October 2009
- Thread starter Ally
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Why saving too much is scary Bad
The next financial trap you have to worry about is the savings bubble.
Way, way too much money is sitting around in savings and chequing accounts as well as money market funds. This money isn`t at risk, but the people squirrelling it away are hurting themselves financially. They`re missing a chance to participate in the stock market recovery and they`re wasting opportunities to pay down debt.
The most recent report from the mutual fund industry shows there`s almost $65-billion sitting in money market funds. Wastage alert: Annualized returns from the biggest five money market funds available to everyday investors average 0.12 per cent right now. A joke, in other words.
What`s not as widely known is that there`s another $60-billion or so that Canadians have sheltered in bank accounts. Add it all up and you get a rough, estimated total of $125-billion in what can accurately be called fear money. That`s money that could be doing other things, but isn`t, because of worries relating to the global financial crisis and recession.
"People are paralyzed now," said Benjamin Tal, senior economist at CIBC World Markets. "They have to start making decisions."
Money market fund holdings have grown over the past year as a result of people getting out of their equity mutual funds. The growth in bank account holdings is a bit trickier to understand.
Read the full article here.
The next financial trap you have to worry about is the savings bubble.
Way, way too much money is sitting around in savings and chequing accounts as well as money market funds. This money isn`t at risk, but the people squirrelling it away are hurting themselves financially. They`re missing a chance to participate in the stock market recovery and they`re wasting opportunities to pay down debt.
The most recent report from the mutual fund industry shows there`s almost $65-billion sitting in money market funds. Wastage alert: Annualized returns from the biggest five money market funds available to everyday investors average 0.12 per cent right now. A joke, in other words.
What`s not as widely known is that there`s another $60-billion or so that Canadians have sheltered in bank accounts. Add it all up and you get a rough, estimated total of $125-billion in what can accurately be called fear money. That`s money that could be doing other things, but isn`t, because of worries relating to the global financial crisis and recession.
"People are paralyzed now," said Benjamin Tal, senior economist at CIBC World Markets. "They have to start making decisions."
Money market fund holdings have grown over the past year as a result of people getting out of their equity mutual funds. The growth in bank account holdings is a bit trickier to understand.
Read the full article here.
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Canada to lead G7 Performers in 2010: IMF
Canada`s economic growth will be slightly weaker than anticipated this year but surge ahead of G7 activity in 2010, according to the International Monetary Fund.
The IMF, the international body that oversees the global monetary system, raised its growth forecast on Thursday for the world economy next year because of an expected pick up in manufacturing across Asia and Europe.
Economic growth was predicted to be strongest among emerging market and developing economies in Asia, the Middle East and Africa because developed countries were the most severely hit by the global financial crisis. However, Canada was expected to have the strongest growth of the Group of Seven developed countries in 2010.
The IMF said the Canadian economy would contract by 2.5% in 2009, 0.2 of a percentage point lower than its previous forecast in July. However, the economy was predicted to expand by 2.1% in 2010, up 0.5 of a percentage point from July. The growth expectation puts Canada ahead of the United States, which is expected to contract by 2.7% this year and grow by 1.7% in 2010.
Italy is expected to grow by just 0.2% next year, while Germany will not be much stronger with 0.3% growth. The United Kingdom and France are both forecast to expand by 0.9%, while gross domestic product in Japan is predicted to increase by 1.7%.
Read the full article http://www.financialpost.com/story-printer.html?id=2054810.
Canada`s economic growth will be slightly weaker than anticipated this year but surge ahead of G7 activity in 2010, according to the International Monetary Fund.
The IMF, the international body that oversees the global monetary system, raised its growth forecast on Thursday for the world economy next year because of an expected pick up in manufacturing across Asia and Europe.
Economic growth was predicted to be strongest among emerging market and developing economies in Asia, the Middle East and Africa because developed countries were the most severely hit by the global financial crisis. However, Canada was expected to have the strongest growth of the Group of Seven developed countries in 2010.
The IMF said the Canadian economy would contract by 2.5% in 2009, 0.2 of a percentage point lower than its previous forecast in July. However, the economy was predicted to expand by 2.1% in 2010, up 0.5 of a percentage point from July. The growth expectation puts Canada ahead of the United States, which is expected to contract by 2.7% this year and grow by 1.7% in 2010.
Italy is expected to grow by just 0.2% next year, while Germany will not be much stronger with 0.3% growth. The United Kingdom and France are both forecast to expand by 0.9%, while gross domestic product in Japan is predicted to increase by 1.7%.
Read the full article http://www.financialpost.com/story-printer.html?id=2054810.
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Stalled GDP sparks fears for Canada`s Recovery
Economic growth was surprisingly nowhere to be found in July, leaving economists wary about the strength of Canada`s recovery in the third quarter.
Gross domestic product was flat in the month, Statistics Canada data showed Wednesday, leaving predictions for a 0.5% rebound in activity hanging in the breeze.
"It just shows that the recovery is fragile as we`ve been saying, so we have to stay the course, continue to implement the economic action plan, the stimulus that we are putting into the economy," Jim Flaherty, the Minister of Finance, told reporters.
The Minister has refrained from declaring the recession over in Canada, in contrast to predictions by the Bank of Canada and Bay Street economists.
His cautiousness appears to have been well founded, given the weakness in July, the month that economists had expected a firm turnaround in activity after a 0.1% rise in June. The June increase was the first rise in GDP in 10 months.
Read the full article here.
