October 2007 Market Research

[BMironov]

Statistics Canada:Canadian international merchandise trade (Oct 11, 2007)
http://www.statcan.ca/Daily/English/071011/d071011a.htm

QUOTE Canada`s merchandise trade surplus with the world widened in August in the wake of a decline in exports and an even sharper decrease in imports, which had hit a record high the month before.

Total expors (Jan - Aug 2007) were +4.4% over (Jan - Aug 2006)
Total imports (Jan - Aug 2007) were +3.84% over (Jan - Aug 2006)


Globe and Mail:
August trade surplus widens as imports tumble (Oct 11, 2007)
http://www.reportonbusiness.com/servlet/st...ry/robNews/home#

 

[BMironov]

TD EconomicsCanadian International Trade Commentary (Oct 11, 2007)
http://www.td.com/economics/comment/rs101107.pdf

QUOTE On balance, it appears that despite the rise in the trade surplus, the underlying details reveal that there was some slowdown in the pace of trade. In fact, today’s report along with the solid housing release, earlier this week, marks the clear divide in Canada’s economy between robust domestic growth and a softening trade picture. Housing sector activity continues apace. Meanwhile, the labour market remains drum tight, with the staggeringly strong job gain of 51K in September cutting the unemployment rate to a new 33-year low of 5.9%. The tight labour market is cranking up wage pressures, with average hourly wages ticking up to a 4.2% y/y increase last month. However, even as domestic demand remains resilient, the performance of the export sector remains weak. During the past eight quarters net trade has lopped off an average 2 percentage points (annual rate) from top line GDP. Going forward, there are little signs of relief on the trade front. While firms levered to still-healthy global demand for key commodities are well positioned for further growth, non-resource manufacturers must contend with sharp erosion in US demand growth, intense competition from overseas producers and a high-flying loonie. Meantime, in spite of this mornings backtrack, imports should be well supported by robust domestic spending trends. All in all, real net trade looks to remain a drag on GDP growth in the second half of 2007 and into 2008, and while domestic demand is seen holding up, this external weakness should nonetheless translate into below potential GDP growth next year (averaging around 2.3%).

 

[BMironov]

CIBC World MarketsEconomic presentation: OPEC`s growing call on itself (Oct 4, 2007)
http://research.cibcwm.com/economic_public...s_nyc_oct07.pdf

Amazing 19-page presentation!

It shows data discussed in the document from Sep 10, 2007:
http://research.cibcwm.com/economic_public...d/occrept62.pdf

 

[BMironov]

Globe and Mail:Canada No.2 in well-off ranking (Oct 11, 2007)
http://www.reportonbusiness.com/servlet/st...ry/robNews/home

QUOTE According to Merrill Lynch, Canada currently boasts a “misery index” of just 6.4 points, ranking the Great White North`s economy second-best off among Group of Seven nations.
...
The lower the number, the better off you are, according to the Merrill index, which measures the economic and social costs for G7 countries, based on their consumer price index, unemployment rate, real gross domestic product, fiscal budget balance, current account and three-month treasury bill rate.
...
Canada`s showing, down from 7.1 points last year, makes it a distant second to Japan at a mere 1.6 points, and leaves it just a tick above Germany at 6.5.

However, like its closest rivals, Canada is streets ahead of the rest of the pack, what with Italy at 13.9 points (down from 15.4 in 2006), France at 15.2 (14.7), the United States at 17.3 (17.9) and Britain the most miserable at 19.6 (17.6).

 

[BMironov]

Just came across of last issue of "Canadian Business" (Oct, 2007)It is much bigger than usual (208 pages versus usual 70). Whole issue is about Canada in 2020.From innovation to immigration and beyond. "Canadian Business" takes in-depth look at Canada`s future - and how we can best prepare to face the daunting list of coming challengesTable of contents:

• Leadership Why change?[*] Vision Canada tomorrow[*] Demographics The human factor[*] Competitiveness Where Canada can win[*] Technology Innovation station[*] Entrepreneurs Michael doesn`t live here anymore[*] Globalization Wake-up call[*] The banks The home game[*] Immigration Give us your skills Border Where Canada meets the world Native affairs Native wisdom The North The final frontier Climate change

• A new world Health care

• Medicare Inc. Education

• Are we getting dumber? Infrastructure

• Things fall apart Infrastructure

• Borrow for tomorrow Taxes

• A smarter kind of taxes

On the last page of the issue you will find forecast of 2020 GDP for world biggest economies.

 

[BMironov]

Toronto Star:RBC predicts solid growth into 2008 (Oct 12, 2007)
http://www.thestar.com/Business/article/266201

QUOTE Canada`s economy should grow by 2.8 per cent in the final half of 2007 and 2.5 per cent next year.

