February 2011 Canadian Economic Fundamentals

[Ally]

Saving $1M for retirement might be possible, but is it enough?





Becoming a millionaire in time for retirement is a more attainable goal than most young Canadians think, according to a major Canadian bank. But then again, $1 million isn't what it used to be.







TD Canada Trust on Wednesday released survey results showing three-quarters of respondents ages 18 to 34 said it is unlikely they'll be worth $1 million or more by the time they retire.







In fact, one-third said their best bet for becoming a millionaire is winning the lottery, while just one in 10 could see themselves getting there by saving money.




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[Ally]

Alberta takes 'bold step' into oilsands upgrading





FORT SASKATCHEWN ` Evoking the spirit of pioneers, outgoing Premier Ed Stelmach said Albertans know success comes from having the courage to take risks, and the $5-billion North West upgrader/refinery announced Wednesday is just the latest `bold step` in that direction.




`I have always said, shipping bitumen out of the province is comparable to selling the topsoil on a farm. This is fulfilling a commitment I made in 2006 to the province during the leadership (race),` he said at the ceremony.




Stelmach added he is keen on ensuring Alberta is a world leader in carbon dioxide reduction, which is why the government announced a $2-billion program two years ago, and has agreed to fund four innovative projects.




`So today we take another bold step in the area of value added with this historic agreement with North West and Canadian Natural for a project that will use carbon-capture technology from Day 1.`




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[Ally]

Alberta enters the upgrading business





FORT SASKATCHEWAN - An agreement with two firms to refine bitumen collected as provincial royalties could serve as a template for future projects that aim to ensure at least 60 per cent of the oilsands output creates jobs and value-added products in Alberta, Energy Minister Ron Liepert said Wednesday.




`I`m optimistic as we move forward it will bring other opportunities down the road,` he said.




While there has been criticism that the province is dabbling in the free market through its Bitumen Royalty In Kind (BRIK) program, Liepert defended the move and challenged the perception of market intervention.




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[Ally]

Premier call bitumen investment 'bold step'





CALGARY - Alberta is taking a "bold step" by directly investing in business, Premier Ed Stelmach said Wednesday, as he confirmed the province will supply bitumen it receives as royalties to a $5-billion oilsands upgrader.




The premier compared backing the North West Upgrading project northeast of Edmonton to moves by earlier Tory governments to create ATB Financial, buy into Syncrude Canada and launch Telus Corp. predecessor AGT Ltd.




"If the benefits of the oilsands accrue to Albertans, why shouldn't Albertans, as owners of the resource, make their own investment?" challenged Stelmach during an announcement in Fort Saskatchewan, just northeast of the capital.




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[Ally]

Province pushes North West upgrader





If the rumours prove to be correct, a deal that will pave the way for the building of a new upgrader in Alberta ultimately capable of handling 150,000 barrels a day involving the province, North West Upgrading and Canadian Natural Resources is going to be signed on Wednesday.




This despite a broadlyheld view by many an oilpatch player that the economics of a new, merchant plant -one not tied to an existing oilsands project -don't work. If that were the case, there would be more such facilities being built. Instead, the only new upgrader that has been announced of late is Suncor's Voyageur 200,000 bbl/d facility that was mothballed with the economic downturn in 2008. Its revival is the result of a partnership struck between Suncor and Total E&P Canada, which saw the shelving of an upgrader Total had been looking to build near Edmonton.




But, there's politics involved in this decision.




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[Ally]

At last, persistence pays off for never-say-die North West founder





Alberta's Industrial Heartland just got its mojo back.




Three years after a brutal economic meltdown crushed plans for a string of massive bitumen upgraders in the sprawling region northeast of Edmonton, the gloom has finally lifted.




Wednesday's launch of the longdelayed North West Upgrading (NWU) bitumen refinery and Enhance Energy's CO2 pipeline project will pour billions of dollars into the local economy, creating 10,000 new construction jobs, 600 engineering jobs and hundreds of new operating positions.




It's a major shot in the arm for the entire Capital Region, and a key step toward expanding the province's value-added manufacturing sector for decades to come.




