March 2011 Canadian Economic Fundamentals
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Canada banking oasis
Banks in the United States and Europe are getting hit by bonus taxes and a welter of new regulation but here in Canada where policy makers see less need to penalize the sector, the Royal Bank of Canada and Toronto Dominion Bank on Thursday trounced earnings expectations with combined first quarter profit of $3.4-billion, driving their shares higher.
TD also boosted its dividend, the first of the big five to do so since the onset of the financial crisis and a major endorsement for the stability of the sector.
`The numbers were excellent,` said Paul Gardner, a portfolio manager at Toronto-based Avenue Investment Management, which has about $250-million in assets. `It`s the Canadian economy and the Canadian banking business that really drove this.`
Read the full article here.
Banks in the United States and Europe are getting hit by bonus taxes and a welter of new regulation but here in Canada where policy makers see less need to penalize the sector, the Royal Bank of Canada and Toronto Dominion Bank on Thursday trounced earnings expectations with combined first quarter profit of $3.4-billion, driving their shares higher.
TD also boosted its dividend, the first of the big five to do so since the onset of the financial crisis and a major endorsement for the stability of the sector.
`The numbers were excellent,` said Paul Gardner, a portfolio manager at Toronto-based Avenue Investment Management, which has about $250-million in assets. `It`s the Canadian economy and the Canadian banking business that really drove this.`
Read the full article here.
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Housing crisis 'inevitable' if prices outpace income
Canada`s hot housing market should cool down somewhat this year, according to a new report from BMO Capital Markets, which says the kind of correction some observers have been warning about is unlikely ` though not impossible, given the right circumstances.
The question of a correction comes down to whether increases in household incomes can keep up with rising home prices. If price rises outpace incomes, said BMO senior economist Sal Guatieri, `a correction would be inevitable.`
While incomes and average home prices kept pace with each other over most of the last three decades, both rising 5.7% a year, Guatieri said in the report that prices more than doubled in the decade to late 2007, and grew twice as fast as incomes from 2002 to 2007.
Read the full article here.
Canada`s hot housing market should cool down somewhat this year, according to a new report from BMO Capital Markets, which says the kind of correction some observers have been warning about is unlikely ` though not impossible, given the right circumstances.
The question of a correction comes down to whether increases in household incomes can keep up with rising home prices. If price rises outpace incomes, said BMO senior economist Sal Guatieri, `a correction would be inevitable.`
While incomes and average home prices kept pace with each other over most of the last three decades, both rising 5.7% a year, Guatieri said in the report that prices more than doubled in the decade to late 2007, and grew twice as fast as incomes from 2002 to 2007.
Read the full article here.
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Will modest tax breaks spur faster, better growth?
Will fairly modest tax incentives work to spur development in some of the languishing business areas scattered around Metro Vancouver?
We`re about to find out. My colleague Kelly Sinoki reports in a Vancouver Sun story accessible here that Coquitlam and Maple Ridge have joined Langley in following Surrey`s lead in this kind of tax policy experiment.
Surrey`s plan was adopted in response to the recession. It shaves a third off the usual development charges and promises a three-year property tax holiday for developments that meet its criteria.
Now Coquitlam and Maple Ridge plan to to vary this criteria somewhat to meet their own needs.
Read the full article here.
Will fairly modest tax incentives work to spur development in some of the languishing business areas scattered around Metro Vancouver?
We`re about to find out. My colleague Kelly Sinoki reports in a Vancouver Sun story accessible here that Coquitlam and Maple Ridge have joined Langley in following Surrey`s lead in this kind of tax policy experiment.
Surrey`s plan was adopted in response to the recession. It shaves a third off the usual development charges and promises a three-year property tax holiday for developments that meet its criteria.
Now Coquitlam and Maple Ridge plan to to vary this criteria somewhat to meet their own needs.
Read the full article here.
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Only a recession stands in the way of $200 oil: Jeff Rubin
Congratulations to Jeff Rubin, who predicted triple digit oil by the end of 2010 -- he's just a few weeks off.