The bank says strong consumer and business spending will more than offset ongoing export-related weakness resulting from slower U.S. growth and the high Canadian dollar.

Craig Wright, vice-president and chief economist of RBC, says Canada should continue to sustain relatively solid growth through 2008.

RBC Report is available at:
http://www.rbc.com/economics/market/pdf/fcst.pdf

QUOTE

• With many economies outperforming expectations in the first half of the year, we project that the global economy will record another solid year of growth, assuming that financial market volatility eases.
• The credit crunch does not totally dissipate with risk being more appropriately re-priced to a higher level. Rising risk aversion may weigh on growth in the near-term, but strong momentum will carry the global economy through this rough patch. Upward inflation pressures are present but will take a back seat to liquidity concerns as policymakers navigate through this period of financial market turmoil.

 

[BMironov]

RBC economics:Provincial Outlook (Oct 2007)
http://www.rbc.com/economics/market/pdf/provfcst.pdf

QUOTE Canada’s economy is so far marching to the beat of its own drummer, but there are sharp regional variations on this economic advantage. As a result, we have lowered our growth forecasts for the Ontario and Quebec economies and have become more bullish on near-term prospects in parts of western Canada.

• British Columbia — More reason for caution in next decade
• Alberta — Coming production surge amidst investment risks
• Saskatchewan — Winning the diversification race?
• Manitoba — Canada’s Goldilocks economy
• Ontario — Forecast lowered; competitiveness waning Quebec — Challenging times, capital spending a key support New Brunswick — Mega projects in the pipelines Nova Scotia — Stronger than last year, upsides developing Newfoundland and Labrador — Unveils new energy plan Prince Edward Island — Potato harvest prospects upbeat

 

[BMironov]

Statistics CanadaInvestment in non-residential building construction (Oct 12, 2007)
http://www.statcan.ca/Daily/English/071012/d071012.pdf

QUOTE Investment in non-residential building construction marked its fourth consecutive year of uninterrupted growth, fuelled mostly by sustained commercial investment in Central Canada and Alberta.

Non-residential investment hit $10.4 billion in the third quarter, up 4.9% from the second quarter.

 

[BMironov]

Edmonton Journal:Canola will fuel $90M refinery (Oct 16, 2007)
http://www.canada.com/edmontonjournal/news...36-fdefbb648ed9

Plant will consume five per cent of crop

QUOTE Canadian Bioenergy Corp. broke ground Monday for construction of its $90-million biodiesel refinery near Fort Saskatchewan.

President Doug Hooper expects the plant to open in mid-2009 and to process 500,000 tonnes of canola seed per year.

In an average year, that would equal the production from 650,000 acres, or five per cent of Canada`s canola harvest, he said. After adding methanol and catalysts, the plant will produce about 200,000 tonnes of refined oil annually.
...
"Using full life-cycle data, it will reduce greenhouse gases by at least 85 per cent for every litre of diesel that it displaces," Hooper said.
...
Canada is a net exporter of canola oil and that its conversion to fuel for domestic consumption creates more value-added activity in Canada -- and makes the country less dependent on export markets. As technology advances, Hooper said, the plant may be able to accept alternative inputs such as wood chips and algae.
...
The plant is being built by Renewable Energy Group, an Iowa company that specializes in such facilities. Hooper expects to create 70 construction jobs, then 35 permanent operating jobs.

 

[BMironov]

Globe and Mail:Gas junior wins deal on pipeline project (Oct 16, 2007)
http://www.theglobeandmail.com/servlet/sto...PStory/Business

MGM Energy secures capacity on Mackenzie Valley pipeline feeder system in NWT

QUOTE MGM Energy Corp., a junior explorer, has a deal to move natural gas through part of the proposed Mackenzie Valley pipeline, the first such contract signed by a company outside the main consortium behind the northern infrastructure project.
...
MGM`s deal is significant because it is the first company outside the Mackenzie project ownership group to make a formal commitment to the struggling project.

Calgary-based MGM has signed what is called a capacity request agreement for 200 million cubic feet of natural gas per day. The deal specifically relates to the so-called gas gathering system which would be built in the Mackenzie Delta near Inuvik in the Northwest Territories, where major fields of natural gas are located.

The gathering system would then connect to the main 1,200-kilometre pipeline that would carry the gas south to northern Alberta and the rest of Canada.
...
The Mackenzie project is led by Imperial Oil Ltd. and includes multinationals such as Royal Dutch Shell PLC. It is slowly working its way through a multiyear regulatory process and is grappling with a soaring budget, which Imperial this year said jumped to $16.2-billion from a previous estimate of $7.5-billion.

