May 2010

[Ally]

`Dramatic shift` in rate-hike expectations

OTTAWA -- The Greek crisis, together with market chaos, forced a "dramatic shift" in expectations of a Bank of Canada rate hike next month, a view reflected in a steep fall of the loonie Thursday on the belief that such increases might no longer be in the offing as panic spreads about Europe.

However, the guessing game on rates took another turn Friday morning after Statistics Canada reported a massive 108,700 job gain in April, the biggest percentage gain since 2002. The data blew past expectations and boosted the value of the Canadian dollar. Still, analysts indicate the jobs data is backward-looking, and does not take into account future developments on the European continent.

Worries that the spillover in Greece may contract credit growth in Europe and threaten the global economic recovery rattled investors on Thursday, with equity markets in North America sustaining deep losses and commodity prices falling.

And in a sign of concern reminiscent of the Lehman Brothers Holdings Inc. collapse, the London interbank offered rate - the cost of borrowing for banks from their peers - rose to its highest level since August, while the cost of protecting European bank debt against default surged to a 13-month high.

Read the full article here.

 

[Ally]

The Economist highlights Canada`s economic strength

The Economist, a prestigious international economics and political magazine, is once again turning its attention to Canada, this time pointing out how well the economy here has survived and recovered from the recent global economic crisis.

In this week`s edition, the magazine profiles Canada in both an editorial and article, calling this country "the least-bad rich-world economy."

"As they contemplate high unemployment, foreclosed homes, shrivelled house prices and the arrogant follies of their investment bankers, Americans may cast envious glances across their northern border," the editorial says.

"When Stephen Harper, the prime minister, hosts the get-togethers of the G8 and G20 countries next month, he will be able to boast to his visitors that his country`s economy is set to perform better than that of any other rich country this year."

The Economist notes that the Canadian economy managed to suffer "only a mild recession and is now well into a solid recovery," as the housing market and banking sector avoided the kinds of collapses seen in other countries, such as the United States.

Read the full article here.

 

[Ally]

The cheapest Canadian cities to buy a house
Canada`s housing market has maintained its strength across the country compared to our struggling neighbours to the south. Skyrocketing prices and bidding wars have continued in cities like Toronto and Vancouver to the exasperation of homebuyers, even though some say a housing bubble is on the horizon.

So where are the deals? By comparing average home prices and median household incomes in cities across the nation, we zeroed in on the cities where you`ll find the best bang for your buck. The following prices are all in Canadian dollars.

1. Anywhere in New Brunswick
Low housing prices combined with a higher-than-average income level make Moncton, St. John and Fredericton great options for buyers looking for a deal. According to the Canadian Real Estate Association (CREA), the average housing price in St. John and Frederiction is around $169,000, with the provincial average hovering around $155,000. The province`s urban centers have jobs in health care, finance and education. The rural economy depends on forestry, mining and fishing, and both Irving Oil and McCain Foods are based in New Brunswick. The province shares the characteristics of all Maritime provinces, like quaint, clapboard homes and easy access to the great outdoors, but doesn`t have the same schizophrenic weather patterns that affects Nova Scotia.

Read the full article here.

 

[Ally]

Huge gain in Canadian jobs last month renews economist`s faith in recovery

OTTAWA - The Canadian economy shifted into high gear last month, creating an extraordinary 108,700 jobs that goes a long way toward reversing the losses of the 2008-09 recession.

The gain was the biggest ever recorded by Statistics Canada in numbers terms, and the biggest in percentage terms since August 2002.

"So much for talk that the recovery was simmering down," BMO Capital economist Douglas Porter wrote in a commentary Friday.

While only half the April job gain was from full-time work and the unemployment rate only slipped a bit, Porter said "there is simply no denying that Canada`s job market is in full-fledged recovery mode."

Statistics Canada said the country added 44,000 full-time jobs last month and all were in the private sector. There were also and 65,000 part-time jobs added.

Read the full article here.

