees criticized the proposal while representatives of the building-trades sector lauded it.
Tax credits can be used to reduce the amount of taxes a person owes to the government, but refundable tax credits can benefit filers even if they have no taxes to be paid; in that case, they could get a refund based on the credit.
The federal Finance Department looks favourably on stimulus spending that helps builders, in part because so many of their materials are made in Canada. This ensures more benefits of stimulus spending remain in this country than if the money goes to taxpayers in the form of rebates to spur consumption. There's a good chance that consumer spending would leak the benefits of stimulus to foreigners: 50 per cent of durable goods bought in Canada are imported.
"[By] contrast, only 20 per cent of investment in residential and non-residential buildings is imported through such inputs as building materials," the Finance Department said in its recent paper on stimulus.
One important decision Mr. Flaherty will have to make should the Tories proceed with this idea is whether to offer a tax credit for home renovation in general, or merely for retrofits and upgrades that increase energy efficiency.
Toronto Dominion Bank chief economist Don Drummond said stimulus for home renovations would be helpful because there's a limit to how many public works projects Ottawa can kick start soon.
"There's only so much of the big infrastructure stuff you can get going in 2009 and 2010," Mr. Drummond said.
"We are past the peak of employment in the construction industry, and those people are going to be getting laid off."
One drawback of programs such as subsidies for retrofitting and house refurbishment is that they are typically difficult to administer, hard to monitor and susceptible to fraud.
In Ottawa, the premiers plan to ask Mr. Harper when they meet with him tonight and tomorrow for more infrastructure money and increased flexibility in spending it.
The Harper government has committed itself to $33-billion over seven years, and is pledging to accelerate that spending. But premiers want the government to add to the overall global total.
Governments also appear close to an agreement to streamline environmental requirements for infrastructure projects. Ontario is particularly concerned for Ottawa to find a way to increase benefits for the unemployed and not just money for worker training. Toronto wants more workers to be able to access benefits.
Premiers will not put a price tag on their requests. "Most premiers are not looking to jam up the feds and put an astronomical number they can't meet," the source said.
Canada's municipal governments yesterday released a list of more than 1,000 infrastructure projects that they say could start this spring if federal funds become available.
Combined, the projects would create more than 150,000 jobs, the Federation of Canadian Municipalities said in a release.
Friday, January 16, 2009
Thursday, January 15, 2009
Financial Update for Jan. 15,2009
Holiday sales: Much worse than feared
Retail group says combined November-December sales fell 2.8%, after expecting a modest gain.
· TSX -273.19 to 8688.36
· DOW -248.42 pts to 8200.14
· Dollar 0.8017 USD
· Oil -.46to $36.82 per barrel.
· Gold -16.30 to $808.20 USD per ounce ·
www.bankofcanada.ca/en/rates/bond-look.html Canadian bond prices
By Parija B. Kavilanz, CNNMoney.com senior writer
Last Updated: January 14, 2009: 2:10 PM ET
NEW YORK (CNNMoney.com) -- The retail industry's leading trade group blamed a "deep recession, severe winter weather and five fewer shopping days" for a 2.8% drop in 2008 holiday sales - a far worse outcome than the industry expected.
The National Retail Federation had originally forecast holiday sales for the combined November-December shopping months to grow 2.2%, which would still have been the weakest pace of gain in at least six years.
As it was, it turned out to be the first-ever decline in the measure since the group initiated it in 1995.
The two-month holiday period can account for as much as 50% of retailers' annual profits and sales.
"The current economic crisis proved to be more challenging than any had anticipated," NRF Chief Economist Rosalind Wells said in a report. "Consumers showed they were more than willing to wait out retailers this year causing increased pressure on prices."
Also, the group said a shift in the calendar which resulted in five fewer shopping days between Thanksgiving and Christmas in 2008 versus the previous year meant consumers had fewer days to do their gift shopping and merchants had fewer days to log additional sales.
The latest government report on December retail sales, also released on Wednesday, supported Wells' point.
The Commerce Department report showed overall retail sales fell 2.8% last month and declined 3.1% excluding auto purchases, despite a last minute surge in holiday-related purchases in the week before Christmas.
December's sales drop marked the sixth straight monthly sales decline in 2008 and the longest consecutive stretch of monthly declines in the measure in at least four decades.
What's more, last year's ugly holiday sales could force an unraveling of the retailing industry, forcing several chains to go out of business in 2009.
Many retailers, including Circuit City, Linens 'n Things and Whitehall Jewelers already either filed for bankruptcy or liquidated last year. That trend is expected to rapidly pick up pace in the weeks and months ahead.
