March 2012 Canadian Economic Fundamentals
- Thread starter Ally
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Debt-service ratio of 7.5% suggests crisis talk overblown
Are you carrying too much debt? How much is too much?
The standard measure of indebtedness is the ratio of household debt to disposable income; that is, the percentage of income that debt represents. That figure in Canada has passed 153 per cent ($1.53 of debt for every dollar of income) and seems likely before long to reach 160 per cent, the level of debt carried by households in the United States just before the housing bubble burst, triggering the 2008-2009 recession.
Bank of Canada Governor Mark Carney and federal Finance Minister Jim Flaherty, among others, have sounded the alarm, warning that many households will be in trouble when interest rates rise, as they surely will eventually.
Read the full article here.
Are you carrying too much debt? How much is too much?
The standard measure of indebtedness is the ratio of household debt to disposable income; that is, the percentage of income that debt represents. That figure in Canada has passed 153 per cent ($1.53 of debt for every dollar of income) and seems likely before long to reach 160 per cent, the level of debt carried by households in the United States just before the housing bubble burst, triggering the 2008-2009 recession.
Bank of Canada Governor Mark Carney and federal Finance Minister Jim Flaherty, among others, have sounded the alarm, warning that many households will be in trouble when interest rates rise, as they surely will eventually.
Read the full article here.
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China's wealthy fleeing grime and political uncertainty
There are two overriding reasons driving thousands of China`s wealthy to emigrate: desire for a better lifestyle, and lack of faith in the ruling Communist party.
China`s economic miracle of the last 30 years, which has created about one million millionaires and up to 300 billionaires, has also created an environmental wasteland and great political uncertainty.
In surveys and interviews many of China`s new rich say they feel insecure. They know that in a country without the rule of law and a dictatorial one-party regime, their wealth can be seized or otherwise taken away from them at any time.
Read the full article here.
There are two overriding reasons driving thousands of China`s wealthy to emigrate: desire for a better lifestyle, and lack of faith in the ruling Communist party.
China`s economic miracle of the last 30 years, which has created about one million millionaires and up to 300 billionaires, has also created an environmental wasteland and great political uncertainty.
In surveys and interviews many of China`s new rich say they feel insecure. They know that in a country without the rule of law and a dictatorial one-party regime, their wealth can be seized or otherwise taken away from them at any time.
Read the full article here.
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Canada's housing bubble: This time is not different
The resilience of the Canadian housing market continues to confound experts. Last April, I wrote about the hot housing sector in Canada. Since then this sector has become even hotter, exhibiting strong signs of a classic bubble. More than ever before, I believe that Canada`s housing market is due for a severe correction.
Read the full article here.
The resilience of the Canadian housing market continues to confound experts. Last April, I wrote about the hot housing sector in Canada. Since then this sector has become even hotter, exhibiting strong signs of a classic bubble. More than ever before, I believe that Canada`s housing market is due for a severe correction.
Read the full article here.
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Why natural gas is already a game changer
Natural gas is a game changer for the U.S. economy according to PIMCO`s Mark Kiesel (via Josh Brown). The report says:
`The energy sector is growing more quickly than the overall economy in numerous areas around the globe due to supportive long-term demand fundamentals from the emerging markets and emerging global supply sources. In the U.S., the use of new drilling technologies for onshore natural gas and oil production is a potential `game changer` for U.S. energy security and an improved economy.`
But how exactly is natural gas a game changer?
First, it`s lowering costs. Onshore shale natural gas production has surged in areas like Marcellus, Haynesville, Fayetteville and Barnett formations. Natural gas output has increased to 22.7 trillion cubic feet (tcf) in October 2011, from 20.2 tcf in December 2007. This has helped push down nat gas prices, and is expected to lower heating costs in the future.
Read the full article here.
