February 2015 Canadian Economic Fundamentals

[Ally]

No more waiting around: TransCanada about to enter the rail business as
Keystone XL delay drags on

TORONTO – Facing increased pressure from rail cutting into its business, while the Keystone XL pipeline remains under unending American review, TransCanada Corp. said it is planning to diversify into the oil-by-rail business within months, improving its customers’ ability to connect to its sprawling North American pipeline and storage network.

“We are approaching 1.2 million barrels per day of [rail-] loading capacity — nobody has waited for Keystone XL pipeline to get built,” Russ Girling, president and CEO of the Calgary-based pipeline operator, said Wednesday following a speech to a business audience in Toronto.

Read the full article here.

 

[Ally]

CMHC CEO says low rates won't put stress on overvalued housing market



Canada’s housing market may be “modestly overvalued,” according to the CEO of CMHC, but that’s no reason to fear a painful crash even after last month’s cut in rates.

Evan Siddall, CEO of Canada Mortgage and Housing Corp., says the federal agency's job is to watch for risk factors, but lower rates aren't going to make a big difference.

Read the full article here.

 

[Ally]

Household debt hits record levels says Statistics Canada

TORONTO – A sustained period of low interest rates has allowed Canadians to rack up record levels of debt which, along with tumbling oil prices, pose a threat to the country’s financial stability, economists say.

The total amount of credit market debt — which includes mortgages, non-mortgage loans and consumer credit — held by Canadian households hit a record high in the third quarter, climbing to 162.6 per cent of disposable income from a revised 161.5 per cent in the second quarter.

Read the full article here.

 

[Ally]

CMHC forecasts moderation in housing market activity for Canada in 2015 and 2016

OTTAWA, ONTARIO--(Marketwired - Feb. 6, 2015) - According to CMHC's first quarter 2015 Housing Market Outlook, Canada Edition, housing starts in 2015 will remain similar to levels observed in 2014 and broadly in line with economic and demographic trends. By 2016, slight moderation is expected.

"Our market outlook calls for gradual moderation in the pace of new home construction over the next couple of years as employment, disposable income and high net migration continue to support the market," said Bob Dugan, Chief Economist for CMHC.

Read the full article here.

 

[Ally]

RBC Provincial Outlook Update

Released February 6, 2015.

provupd2015.pdf

 

[Ally]

CMHC CEO says low rates won't put stress on overvalued housing market

Canada’s housing market may be “modestly overvalued,” according to the CEO of CMHC, but that’s no reason to fear a painful crash even after last month’s cut in rates.

Evan Siddall, CEO of Canada Mortgage and Housing Corp., says the federal agency's job is to watch for risk factors, but lower rates aren't going to make a big difference.

Read the full article here.

 

[Ally]

Yup, you're bang on again
@reinresearch team. Transit even more important: Young and carless
analysis

Inside the packed Joe Louis Arena this week, Ford Motor Co. hit the three notes that reliably send attendees of the Detroit auto show into rapture: big, fast and cool. A new Ford F-150 Raptor, a souped-up off-road version of its bestselling pickup truck, was the first to roll out. Next, a new Mustang for track enthusiasts—lots of horsepower, no air conditioning—rumbled onto the floor. But the best was saved for last: a new Ford GT supercar concept. The low-slung racer was all giant rims and gaping air intakes, leaving executive vice-chairman Bill Ford and CEO Mark Fields giddy with excitement. “Bill, should we build it?” Fields asked, playing to the crowd. Replied Ford: “I think we should.”

To say Detroit is feeling good again is an understatement. As snow fell outside, a party heated up inside the sprawling Cobo conference centre a few steps from the arena, with free food, chatty executives and lots of vehicular eye candy. Among the highlights: new pickup trucks from Toyota and Nissan; Fiat Chrysler’s Alfa Romeo 4C Spider coupe; a curvy Mercedes GLE Coupe; and an Acura NSX supercar that will cost around $150,000. With the desperate days of the recession long gone, automakers are experiencing what amounts to automotive heaven: an improving U.S. economy alongside plummeting oil prices—all at a time when it’s never been easier for consumers to borrow cash. As a result, the industry collectively moved 16.5 million new vehicles off dealers’ lots last year, the most since 2006. In Canada, meanwhile, sales set a new record of 1.85 million. What’s more, thanks to cheap gasoline, there are predictions 2015 could be even better.

Read the full article here.

 

[Ally]

Canada jumps from 6th place
to 2nd in @Bloomberg's
'"Best Countries for Business" 2014 rankings

For the third year in a row, Bloomberg Rankings presents its exclusive analysis of the world's most attractive countries for business according to 2013 data.

Hong Kong again tops the list, thanks in part to the low cost of starting a business there. Canada jumped from sixth place to second largely because of the receptivity of its consumers, measured by the size of its middle class, household consumption and GDP per capita. The U.S. fell from second to third place, as the cost of setting up a business there increased considerably relative to other countries.

Read the full article here.

 

[Ally]

Calgary's real estate market sinks, but Toronto's big spenders out in force

While real estate market observers are waiting to see if the wobbles in Calgary’s real estate market rattle consumers in other Canadian cities, buyers in Toronto’s high-priced Rosedale enclave seem anything but nervous.

“It’s been quite a week in the neighbourhood,” says real estate agent Linda Drope, who sold the three-storey mansion at 90 Roxborough St. E.