The latest casualty - regional department store chain Gottchalks, which operates 58 stores in six Western states - filed for bankruptcy Wednesday. But analysts warn that given the credit market freeze, it's highly unlikely that any merchant who files for bankruptcy in this environment will come out alive
Retail group says combined November-December sales fell 2.8%, after expecting a modest gain.
· TSX -273.19 to 8688.36
· DOW -248.42 pts to 8200.14
· Dollar 0.8017 USD
· Oil -.46to $36.82 per barrel.
· Gold -16.30 to $808.20 USD per ounce ·
www.bankofcanada.ca/en/rates/bond-look.html Canadian bond prices
By Parija B. Kavilanz, CNNMoney.com senior writer
Last Updated: January 14, 2009: 2:10 PM ET
NEW YORK (CNNMoney.com) -- The retail industry's leading trade group blamed a "deep recession, severe winter weather and five fewer shopping days" for a 2.8% drop in 2008 holiday sales - a far worse outcome than the industry expected.
The National Retail Federation had originally forecast holiday sales for the combined November-December shopping months to grow 2.2%, which would still have been the weakest pace of gain in at least six years.
As it was, it turned out to be the first-ever decline in the measure since the group initiated it in 1995.
The two-month holiday period can account for as much as 50% of retailers' annual profits and sales.
"The current economic crisis proved to be more challenging than any had anticipated," NRF Chief Economist Rosalind Wells said in a report. "Consumers showed they were more than willing to wait out retailers this year causing increased pressure on prices."
Also, the group said a shift in the calendar which resulted in five fewer shopping days between Thanksgiving and Christmas in 2008 versus the previous year meant consumers had fewer days to do their gift shopping and merchants had fewer days to log additional sales.
The latest government report on December retail sales, also released on Wednesday, supported Wells' point.
The Commerce Department report showed overall retail sales fell 2.8% last month and declined 3.1% excluding auto purchases, despite a last minute surge in holiday-related purchases in the week before Christmas.
December's sales drop marked the sixth straight monthly sales decline in 2008 and the longest consecutive stretch of monthly declines in the measure in at least four decades.
What's more, last year's ugly holiday sales could force an unraveling of the retailing industry, forcing several chains to go out of business in 2009.
Many retailers, including Circuit City, Linens 'n Things and Whitehall Jewelers already either filed for bankruptcy or liquidated last year. That trend is expected to rapidly pick up pace in the weeks and months ahead.
The latest casualty - regional department store chain Gottchalks, which operates 58 stores in six Western states - filed for bankruptcy Wednesday. But analysts warn that given the credit market freeze, it's highly unlikely that any merchant who files for bankruptcy in this environment will come out alive
Wednesday, January 14, 2009
Financial Update
Energy stocks help TSX claw back losses; N.Y. weak on Alcoa earnings- The Canadian Press
TORONTO - The Toronto stock market closed sharply higher Tuesday following a steep loss as energy stocks revived and financials advanced after Bank of Montreal (TSX:BMO) bought a piece of troubled U.S. insurer American International Group.
· TSX +168.22 to 8961.55
· DOW -25.41 pts to 8448.56
· Dollar 0.8224 USD
· Oil +$1.09to $38.87 per barrel.
· Gold +$4.30 to $825.00 USD per ounce
· www.bankofcanada.ca/en/rates/bond-look.html Canadian bond prices
Oilsands on agenda for Obama visit: Harper
Renata D'Aliesio and Jason Fekete, Calgary Herald Published: Tuesday, January 13, 2009
The oilsands will be on the agenda when Prime Minister Stephen Harper meets with Barack Obama on his first foreign trip as president of the United States.
Harper told a local morning radio show today that his Conservative government wants to work together with its southern neighbour on energy and environmental issues, and he'll stress this point when Obama travels to Canada soon after his Jan. 20 inauguration as America's 44th president.
The prime minister acknowledged there are concerns about the environmental footprint of the oilsands -- the largest industrial development in Canada.
"To be frank on the oilsands, we've got to do a better job environmentally. We hear a lot of pressure on that," Harper said.
"At the same time, the development of these things is pretty important, in our judgment, to North American energy security. So I think there's balance to be seen there."
Harper, who said he's "delighted" Obama has chosen Canada as his first foreign visit, pointed out the United States has its own environmental challenges related to energy production.
"The United States is a big country for coal-powered electrical generation. That's pretty dirty, too," the prime minister said.
Harper is in Calgary today meeting with a dozen heavy hitters from the business community. He held a 60- to 90-minute meeting at the Harry Hays building downtown to get their input on what sort of economic stimulus should be in the Jan. 27 federal budget.