Natural gas is a game changer for the U.S. economy according to PIMCO`s Mark Kiesel (via Josh Brown). The report says:
`The energy sector is growing more quickly than the overall economy in numerous areas around the globe due to supportive long-term demand fundamentals from the emerging markets and emerging global supply sources. In the U.S., the use of new drilling technologies for onshore natural gas and oil production is a potential `game changer` for U.S. energy security and an improved economy.`
But how exactly is natural gas a game changer?
First, it`s lowering costs. Onshore shale natural gas production has surged in areas like Marcellus, Haynesville, Fayetteville and Barnett formations. Natural gas output has increased to 22.7 trillion cubic feet (tcf) in October 2011, from 20.2 tcf in December 2007. This has helped push down nat gas prices, and is expected to lower heating costs in the future.
Read the full article here.
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Housing bubble or prudent investment?
One of the dirty little secrets of financial analysis is that you can "prove" that the very same asset is either expensive or cheap, simply by choosing different yardsticks to measure it.
In the debate over Canada's supposed housing bubble, you can make housing look expensive by looking at how home prices compare with annual incomes or with rents. In both cases, these ratios are now above their long-term averages, suggesting housing is expensive.
But you can also make home prices look cheap by comparing today's average mortgage payment with those of past years. In this case, homes look cheaper than in the past.
Read the full article here.
One of the dirty little secrets of financial analysis is that you can "prove" that the very same asset is either expensive or cheap, simply by choosing different yardsticks to measure it.
In the debate over Canada's supposed housing bubble, you can make housing look expensive by looking at how home prices compare with annual incomes or with rents. In both cases, these ratios are now above their long-term averages, suggesting housing is expensive.
But you can also make home prices look cheap by comparing today's average mortgage payment with those of past years. In this case, homes look cheaper than in the past.
Read the full article here.
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Mortgage price wars have subsided, HSBC chief says
After a flurry of competition in the Canadian mortgage market over the past month, the undercutting between major banks appears to have subsided, says a top banking executive.
HSBC Bank Canada chief executive officer Lindsay Gordon said the price war that erupted between banks, which were offering historic-low mortgage rates of 2.99 per cent on four- and five-year fixed rate mortgages with 25- and 30-year amortizations, was an indicator of just how cutthroat the lending market has become of late.
Read the full article here.
After a flurry of competition in the Canadian mortgage market over the past month, the undercutting between major banks appears to have subsided, says a top banking executive.
HSBC Bank Canada chief executive officer Lindsay Gordon said the price war that erupted between banks, which were offering historic-low mortgage rates of 2.99 per cent on four- and five-year fixed rate mortgages with 25- and 30-year amortizations, was an indicator of just how cutthroat the lending market has become of late.
Read the full article here.
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Oil sands in Canada's best interests: Redford
Alberta Premier Alison Redford had some strong words for her Ontario counterpart Monday after Dalton McGuinty said Alberta`s hot energy industry had significantly undermined his province`s economy.
Speaking to reporters, McGuinty characterized the strong Canadian dollar as a `petrodollar` driven upwards by global demand for oil and gas and said it had `knocked the wind` out of Ontario`s exporters and manufacturers.
Read the full article here.
Alberta Premier Alison Redford had some strong words for her Ontario counterpart Monday after Dalton McGuinty said Alberta`s hot energy industry had significantly undermined his province`s economy.
Speaking to reporters, McGuinty characterized the strong Canadian dollar as a `petrodollar` driven upwards by global demand for oil and gas and said it had `knocked the wind` out of Ontario`s exporters and manufacturers.
Read the full article here.
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Most Canadians interested in owning a business: Survey
OTTAWA ` Most Canadians would be willing to start their own business under the right conditions, a survey released Wednesday suggests.
A poll done by Bank of Montreal showed 76 per cent of respondents said they'd be willingness to go into business for themselves.
But many don't, and there are reasons for that. Fifty-two per cent of respondents said a lack of access to capital is the biggest obstacle to starting a new company, while one-third said not being able to translate ideas into sound business plans is their main hurdle.
