TSX-282.85 the index is still up about 30 % from its March lows.
DOW -129.91 A possibility of a rating downgrade of British government debt and renewed worries about an American economic recovery sent stock markets down sharply
Dollar +.18c to 87.87USD the strong performance on equity and commodity markets energized the Canadian dollar
Oil -$.99 to $61.05US per barrel
Gold +$13.80 to $951.20USD per ounce
Canadian 5 yr bond yields +.11bps to 2.25- Unexpected with the drop in TSX. Four weeks ago it was 1.94.
http://www.financialpost.com/markets/market-data/money-yields-can_us.html?tmp=yields-can_us
The yield, rate of return on your bond, can be read through a yield curve, which is the pattern of yields on bonds. This increase in bond yield is something to watch. If the bond yield continues to go up, the spread will continue to shrink and this could be a trigger for interest rates to rise
A couple of articles which may mistakenly seem conflicting on Canadian Banks. One says due to the strength of the Canadian banking system, Canadian Banks will be the first to recover. The other announces a drop in bank ratings, however although it agrees Canadian Banks are still strong, it advises Canadian banks are still heavily influenced by U.S. and global economic trends.
New federal credit card rules give clearer info, minimum 21-day grace period
By The Canadian Press
TORONTO - The countless Canadian consumers willing to pay the often hefty price of relying on a credit card are getting a break from federal Finance Minister Jim Flaherty - although some critics aren't convinced that it's much of a reprieve at all.
Flaherty unveiled new rules Thursday that will cost banks and other credit-card issuers "tens of millions of dollars," requiring clearer information and a minimum 21-day interest-free period on new purchases made with plastic.
However, Flaherty has no intention of limiting card interest rates, which range from about nine per cent to twice that much for bank-issued cards, and typically from 19 to 28 per cent for cards from big department stores and other retailers.
The banks and other credit card issuers have come under fire during the recession from ordinary consumers, businesses and critics worried about a clampdown on credit, more restrictions on card use, rising penalties and sky-high interest rates at a time when the global credit crunch has squeezed their ability to get financing.
Thursday's changes, Flaherty told a news conference in Toronto, will improve a well functioning financial system that already provides adequate choice for consumers.
"There are dozens and dozens of options for consumers - some credit cards with higher interest rates offer more frills and benefits and points and various things," he observed.
"Our concern is to make sure that consumers have easily available, clear information so that they can make informed choices."
NDP Leader Jack Layton jibed that Flaherty's changes merely mean consumers will be told a bit more about how they're going to be gouged.
"Today was a day when the banks won," Layton said.
He called for legislation requiring banks to provide no-frills low-interest cards, saying the choice consumers have now is that "they can be gouged, or they can be gouged more deeply."
However, Bruce Cran, president of the Consumers' Association of Canada, said consumers should be pleased.
"All of the things that he's done in there are actually just what we asked for," Cran said from Washington, where the U.S. Congress has approved a bill that prohibits card companies from arbitrarily raising interest rates on existing balances, bans a variety of fees and restricts access to cards for people younger than 21.
The Americans "have got a range of different problems to what we have in Canada," Cran said, "but I think Mr. Flaherty has done a much better job of addressing the real problems that we've encountered."
As for the level of card interest rates, "these things take care of themselves," Cran said. "We do have 300 card issuers, and if there's demand for that sort of (low-interest) card, it should gain a place in the marketplace without having to legislate it."
In Ottawa, Liberal finance critic John McCallum - a former chief economist at the Royal Bank - said Flaherty's moves are "not a bad start, but they have not finished the job."
The new framework - particularly the 21-day grace period on all new purchases when cardholders pay the monthly balance in full by the due date - "was resisted by financial institutions," Flaherty declared.
"It is a major change; it will cost financial institutions tens of millions of dollars," he said.
"Right now the situation is that credit cards offer 15-to 24-day grace periods with most offering 21 days. However, many cards also charge consumers interest that accrues during that period, even if they pay their balance in full that month," Flaherty said.
"Moreover, if a consumer carries a balance from one month to another, some cards essentially give that consumer no grace period on new purchases."
Under the new regulations, the 21-day grace period on new purchases applies even if an outstanding balance is carried forward from the previous month, as long as the full balance is paid by the current month's deadline.