The former chief economist at CIBC says this is about more than chaos in the Middle East. He points out on his blog that Brent crude was above $100 per barrel before protests erupted in Tahrir Square.
Read the full article here.
Congratulations to Jeff Rubin, who predicted triple digit oil by the end of 2010 -- he's just a few weeks off.
The former chief economist at CIBC says this is about more than chaos in the Middle East. He points out on his blog that Brent crude was above $100 per barrel before protests erupted in Tahrir Square.
Read the full article here.
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Surging crude prices threaten to become drag on recovery
EDMONTON - Maybe the oilpatch has had too much of a good thing.
Even as crude oil prices surged again Monday - jumping more than $1 US a barrel to close at $105.44 in New York - energy investors flocked to the exits, along with just about everyone else.
By the close, Toronto's lead index was down 160 points or 1.1 per cent to 14,092.35 as every sector lost ground, with three stocks declining for every gainer. Energy stocks, which have been on a tear for the past six months, slid 1.5 per cent and energy trusts shed nearly 0.5 per cent.
It was a similar story in New York, where the Dow Jones Industrial Average fell nearly 80 points to close at 12,090.03, and the S&P 500 Index dropped 11 points to 1,310.13. As in Toronto, many top U.S. oil stocks got whacked, including Chevron, Apache and Murphy.
Read the full article here.
EDMONTON - Maybe the oilpatch has had too much of a good thing.
Even as crude oil prices surged again Monday - jumping more than $1 US a barrel to close at $105.44 in New York - energy investors flocked to the exits, along with just about everyone else.
By the close, Toronto's lead index was down 160 points or 1.1 per cent to 14,092.35 as every sector lost ground, with three stocks declining for every gainer. Energy stocks, which have been on a tear for the past six months, slid 1.5 per cent and energy trusts shed nearly 0.5 per cent.
It was a similar story in New York, where the Dow Jones Industrial Average fell nearly 80 points to close at 12,090.03, and the S&P 500 Index dropped 11 points to 1,310.13. As in Toronto, many top U.S. oil stocks got whacked, including Chevron, Apache and Murphy.
Read the full article here.
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Oil price breaks free of reality
If fear could be stored in a barrel, it would be far more profitable today than going through all the trouble of producing oil itself.
There is plenty of it to go around in the market, where doomsday scenarios are beginning to play out, one more dreadful than the next, expanding the fear premium on oil.
Yesterday, oil prices climbed above US$105 a barrel in New York as options traders placed more bets than ever that crude oil is on its way to US$200 a barrel amid perceptions that civil unrest in the Middle East will get worse.
Their motivation? Websites in Saudi Arabia, the leader and biggest producer in the Organization of Petroleum Exporting Countries, are calling for a nationwide `Day of Rage` on March 11 and March 20, according to Human Rights Watch.
Read the full article here.
If fear could be stored in a barrel, it would be far more profitable today than going through all the trouble of producing oil itself.
There is plenty of it to go around in the market, where doomsday scenarios are beginning to play out, one more dreadful than the next, expanding the fear premium on oil.
Yesterday, oil prices climbed above US$105 a barrel in New York as options traders placed more bets than ever that crude oil is on its way to US$200 a barrel amid perceptions that civil unrest in the Middle East will get worse.
Their motivation? Websites in Saudi Arabia, the leader and biggest producer in the Organization of Petroleum Exporting Countries, are calling for a nationwide `Day of Rage` on March 11 and March 20, according to Human Rights Watch.
Read the full article here.
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Canadian housing market 'moderately' overvalued: BMO
The Canadian housing market is `moderately` overvalued, but a significant correction is likely not in the cards, says a report by the Bank of Montreal.
The ratio of average resale prices to personal incomes is currently 14 per cent above the long-term mean, suggesting that prices have gotten ahead of incomes, says BMO economist Sal Guatieri in a report to be released Friday.
`Home prices are expected to cool and prices stabilize this year in response to higher interest rates, tighter mortgage rules and lower affordability,` said Guatieri. `While we do not expect a significant correction nationwide, the risk of such would increase if prices were to continue to outrun incomes or if interest rates were to increase rapidly.`
During the last real estate bubble in 1989, prices were about 21 per cent above incomes in comparison. In the United States in 2005, prices were 26 per cent above incomes.