Read the full article here.
OTTAWA ` Most Canadians would be willing to start their own business under the right conditions, a survey released Wednesday suggests.
A poll done by Bank of Montreal showed 76 per cent of respondents said they'd be willingness to go into business for themselves.
But many don't, and there are reasons for that. Fifty-two per cent of respondents said a lack of access to capital is the biggest obstacle to starting a new company, while one-third said not being able to translate ideas into sound business plans is their main hurdle.
Read the full article here.
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Canada's home prices drop for second straight month
OTTAWA ` Canadian housing prices were flat or falling in the last quarter of 2011, according to the Teranet-National Bank house price index released Wednesday.
Home prices fell in December by 0.2% from the previous month, the second straight monthly decline following two consecutive months of flat prices, National Bank senior economist Marc Pinsonneault wrote in his monthly report.
The index was up 6.8% from December 2010, though the year-over-year advance had slowed somewhat from the 7.1% gain posted in November.
Read the full article here.
OTTAWA ` Canadian housing prices were flat or falling in the last quarter of 2011, according to the Teranet-National Bank house price index released Wednesday.
Home prices fell in December by 0.2% from the previous month, the second straight monthly decline following two consecutive months of flat prices, National Bank senior economist Marc Pinsonneault wrote in his monthly report.
The index was up 6.8% from December 2010, though the year-over-year advance had slowed somewhat from the 7.1% gain posted in November.
Read the full article here.
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Harper's strategy gets double boost
The Harper government`s notion of an energy strategy ` emphasize the power and efficiency of markets, get rid of red tape, finger environmental radicals, and remind the U.S. how secure Canadian supplies are ` received a double boost this week.
The obvious one was the Obama administration`s embrace of the news that TransCanada plans to proceed with the southern portion of the Keystone XL pipeline. This is half the pipeline whose approval the White House recently nixed. The White House also seems favourably disposed towards a more ecologically sensitive route for the Northern leg. Just don`t ask for any decisions until after the presidential election.
Read the full article here.
The Harper government`s notion of an energy strategy ` emphasize the power and efficiency of markets, get rid of red tape, finger environmental radicals, and remind the U.S. how secure Canadian supplies are ` received a double boost this week.
The obvious one was the Obama administration`s embrace of the news that TransCanada plans to proceed with the southern portion of the Keystone XL pipeline. This is half the pipeline whose approval the White House recently nixed. The White House also seems favourably disposed towards a more ecologically sensitive route for the Northern leg. Just don`t ask for any decisions until after the presidential election.
Read the full article here.
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Bank of Canada shows inflation is not inevitable
In an effort to contain the financial crisis that began in September 2008, central banks around the world, including Canada`s, collectively bought trillions of dollars worth of assets with, crudely speaking, newly printed money. In the U.S. for instance, the size of the Federal Reserve`s balance sheet has reached unprecedented levels, giving rise to inflation fears.
Are these fears grounded? Surprisingly, one answer comes from looking at the behaviour of the Bank of Canada during 2008-09, when it successfully reduced the size of its balance sheet as economic conditions improved.
Read the full article here.
In an effort to contain the financial crisis that began in September 2008, central banks around the world, including Canada`s, collectively bought trillions of dollars worth of assets with, crudely speaking, newly printed money. In the U.S. for instance, the size of the Federal Reserve`s balance sheet has reached unprecedented levels, giving rise to inflation fears.
Are these fears grounded? Surprisingly, one answer comes from looking at the behaviour of the Bank of Canada during 2008-09, when it successfully reduced the size of its balance sheet as economic conditions improved.
Read the full article here.
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More crude oil will likely be shipped to Eastern Canada, officials say
OTTAWA ` Canada's oilpatch will likely ramp up efforts to ship more crude to Eastern Canada, a senior federal government official said here Tuesday.