The new regulations will also require that credit card applications and contracts feature a simple summary box of "all salient information, such as interest rates, grace periods and fees."
Additionally, monthly statements will have to show how long it would take to pay off a balance by making only minimum payments. This will give consumers a truer picture of their debt load, Flaherty said.
The regulations, open for comment until June 13, also include:
-Notice on monthly statements if interest rates are going to increase during the next statement period;
-Express consent from the consumer for credit limit increases;
-Prohibition of some debt-collection practices, such as contacting clients later than 9 p.m. on weekdays or Saturdays, and after 5 p.m. on Sundays.
Flaherty noted that about 25 million Canadians have credit cards and most pay their monthly balances in full, "which is a great credit to how prudent Canadians are generally."
But Layton said financial institutions are encouraging consumers to use credit cards to buy groceries, and he meets people who are using cards to meet mortgage payments.
"In other words, they're up against the wall with a gun to their head," the NDP leader said, "and the banks refuse to give really fair interest rates to people like that, and the government is backing the banks."
The Consumers' Association's Cran commented that low introductory card rates "tend to take advantage of people that don't fully understand what's going on," and "we do object to some of the high penalty rates - I just can't see the point of penalizing people who can't pay."
But overall, "I've got to congratulate Mr. Flaherty."
"The proposed regulations are too little, too late to stop gouging of financial consumers by credit card companies," countered Duff Conacher, head of the Canadian Community Reinvestment Coalition.
The bank-accountability citizen group is calling on Flaherty to require credit card companies to undergo independent audits "to determine if they are reaping excessive profits."
In addition to not addressing interest rates, the rule changes do not deal with credit card interchange fees levied on merchant transactions.
Flaherty noted that parliamentary committees have been looking at the issue.
Credit Suisse chops ratings on Canada banks
John Greenwood, Financial Post
Canadian bank stocks are headed for a second wave of trouble, a Bay Street analyst warned Thursday.
James Bantis, an analyst at Credit Suisse, chopped his ratings on Canadian Imperial Bank of Commerce, Bank of Montreal, Royal Bank of Canada and Bank of Nova Scotia on concern the recent run-up in share prices fails to take into account the impact the recession will continue to have on bank revenues.
Mr. Bantis forsees rising loan loss provisions and pressure on retail margins, as the second round effects of the credit crunch and recession set in.
"We believe the severity of the economic slowdown in Canada is still in early days and earnings challenges remain ahead, not behind the banking sector," Mr. Bantis said in the note, titled "Green Shoots or Green Weeds."
Many of the threats that emerged at the height of the financial crisis late last year such as the risk of depression and possible systemic failure of global credit markets have abated, but Canadian banks are still heavily influenced by U.S. and global economic trends, most of which suggest tough times well into 2010.
But according to Mr. Bantis, this possibility is not reflected in current bank share prices.
Since its February low, the S&P/TSX Bank index has moved up 58%.
"Time to sell into strength," Mr. Bantis said.
Thursday he cut his ratings on CIBC and Bank of Montreal to "Underperform" from "Neutral," and lowered Royal and Scotia to "Neutral" from "Outperform."
The comments come about a week before the banks are set to report financial results for the second quarter.
On Friday, Scotia Capital analyst Kevin Choquette predicted an 8% decline in second quarter bank earnings compared to the same period in 2008 because of a doubling of loan loss provisions.
But he said results would be buoyed by a falling Canadian dollar and improving wholesale banking margins.
Mr. Choquette did not change any of his ratings at the time.
Calling their share prices "compelling," Mr. Choquette said Canadian banks "are well capitalized, with high-quality balance sheets, a diversified revenue mix [and] a solid long-term earnings growth outlook."
"The reduced fear about the collapse of the U.S. banking system has taken a lot of pressure off Canadian bank stocks that have been suffering from valuation contagion compounded by aggressive investor views that the Canadian system has massive leverage," he said.
Despite share price declines they suffered in the financial crisis -- the sector lost more than half its value -- Canadian banks for the most part steered clear of the kind of investments in credit derivatives that destroyed Lehman brothers and brought so many global banks to their knees.