Read the full article here.
The Canadian housing market is `moderately` overvalued, but a significant correction is likely not in the cards, says a report by the Bank of Montreal.
The ratio of average resale prices to personal incomes is currently 14 per cent above the long-term mean, suggesting that prices have gotten ahead of incomes, says BMO economist Sal Guatieri in a report to be released Friday.
`Home prices are expected to cool and prices stabilize this year in response to higher interest rates, tighter mortgage rules and lower affordability,` said Guatieri. `While we do not expect a significant correction nationwide, the risk of such would increase if prices were to continue to outrun incomes or if interest rates were to increase rapidly.`
During the last real estate bubble in 1989, prices were about 21 per cent above incomes in comparison. In the United States in 2005, prices were 26 per cent above incomes.
Read the full article here.
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'Steady' job market predicted for Canada in Q2
OTTAWA ` Canada should see a "steady hiring climate" in the second quarter of this year, according to survey results from staffing agency Manpower.
In its quarterly outlook, Manpower said there is an overall positive outlook of 13 per cent for the period that lasts from April to June.
That number is derived by taking the 21 per cent of employers who said they would add staff and subtracting the five per cent who said they would cut employment, with some adjustments for seasonal variations. Most of the more than 1,900 employers surveyed said they expected staff levels to remain the same.
The overall outlook is even with what it was going into the first quarter, and five points ahead of the second-quarter outlook a year ago.
Read the full article here.
OTTAWA ` Canada should see a "steady hiring climate" in the second quarter of this year, according to survey results from staffing agency Manpower.
In its quarterly outlook, Manpower said there is an overall positive outlook of 13 per cent for the period that lasts from April to June.
That number is derived by taking the 21 per cent of employers who said they would add staff and subtracting the five per cent who said they would cut employment, with some adjustments for seasonal variations. Most of the more than 1,900 employers surveyed said they expected staff levels to remain the same.
The overall outlook is even with what it was going into the first quarter, and five points ahead of the second-quarter outlook a year ago.
Read the full article here.
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Condos help Canada February housing starts rise 6.6%
TORONTO (Reuters) - Canadian housing starts rose 6.6 percent in February, largely on a rise in starts of multi-unit buildings, Canada Mortgage and Housing Corp said on Tuesday.
Housing starts climbed to a seasonally adjusted annualized rate of 181,900 units in February from a revised 170,600 units in January. January starts were revised up slightly from 170,400.
Analysts, on average, had forecast 173,000 starts in February.
Urban starts rose by 9.4 percent to 161,000 units, driven by a 14.5 percent rise in construction of multiple-unit buildings, mainly condominiums, in Saskatchewan and Toronto, accounting for 94,900 units.
Read the full article here.
TORONTO (Reuters) - Canadian housing starts rose 6.6 percent in February, largely on a rise in starts of multi-unit buildings, Canada Mortgage and Housing Corp said on Tuesday.
Housing starts climbed to a seasonally adjusted annualized rate of 181,900 units in February from a revised 170,600 units in January. January starts were revised up slightly from 170,400.
Analysts, on average, had forecast 173,000 starts in February.
Urban starts rose by 9.4 percent to 161,000 units, driven by a 14.5 percent rise in construction of multiple-unit buildings, mainly condominiums, in Saskatchewan and Toronto, accounting for 94,900 units.
Read the full article here.
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Home prices to stay stable, RBC says
The Bank of Canada held its interest rate steady this week, but analysts suggest future mortgage rate hikes will be the biggest factor when it comes to assessing how affordable homeownership is for Canadians.
`Our affordability measure looks at the cost of owning a home at current market prices,` says Robert Hogue, senior economist at RBC Economics Research. `We calculate mortgage payments ` utilities and property taxes. [The affordability measure] is all those costs as a percentage of the median household income, so the higher the measure, the less affordable is housing or homeownership.`
The Housing Trends and Affordability report, covering the fourth quarter of 2010 released by RBC, indicates that, mainly due to lower mortgage rates, most categories of homes were more affordable for Toronto homebuyers. The RBC affordability measure for condominium apartments in Toronto eased 0.6 of a percentage point to 31.3%.