But Canadians shouldn't anticipate the construction of costly new refineries to match the rise of oilsands production in Eastern Canada, a House of Commons committee was told.
The natural resources committee, at the request of the NDP, is looking into the question of why Canada is building pipelines to ship diluted bitumen to Texas and China rather than ship it to under-utilized refineries across Canada ` including those in Eastern Canada that rely on imports.
Read the full article here.
OTTAWA ` Canada's oilpatch will likely ramp up efforts to ship more crude to Eastern Canada, a senior federal government official said here Tuesday.
But Canadians shouldn't anticipate the construction of costly new refineries to match the rise of oilsands production in Eastern Canada, a House of Commons committee was told.
The natural resources committee, at the request of the NDP, is looking into the question of why Canada is building pipelines to ship diluted bitumen to Texas and China rather than ship it to under-utilized refineries across Canada ` including those in Eastern Canada that rely on imports.
Read the full article here.
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CMHC curbs mortgage insurance offerings to banks
The federal housing agency is serving notice to banks and other lenders that it is nearing the limit on mortgage insurance it can offer them.
The Canada Mortgage and Housing Corp. said Tuesday it "has recently received an unexpected level of requests for large amounts of CMHC portfolio insurance."
"To ensure equitable access to portfolio insurance within CMHC's annual limits, an allocation process is being established, which has caused some delays."
Read the full article here.
The federal housing agency is serving notice to banks and other lenders that it is nearing the limit on mortgage insurance it can offer them.
The Canada Mortgage and Housing Corp. said Tuesday it "has recently received an unexpected level of requests for large amounts of CMHC portfolio insurance."
"To ensure equitable access to portfolio insurance within CMHC's annual limits, an allocation process is being established, which has caused some delays."
Read the full article here.
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A new immigration point system for Canada starts in 2012
A revised points-based selection grid will be introduced to favour young immigrants with strong language skills, says federal Immigration Minister Jason Kenney.
Prospective immigrants in licensed professions will need to be pre-assessed to ensure they are likely to get certification in Canada before their applications are processed, Kenney said in Toronto at the annual gathering of Metropolis, an immigration research network that is about to lose its federal funding.
Currently, immigration applicants can skirt the mandatory language requirement by entering through the Provincial Nominee Program, which allows provinces to select immigrants with job offers from local employers.
Read the full article here.
A revised points-based selection grid will be introduced to favour young immigrants with strong language skills, says federal Immigration Minister Jason Kenney.
Prospective immigrants in licensed professions will need to be pre-assessed to ensure they are likely to get certification in Canada before their applications are processed, Kenney said in Toronto at the annual gathering of Metropolis, an immigration research network that is about to lose its federal funding.
Currently, immigration applicants can skirt the mandatory language requirement by entering through the Provincial Nominee Program, which allows provinces to select immigrants with job offers from local employers.
Read the full article here.
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Icelanders float the idea of adopting the loonie
OTTAWA -- Will the loonie soon be flying high in Iceland?
For months, Icelanders have been toying with the idea of ditching the tarnished krona, which has never fully recovered from the collapse of the financial system four years ago.
One suggestion floating around the North Atlantic island is instead of the adopting the euro -- a natural fit given Iceland has taken initial steps to join the European Union -- it might cast a furtive eye to the Canadian loonie.
Read the full article here.
OTTAWA -- Will the loonie soon be flying high in Iceland?
For months, Icelanders have been toying with the idea of ditching the tarnished krona, which has never fully recovered from the collapse of the financial system four years ago.
One suggestion floating around the North Atlantic island is instead of the adopting the euro -- a natural fit given Iceland has taken initial steps to join the European Union -- it might cast a furtive eye to the Canadian loonie.
Read the full article here.
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Slow growth means low rates
The Canadian economy slowed in the final quarter of 2011, despite surprisingly strong growth in some key sectors, pointing to continued low interest rates for the time being.