As a result they are now widely recognized as among the safest in the world, which has attracted a lot of interest from foreign investors as well as governments.
But while the effects of the credit crunch appear to be subsiding, the Canadian economy has suffered a blow from the declining global economy and the collapse of the commodities market, and the impact is starting to manifest itself in the form of slumping corporate profits and rising unemployment.
Canada, Australia, the U.K. seen first to recover from recession
Alia McMullen, Financial Post
Canada, with Australia and the United Kingdom, is expected to be among the first of the advanced economies to emerge from recession, close its output gap and return to a normal rate of economic growth. But it will likely be close to a decade before conditions normalize in the mega economies of the United States, Europe and Japan, a report says.
By analyzing business new orders data, a key indicator of growth, Goldman Sachs economists Peter Berezin and Alex Kelston said Canada, Australia and the U.K. would likely return to their long-term trend rate of economic growth sometime in the second half of 2010 or early 2011.
Their output gaps -- the difference between actual and potential output -- would likely close between 2013 and 2015.
On the other hand, the United States and Europe were not expected to return to trend growth until 2011, with output likely to run under capacity until 2017. Japan, while returning to a trend rate of growth sooner, was not expected to close its output gap until 2019.
Not all believe the U.S. juggernaut will lag others in recovery. Bill Cheney, the chief economist at MFC Global Investment Management in Boston said the U.S. was the first to fall into recession and it would likely lead the world back out.
Nariman Behravesh, the chief economist at IHS Global Insight said China and the U.S. would likely lead the world out of recession, with Europe lagging behind.
This sentiment falls in line with U.S. government expectations. Douglas Elmendorf, the director of the Congressional Budget Office said in a testimony to the House Budget Committee on Thursday that the economy's output gap would average 7% of gross domestic product, equivalent to about US$1-trillion, in 2009-10. However, he said the U.S. would close this output gap by 2013.
While some countries are expected to take longer than others to make a full recovery, Mr. Berezin and Mr. Kelston said it appeared almost all major economies had already experienced their worst quarter of GDP in either the fourth quarter of 2008 or the first quarter of this year.
"This is important in as much as our research suggests that equity markets tend to bottom and equity volume tends to peak around the time when growth is at its worst," they said. "This supports our strategists' view that equities should continue to grind higher in the months ahead."
The report predicted the time taken for countries to return to their trend rate of growth and close their output gap would have a huge bearing on asset prices.
"Countries that are among the first to close their output gaps are also likely to experience foreign exchange appreciation," the Goldman economists said.
Emerging market economies were likely to return to trend growth an average six months before advanced economies. These countries are also expected to close their output gaps almost two years before developed nations.
However, conditions across the emerging markets will differ. For example, Asian economies are expected to rebound before those in Eastern Europe, while Latin America will likely recover before Mexico.
Friday, May 22, 2009
Thursday, May 21, 2009
Financial Update May 21, 2009
New numbers give hope for early recovery
TSX+131.49
DOW -52.81
Dollar +1.21c to 87.69USD the strong performance on equity and commodity markets energized the Canadian dollar
Oil +$1.94 to $62.04US per barrel
Gold +$10.70 to $937.40USD per ounce
Canadian 5 yr bond yields -.01bps to 2.16
http://www.financialpost.com/markets/market-data/money-yields-can_us.html?tmp=yields-can_us
New numbers give hope for early recovery
JULIAN BELTRAME
THE CANADIAN PRESS
OTTAWA -- The hair-raising plunge in the world and Canadian economies this winter is showing signs of levelling off as new evidence emerged yesterday pointing to improving conditions.
Economic growth is still months away, say economists, but with each "less bad'' indicator that is posted, fear of continued free-fall is being replaced by cautious optimism.
"I'm in the glass half-full camp,'' said Bank of Montreal deputy chief economist Douglas Porter. "The way the financial markets are going, I think it's quite possible we'll see a recovery sooner than the end of the year. It seems the optimism is becoming more infectious around the world, and that's a good thing.''
The glass half-empty camp argues that financial markets, while much improved, remain risk adverse and that the recovery may be too dependent on temporary massive government stimulus to be sustained.
Yesterday saw more reasons to support a growing consensus that sees global economies starting to come out of the nightmare of the past few months.