 

[Ally]

Housing starts edge higher in April

OTTAWA — Home construction rose 1.3 per cent in April as Canada`s real estate market continued to show signs of recovery.

Canada Mortgage and Housing Corp. said Monday housing starts rose by a seasonally adjusted annual rate of 201,700 units last month, up from a revised 199,200 units in March. The March number was previously estimated at 197,300 units.

Economists had expected starts to increase by around 205,000 units in April.

"Higher multiple starts were nearly offset by a decline in single starts and rural area starts in April, said Bob Dugan, CMHC`s chief economist. "As a result, total housing starts edged higher in April."

Urban starts increased by 5.1 per cent to 182,500 units on a seasonally adjusted annual rate in April. Multiple-unit construction was up 27.2 per cent to 98,600, while single units fell 12.7 per cent to 83,900.

In British Columbia, urban construction rose 16.4 per cent and the Prairie region posted a 6.7 per cent gain. Ontario was up 4.5 per cent and Quebec rose 1.1 per cent, while Atlantic Canada declined 3.3 per cent.

Read the full article here.

 

[Ally]

More positive economic numbers expected

If record job gains from April weren`t enough to convince you the Canadian economy is on solid ground, a few more measures are coming down the pipe this week that could support the case.

"In Canada, we`re in the home stretch of reports on what was evidently a very strong first quarter, and the early news on Q2," CIBC World Markets chief economist Avery Shenfeld said in a research note Friday, which followed Statistics Canada`s report that 108,700 additional people found work last month -- about four times what was expected.

Today, Canada Mortgage and Housing Corp. reports its April housing-start figures. Economists anticipate an annualized rate of 205,000, up from a revised figure of 200,900 in March.

"To date, housing starts have risen a massive 80 per cent from their cyclical lows, retracing over half of the peak-to-trough drop," Millan Mulraine, senior strategist with TD Securities, said in a report.

Mulraine, who`s forecasting a start level of 210,000 for April, attributes some of the current strength to homebuyers looking to avoid the new harmonized sales taxes taking effect in B.C. and Ontario in July.

Another big report comes Wednesday in the form of merchandise trade data for March. Economists anticipate a Canadian surplus -- the amount exported minus what`s imported -- of $1.6 billion, up from $1.4 billion in February. If right, it would mark the fourth straight surplus.

Read the full article here.

 

[Ally]

Britons face `express demolition` in Spain

COSTA ALMERIA, Spain - Britons living in Spain have been warned that some face "express demolition" of their houses under a new law announced by the regional government of Andalusia.

Owners of homes which are retrospectively judged to have fallen foul of regional planning rules can now be given just one month`s notice that council bulldozers are being sent in. The change is part of a move against excessive development in one of Spain`s most popular regions.

Thousands of homes bought or built in good faith have been put at risk since the regional authority began reviewing local councils` planning approvals -- and concluded that in many cases, permission to build should never have been granted.

An estimated 5,000 Britons have properties in the hills of Almanzora, one of the worst affected areas 60 miles north of the coastal city of Almeria in southern Spain.

Read the full article here.

 

[Ally]

Dupuis: Housing the goose that laid the golden egg

Last week, I detailed the economic impact of the residential construction industry in the GTA and mentioned in passing a statement by Gluskin Sheff chief economist and strategist David Rosenberg to the effect that housing was behind Canada`s miraculous economic recovery.

This week, I re-read Rosenberg`s economic commentary called "Coffee with Dave: Market Musings and Data Deciphering," and took heart in his glowing comments about the contribution of housing to the economy, particularly of late.

"Looking back to last year, it would have been inconceivable to be talking about a Canadian economic miracle, but that is exactly what we have on our hands today; a classic V-shaped recovery. This begs the question as to what has been the principal factor underpinning this impressive Canadian economic revival, especially in relation to what is happening in the United States. We can answer the question in one word: housing," Rosenberg wrote.

"The housing sector is the quintessential leading indicator of the economy, and true to form, it caught fire before the overall economy did," Rosenberg added.