 

[BMironov]

CIBC World Markets:Forecast: A Nickel Back (Oct 15, 2007)
http://research.cibcwm.com/economic_public...load/foct07.pdf

"At the heart of thi s reversal of fortune is the huge shift in the global terms of trade over the last decade, which has seen economic value-added migrate from information technology back to resource rents under the ground."

QUOTE While it`s been three decades since Canadians have seen their currency at par with the once almighty US dollar, the loonie`s flight is far from over. By the end of next year you`ll get as much as a nickel back when you trade your loonies for greenbacks, the biggest premium since 1960.
...
Today it`s not Russian or Mexican defaults that de-stabilize global credit markets, but defaults by homeowners deep inside the American heartland. The American economy has gone from the global engine of growth to the world economy`s Achilles heel in the space of a decade.

Table of contents:[list type=decimal][*] The US Economy: Scraping By

• Worst to Come for Housing?
• "Collateral" Damage to Consumers
• Net Exports "Really" Positive
• Inflation: Parting Ways
• Canada: America`s Dance Partner No More
  • Outpacing US Despite Premium Exchange Rate
  • Where Ties Still Bind
  • Buoyed by Energy, Industrials
    Government Pitches In
    Labour Market Tight, Wage Growth Accelerates
  Little US Contagion to Global Growth Central Banks Less Hawkish
  Emerging Markets Have Weathered Turbulence Well
  Japan Regains its Economic Footing
  Eurozone: ECB and BoE Steer Soft Landing

[/list type=decimal]

 

[BMironov]

Financial Post:Building B.C.`s most expensive mine (Oct 12, 2007)
http://www.canada.com/nationalpost/financi...ac-609d52a0c26d

Galore Creek project

QUOTE From sun-up to sun-down, they fly people and goods -- including 12.5-million litres of diesel this year, 167 camp buildings, and massive Caterpillar dozers that dangle beneath earth`s largest helicopter -- to the spots where the project`s 670 workers are building the most expensive mine ever dug into British Columbian soil.
...
The Galore Creek Mine, a joint-venture by Vancouver-based miners NovaGold Resources Inc. and Teck Cominco Ltd., is so expensive that its construction costs exceed those of the 2010 Vancouer Olympics -- including all of the Games venues and highway upgrades -- and so rich with copper and gold that, at current metal prices, it will pay those costs back in just 24 months and churn out $1-billion in annual after-tax cash flow in following years.

Its construction is an engineering feat that includes building a four-kilometre tunnel, 135-kilometre road and two pipelines -- one for diesel, another for ore concentrate -- along steep canyon walls and over churning rivers in a part of the province that averages two metres of precipitation a year.

NovaGold Resources Inc about Galore Creek project:
http://www.novagold.com/section.asp?pageid=3358
QUOTE Galore Creek is expected to produce 432 million pounds of copper, 341,000 ounces of gold and 4 million ounces of silver annually for the first 5 years of production, transitioning NovaGold to a mid-tier producer and significantly increasing Teck Cominco`s annual copper and gold production. With over 540 million tonnes of reserves and approximately 1 billion tonnes of resources, there remains considerable potential to increase annual production and extend the mine life beyond 20 years.

 

[BMironov]

Toronto Star:Skeena debt holders to get money back (Oct 17, 2007)
http://www.thestar.com/Business/article/267614

Owners of $2 billion in Skeena notes get good news but committee is tight-lipped about other trusts

QUOTE An investor committee working to revive a $35 billion piece of the asset-backed commercial paper market gave assurances yesterday it will finalize retooling plans for the remaining 21 frozen trusts by mid-December, but it is worried that sharing details now will sabotage the restructuring.The committee has already hammered out a plan for note holders of the $2.1 billion Skeena Capital Trust, sponsored by Dundee Securities Corp. Note holders will receive the full value of their original investment, along with "accrued interest net of restructuring costs." Losses were not specified.

 

[BMironov]

Globe and Mail:Re/Max sees home sales slowing in 2008 while prices rise 6% (Oct 17, 2007)
http://www.reportonbusiness.com/servlet/st...ry/robNews/home

QUOTE The Re/Max real estate company sees Canadian home sales slowing in 2008 while prices rise 6 per cent, on average.After extraordinary gains in 2007, the housing market`s performance is expected to moderate in most major Canadian centres, the firm said Wednesday in an outlook report covering 18 markets across the country.