* Canada's inflation rate fell to a near 15-year low of 0.4 per cent in April, a clear signal of economic weakness but because the plunge was due to a single-factor -- lower gasoline prices compared to last year -- the steep drop was not worrisome.
* The country's leading indicator of future economic activity rose 0.5 per cent last month over March, the first sign of life in eight months.
* As significant, a survey of 220 fund managers by Bank of America-Merrill Lynch showed the bulls are waking from their slumber, with 57 per cent of managers forecasting a stronger global economy in the next 12 months.
"The unrelenting gloom of a mere three months ago has been replaced by a fairly typical early-cyclical sentiment, with the only hint of potential irrational exuberance in emerging markets,'' the global investment bank said.
The May survey showed that fund managers are still reluctant to jump into the market with both feet as asset allocations remain underweight in securities by six per cent, but that is less than the minus-17 per cent number found in the April survey.
Merrill Lynch analysts said there is still a risk of "too much, too soon'' with the stock markets rally of the past two months, but noted that unlike last fall and early 2009, investors now appear willing to shrug off bad news in expectation the economy will indeed recover.
The past month has seen the emergence of a number of so-called "green shoots'' that point to an improving economic landscape.
After a correction last week, Toronto's stock exchange was back over the 10,000-point line this week.
More bad news is on the way as countries start reporting first-quarter gross domestic product retreats in the next few weeks.
Japan said yesterday its economy contracted a massive 15.2 per cent, the most since it began to keep records in 1955.
The Bank of Canada forecasts Canada's first quarter GDP contraction will top seven per cent when all the data is available in two weeks, also the worst performance since records began in 1961.
But these numbers represent a rear-view mirror of the economy, say analysts, something markets have already left behind.
Economists also judged that the Bank of Canada is now less likely to resort to extraordinary measures because the risk of further steep contraction has diminished.
In a speech Tuesday, Bank of Canada deputy governor John Murray said the bank's action of dropping the policy rate to 0.25 per cent -- and vowing to keep it there for the next year -- has succeeded in improving credit.
TSX+131.49
DOW -52.81
Dollar +1.21c to 87.69USD the strong performance on equity and commodity markets energized the Canadian dollar
Oil +$1.94 to $62.04US per barrel
Gold +$10.70 to $937.40USD per ounce
Canadian 5 yr bond yields -.01bps to 2.16
http://www.financialpost.com/markets/market-data/money-yields-can_us.html?tmp=yields-can_us
New numbers give hope for early recovery
JULIAN BELTRAME
THE CANADIAN PRESS
OTTAWA -- The hair-raising plunge in the world and Canadian economies this winter is showing signs of levelling off as new evidence emerged yesterday pointing to improving conditions.
Economic growth is still months away, say economists, but with each "less bad'' indicator that is posted, fear of continued free-fall is being replaced by cautious optimism.
"I'm in the glass half-full camp,'' said Bank of Montreal deputy chief economist Douglas Porter. "The way the financial markets are going, I think it's quite possible we'll see a recovery sooner than the end of the year. It seems the optimism is becoming more infectious around the world, and that's a good thing.''
The glass half-empty camp argues that financial markets, while much improved, remain risk adverse and that the recovery may be too dependent on temporary massive government stimulus to be sustained.
Yesterday saw more reasons to support a growing consensus that sees global economies starting to come out of the nightmare of the past few months.
* Canada's inflation rate fell to a near 15-year low of 0.4 per cent in April, a clear signal of economic weakness but because the plunge was due to a single-factor -- lower gasoline prices compared to last year -- the steep drop was not worrisome.
* The country's leading indicator of future economic activity rose 0.5 per cent last month over March, the first sign of life in eight months.
* As significant, a survey of 220 fund managers by Bank of America-Merrill Lynch showed the bulls are waking from their slumber, with 57 per cent of managers forecasting a stronger global economy in the next 12 months.
"The unrelenting gloom of a mere three months ago has been replaced by a fairly typical early-cyclical sentiment, with the only hint of potential irrational exuberance in emerging markets,'' the global investment bank said.
The May survey showed that fund managers are still reluctant to jump into the market with both feet as asset allocations remain underweight in securities by six per cent, but that is less than the minus-17 per cent number found in the April survey.
