The best thing about 2008 is that there is only 8 ½ months left-top investment banker, name withheld
· TSX -226.55 Canadian Press The Toronto stock market ended with a triple-digit loss
Friday as disappointing earnings from usually reliable General Electric Co. cast a shadow
over stock markets and made investors fret over the quality of upcoming quarterly
results
· Dow -256.66 Wall Street index futures were negative and overseas stock markets were
down after big U.S. bank Wachovia Corp. announced it is cutting its dividend and raising $7
billion in new capital after a first-quarter net loss of $350 million. Canadian Press
· Dollar -.44c to $ $97.71US
· Oil +$0.03 to $110.14 US per barrel demand for oil will slip in the coming months amid a
global economic downturn, but prices may remain high because of uncertainty over supply.
· Gold -$4.70 to $923.60US
Bond Rates: http://www.bankofcanada.ca/en/rates/bonds.html <http://www.bankofcanada.ca/en/rates/bonds.html>
Bloomberg news Subprime Mortgages have proved to be a bigger catastrophe for captains of the insurance industry than any natural disaster. American International Group Inc cut the 2007 cash bonus for chief executive Martin Sullivan by 42% as the world’s largest insurer reported its biggest quarterly loss in 89 years. Ambac Financial Group Inc denied Robert Genader any bonus, slashed his cash compensation by 71% and then replaced him in Jan. Boards are holding CEO’s accountable for US$38 billion of subprime losses by slicing their salaries and bonuses by an average 20%. That compares with an average 8.2% increase for the CEO’s in 2005, when directors excused them for US$41.1 billion of costs from Hurricane Katrina
Housing prices inch up 0.3% in February: StatsCan
Last Updated: Friday, April 11, 2008 10:05 AM ET
CBC News <http://www.cbc.ca/news/credit.html>
New housing prices across Canada increased 0.3 per cent in February owing to rising labour and material costs, Statistics Canada reported Friday.
On a year-over-year basis, contractors' selling prices increased 6.2 per cent, down from the 6.5 per cent increase observed in February.
"The increase in new housing prices in Canada slowed in February, following two consecutive months in which the rate of growth was gaining speed," the federal agency said. "This deceleration continues the downward trend that started in September 2006."
Saskatchewan's strong housing market led the country, with builders citing the high cost of materials and a notable labour shortage, Statistics Canada said. Saskatoon recorded an annual price increase of 58.3 per cent — the city's largest recorded increase.
In monthly comparisons, new home prices in Saskatoon rose 4.3 per cent in February over January. Regina's new housing prices in February climbed seven per cent over January.
New February home prices dropped 0.9 per cent in Edmonton and 0.3 per cent in Calgary from the previous month. The federal agency said the slowing housing market is shifting.
"With some migrants leaving the province, there are many resale houses on the market, making for slower new housing sales," Statistics Canada said.
Material, labour and land development costs helped drive up new home prices in Nova Scotia and Newfoundland and Labrador to record levels. St. John's recorded a year-over-year increase of 12.2 per cent while Halifax prices climbed 11.4 per cent.
New housing price increases
February 2007 - February 2008 (%)
January 2008 - February 2008 (%)
Canada
6.2
0.3
St. John's
12.2
2.9
Halifax
11.4
0
Charlottetown
2.4
0
Saint John, Fredericton and Moncton
2.1
-0.4
Quebec
4.0
0.5
Montreal
4.7
1.0
Ottawa–Gatineau
3.3
1.3
Toronto and Oshawa
4.4
0.3
Hamilton
3.6
0.8
St. Catharines–Niagara
5.3
1.9
Kitchener
2.0
-0.1
London
3.7
0
Windsor
0.3
0.3
Greater Sudbury and Thunder Bay
6.3
1.2
Winnipeg
14.5
0.1
Regina
28.6
7.0
Saskatoon
58.3
4.3
Calgary
5.2
-0.3
Edmonton
14.8
-0.9
Vancouver
6.6
0.2
Victoria
1.6
0
Monday, April 14, 2008
Friday, April 11, 2008
Central Bank Expected to Lower Interest Rates 150 basis points to 2 percent by July
That would be three consecutive rate decreases of 50 bps beginning April 22nd. June 10th and July 15th are the next announcements.