From there, Rosenberg looks at the direct and indirect impacts of the housing sector noting that every dollar increase in housing wealth translates into seven to nine cents of incremental spending in the GDP accounts. "Housing has tremendous spin-off effects outside the wealth effect – the impact on building materials, real estate income, legal services, architecture billing, classified ads, infrastructure, etc. – and it`s all locally driven," he notes.

Read the full article here.

 

[Ally]

Canada housing starts edge higher in April

OTTAWA — Home construction rose 1.3 per cent in April as Canada`s real estate market continued to show signs of recovery.

Canada Mortgage and Housing Corp. said Monday housing starts rose to a seasonally adjusted annual rate of 201,700 units last month, up from a revised 199,200 units in March. The March number was previously estimated at 197,300 units and initially revised up to 200,900 before the latest change.

Economists had expected starts at around 205,000 units for April.

"Higher multiple starts were nearly offset by a decline in single starts and rural area starts in April," said Bob Dugan, CMHC`s chief economist.

Urban starts increased by 5.1 per cent to 182,500 units on a seasonally adjusted annual rate in April. Multiple-unit construction was up 27.2 per cent to 98,600, while single units fell 12.7 per cent to 83,900.

In British Columbia, urban construction rose 16.4 per cent and the Prairie region posted a 6.7 per cent gain. Ontario was up 4.5 per cent and Quebec rose 1.1 per cent, while Atlantic Canada declined 3.3 per cent.

Read the full article here.

 

[Ally]

`Clear signs` of recovery across country, report finds

Ontario`s battered economy will share top spot with British Columbia in Canadian economic growth this year, as labour markets continue their recovery, consumers begin spending on big-ticket items again and the auto sector rebounds, the Conference Board of Canada said Monday.

In its Canadian Provincial Outlook: Spring 2010, the board says Ontario`s economy will expand at 3.8 per cent this year, a rate matched only by that forecast for B.C.

"There are clear signs of economic recovery from cost to coast," said Marie-Christine Bernard, associate director of provincial forecasting.

"The improved domestic economies of Ontario and B.C., along with increased demand from the United States, will support a strong rebound in both provinces.

"However the rebound will be gradual for most other provinces, spreading over the next two years," Bernard said.

Read the full article here.

 

[Ally]

U.S.: an indebted Nation

n the past four years — 2007 to 2010 inclusive — U.S. budget deficits have totalled $3.6-trillion and are projected (by the White House`s OMB and Congress`s CBO) to total just as much over the coming four years, even with an economic upswing. Whereas the deficit was 1.2% of GDP in 2007, at the end of 2010 it`ll be 10.6% of GDP.

For comparison, consider that Greece, which is now getting a bailout of $160-billion, currently has a deficit-to-GDP ratio of 13.6%. Unlike Greece, which participates in the euro and thus has no power to print its own money, the United States does have such power and is exercising it (as it has since 1971). Washington will default on its debt surreptitiously, by inflation. Not only does destructive Fed policy create new federal debt, it also then recklessly monetizes it, causing inflation.

Since 1959, Fed rate hikes have led to recessions and huge increases in the U.S. federal debt, while rate cuts have preceded expansions and decelerations in the growth rate of federal debt. The mechanism is indirect: Swings in Fed policy cause subsequent swings in the business cycle, which cause swings in the U.S. fiscal balance. Following Fed rate hikes that invert the treasury yield curve, recessions generate less income and profits and thus diminished tax revenue for government, while also boosting government spending on a fast-growing pool of jobless people, so-called "stimulus packages," and bailouts. The result is a widening budget deficit and a faster-rising national debt.

Alternatively, Fed rate cuts eventually bring upswings in the business cycle, more income and profit, hence greater tax revenue and less government spending on the unemployed, pork projects and failed firms. The result is a narrowing of the federal budget deficit (and sometimes, as in 1998-2001, a return to budget surpluses) and a deceleration in the growth of the federal national debt.

Read the full article here.