Merrill Lynch analysts said there is still a risk of "too much, too soon'' with the stock markets rally of the past two months, but noted that unlike last fall and early 2009, investors now appear willing to shrug off bad news in expectation the economy will indeed recover.
The past month has seen the emergence of a number of so-called "green shoots'' that point to an improving economic landscape.
After a correction last week, Toronto's stock exchange was back over the 10,000-point line this week.
More bad news is on the way as countries start reporting first-quarter gross domestic product retreats in the next few weeks.
Japan said yesterday its economy contracted a massive 15.2 per cent, the most since it began to keep records in 1955.
The Bank of Canada forecasts Canada's first quarter GDP contraction will top seven per cent when all the data is available in two weeks, also the worst performance since records began in 1961.
But these numbers represent a rear-view mirror of the economy, say analysts, something markets have already left behind.
Economists also judged that the Bank of Canada is now less likely to resort to extraordinary measures because the risk of further steep contraction has diminished.
In a speech Tuesday, Bank of Canada deputy governor John Murray said the bank's action of dropping the policy rate to 0.25 per cent -- and vowing to keep it there for the next year -- has succeeded in improving credit.
Wednesday, May 20, 2009
Financial Update for May 20, 2009
TSX back in rally mode as oil hits US$60; N.Y. tepid on construction data
"We're into the third month of a very powerful rally - this could go on for months," observed Paul Thornton, investment adviser at Global Maxfin Capital. "This is going to be driven higher by the enormous amounts of cash that have been on the sidelines - people are afraid of missing this rally and the institutions have been big buyers."
TSX+338.10 to 10,100.95 reclaiming last week's losses, as higher oil prices boosted energy issues and as the TSX caught up with a rise by U.S. stocks on Monday when the TSX was closed.
DOW -29.23
Dollar +1.67c to 86.48USD the strong performance on equity and commodity markets energized the Canadian dollar
Oil +$2.69 + $.58 to $60.10US per barrel
Gold +$5 to $926.70USD per ounce
Canadian 5 yr bond yields +.04bps to 2.16
http://www.financialpost.com/markets/market-data/money-yields-can_us.html?tmp=yields-can_us
The yield, rate of return on your bond, can be read through a yield curve, which is the pattern of yields on bonds. This increase in bond yield is something to watch. If the bond yield continues to go up, the spread will continue to shrink and this could be a trigger for interest rates to rise
April Uptick
National Post Published: Saturday, May 16, 2009
The Canadian Real Estate Association said this week that the rebound in home sales and prices for April was stronger than expected. Seasonally adjusted national sales climbed 11.2% from March, the largest month-over-month gain in more than five years. The number of homes that changed hands (34,838), was higher than in any of the prior seven months.
Calgary led the rebound, with a 31% gain in sales over March, followed by Vancouver (30%), Montreal (15%) and Toronto (10%). Sales were up from March levels in 70% of markets across the country. Actual sales of 43,473 in April was down 11.8% from the same month a year ago.
The average sale price of $306,366 is 3.2% below April, 2008's, average. Inventory numbers were down 1.8%, to their lowest level since June, 2006, and 16.4% below the peak in May, 2008. The supply-versus-demand ratio is more balanced now in British Columbia, Alberta, Ontario and Quebec.
Home Depot beats estimates Bloomberg News Published: Tuesday, May 19, 2009
Home Depot Inc., the world's largest home-improvement retailer, posted profit that exceeded analysts' estimates after the company reduced costs.
Net income rose to US$514-million, or 30 U.S. cents a share, from US$356-million, or 21 U.S. cents, a year earlier, the Atlanta-based company said on Tuesday in a statement. Sales fell 9.7% to US$16.2 billion in the three months ended May 3.
Excluding some items, Home Depot's profit was 35 U.S. cents a share. Analysts anticipated earnings on that basis of 29 U.S. cents from revenue of US$15.8 billion, the average of estimates compiled by Bloomberg.
Sales in stores open at least a year fell 10.2% in the period. Colin McGranahan, an analyst with Sanford C. Bernstein & Co. in New York, estimated a decline of 11.7%.