The annualized pace of growth was 1.8 per cent between October and December, following an upwardly revised 4.2-per-cent increase during the previous three months, Statistics Canada said Friday.
The fourth-quarter growth was led by consumer spending, business investment and exports, the federal agency said.
Read the full article here.
The Canadian economy slowed in the final quarter of 2011, despite surprisingly strong growth in some key sectors, pointing to continued low interest rates for the time being.
The annualized pace of growth was 1.8 per cent between October and December, following an upwardly revised 4.2-per-cent increase during the previous three months, Statistics Canada said Friday.
The fourth-quarter growth was led by consumer spending, business investment and exports, the federal agency said.
Read the full article here.
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Despite slow fourth quarter growth, analysts see plenty of cheer in GDP report
OTTAWA - The Canadian economy showed signs of revival at the end of last year, a welcome signal that the sharp slowdown of the fall may have been a temporary setback in a slow-moving recovery.
The country's gross domestic product grew 0.4 per cent in December ` after the surprising 0.1 per cent dip of November ` posting a 1.8 per cent annualized gain for the final quarter of 2011.
That's slightly weaker than the Bank of Canada's call, but the miss was more than compensated for by an upward revision of third-quarter growth to 4.2 per cent from the previously reported 3.5 per cent.
Read the full article here.
OTTAWA - The Canadian economy showed signs of revival at the end of last year, a welcome signal that the sharp slowdown of the fall may have been a temporary setback in a slow-moving recovery.
The country's gross domestic product grew 0.4 per cent in December ` after the surprising 0.1 per cent dip of November ` posting a 1.8 per cent annualized gain for the final quarter of 2011.
That's slightly weaker than the Bank of Canada's call, but the miss was more than compensated for by an upward revision of third-quarter growth to 4.2 per cent from the previously reported 3.5 per cent.
Read the full article here.
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Investors hope U.S. can crank out third month of job gains
TORONTO - Tired stock markets could find the impetus for another leg up this week if the American job market can manage a third, straight month of job gains in excess of 200,000.
"That`s not an overstatement at all," said Andrew Pyle, investment adviser with Scotia McLeod in Peterborough, Ont., adding that a continuing improvement in the number of people applying for jobless insurance suggests the economy can pull off another 200,000-plus number.
Rising employment in the U.S. spells good news for Canada as a stronger American economy will create more demand for Canadian exports such as oil, metals and manufactured goods.
Read the full article here.
TORONTO - Tired stock markets could find the impetus for another leg up this week if the American job market can manage a third, straight month of job gains in excess of 200,000.
"That`s not an overstatement at all," said Andrew Pyle, investment adviser with Scotia McLeod in Peterborough, Ont., adding that a continuing improvement in the number of people applying for jobless insurance suggests the economy can pull off another 200,000-plus number.
Rising employment in the U.S. spells good news for Canada as a stronger American economy will create more demand for Canadian exports such as oil, metals and manufactured goods.
Read the full article here.
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Flaherty promises jobs and growth
Finance Minister Jim Flaherty is playing down tough austerity talk and promised `a jobs and growth budget` on March 29, but opposition MPs say Canada is `teetering on a profound economic malaise` depending on which direction the federal government decides to take the upcoming budget.
`This is a jobs and growth budget,` Mr. Flaherty told reporters last week, noting that it now runs more than $256-billion a year. `We`re talking about relatively small spending reductions, certainly nothing more than moderate spending reductions in a budget of that size.`
Read the full article here.
Finance Minister Jim Flaherty is playing down tough austerity talk and promised `a jobs and growth budget` on March 29, but opposition MPs say Canada is `teetering on a profound economic malaise` depending on which direction the federal government decides to take the upcoming budget.
`This is a jobs and growth budget,` Mr. Flaherty told reporters last week, noting that it now runs more than $256-billion a year. `We`re talking about relatively small spending reductions, certainly nothing more than moderate spending reductions in a budget of that size.`
Read the full article here.