 

[Ally]

New home prices edge up 0.3% in March

OTTAWA — Prices for new homes in Canada rose 0.3 per cent in March, following a 0.1 per cent increase the previous month and extending gains that began in July 2009, Statistics Canada reported Wednesday.

The March increase was in line with economists` forecasts.

Statistics Canada said its new house price index was also up 1.6 per cent in March from a year earlier, compared with an annual increase of 0.9 per cent in February. "The growth in March was mostly due to higher prices in Vancouver," the federal agency said.

The new housing price index measures changes over time in the selling prices of new houses.

Higher material costs helped boost the index in Montreal and the Ontario cities of Kitchener and London, where prices saw the biggest month-to-month jump.

Read the full article here.

 

[Ally]

New website targets real estate agents

Real estate agents, already under siege from Canada`s competition watchdog, are being targeted by a new website that would have them competing for listings and might ultimately lower their commissions.

iBidBroker.comwas launched by 29-year-old Ajay Jain of Toronto, a realtor who once worked in land acquisitions for SmartCentres Inc., one of Canada`s largest shopping-centre developers.

"The changes in the industry are part of the reason for the launch, but it wasn`t the initial reason because the idea was conceived about six or seven months ago," Jain said. "I felt the [Realtors`] current method of attracting consumers was being done in a very archaic fashion."

His move comes as the Competition Bureau continues its battle with the Canadian Real Estate Association (CREA) over access to the Multiple Listing Service system, which controls about 90 per cent of residential real-estate transactions in Canada. The bureau has filed an application with the Competition Tribunal with a goal of opening up the MLS to more a la carte services, including discount brokers.

The tribunal has now set the first date for hearings on the matter. On June 30, it will listen to arguments from two parties on why they should be given intervener status. One of the parties is the owner of an alternative real-estate listing network and the other is lawyer Lawrence Dale, who is suing CREA.

Read the full article here.

 

[Ally]

Oil prices to stay low through 2011: CBC report

OTTAWA - Several key forces are holding oil prices around US$80 a barrel, and not even the oil leak in the Gulf of Mexico and positive news on Europe`s debt crisis are enough to lift prices in the near term, says a CIBC report released yesterday.

Unlike the spike in prices seen in 2004 when Hurricane Katrina affected production in the Gulf and the peak above $145 US a barrel in July 2008 --mainly due to speculation-- "several countering forces are at play in the oil market that should see prices stay below triple-digit territory over the next 18 months, averaging $80 US a barrel this year and $85 US in 2011," says the report by CIBC senior economist Peter Buchanan.

Many countries, including the world`s top oil consumer, the United States, "will have to cut bloated deficits, and the drag from those efforts will keep the global recovery`s pace from matching past ones, restraining oil demand," the report says.

In booming China, oil demand is likely temporary, the result of "increased consumption by the power sector to offset reduced hydroelectric production resulting from the worst drought to hit the country in a century," it says.

Read the full article here.

 

[Ally]

T. Boone Pickens` Oil Price Predictions for 2010-2011

Click here to watch.

 

[Ally]

Downturn more asset collapse than economic recession

The latest economic downturn will go down in history as one of the fastest declines in recent memory. A new report concludes that the drop in stocks, commodities and exchange prices was much faster than the three previous recessions dating back to 1980.

But it also found that although the downturn hit the markets hard, the effects were felt less in the real economy compared to past recessions.

"The amplitude of the declines was markedly different: sharper in financial markets, more muted in the real economy," the report, written by Phillip Cross, said.

For instance, the Canadian dollar retreated from parity to a low of 79¢ in a mere 10 months between May 2008 and March 2009. That kind of drop took over a year to happen in the previous three recessions.

Read the full article here.

 

[Ally]

How an epic battle began

Lawrence Dale is either a crusader championing the rights of Canadian homeowners or a parasite trying to sponge off the real-estate industry.