Read the full article here.
The Bank of Canada held its interest rate steady this week, but analysts suggest future mortgage rate hikes will be the biggest factor when it comes to assessing how affordable homeownership is for Canadians.
`Our affordability measure looks at the cost of owning a home at current market prices,` says Robert Hogue, senior economist at RBC Economics Research. `We calculate mortgage payments ` utilities and property taxes. [The affordability measure] is all those costs as a percentage of the median household income, so the higher the measure, the less affordable is housing or homeownership.`
The Housing Trends and Affordability report, covering the fourth quarter of 2010 released by RBC, indicates that, mainly due to lower mortgage rates, most categories of homes were more affordable for Toronto homebuyers. The RBC affordability measure for condominium apartments in Toronto eased 0.6 of a percentage point to 31.3%.
Read the full article here.
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The 12 most overpriced housing markets in the world
Property prices in the U.S. may have fallen 2% in February, but many homeowners around the world are in the midst of a massive housing bubble.
Prices continue to be pushed up by the traditional formula: excessive demand, inadequate supply, and easy lending.
The Economist has broken down which markets are most overvalued, by comparing rental prices to sale prices of properties.
We've added context on each market by looking at GDP growth, unemployment levels and changes in monetary policy to figure out if a bubble is actually forming in any of these markets.
Read the full article here.
Property prices in the U.S. may have fallen 2% in February, but many homeowners around the world are in the midst of a massive housing bubble.
Prices continue to be pushed up by the traditional formula: excessive demand, inadequate supply, and easy lending.
The Economist has broken down which markets are most overvalued, by comparing rental prices to sale prices of properties.
We've added context on each market by looking at GDP growth, unemployment levels and changes in monetary policy to figure out if a bubble is actually forming in any of these markets.
Read the full article here.
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Majority of Canadians confident about buying a home, say housing market is more balanced: RBC poll
TORONTO, March 9 /CNW/ - An overwhelming majority of Canadians (90 per cent) are confident about real estate in Canada as an investment and 85 per cent feel that they are doing a good or excellent job of paying down their mortgage, according to the 18[sup]th[/sup] Annual RBC Homeownership Study. Almost three-quarters of Canadians (73 per cent) believe that they or their family are well-positioned to weather a housing drop.
"Canadians believe in the long-term benefits of owning a home including the value it can provide, both personally and as a long term investment," said Marcia Moffat, RBC head of home equity financing. "Last year's survey showed that people were looking to buy ahead of rising costs. This year marks a return to more normal levels of purchase intentions and recent housing data reflects this move to a more balanced market."
Interest in purchasing a home over the next two years has declined slightly but remains high overall, as 29 per cent say it's likely they will buy. This is down two points from 2010 yet higher than any other year since 2006. Compared to last year, fewer Canadians are saying it's better to buy now (55 per cent, a drop of 12 points) than wait (45 per cent, up 12 points). Among those likely to buy, over half (57 per cent) are looking to buy within 18 to 24 months while almost one-quarter (24 per cent) are planning to buy in the next year.
Read the full article here.
TORONTO, March 9 /CNW/ - An overwhelming majority of Canadians (90 per cent) are confident about real estate in Canada as an investment and 85 per cent feel that they are doing a good or excellent job of paying down their mortgage, according to the 18[sup]th[/sup] Annual RBC Homeownership Study. Almost three-quarters of Canadians (73 per cent) believe that they or their family are well-positioned to weather a housing drop.
"Canadians believe in the long-term benefits of owning a home including the value it can provide, both personally and as a long term investment," said Marcia Moffat, RBC head of home equity financing. "Last year's survey showed that people were looking to buy ahead of rising costs. This year marks a return to more normal levels of purchase intentions and recent housing data reflects this move to a more balanced market."