Those included in the business round table are oilpatch giants Randy Eresman from EnCana, Murray Edwards of Canadian Natural Resources, Hal Kvisle from TransCanada, Rick George from Suncor and Ron Brenneman from Petro-Canada. Also taking part in the meeting are senior executives from other sectors, including Sean Durfy from WestJet, Steve Snyder of TransAlta, Nancy Southern from ATCO, Ron Mannix of Coril Holdings, Fred Green from Canadian Pacific Railway and George Gosbee of Tristone Capital.
It's the latest round of pre-budget consultations Ottawa is conducting with business leaders, labour groups and ordinary Canadians in advance of its fiscal blueprint. Harper has said the budget will be the biggest in a long time, while Finance Minister Jim Flaherty has promised extraordinary measures.
The prime minster told the Calgary radio station that his government is considering tax cuts for Canada's middle class and enhancements to the Employment Insurance program.
"It's a little difficult to do a temporary tax cut. How do you do a temporary tax cut? You don't want to be in a position of raising rates back up again," Harper said.
"But I do think we have to do something to make sure that the middle class is part of the budgetary package that we'll be bringing down, and that they're part of the recovery plan."
Harper reiterated plans to significantly boost infrastructure spending nationwide, but said he doesn't want to see long-run structural deficits.
"It is a time for the government to go in, borrow that money, put it to use, make sure the economic activity and confidence is sustained through what we think will be a difficult year or two," he said.
"The vast majority of spending that we will do, we will make sure is short term," he added. "We'll try and make sure there's not a big tail and we're not having deficits once the economy recovers. "
TORONTO - The Toronto stock market closed sharply higher Tuesday following a steep loss as energy stocks revived and financials advanced after Bank of Montreal (TSX:BMO) bought a piece of troubled U.S. insurer American International Group.
· TSX +168.22 to 8961.55
· DOW -25.41 pts to 8448.56
· Dollar 0.8224 USD
· Oil +$1.09to $38.87 per barrel.
· Gold +$4.30 to $825.00 USD per ounce
· www.bankofcanada.ca/en/rates/bond-look.html Canadian bond prices
Oilsands on agenda for Obama visit: Harper
Renata D'Aliesio and Jason Fekete, Calgary Herald Published: Tuesday, January 13, 2009
The oilsands will be on the agenda when Prime Minister Stephen Harper meets with Barack Obama on his first foreign trip as president of the United States.
Harper told a local morning radio show today that his Conservative government wants to work together with its southern neighbour on energy and environmental issues, and he'll stress this point when Obama travels to Canada soon after his Jan. 20 inauguration as America's 44th president.
The prime minister acknowledged there are concerns about the environmental footprint of the oilsands -- the largest industrial development in Canada.
"To be frank on the oilsands, we've got to do a better job environmentally. We hear a lot of pressure on that," Harper said.
"At the same time, the development of these things is pretty important, in our judgment, to North American energy security. So I think there's balance to be seen there."
Harper, who said he's "delighted" Obama has chosen Canada as his first foreign visit, pointed out the United States has its own environmental challenges related to energy production.
"The United States is a big country for coal-powered electrical generation. That's pretty dirty, too," the prime minister said.
Harper is in Calgary today meeting with a dozen heavy hitters from the business community. He held a 60- to 90-minute meeting at the Harry Hays building downtown to get their input on what sort of economic stimulus should be in the Jan. 27 federal budget.
Those included in the business round table are oilpatch giants Randy Eresman from EnCana, Murray Edwards of Canadian Natural Resources, Hal Kvisle from TransCanada, Rick George from Suncor and Ron Brenneman from Petro-Canada. Also taking part in the meeting are senior executives from other sectors, including Sean Durfy from WestJet, Steve Snyder of TransAlta, Nancy Southern from ATCO, Ron Mannix of Coril Holdings, Fred Green from Canadian Pacific Railway and George Gosbee of Tristone Capital.
It's the latest round of pre-budget consultations Ottawa is conducting with business leaders, labour groups and ordinary Canadians in advance of its fiscal blueprint. Harper has said the budget will be the biggest in a long time, while Finance Minister Jim Flaherty has promised extraordinary measures.
The prime minster told the Calgary radio station that his government is considering tax cuts for Canada's middle class and enhancements to the Employment Insurance program.
"It's a little difficult to do a temporary tax cut. How do you do a temporary tax cut? You don't want to be in a position of raising rates back up again," Harper said.
"But I do think we have to do something to make sure that the middle class is part of the budgetary package that we'll be bringing down, and that they're part of the recovery plan."
Harper reiterated plans to significantly boost infrastructure spending nationwide, but said he doesn't want to see long-run structural deficits.
"It is a time for the government to go in, borrow that money, put it to use, make sure the economic activity and confidence is sustained through what we think will be a difficult year or two," he said.
"The vast majority of spending that we will do, we will make sure is short term," he added. "We'll try and make sure there's not a big tail and we're not having deficits once the economy recovers. "
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