Lowe's Cos., the company's smaller rival, reported first-quarter earnings on Monday that also topped analysts' estimates as it curbed discounts and boosted sales of more-profitable plants and flowers.
Couple pay 1p a month for mortgage after rates slashed
A couple are paying just 1p a month on their mortgage after the Bank of England slashed interest rates
Daily Telegraph
Ben Cameron and his wife Nicola are being charged the nominal sum after signing up for an interest-only tracker deal in December 2007.
Their mortgage with Cheltenham & Gloucester tied their payments to 1.01 per cent below the base rate, which then stood at 5.5 per cent.
Since then it has fallen to 0.5 per cent, cutting their monthly bill from around £1,500 ($2,674) to zero.
But the couple from Hampton, south west London are being charged 1p because their building society's computers cannot deal with payments of nothing.
Their case highlights the tens of thousands of homeowners who have had their repayments slashed by the series of rate cuts imposed by the Bank in an attempt to stimulate lending. Interest rates have been reduced six times since October last year.
But while most people who took out tracker deals pegged below the base rate are still spending hundreds of pounds a month to pay off the capital on their homes, the Camerons' interest-only deal means they are enjoying a zero interest loan.
Mr Cameron, 37, an estate agent, said that they were keeping the money they have saved to put more equity in their home when their mortgage deal comes up for renewal. They had originally paid a 20 per cent deposit on the £400,000 property.
"We fell incredibly lucky, we almost didn't go for it," he told the Evening Standard. "We look at our mortgage statements now and they look ridiculous, it's fantastic." The couple are expecting their first baby in June.
Since rates began falling lenders have withdrawn all tracker deals that are tied below the base rate. The most attractive tracker mortgage currently on the market is 2.39 per cent above the Bank's rate.
Staying alive: As recession deepens, businesses keep bankruptcy at bay
By Julian Beltrame, The Canadian Press
OTTAWA - The ability of Canadian businesses to survive the worst recession in decades is giving hope that the rebound from current massive job losses will be stronger than widely expected.
One of the biggest surprises of the downturn - unique to Canada - is that as the economy has slumped, the number of businesses declaring bankruptcy has also declined.
This has hardly ever happened before and although Canada is only seven months into a recession expected to last another half-year, it suggests that the corporate destruction of past recessions won't be a major factor this time around.
"This is the story of the recession so far," Benjamin Tal of CIBC World Markets said Tuesday.
"The recession is not over, so I would expect to see (business bankruptcy) numbers rising before it is over. But the fact we're starting from a very low point suggests that the number will not be very high compared to previous recessions."
The federal Office of the Superintendent of Bankruptcy reported last week that insolvencies in March totalled 14,244, up 51 per cent from March of last year. But while swelling numbers of individuals succumbed to their debts, business bankruptcies were down 10 per cent.
By comparison, five months into the downturns of 1982 and 1992 corporate bankruptcies were 15 to 20 per cent higher than pre-recession levels, Tal said in an analysis.
In the United States, he added, business bankruptcies now are about 40 per cent higher than a year ago.
For the first three months of 2009 - in which the Bank of Canada estimates the economy contracted at an annualized rate of 7.3 per cent, the worst on record - business bankruptcies were actually down 14 per cent from the corresponding period in 2008.
Not all Canadian businesses have been fortunate. This year has seen several high-profile Canadian bankruptcy filings, notably Nortel Networks (TSX: NT.TO) and AbitibiBowater (TSX: ABH.TO).
And consumer insolvencies were up 57 per cent in March over a year ago.
However, Tal says Canadian businesses, after years of profit, entered the recession with plenty of cash. As well, many have aggressively downsized - laying off workers to cut operating costs. In fact, over 300,000 jobs have disappeared in the past six months.
While that is bad news for workers, Tal says it portends well for the recovery, which most economists, including the Bank of Canada, forecast will begin late in 2009.
Fewer corporate bankruptcies could result in a quicker rebound in the employment market, which normally trails recoveries, says Tal.
"There's been a little bit of pre-emptive downsizing that is making the situation worse now, but it means the recovery will be faster because it is much easier to re-hire when you still exist," he observed.
Tuesday brought another indication that Canada is surviving the recession better than its southern neighbour.