Read the full article here.

 

[Ally]

California gives oil
companies 2,500 permits to dump waste into protected aquifers - Yet call
Canadian oil a problem. Hypocrisy at the highest degree

BAKERSFIELD, Calif. - Regulators in California, the country's third-largest oil-producing state, have authorized oil companies to inject production fluids and waste into what are now federally protected aquifers more than 2,500 times, risking contamination of underground water supplies that could be used for drinking water or irrigation, state records show.

While the permits go back decades, an Associated Press analysis found that nearly half of those injection wells — 46 per cent — were approved or began injections in the last four years under Gov. Jerry Brown, who has pushed state oil and gas regulators to speed up the permitting process. That happened despite growing warnings from the U.S. Environmental Protection Agency since 2011 that state regulators were out of compliance with federal laws meant to protect underground drinking-water stores from oilfield contamination.

Read the full article here.

 

[Ally]

Micro condos a big mistake for
long-term investors in Canada

TORONTO – The appeal of so-called shoebox condos — no larger than the size of two average living rooms — will face its first real test in Canada this year, with an influx of the compact homes set to hit the country’s largest real estate market.

Investors are betting on big returns from young renters who can’t afford to buy in the red-hot real estate market and don’t mind living in a unit, about 500 square feet, where their dining table might have to fold down into a bed.

Read the full article here.

 

[Ally]

RBC's Canadian housing forecast update

The steep drop in oil prices since last summer continued to reshape the economic and financial landscape for Canada’s housing market recently. In the first week of February, we made changes to our economic and interest rate forecasts, which have prompted us to revise the housing market projections for Canada and the provinces for 2015 and 2016.

housingforecastFebruary2015.pdf

Read the full article here.

 

[Ally]

Housing starts rise in January

OTTAWA The annual pace of new housing starts defied expectations and picked up in January as more multiple-unit starts offset a drop in single-detached starts, the Canada Mortgage and Housing Corp. says.

The federal agency said Monday that the seasonally adjusted annual rate increased to 187,276 units in January from 179,637 in December.

Read the full article here.

 

[Ally]

Canadians want work. Why have so many stopped looking?

The percentage of working-age Canadians who aren’t working – who aren’t even looking for a job – is at a historic high years after the economy supposedly bounced back from the recession. The labour participation rate for Canadian men in their working prime – ages 25 through 54 – is the lowest it’s been since Statistics Canada started collecting that data.

Women’s participation rate, rising since the 1950s, has been largely stagnant since 2006.

Read the full article here.

 

[Ally]

Rate cut expected as Canadian economy suffers from slow job growth

Growing angst about the sluggish pace of job creation could provide more cover for the Bank of Canada to lower interest rates again.

Carolyn Wilkins, Governor Stephen Poloz’s top deputy, warned in a speech Tuesday that the economy is still 270,000 jobs short of full employment, weakness that is weighing on a country already grappling with the oil price collapse.

Read the full article here.

 

[Ally]

BoC measuring job market struggles ahead of next rate announcement

OTTAWA -- The Bank of Canada is monitoring the struggles of the job market as an indicator of the country's economic health ahead of next month's interest-rate announcement, a senior bank official said Tuesday.

The central bank, which blindsided markets last month by lowering its trend-setting rate, is also prepared to take further action to help a wobbly economic recovery that was recently jarred by falling oil prices, senior deputy governor Carolyn Wilkins said.

Read the full article here.

 

[Ally]

Bank of Canada measuring
job market struggles ahead of next rate announcement

OTTAWA — The Bank of Canada is monitoring the struggles of the job market as an indicator of the country’s economic health ahead of next month’s interest-rate announcement, a senior bank official said Tuesday.

The central bank, which blindsided markets last month by lowering its trend-setting rate, is also prepared to take further action to help a wobbly economic recovery that was recently jarred by falling oil prices, senior deputy governor Carolyn Wilkins said.

Read the full article here.

 

[Ally]

Why Canada’s snowbirds are
under U.S. scrutiny

Canadians who normally head south of their border for warmer weather are keeping closer track of their time in the United States because if they stay too long, they could lose their Canadian health benefits and might owe U.S. income tax.

Just last year, the two countries implemented an agreement to scan passports and share the information, meaning that – unlike past years – America’s tax authorities now know exactly how long snowbirds are spending in warmer climes like Florida, California and Arizona.

Read the full article here.

 

[Ally]

Ground-breaking Supreme Court decision affects all real estate contracts

The Supreme Court of Canada recently released a ground-breaking decision, Bhasin v. Hrynew, which articulates newly clarified duties on how the parties to a contract must behave towards each other. The decision has important implications for real estate contracts and the industry in general.

In particular, the decision addresses the question of how good faith and honesty come into play, in terms of each party’s contractual performance.

Read the full article here.

 

[Ally]

Canada's infrastructure gap is widest in big cities

Canada’s big-city mayors gathered in Toronto this week to make their annual appeal to senior levels of government for help in solving some of their biggest problems. At the top of their list each year is infrastructure.

Last week, the country’s first ministers convened in Ottawa to make a similar appeal for federal funding to address their infrastructure requirements. Federal Finance Minister Joe Oliver was quick to tell the premiers to take a hike, a suggestion with which most of the provincial leaders took great umbrage.

Read the full article here.