· TSX +159.03 (Reuters) The Toronto Stock Exchange had an afternoon rally to help the TSX finish the day with triple-digit gains, despite declines in gold and mining stocks. The biggest drop was in MacDonald Dettwiler and Associates shares following the government's unprecedented move to block the sale of its satellite unit to rocket-maker Alliant Techsystems .
· Dow + 54.72 Wall Street investors shrugged off weak earnings reports to focus on optimism at major discount retailers. Wal-Mart Stores Inc. and Costco Wholesale Corp. reported sharp increases and indicated they expect sales to keep rising.
· Dollar -.01c to $ $98.15US
· Oil -$0.76 to close at $110.11 US per barrel Gold -5.30to $928.38US
Bond Rates: http://www.bankofcanada.ca/en/rates/bonds.html <http://www.bankofcanada.ca/en/rates/bonds.html>
April 10 (Bloomberg) -- Canada's February trade surplus <http://www.bloomberg.com/apps/quote?ticker=CATBTOTB%3AIND> widened to the largest in nine months, led by increased exports of passenger cars and energy. The surplus widened to C$4.94 billion from a revised C$2.78 billion in January, Statistics Canada said <http://www.statcan.ca/Daily/English/080410/d080410a.htm> today in Ottawa. Exports rose 3.8 percent, the fastest in 11 months, as energy <http://www.bloomberg.com/apps/quote?ticker=CATBNRGX%3AIND> sales abroad rose to a record.
Canada, the world's eighth-biggest economy, is benefiting from high demand <http://www.bloomberg.com/apps/quote?ticker=CMCIPI3M%3AIND> for commodities such as oil and metals, helping the country ride out a slump in manufacturing. Still, the outlook for exports is likely to worsen in future months as the U.S. economic slowdown crimps demand for Canadian products, said Jacqui Douglas <http://search.bloomberg.com/search?q=Jacqui+Douglas&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1> , an economist at TD Securities in Toronto.
``I don't think the Bank of Canada is expecting this to continue,'' Douglas said of the widening surplus. ``The risk is that exports turn down sharply over the next few months.'' The central bank cut interest rates by half a point for the first time since 2001 on March 4, citing ``intensifying'' signs of a decline in exports on slower demand from the U.S. and the high Canadian currency.
TD Securities, a division of Toronto-Dominion Bank, expects the central bank to lower interest rates 150 basis points to 2 percent by July, starting with a 50 basis point reduction at the next announcement on April 22.
ABCP investors say they were duped, defrauded by financial community
Julian Beltrame, The Canadian Press
OTTAWA - The breakdown of the $32-billion asset-backed commercial paper system amounted to criminal fraud on "duped" innocent investors that no-one in Canada appears prepared to investigate or prosecute, a House of Commons committee was told Thursday.
"It's a free ride in Canada for financial crime," said Larry Elford, a former Alberta financial adviser who now heads an investment advocacy group.
"The law simply does not apply to the financial industry."
In the first public hearing on the financial markets crisis that unfolded from the U.S. subprime meltdown last summer, the House finance committee heard a litany of horror stories from investors unwittingly caught up in the secretive, arcane world of high finance.
Speaking in Toronto, Finance Minister Jim Flaherty said the commercial paper fiasco was more evidence that Canada's system of independent provincial and territorial regulators, such as the Ontario Securities Commission, does not work.
"We have 13 securities regulators in Canada, which, quite frankly, makes no sense and makes for a great deal of inefficiency," he said. "This another reason why we need to move forward with a national securities regulator in Canada."
But while several financial analysts at the committee hearings also said a national regulator would help, they cautioned that the new oversight body should be mandated to look after only the interests of investors.
"The current financial regulatory system is broken and offers no protection to Canadian investors," said Diane Urquhart, a Toronto-area independent financial analyst.
Elford said current provincial regulators have a conflict of interest and too close ties with the financial industry.
"They not only fail to protect consumers, but they give Canadians a false sense of security," said Elford. "We are sitting ducks. If one finds a law being broken, there is simply no police agency to call that does not have a conflict of interest."
Investors who say they have hundreds of thousands of dollars in savings in jeopardy told the legislators they were "duped" by financial institutions that advertised their investment vehicles as safe, and that they have lost faith in the regulatory bodies.
One Victoria investor, Wynne Miles, 58, who described herself as self-employed and with no pension, had placed her life savings in what she supposed were government treasury bills, only to find out in July they had been transferred into non-bank ABCP without her knowledge.