Canada Mortgage and Housing Corp. projected the recession will cause housing starts to fall about 33 per cent this year to 141,900, but predicted that building will edge up in subsequent years - although not to the 200,000-plus rates seen in the past several years.
While that shows significant weakness, it is far ahead of the U.S. situation, where starts have crumbled to one-quarter of pre-recession levels. Nor are the Canadian numbers far off the demographic fundamentals, including population growth.
"Housing market activity will begin to strengthen in 2010 as the Canadian economy recovers, bringing housing starts more in line with demographic fundamentals over the forecast period," said CMHC chief economist Bob Dugan.
Dugan forecasts housing starts in the 150,000 to 180,000 range over the next four years.
"We're into the third month of a very powerful rally - this could go on for months," observed Paul Thornton, investment adviser at Global Maxfin Capital. "This is going to be driven higher by the enormous amounts of cash that have been on the sidelines - people are afraid of missing this rally and the institutions have been big buyers."
TSX+338.10 to 10,100.95 reclaiming last week's losses, as higher oil prices boosted energy issues and as the TSX caught up with a rise by U.S. stocks on Monday when the TSX was closed.
DOW -29.23
Dollar +1.67c to 86.48USD the strong performance on equity and commodity markets energized the Canadian dollar
Oil +$2.69 + $.58 to $60.10US per barrel
Gold +$5 to $926.70USD per ounce
Canadian 5 yr bond yields +.04bps to 2.16
http://www.financialpost.com/markets/market-data/money-yields-can_us.html?tmp=yields-can_us
The yield, rate of return on your bond, can be read through a yield curve, which is the pattern of yields on bonds. This increase in bond yield is something to watch. If the bond yield continues to go up, the spread will continue to shrink and this could be a trigger for interest rates to rise
April Uptick
National Post Published: Saturday, May 16, 2009
The Canadian Real Estate Association said this week that the rebound in home sales and prices for April was stronger than expected. Seasonally adjusted national sales climbed 11.2% from March, the largest month-over-month gain in more than five years. The number of homes that changed hands (34,838), was higher than in any of the prior seven months.
Calgary led the rebound, with a 31% gain in sales over March, followed by Vancouver (30%), Montreal (15%) and Toronto (10%). Sales were up from March levels in 70% of markets across the country. Actual sales of 43,473 in April was down 11.8% from the same month a year ago.
The average sale price of $306,366 is 3.2% below April, 2008's, average. Inventory numbers were down 1.8%, to their lowest level since June, 2006, and 16.4% below the peak in May, 2008. The supply-versus-demand ratio is more balanced now in British Columbia, Alberta, Ontario and Quebec.
Home Depot beats estimates Bloomberg News Published: Tuesday, May 19, 2009
Home Depot Inc., the world's largest home-improvement retailer, posted profit that exceeded analysts' estimates after the company reduced costs.
Net income rose to US$514-million, or 30 U.S. cents a share, from US$356-million, or 21 U.S. cents, a year earlier, the Atlanta-based company said on Tuesday in a statement. Sales fell 9.7% to US$16.2 billion in the three months ended May 3.
Excluding some items, Home Depot's profit was 35 U.S. cents a share. Analysts anticipated earnings on that basis of 29 U.S. cents from revenue of US$15.8 billion, the average of estimates compiled by Bloomberg.
Sales in stores open at least a year fell 10.2% in the period. Colin McGranahan, an analyst with Sanford C. Bernstein & Co. in New York, estimated a decline of 11.7%.
Lowe's Cos., the company's smaller rival, reported first-quarter earnings on Monday that also topped analysts' estimates as it curbed discounts and boosted sales of more-profitable plants and flowers.
Couple pay 1p a month for mortgage after rates slashed
A couple are paying just 1p a month on their mortgage after the Bank of England slashed interest rates
Daily Telegraph
Ben Cameron and his wife Nicola are being charged the nominal sum after signing up for an interest-only tracker deal in December 2007.
Their mortgage with Cheltenham & Gloucester tied their payments to 1.01 per cent below the base rate, which then stood at 5.5 per cent.
Since then it has fallen to 0.5 per cent, cutting their monthly bill from around £1,500 ($2,674) to zero.