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[Ally]

Housing activity to move in line with demographic fundamentals in 2011






OTTAWA, February 17, 2011 ` After trending lower in the second half of 2010, housing starts are forecast to stabilize at levels consistent with demographic fundamentals in 2011 and 2012, according to Canada Mortgage and Housing Corporation`s (CMHC) first quarter Housing Market Outlook, Canada Edition.[sup]1




Housing starts will be in the range of 157,300 to 192,900 units in 2011, with a point forecast of 177,600 units. In 2012, housing starts will be in the range of 154,600 to 211,200 units, with a point forecast of 183,800 units.




`Modest economic growth will continue to push employment levels higher this year and next. This, in conjunction with relatively low mortgage rates, will continue to support demand for new homes. Housing starts will remain in line with long term demographic fundamentals over the course of 2011 and 2012,` said Bob Dugan, Chief Economist for CMHC.




Existing home sales will be in the range of 398,500 to 485,500 units in 2011, with a point forecast of 441,500 units. In 2012, MLSÂ2[/sup] sales will move up and are expected to be in the range of 406,300 to 519,700 units, with a point forecast of 462,900 units.



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[Ally]

House prices to match inflation: CMHC




Canadian house prices will move in line with inflation for the next two years, Canada Mortgage and Housing Corp. said in its first quarter market outlook.




The report is the third from a major market forecaster in the last week. The Canadian Real Estate Association and Royal Bank of Canada also predicted small gains through 2011 and 2012.



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[Ally]

GE chief preaches faith in remote possibilities





EDMONTON ` With a growing global hunger for commodities, Canada has both the resources and people with technical ability to deliver.




But most of this potential is in remote areas, and there hasn`t been much discussion about what is needed to make these locations more attractive both to businesses and new residents.




So GE Canada launched a Canada-wide series of roundtables with local businesses and chambers of commerce last month and sent out a questionnaire to a variety of firms.




`We are bullish on Canada, and see an opportunity for Canada and its remote communities ` a global opportunity for business that they have never had before,` said Elyse Allan, chief executive for GE Canada after a discussion with the Edmonton Chamber of Commerce on Wednesday.




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[Ally]

Steadier housing market seen ahead




OTTAWA ` Housing starts are expected to stabilize this year and next, after slowing in the second half of 2010, Canada Mortgage and Housing Corp. said Thursday.




Construction will total between 157,300 and 192,900 units in 2011 and range from 154,600 to 211,200 units in 2012, the federal agency said.




`Modest economic growth will continue to push employment levels higher this year and next,` said CMHC chief economist Bob Dugan.



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[Ally]

Canada builds reputation for infrastructure




MONTREAL - For years, Canadian infrastructure companies have staked out their growth on a renowned capability for building everything from wastewater plants to transit systems in far-flung corners of the globe.




But the world is now looking at them for a different kind of skill set they have honed largely at home: setting up hospitals and sports complexes.




Canada is poised to carve out strong niche plays in medical and athletic infrastructure over the next five years, say top officials with Export Development Canada (EDC). Canadian firms are marketing their expertise based on what they have accomplished domestically, even as some argue the competitive process puts them at a disadvantage.



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[Ally]

Canadian wholesale trades rises for fifth straight month





OTTAWA ` Canadian wholesale trade rose by 0.8% in December from November, just shy of expectations, according to data from Statistics Canada on Thursday.




It was the fifth straight increase and included gains in six of the seven subsectors, representing almost all of wholesale sales. In volume terms, sales were up 1.2% in December. Inventories declined by 0.5%, which points to increased future activity by wholesalers.




Analysts surveyed by Reuters had forecast a rise of 0.9%. All figures are adjusted for seasonal factors such as Christmas sales.




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[Ally]

Chinese stance throws G20 indicator deal into doubt





PARIS ` China rejected plans to use real exchange rates and currency reserves to measure global economic imbalances, casting doubt on the ability of Group of 20 major economic powers to reach agreement at a meeting on Friday.







Speaking shortly before the start of a two-day meeting of finance ministers and central bankers, Chinese Finance Minister Xie Xuren also said the G20 should use trade figures rather than current account balances to assess economic distortions.







China's trade surplus has diminished of late.