While economic prospects should continue to improve, few major markets are expected to exceed record sales levels set in 2007.
...
“Western markets were first out of the gate in 2007, but those in the East followed suit,” says Michael Polzler, executive vice-president and regional director for Re/Max in Ontario and Atlantic Canada.

“By year-end, some of the most impressive gains in home sales will be realized in Ontario and Atlantic Canada. Solid economic fundamentals, including billions of dollars in capital projects, a positive unemployment outlook, and solid consumer confidence levels will propel markets forward.
...
Major market leaders for price appreciation in 2008 include St. John`s, 12 per cent; Regina and Kelowna-Central Okanagan, 9 per cent, Hamilton-Burlington, Ont., and Saint John, New Brunswick, 8 per cent; and Greater Vancouver, 7 per cent.

Leading the country in predicted sales growth next year are Kitchener-Waterloo, Ont., at 7 per cent, followed by Hamilton-Burlington, London-St. Thomas, Ont., Sudbury, Ont., and Halifax-Dartmouth, N.S., each forecasting a 5 per cent gain.

By the end of 2007, housing values across the country are expected to shatter existing records.

Double-digit increases in average price this year are forecast for Saskatoon, 49 per cent; Edmonton, 31.5 per cent; Regina, 21 per cent; Calgary, 20 per cent; Sudbury, Ont., 20 per cent; Kelowna, B.C., 19.5 per cent; Saint John, N.B., 17 per cent; St. John`s, N.L., 12 per cent; and Greater Vancouver, 10 per cent.

ReMAX report "Housing market outlook 2008":
http://www.remax-oa.com/MarketReports_PDF/...tPR2007_RPT.pdf

 

[BMironov]

Financial Post:Canada lures offshore investors, report says (Oct 17, 2007)
http://www.canada.com/nationalpost/financi...65-c9550980aa5e

Us$23B Surplus: UN

QUOTE Canada placed among the top 10 nations in terms of attracting and deploying foreign investment last year, a UN-sponsored report said yesterday.
...
According to the data, Canada ranked sixth worldwide in terms of attracting foreign investment, with almost $70-billion coming into the country from abroad -- more than double what the country attracted in 2005. However, much of that increase was attributed to the two major deals involving Inco and Four Seasons. The top three countries in terms of attracting foreign dollars were the United States (US$175-billion), Britain (US$140-billion) and France (just over US$80-billion).

In terms of investing abroad, Canadians ranked ninth, having spent $45.2-billion overseas, or a 34% increase from 2005. The top three globally were the U.S. (US$217-billion), France (US$115-billion) and Spain (close to US$90-billion).

Report overview (49 pages, 594Kb):
http://www.unctad.org/en/docs/wir2007overview_en.pdf

Full report (323 pages, 4.7Mb):
http://www.unctad.org/en/docs/wir2007_en.pdf

 

[BMironov]

RBC economics:The economic shocks confronting Canada do not all point south (Oct 2007)
http://www.rbc.com/economics/market/pdf/shocks.pdf

QUOTE The Canadian economy is currently contending with a number of negative shocks. The most recent is the ongoing financial market turmoil that has emerged from a distressed U.S. housing market and is weighing on the U.S. expansion. In addition, the manufacturing sector is contending with the recent rapid appreciation of the Canadian dollar that is both making export goods more expensive in the U.S. market and making imports more competitive in the Canadian market. Yet, despite these seemingly negative factors, the Canadian economy reported an impressive 51,000 jump in employment in September and a staggering 20% jump in September housing starts to 278,200 units, the third highest annualized level on record. How can this happen given the strong headwinds currently confronting the Canadian economy? One possible explanation is that Canada’s economy is also contending with a third shock — a rise in this economy’s “terms of trade” — a shock of the positive kind that is much more supportive of growth.

“Terms of trade” is simply defined as the ratio of export prices to import prices. As the accompanying chart shows, Canada’s terms of trade have shot up 20% since 2002 after displaying a relatively flat trend during the previous two decades. This recent surge is largely a reflection of the rapid rise in prices for a number of key commodity exports like oil, base metals and grains that have seen sharply rising demand, particularly from recently industrializing economies such as China.

Very interesting 2-page report explaining these days of Canadian economy! We live in such an interesting time when all players have to adjust to new era:

• RBC is dropping "affordability index"
• Statistics Canada introducing new mesaures for economy output ...

 

[BMironov]

Globe and Mail:Russian ship crosses `Arctic bridge` to Manitoba (Oct 18, 2007)
http://www.theglobeandmail.com/servlet/sto...l_gam_mostemail

Arrival of the Kapitan Sviridov at the port in Churchill marks historic first step in the construction of a new trade route, officials say

QUOTE The Russian ship slipped into Canada`s northern seaport under the cover of darkness yesterday, and its arrival was hailed as an historic step in the construction of an Arctic bridge between the two countries.