But the couple from Hampton, south west London are being charged 1p because their building society's computers cannot deal with payments of nothing.
Their case highlights the tens of thousands of homeowners who have had their repayments slashed by the series of rate cuts imposed by the Bank in an attempt to stimulate lending. Interest rates have been reduced six times since October last year.
But while most people who took out tracker deals pegged below the base rate are still spending hundreds of pounds a month to pay off the capital on their homes, the Camerons' interest-only deal means they are enjoying a zero interest loan.
Mr Cameron, 37, an estate agent, said that they were keeping the money they have saved to put more equity in their home when their mortgage deal comes up for renewal. They had originally paid a 20 per cent deposit on the £400,000 property.
"We fell incredibly lucky, we almost didn't go for it," he told the Evening Standard. "We look at our mortgage statements now and they look ridiculous, it's fantastic." The couple are expecting their first baby in June.
Since rates began falling lenders have withdrawn all tracker deals that are tied below the base rate. The most attractive tracker mortgage currently on the market is 2.39 per cent above the Bank's rate.
Staying alive: As recession deepens, businesses keep bankruptcy at bay
By Julian Beltrame, The Canadian Press
OTTAWA - The ability of Canadian businesses to survive the worst recession in decades is giving hope that the rebound from current massive job losses will be stronger than widely expected.
One of the biggest surprises of the downturn - unique to Canada - is that as the economy has slumped, the number of businesses declaring bankruptcy has also declined.
This has hardly ever happened before and although Canada is only seven months into a recession expected to last another half-year, it suggests that the corporate destruction of past recessions won't be a major factor this time around.
"This is the story of the recession so far," Benjamin Tal of CIBC World Markets said Tuesday.
"The recession is not over, so I would expect to see (business bankruptcy) numbers rising before it is over. But the fact we're starting from a very low point suggests that the number will not be very high compared to previous recessions."
The federal Office of the Superintendent of Bankruptcy reported last week that insolvencies in March totalled 14,244, up 51 per cent from March of last year. But while swelling numbers of individuals succumbed to their debts, business bankruptcies were down 10 per cent.
By comparison, five months into the downturns of 1982 and 1992 corporate bankruptcies were 15 to 20 per cent higher than pre-recession levels, Tal said in an analysis.
In the United States, he added, business bankruptcies now are about 40 per cent higher than a year ago.
For the first three months of 2009 - in which the Bank of Canada estimates the economy contracted at an annualized rate of 7.3 per cent, the worst on record - business bankruptcies were actually down 14 per cent from the corresponding period in 2008.
Not all Canadian businesses have been fortunate. This year has seen several high-profile Canadian bankruptcy filings, notably Nortel Networks (TSX: NT.TO) and AbitibiBowater (TSX: ABH.TO).
And consumer insolvencies were up 57 per cent in March over a year ago.
However, Tal says Canadian businesses, after years of profit, entered the recession with plenty of cash. As well, many have aggressively downsized - laying off workers to cut operating costs. In fact, over 300,000 jobs have disappeared in the past six months.
While that is bad news for workers, Tal says it portends well for the recovery, which most economists, including the Bank of Canada, forecast will begin late in 2009.
Fewer corporate bankruptcies could result in a quicker rebound in the employment market, which normally trails recoveries, says Tal.
"There's been a little bit of pre-emptive downsizing that is making the situation worse now, but it means the recovery will be faster because it is much easier to re-hire when you still exist," he observed.
Tuesday brought another indication that Canada is surviving the recession better than its southern neighbour.
Canada Mortgage and Housing Corp. projected the recession will cause housing starts to fall about 33 per cent this year to 141,900, but predicted that building will edge up in subsequent years - although not to the 200,000-plus rates seen in the past several years.
While that shows significant weakness, it is far ahead of the U.S. situation, where starts have crumbled to one-quarter of pre-recession levels. Nor are the Canadian numbers far off the demographic fundamentals, including population growth.
"Housing market activity will begin to strengthen in 2010 as the Canadian economy recovers, bringing housing starts more in line with demographic fundamentals over the forecast period," said CMHC chief economist Bob Dugan.
Dugan forecasts housing starts in the 150,000 to 180,000 range over the next four years.
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