G20 countries, which together account for 85 per cent of world economic output, are trying to agree on a set of measurements as a basis for economic policy guidelines to avoid a repeat of the 2008 global financial crisis.




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[Ally]

China, the elephant in the global economic-recovery room




In public, the world`s financial chiefs warn of a `two-speed recovery` in which some countries, especially China, are experiencing fast-growing economies while others, notably the United States and much of Europe, are mired in debt and unemployment and barely growing at all.





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[Ally]

Concrete equities investor tells of lost $200,000





CALGARY - Intrigued by what seemed like a "promising investment" featured in ads from a company sponsoring the TV investing show Dragon's Den, Jacquie Karch reached out to Concrete Equities.




That decision in 2007, she told an Alberta Securities Commission hearing Thursday, has resulted in her struggling to pay off a $200,000 line of credit taken out to invest in four projects of the now-defunct commercial real estate venture and the loss of more than $30,000 in RRSPs.




"I wish I had never heard of Concrete Equities," the former teacher, who has been on long-term disability since 2006 because of her multiple sclerosis, said. "Three and a half years ago I had my condo paid off. It's not like I can go out and get a job."




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[Ally]

Housing is more lifestyle decision than investment, realty chief says





The Canadian housing market remains strong, but the days of double-digit gains in real estate are largely over, according to the president of Coldwell Banker Canada.




And that's all the more reason to view purchasing a home as primarily a lifestyle decision rather than as an investment in the hopes of a "quick return," John Geha said.




"The double-digit appreciation days are gone, but we're still seeing solid growth in real estate values," Geha said in a phone interview from Kelowna. "It's a healthy market."




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[Ally]

Vancouver still world's most liveable city: Survey




In the annual survey by the Economist Intelligence Unit, the Canadian west coast city and 2010 Winter Olympics host scored 98 percent on a combination of stability, health care, culture and environment, education, and infrastructure -- a score unchanged from last year.





It has topped the list from 2007.





Although Melbourne pipped the Austrian capital for silver medal, there was no other major change near the top of the list of 140 cities worldwide. Auckland, New Zealand, came in 10th.





"Mid-sized cities in developed countries with relatively low population densities tend to score well by having all the cultural and infrastructural benefits on offer with fewer problems related to crime or congestion," said Jon Copestake, editor of the report, in a statement.





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[Ally]

Canadians insulated from food shock




It's debatable whether Canadians' taste for processed, packaged foods is bad for their health, but it may help protect them in a global food crisis.




Canada, Switzerland and the U.K. should suffer the least among global economies from higher food prices, while Brazil, Turkey and India would feel the most pain, according to a new report from UBS AG.




"The way in which we tend to consume food means that the price of raw materials tends to be a smaller part of the overall costs we pay," Larry Hatheway, a London-based economist with the investment bank, said in an interview. "In high-income economies like Canada, it turns out that packaging and advertising in particular, are a significant fraction of what we pay for when we purchase products."



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[Ally]

Canada's tame inflation bucks global trend





OTTAWA ` Canada's annual inflation rate slipped to a relatively tame 2.3% in January, bucking a global trend which has seen several major nations struggle to keep rising prices under control.




January's rate, which matched market expectations, compares to 2.4% in December. It also means the Bank of Canada will be under no immediate pressure to raise interest rates on March 1.




Statistics Canada said on Friday that energy prices had risen 9.0% in the 12 months to January following a 10.5% year-on-year rise in December. Gasoline prices advanced by 13.0% on the year, the same rate seen in December.




Overall, prices were up by 0.3% from December.



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[Ally]

Canada rate hike in May likely: Poll




Most of Canada`s primary securities dealers expect an interest rate hike in the first half of the year, with May seen as the most likely month for the central bank to resume its tightening campaign.




A Reuters survey on Friday also showed that in the past month three of the dealers ` the institutions that deal directly with the central bank as it carries out monetary policy ` had pushed back their forecast for the next rate hike. One brought their forecast forward.




None of the 12 dealers expected the Bank of Canada to hike rates at the next policy-setting announcement on March 1.




Seven of the primary dealers see a hike in the first half of the year, unchanged from the Jan. 18 poll.



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