April 2011 Canadian Economic Fundamentals

[Ally]

Canadians take Canada's debt warning to heart




Canadians appear to have gotten the message Mark Carney was sending when the Bank of Canada governor went public last year with his concerns about rising levels of household debt.




In the months since his remarks ` which were augmented by changes to lending rules by Ottawa ` growth in consumer borrowing has noticeably slowed, according to Royal Bank of Canada and credit-counselling agencies. A clearer picture will be available when the banks report their second-quarter earnings next month.





Read the full article here.

 

[Ally]

Canada losting capacity to compete: TD




OTTAWA` Canada`s role as a major exporting nation is withering at the hand of the soaring loonie, dismal productivity gains and rising unit labour costs, TD Economics warned in a report Monday.




It adds that without improvements in the country`s competitiveness, Canada`s share of world exports will continue to decline and, so too, will the higher wages and jobs that economic activity now provides.




Alarmingly, the report points out that as the loonie took flight in recent years, no other country lost as much market share in the United States as Canada. The U.S. is the world`s biggest economy and Canada`s largest trading partner.





Read the full article here.

 

[Ally]

How to avoid hidden mortgage costs




If Canadians shopped for cars the same way we shop for mortgages, most of us would be driving around in old beaters that would be better used as lawn ornaments. That`s because all of our focus would be on price (interest rate), and not on potential repair costs (interest rate penalties).




If choosing a car based solely on its purchase price seems short-sighted to most of us, why do we make this mistake with mortgages? It`s probably because most people just don`t think they will need to break their mortgage contract early. But with so many variables ` such as job transfers, an expanding family, an inheritance, the chance to buy your dream home, divorce, job loss ` can you ever really be sure?




If you do need to pay out your fixed-rate mortgage early, you may be shocked when you see the penalty charged by your lender, and even more so when you realize that you could have avoided most of that cost by simply choosing another lender offering the same interest rate. This column will use four different hypothetical borrowers to compare how fixed-rate mortgage penalties are calculated. In each case, we`ll figure out the extra penalty charged by some lenders, and then calculate the reduction in their interest rate necessary to make the overall cost of their mortgage equivalent to the cost of borrowing from other lenders who use more reasonable penalty calculations. (If that sounds confusing, fear not. It`ll become clearer when I show you the numbers.)





Read the full article here.

 

[Ally]

Canada's home resale price rises in February, report says





Canadian home resale prices rose in February for a third consecutive month, buoyed by continued strength in Vancouver, according to a report on Wednesday.







The Teranet-National Bank Composite House Price Index, which measures price changes for repeat sales of single-family homes in six metropolitan areas, showed overall prices were up 0.1 percent in February from January.







Prices also rose in Montreal and Ottawa, but dipped in Calgary, Halifax and Toronto.



Read the full article here.

 

[Ally]

Loonie to outperform when U.S. turns




LONDON ` The Canadian dollar is well placed to take over from the Australian dollar as the best performing commodity currency once the U.S. economy and expectations of Federal Reserve policy tightening pick up.




The commodity-backed Canadian and Australian dollars tend to benefit in times of accelerating global economic growth but the higher-yielding and China-linked Aussie has outperformed and is expected to continue to do so in the near term.




However, analysts say there may be limited room for further gains in the Aussie which has risen 6 percent against the U.S. dollar this year to its highest in nearly three decades.







Given Canada`s close geographic and trade links to the United States, an improved U.S. economy could be the trigger for the Canadian dollar to outshine other commodity currencies.





Read the full article here.

 

[Ally]

Ottawa wants a piece of capital gains splits




If a proposal from the recently shelved federal budget is any indication, the Department of Finance and the Canada Revenue Agency have begun to target entrepreneurs and small businesses in their crackdown on high-net-worth taxpayers by attacking capital gains splitting with minor children.




In an article for CCH Estate Planner, tax lawyer Michael Goldberg of Toronto-based Minden Gross LLP explains how the existing $750,000 capital gains exemption for shares of small business corporations has become "something of a sacred cow."




But as financial planners try to multiply the exemption to include family members -each with their own additional $750,000 exemption -it appears the government is becoming annoyed. An indication comes from Budget Resolution No. 23, which proposed measures to extend the "kiddie tax" to capital gains realized by minor children.





Read the full article here.

 

[Ally]

Why the world oil supply will decline faster than anyone expects





The man who invented peak oil, M. King Hubbert, got a few things wrong. Indeed, he was too optimistic.


pointed out some problems with the Hubbert Curve in a presentation this week at the 3rd Biophysical







Hubbert expected nuclear power to take over before oil reached peak. He also expected more development of wind, water and solar power. Finally, he didn't count on the rise of China and India.





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[Ally]

Selling house not just about the highest price




The number one question you need to ask yourself if you're selling your home this spring is: How do I net the most money?




It's not how do I get the most money for my home. It's how do I keep the most money in my pocket after paying all my expenses, including commissions and fees.




Discounters are popping up everywhere now that they can access the Multiple Listing Service. Then there's still the full-service broker who promises a better price and ultimately more money in your pocket.




A settlement last year between the Competition Bureau and the Canadian Real Estate Association, which represents about 100 boards across the country and almost 100,000 agents, allows consumers to have "a mere listing" on the MLS. Being on the MLS system is key since about 90% of transactions are handled by organized real estate.





Read the full article here.

 

[Ally]

A stock, a bond - a home is both




You walk into the open house, take one look and say to yourself: This is it. It's the house I have to live in. Where do I pay? A bidding war? I'm in.




Over my years of buying houses, I never bought one that did not have that frisson moment, that thrill of finding a place so suited to my wants. Indeed, I have in the past decided that I wanted to buy a house in what seems, in retrospect, to be nanoseconds. (By contrast, I've taken weeks to decide on the right pair of shoes.)




It is no way to make an "investment," to be sure. But, as I've previously discussed in this space, buying a house is perhaps the most uninvestment-like of investments.





Read the full article here.