The Kapitan Sviridov docked in Churchill, Man., yesterday morning, having sailed from Estonia loaded with bags of fertilizer destined for sale to North American farmers. It`s the first time the port has accepted imports from Russia.
...
"Today represents the first successful shipment on the Arctic bridge," said Mike Ogborn, managing director of OmniTrax, the company that owns the port. "It is a great step forward in showing the world that the port of Churchill is a two-way port."

The concept of the Arctic bridge has long been a priority for the government of Manitoba, which sees vast potential for Churchill as the northern hub of a mid-continent trade corridor that would extend to the Gulf of Mexico. Churchill already boasts the advantage of having the shortest sea route between Canada and northern Europe, and it received a substantial boost this month when Prime Minister Stephen Harper announced $68-million in public and private funding to upgrade the aging port and railway.

The Russian government is also eager to encourage Churchill`s growth, because it sees it as a natural outlet for its northern port of Murmansk.

"The goal is very simple," said Sergey Khuduiakov, acting press attaché for the embassy of the Russian Federation. "Global warming gives us an opportunity to establish better marine shipping routes between Canada and Russia, and this project, Arctic bridge, has very good prospects.
...
Michael Berk, a research fellow at the Canadian Institute of International Affairs, a non-profit think tank, said Churchill could become the terminus of a new silk road linking Eurasia and North America.

 

[BMironov]

Edmonton Journal:Spreading resource revenue around (Oct 19, 2007)
http://www.canada.com/edmontonjournal/news...89-c9944355dabc

Analyst sees cash from northern development benefiting infrastructure improvements throughout province

QUOTE The province is looking to the oilsands industry to help finance solutions to the transportation infrastructure squeeze between the northern mines and southern suppliers, an oilsands conference heard Thursday.
...
Alberta`s oilsands will generate three per cent of the world`s oil by 2030 and despite efforts to develop alternate energy sources to fossil fuel, global demand will increase 43 per cent by 2030, mostly in developing countries, Mansell said.

While many estimates put the oil and gas industry at 20 per cent of the provincial economy, it`s more like 50 per cent when you include services provided to the sector by accountants, lawyers and government, he added. "And that`s not counting induced benefits such as lower taxes."

Oilsands make up only 25 per cent of the province`s energy value with natural gas and gas liquids at 50 per cent, but that will change as oilsands expand and gas reserves decline, Mansell said.
...
Mansell said everyone is too preoccupied with how we divide the royalty pie following the recent review of the royalty structure. "It`s not how much we get, but how we spend it."

 

[BMironov]

The Canadian Press:Sask. Liberals say sell fertilizer co. and give money to the cities (Oct 18, 2007)
http://canadianpress.google.com/article/AL...AdLWlnvfubuFdCQ

QUOTE Saskatchewan Liberals say the province should sell its profitable stake in the fertilizer company SaskFerco and put the money toward improving cities.

David Karwacki says $400 million dollars from the sale should be put toward infrastructure improvements to make sure cities can keep up with the hot economy.

Of that money, $200 million would go to Regina and Saskatoon for infrastructure improvements and another $100 million would be split between Regina, Saskatoon, Moose Jaw and Prince Albert for projects that discourage urban sprawl.

The remaining $100 million would go to smaller communities throughout the province.

Any money left over from the sale, Karwacki says, would go toward debt reduction.

I believe, it is pre-election promise.

 

[BMironov]

Toronto Star:High loonie eroding Canadian pensions (Oct 19, 2007)
http://www.thestar.com/Business/article/268535

QUOTE Canadian pensions lost 0.7 per cent in the quarter because of the soaring loonie, trimming year-to-date results to just 1.8 per cent, Royal Bank`s investor services arm said Friday.

RBC Dexia Investor Services, which manages $340 billion in Canadian pension plans, said currency losses continued to eclipse global equity returns.
...
"Given that foreign stocks constitute about half the equity allocation of a typical pension fund, Canadian plan sponsors are sharpening their focus on currency management."

Canadian equities returned only 0.6 per cent to pension funds in the latest quarter, trailing the S&P TSX composite index by 1.4 per cent.

"Domestic stocks rallied in the month of September, driven mainly by materials and technology," McDougall said. ``Unfortunately, most pension funds were under-exposed to these key sectors."

Year-to-date, pension plans gained 11.3 per cent, marginally outpacing the benchmark index.

Bonds were the top-performing asset class in the quarter, earning pensions a modest 1.7 per cent.