Interest in purchasing a home over the next two years has declined slightly but remains high overall, as 29 per cent say it's likely they will buy. This is down two points from 2010 yet higher than any other year since 2006. Compared to last year, fewer Canadians are saying it's better to buy now (55 per cent, a drop of 12 points) than wait (45 per cent, up 12 points). Among those likely to buy, over half (57 per cent) are looking to buy within 18 to 24 months while almost one-quarter (24 per cent) are planning to buy in the next year.
Read the full article here.
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In a buyer's market, most Albertans not in a hurry to purchase home: Survey
CALGARY - Interest in purchasing a home has declined in Alberta, according to the 18th Annual RBC Homeownership Survey.
The report, released Wednesday, said one third of Albertans (33 per cent) are likely to buy in the next two years, down two points from last year (35 per cent).
But Alberta leads the country in seeing the housing market shifting toward buyers as 57 per cent say it's a buyers market - a jump of 13 points over last year. Almost one third of homeowners in the province (32 per cent) say the value of their home has decreased in the last two years, almost double any other province.
Read the full article here.
CALGARY - Interest in purchasing a home has declined in Alberta, according to the 18th Annual RBC Homeownership Survey.
The report, released Wednesday, said one third of Albertans (33 per cent) are likely to buy in the next two years, down two points from last year (35 per cent).
But Alberta leads the country in seeing the housing market shifting toward buyers as 57 per cent say it's a buyers market - a jump of 13 points over last year. Almost one third of homeowners in the province (32 per cent) say the value of their home has decreased in the last two years, almost double any other province.
Read the full article here.
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Imperial Oil CEO says oil sands offer tremendous opportunity for Canada and the United States
HOUSTON, March 8 /CNW/ - A next generation of oil sands development in Canada is set to emerge amid rising world demand for energy resources, Imperial Oil Chairman, President and CEO Bruce March said today at the annual IHS CERA executive conference.
"Oil sands investments are now in a period of recovery, driven by resurgent world demand for energy resources and by a positive long-term outlook for energy," said March.
Speaking during a conference plenary session entitled Strategies in an Era of Recovery, March said Canada's 170 billion barrels of recoverable oil sands reserves are needed to help provide the energy required to fuel improving living standards throughout the developing world.
Oil sands development also represents an important economic opportunity for Canada and the United States in terms of energy security, job creation and economic activity. March said oil sands development will be a key component of the U.S. economy, and could generate 340,000 new U.S. jobs plus 590,000 jobs in Canada over the next 25 years.
Read the full article here.
HOUSTON, March 8 /CNW/ - A next generation of oil sands development in Canada is set to emerge amid rising world demand for energy resources, Imperial Oil Chairman, President and CEO Bruce March said today at the annual IHS CERA executive conference.
"Oil sands investments are now in a period of recovery, driven by resurgent world demand for energy resources and by a positive long-term outlook for energy," said March.
Speaking during a conference plenary session entitled Strategies in an Era of Recovery, March said Canada's 170 billion barrels of recoverable oil sands reserves are needed to help provide the energy required to fuel improving living standards throughout the developing world.
Oil sands development also represents an important economic opportunity for Canada and the United States in terms of energy security, job creation and economic activity. March said oil sands development will be a key component of the U.S. economy, and could generate 340,000 new U.S. jobs plus 590,000 jobs in Canada over the next 25 years.
Read the full article here.
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Is the house of Saud next?
As Libya descends into a bloody and protracted civil war, both the White House and International Energy Agency are considering tapping strategic oil reserves.
Normally, no one would care what`s happening in a remote desert country that has been a pariah state for decades. But when you produce 1.6 million barrels a day of oil in a market in which global supply and demand was already balanced on a knife `edge, all of a sudden everybody cares.
Read the full article here.
As Libya descends into a bloody and protracted civil war, both the White House and International Energy Agency are considering tapping strategic oil reserves.
Normally, no one would care what`s happening in a remote desert country that has been a pariah state for decades. But when you produce 1.6 million barrels a day of oil in a market in which global supply and demand was already balanced on a knife `edge, all of a sudden everybody cares.