By attempting to offer alternative discount real-estate services to Canadians looking to sell and buy their homes on the multiple listing service (MLS), the 47-year-old real-estate lawyer helped spark what is becoming an epic battle between Canada`s competition watchdog and the country`s dominant real-estate association.

In 2001, he launched a discount real-estate firm, Realtysellers (Ontario) Ltd., that reduced the role of agents and the commissions they collect from homebuyers and sellers.

"They were wild the day we got started," he explains during an interview in his home in the tony Forest Hill neighbourhood in Toronto. "The fear in the industry is that it`s being disinter-mediated. They want to control the data because it`s the Holy Grail."

For almost a decade, the real-estate industry has been trying to protect its pricing structure and its grip on the MLS, the system through which 90% of homes are bought and sold in this country. In doing so, it wound up in the cross-hairs of Canada`s Competition Bureau -- and locked in a nasty public-relations battle many believe it can`t win.

The first inklings that Canada`s competition watchdog and the country`s most powerful real estate association were on a collision course surfaced in the summer of 2006.

Read the full article here.

 

[Ally]

Canada second only to Mexico for low corporate taxes: KPMG

OTTAWA -- Canada is second in a contest among 10 major economies when it comes to low corporate taxes, with three Canadian cities in the top five among major centres, according to a KPMG study released Wednesday.

Mexico took the top spot in the survey, with the Netherlands coming third, Australia fourth, the United Kingdom coming next, the United States after that, and Germany, Italy, Japan and France completing the list in that order.

Canada`s overall score was 63.9, which is meant to represent the proportion of corporate tax rates paid in the U.S., which is automatically assigned an score of 100. Mexico came in at 59.9.

The study takes into consideration income tax, capital tax, sales tax, property tax, local business taxes and taxes related to labour.

Canada finished third overall when this study was done in 2008. KPMG said controversial harmonized sales taxes - being introduced in Ontario and British Columbia in July and shifting some tax burden from companies to consumers - helped improve the country`s standing.

Read the full article here.

 

[Ally]

U.S. home foreclosures hit record high in April

U.S. home foreclosures climbed to a record level in April, a sign that government mortgage relief efforts have yet to turn the tide of property seizures, according to a report by RealtyTrac Inc.

"Right now it appears that the banks are focusing on processing the loans already in foreclosure, and slowing down the initiation of new foreclosure proceedings as a way of managing inventory levels," Rick Sharga, RealtyTrac`s executive vice-president, said in an email. "We`ll probably see this trend continue for a while."

Bank repossessions rose to 92,432 in April, up 45 per cent from a year earlier, Irvine, California-based RealtyTrac said Thursday in a statement. Foreclosure filings, including default and auction notices, fell 2 per cent to 333,837. One of every 387 households received a filing.

Unemployment of 9.9 per cent and a rising percentage of homes worth less than the mortgages on them are combining to thwart a housing recovery, according to RealtyTrac. About 5 million delinquent loans will probably end up in the foreclosure process in addition to the 1.2 million homes already taken back by lenders, Sharga said.

Defaults may not peak until 2011 depending on how lenders process them, Sharga said.

Read the full article here.

 

[Ally]

Calgary Police, RCMP to join forces in major mortgage fraud case

Police will speak with Calgary Northeast MP Devinder Shory after announcing Thursday their review of a massive mortgage fraud involving dozens of city properties has become a criminal investigation.

The Tory MP, among hundreds of defendants named in a civil suit filed by the Bank of Montreal, is accused of negligently acting as a lawyer on behalf of clients who used fraudulent documents to obtain mortgages, according to a statement of claim filed by the bank.

RCMP spokesman Sgt. Patrick Webb said investigators, after reviewing a sample of the voluminous paperwork provided to police by the bank, determined criminal activity might be involved. The investigation would involve speaking with Shory, among others named in the civil suit, he said.

"What that will involve is members from both agencies working together to look at the materials presented by Bank of Montreal — literally tens of thousands of documents — as well as commencing the likely hundreds of interviews, which will be required," said Webb

Read the full article here.