And retired Alberta farmer Murray Candlish told a similar story about how his $350,000 in savings was invested in a triple-A rated trust he was assured was as secure as the Canadian banking system.
"Now our dreams are slowly disappearing as the value of our investment erodes," Candlish told the committee.
The first-person testimonials held MPs from all four parties in thrall for most of the two hours and surprised some, who said they assumed investors knew what they were getting into.
"It's been like a red light going on for us," said Bloc Quebecois MP Paul Crete.
Crete said the finance committee has made the ABCP matter a priority for future hearings, which will begin after investors vote on a plan to settle issue on April 25.
"We have to have people from banks, regulators, others who can tell us why this crisis is there and what are the solutions to this problem."
Thursday's witnesses, who included investors and investment experts, had no trouble pinpointing the problem.
Even now, they said, the system is protecting itself, citing Tuesday's proposed "relief plan" by Canaccord Capital Inc. (TSX: CCI.TO <http://ca.finance.yahoo.com/q?s=CCI.TO> ) to repurchase up to $138 million of the debt held by 1,430 of its individual clients holding less than $1 million in the investment.
Miles points out that investor acceptance comes with strings. "The requirement that we waive our rights to sue is unacceptable," she said. "I feel as if I am being offered an ultimatum and that makes me very angry. We have been wronged." She said she will reject the offer if she was forced to waive her rights.
Some of the witnesses said that the system is so broken that eight months after the commercial paper was frozen, some Canadians still don't know that part of their investments may be in ABCP.
Liberal finance critic John McCallum, a former chief economist with the Royal Bank, said the allegations need to be investigated, but he was not prepared apportion blame at this time.
"I can't stand here today and say who's to blame, but we have heard disturbing allegations about regulators who may be in the pockets of the regulated," he said. "We need to find out what went wrong in this particular disaster and what we can do to make sure that future crises are less likely to happen."
That would be three consecutive rate decreases of 50 bps beginning April 22nd. June 10th and July 15th are the next announcements.
· TSX +159.03 (Reuters) The Toronto Stock Exchange had an afternoon rally to help the TSX finish the day with triple-digit gains, despite declines in gold and mining stocks. The biggest drop was in MacDonald Dettwiler and Associates shares following the government's unprecedented move to block the sale of its satellite unit to rocket-maker Alliant Techsystems .
· Dow + 54.72 Wall Street investors shrugged off weak earnings reports to focus on optimism at major discount retailers. Wal-Mart Stores Inc. and Costco Wholesale Corp. reported sharp increases and indicated they expect sales to keep rising.
· Dollar -.01c to $ $98.15US
· Oil -$0.76 to close at $110.11 US per barrel Gold -5.30to $928.38US
Bond Rates: http://www.bankofcanada.ca/en/rates/bonds.html <http://www.bankofcanada.ca/en/rates/bonds.html>
April 10 (Bloomberg) -- Canada's February trade surplus <http://www.bloomberg.com/apps/quote?ticker=CATBTOTB%3AIND> widened to the largest in nine months, led by increased exports of passenger cars and energy. The surplus widened to C$4.94 billion from a revised C$2.78 billion in January, Statistics Canada said <http://www.statcan.ca/Daily/English/080410/d080410a.htm> today in Ottawa. Exports rose 3.8 percent, the fastest in 11 months, as energy <http://www.bloomberg.com/apps/quote?ticker=CATBNRGX%3AIND> sales abroad rose to a record.
Canada, the world's eighth-biggest economy, is benefiting from high demand <http://www.bloomberg.com/apps/quote?ticker=CMCIPI3M%3AIND> for commodities such as oil and metals, helping the country ride out a slump in manufacturing. Still, the outlook for exports is likely to worsen in future months as the U.S. economic slowdown crimps demand for Canadian products, said Jacqui Douglas <http://search.bloomberg.com/search?q=Jacqui+Douglas&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1> , an economist at TD Securities in Toronto.
``I don't think the Bank of Canada is expecting this to continue,'' Douglas said of the widening surplus. ``The risk is that exports turn down sharply over the next few months.'' The central bank cut interest rates by half a point for the first time since 2001 on March 4, citing ``intensifying'' signs of a decline in exports on slower demand from the U.S. and the high Canadian currency.
TD Securities, a division of Toronto-Dominion Bank, expects the central bank to lower interest rates 150 basis points to 2 percent by July, starting with a 50 basis point reduction at the next announcement on April 22.