Read the full article here.
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China records surprise trade deficit
China reported a surprise trade deficit in February as surging prices for oil and other commodities pushed up its import bill.
February export growth plunged to 2.4 per cent as businesses were idled for the weeklong Lunar New Year holiday while imports of higher-priced oil and other goods rose 19.4 per cent for a deficit of $7.3-billion, data showed Thursday.
Read the full article here.
China reported a surprise trade deficit in February as surging prices for oil and other commodities pushed up its import bill.
February export growth plunged to 2.4 per cent as businesses were idled for the weeklong Lunar New Year holiday while imports of higher-priced oil and other goods rose 19.4 per cent for a deficit of $7.3-billion, data showed Thursday.
Read the full article here.
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Canadian hotels looking more attractive to foreign buyers
Investors in Canadian hotels have had one thing in common over the last decade ` their nationality. In 92 per cent of accommodation property deals over the past 10 years, the buyers have been domestic.
Foreign buyers have preferred larger markets such as the United States. They have also favoured Asia, where economic growth has been outpacing that of North America.
Read the full article here.
Investors in Canadian hotels have had one thing in common over the last decade ` their nationality. In 92 per cent of accommodation property deals over the past 10 years, the buyers have been domestic.
Foreign buyers have preferred larger markets such as the United States. They have also favoured Asia, where economic growth has been outpacing that of North America.
Read the full article here.
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Forecaster weighs risks of economic aftershocks
EDMONTON - It's a little early to know with certainty how Japan's devastating earthquake will affect the global economy, energy prices or market psychology.
With all the other factors at play -the war in Libya, the U.S. fiscal crisis and the looming end of the Federal Reserve Board's moneyprinting program, which has temporarily boosted stock prices -it's just another brick in a mounting wall of worries.
"The Japan earthquake adds another uncertainty to markets that were already plagued with turmoil in the Middle East and European debt concerns," Kang Shin Woo, chief investment officer at Korea Investment Management Co., told Bloomberg. "This could raise concern for the Japanese economy, (which) has showed some signs of recovery."
Read the full article here.
EDMONTON - It's a little early to know with certainty how Japan's devastating earthquake will affect the global economy, energy prices or market psychology.
With all the other factors at play -the war in Libya, the U.S. fiscal crisis and the looming end of the Federal Reserve Board's moneyprinting program, which has temporarily boosted stock prices -it's just another brick in a mounting wall of worries.
"The Japan earthquake adds another uncertainty to markets that were already plagued with turmoil in the Middle East and European debt concerns," Kang Shin Woo, chief investment officer at Korea Investment Management Co., told Bloomberg. "This could raise concern for the Japanese economy, (which) has showed some signs of recovery."
Read the full article here.
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Canadian wealth rebounding at a faster pace than in U.S.
How wealth is rebounding
Wealth among Canadians has rebounded at a faster pace than that of our American cousins, buoyed by a strong real estate market and stronger stocks pumped up by commodities prices.
"The rollicking stock market helped boost the net worth of American households in [the fourth quarter], though they remain nearly $9-trillion (or 13 per cent) poorer than before the credit crisis because of depressed home values and the almost $2-trillion loss in equity values," economist Sal Guatieri of BMO Nesbitt Burns said in a research note.
"Conversely, Canadian household wealth continues to scale new heights on the back of record house prices and a near-full recovery in equities (thanks to the commodities boom."
Read the full article here.
How wealth is rebounding
Wealth among Canadians has rebounded at a faster pace than that of our American cousins, buoyed by a strong real estate market and stronger stocks pumped up by commodities prices.
"The rollicking stock market helped boost the net worth of American households in [the fourth quarter], though they remain nearly $9-trillion (or 13 per cent) poorer than before the credit crisis because of depressed home values and the almost $2-trillion loss in equity values," economist Sal Guatieri of BMO Nesbitt Burns said in a research note.
"Conversely, Canadian household wealth continues to scale new heights on the back of record house prices and a near-full recovery in equities (thanks to the commodities boom."
Read the full article here.