ABCP investors say they were duped, defrauded by financial community
Julian Beltrame, The Canadian Press
OTTAWA - The breakdown of the $32-billion asset-backed commercial paper system amounted to criminal fraud on "duped" innocent investors that no-one in Canada appears prepared to investigate or prosecute, a House of Commons committee was told Thursday.
"It's a free ride in Canada for financial crime," said Larry Elford, a former Alberta financial adviser who now heads an investment advocacy group.
"The law simply does not apply to the financial industry."
In the first public hearing on the financial markets crisis that unfolded from the U.S. subprime meltdown last summer, the House finance committee heard a litany of horror stories from investors unwittingly caught up in the secretive, arcane world of high finance.
Speaking in Toronto, Finance Minister Jim Flaherty said the commercial paper fiasco was more evidence that Canada's system of independent provincial and territorial regulators, such as the Ontario Securities Commission, does not work.
"We have 13 securities regulators in Canada, which, quite frankly, makes no sense and makes for a great deal of inefficiency," he said. "This another reason why we need to move forward with a national securities regulator in Canada."
But while several financial analysts at the committee hearings also said a national regulator would help, they cautioned that the new oversight body should be mandated to look after only the interests of investors.
"The current financial regulatory system is broken and offers no protection to Canadian investors," said Diane Urquhart, a Toronto-area independent financial analyst.
Elford said current provincial regulators have a conflict of interest and too close ties with the financial industry.
"They not only fail to protect consumers, but they give Canadians a false sense of security," said Elford. "We are sitting ducks. If one finds a law being broken, there is simply no police agency to call that does not have a conflict of interest."
Investors who say they have hundreds of thousands of dollars in savings in jeopardy told the legislators they were "duped" by financial institutions that advertised their investment vehicles as safe, and that they have lost faith in the regulatory bodies.
One Victoria investor, Wynne Miles, 58, who described herself as self-employed and with no pension, had placed her life savings in what she supposed were government treasury bills, only to find out in July they had been transferred into non-bank ABCP without her knowledge.
And retired Alberta farmer Murray Candlish told a similar story about how his $350,000 in savings was invested in a triple-A rated trust he was assured was as secure as the Canadian banking system.
"Now our dreams are slowly disappearing as the value of our investment erodes," Candlish told the committee.
The first-person testimonials held MPs from all four parties in thrall for most of the two hours and surprised some, who said they assumed investors knew what they were getting into.
"It's been like a red light going on for us," said Bloc Quebecois MP Paul Crete.
Crete said the finance committee has made the ABCP matter a priority for future hearings, which will begin after investors vote on a plan to settle issue on April 25.
"We have to have people from banks, regulators, others who can tell us why this crisis is there and what are the solutions to this problem."
Thursday's witnesses, who included investors and investment experts, had no trouble pinpointing the problem.
Even now, they said, the system is protecting itself, citing Tuesday's proposed "relief plan" by Canaccord Capital Inc. (TSX: CCI.TO <http://ca.finance.yahoo.com/q?s=CCI.TO> ) to repurchase up to $138 million of the debt held by 1,430 of its individual clients holding less than $1 million in the investment.
Miles points out that investor acceptance comes with strings. "The requirement that we waive our rights to sue is unacceptable," she said. "I feel as if I am being offered an ultimatum and that makes me very angry. We have been wronged." She said she will reject the offer if she was forced to waive her rights.
Some of the witnesses said that the system is so broken that eight months after the commercial paper was frozen, some Canadians still don't know that part of their investments may be in ABCP.
Liberal finance critic John McCallum, a former chief economist with the Royal Bank, said the allegations need to be investigated, but he was not prepared apportion blame at this time.
"I can't stand here today and say who's to blame, but we have heard disturbing allegations about regulators who may be in the pockets of the regulated," he said. "We need to find out what went wrong in this particular disaster and what we can do to make sure that future crises are less likely to happen."
Wednesday, April 9, 2008
Financial Update
Market sentiment was shaken by a report from the International Monetary Fund that forecast write-down losses related to the credit crisis could reach $945 billion.
· TSX -17.48 (Reuters) The Toronto Stock Exchange's main index snapped its six-day
winning streak and closed slightly lower on Tuesday, hurt by softer commodities and
recurrent worries over the impact of the U.S. economic slowdown.
· Dow -35.99
· Dollar -.39c to $ $98.69US
· Oil -$0.59 to close at $108.50 US per barrel Retail gasoline prices pulled back slightly
from record levels yesterday and gave some consumers a small break, but a new
government forecast said gas could reach as high as $4 US a gallon in the United States
during the summer driving season
· Gold -8.70 to $914US Shares of gold producers lost 1.7 percent as the price of bullion was
stung by profit-taking. Barrick Gold was among the day's biggest weighted decliners
Bond Rates: http://www.bankofcanada.ca/en/rates/bonds.html
Mortgage crisis 'in final innings,' CEO predicts
MARY ALTAFFER, THE ASSOCIATED PRESS
Joe Bel Bruno The Associated PressMorgan Stanley chief executive John Mack said yesterday that Wall Street is facing the most difficult conditions that he has seen in 40 years, but he feels the global credit crisis might be "in the final innings.''
Mack, who easily won re-election to Morgan Stanley's board along with 10 other directors, said at the investment bank's annual meeting that he still plans to "go slow'' because of the market's turbulence. The bank wrote down billions of dollars worth of securities linked to risky subprime mortgages and other debt since last year.
"We're keeping powder dry,'' he said. "We feel the risks on the market, the run on Bear Stearns, and we think it is important to have very liquid positions and we're working toward that.''
He expects more bad news will come out as the world's banks recover from the subprime mortgage crisis, particularly from "overseas and some small retail banks in this country.''
However, Mack said he thinks the market is turning and that could provide opportunity.
In fact, Mack said that Morgan Stanley is seeing opportunities in the same mortgage market that caused Wall Street's pain this year.
"I don't know if this is the bottom or close to the bottom, but at some point it will be wise to invest there,'' he said.
Mack faced a tough test at this year's annual meeting after three pension funds aligned themselves against the nomination of Morgan Stanley's slate of directors. However, all secured easy re-election, according to preliminary tallies.
Bill Patterson, executive director of CtW Investment Group, said more is needed to ensure Morgan Stanley and other banks don't take excessive risks.
· TSX -17.48 (Reuters) The Toronto Stock Exchange's main index snapped its six-day
winning streak and closed slightly lower on Tuesday, hurt by softer commodities and
recurrent worries over the impact of the U.S. economic slowdown.
· Dow -35.99
· Dollar -.39c to $ $98.69US
· Oil -$0.59 to close at $108.50 US per barrel Retail gasoline prices pulled back slightly
from record levels yesterday and gave some consumers a small break, but a new
government forecast said gas could reach as high as $4 US a gallon in the United States
during the summer driving season
· Gold -8.70 to $914US Shares of gold producers lost 1.7 percent as the price of bullion was
stung by profit-taking. Barrick Gold was among the day's biggest weighted decliners
Bond Rates: http://www.bankofcanada.ca/en/rates/bonds.html
Mortgage crisis 'in final innings,' CEO predicts
MARY ALTAFFER, THE ASSOCIATED PRESS
Joe Bel Bruno The Associated PressMorgan Stanley chief executive John Mack said yesterday that Wall Street is facing the most difficult conditions that he has seen in 40 years, but he feels the global credit crisis might be "in the final innings.''
Mack, who easily won re-election to Morgan Stanley's board along with 10 other directors, said at the investment bank's annual meeting that he still plans to "go slow'' because of the market's turbulence. The bank wrote down billions of dollars worth of securities linked to risky subprime mortgages and other debt since last year.
"We're keeping powder dry,'' he said. "We feel the risks on the market, the run on Bear Stearns, and we think it is important to have very liquid positions and we're working toward that.''
He expects more bad news will come out as the world's banks recover from the subprime mortgage crisis, particularly from "overseas and some small retail banks in this country.''
However, Mack said he thinks the market is turning and that could provide opportunity.
In fact, Mack said that Morgan Stanley is seeing opportunities in the same mortgage market that caused Wall Street's pain this year.
"I don't know if this is the bottom or close to the bottom, but at some point it will be wise to invest there,'' he said.
Mack faced a tough test at this year's annual meeting after three pension funds aligned themselves against the nomination of Morgan Stanley's slate of directors. However, all secured easy re-election, according to preliminary tallies.
Bill Patterson, executive director of CtW Investment Group, said more is needed to ensure Morgan Stanley and other banks don't take excessive risks.
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