Economic growth was surprisingly nowhere to be found in July, leaving economists wary about the strength of Canada`s recovery in the third quarter.
Gross domestic product was flat in the month, Statistics Canada data showed Wednesday, leaving predictions for a 0.5% rebound in activity hanging in the breeze.
"It just shows that the recovery is fragile as we`ve been saying, so we have to stay the course, continue to implement the economic action plan, the stimulus that we are putting into the economy," Jim Flaherty, the Minister of Finance, told reporters.
The Minister has refrained from declaring the recession over in Canada, in contrast to predictions by the Bank of Canada and Bay Street economists.
His cautiousness appears to have been well founded, given the weakness in July, the month that economists had expected a firm turnaround in activity after a 0.1% rise in June. The June increase was the first rise in GDP in 10 months.
Read the full article here.
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Housing Market `Correction is Behind us`: Price Index
OTTAWA -- Home prices in Canada rose 1.6% in July, the third straight monthly increase after eight consecutive declines, according to the Teranet-National Bank house price index.
Prices rose in all of the six metropolitan areas surveyed, the first time that has happened in 13 months, the report stated.
Moreover, in three of the six areas - Halifax, Ottawa and Montreal - prices rose to levels above their pre-recession peaks.
Nationally, prices were still down from a year earlier, off 5.1% in July, representing the eighth consecutive 12-month decline.
Nevertheless, the recent monthly gains indicate "the market correction is behind us," said National Bank senior economist Marc Pinsonneault.
Read the full article here.
OTTAWA -- Home prices in Canada rose 1.6% in July, the third straight monthly increase after eight consecutive declines, according to the Teranet-National Bank house price index.
Prices rose in all of the six metropolitan areas surveyed, the first time that has happened in 13 months, the report stated.
Moreover, in three of the six areas - Halifax, Ottawa and Montreal - prices rose to levels above their pre-recession peaks.
Nationally, prices were still down from a year earlier, off 5.1% in July, representing the eighth consecutive 12-month decline.
Nevertheless, the recent monthly gains indicate "the market correction is behind us," said National Bank senior economist Marc Pinsonneault.
Read the full article here.
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Twin Addictions
A world expert on economics delivered a cogent and optimistic analysis of the global financial meltdown, its causes, its cure and its effect on the future at the recent Global Business Forum in Banff Alberta.
Dr. Nariman Behravesh, chief economist with IHS Global Insight ( www.ihsglobalinsight.com),blamed twin "addictions" for 2008`s financial catastrophe: dependency on easy credit on the part of nations with trade deficits and excessive reliance on exports by those with trade surpluses. "Germany and Japan have been hit harder than the U.S. because trade-surplus countries have been hit harder than trade-deficit countries," said Dr. Behravesh.
This vicious circle fuelled global growth until the credit markets sank in August 2007. Then the final straw was a year later when Washington let gigantic Lehman Brothers Holdings Inc. go bust.
"That [Lehman`s bankruptcy] was the one of the biggest policy blunders since the Great Depression. Credit markets completely froze and a mild recession turned out to be the worst in decades. It was totally avoidable," he said. "Fortunately, government actions after that avoided the Great Depression 2.0."
His keynote speech addressed a number of key questions: Is the recession over? What will drive the recovery? What will be the shape of the recovery? Will there be inflation problems? And how will U.S. debt affect the value of the US dollar?
Read the full article here.
A world expert on economics delivered a cogent and optimistic analysis of the global financial meltdown, its causes, its cure and its effect on the future at the recent Global Business Forum in Banff Alberta.
Dr. Nariman Behravesh, chief economist with IHS Global Insight ( www.ihsglobalinsight.com),blamed twin "addictions" for 2008`s financial catastrophe: dependency on easy credit on the part of nations with trade deficits and excessive reliance on exports by those with trade surpluses. "Germany and Japan have been hit harder than the U.S. because trade-surplus countries have been hit harder than trade-deficit countries," said Dr. Behravesh.
This vicious circle fuelled global growth until the credit markets sank in August 2007. Then the final straw was a year later when Washington let gigantic Lehman Brothers Holdings Inc. go bust.
"That [Lehman`s bankruptcy] was the one of the biggest policy blunders since the Great Depression. Credit markets completely froze and a mild recession turned out to be the worst in decades. It was totally avoidable," he said. "Fortunately, government actions after that avoided the Great Depression 2.0."
His keynote speech addressed a number of key questions: Is the recession over? What will drive the recovery? What will be the shape of the recovery? Will there be inflation problems? And how will U.S. debt affect the value of the US dollar?
Read the full article here.
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Aussie Invasion?
On Bay Street, there is at least a real deal a day: Companies, governments and investors are either raising money or buying or selling something, all of which normally requires the assistance of a broker. Then there are rumoured deals -- some of which do end up becoming real.
So what are we to make of the talk that Australia`s Macquarie Group, which defines itself as a "global provider of banking, financial, advisory, investment and funds management services," is set to make another acquisition in Canada? The chat is that a few weeks after closing its $116-million acquisition of Calgary-based Tristone Capital Global, Macquarie is in talks to acquire Blackmont Capital, an investment dealer with operations in both the institutional and retail markets. Blackmont, which also has an asset-management capability -- through KBSH Capital Management -- was acquired by CI Financial in early 2007 for $251-million.
At the time of that purchase, CI said, "The acquisition of Rockwater continues our strategy of expanding CI`s distribution capabilities and building increased scale in our asset management business.... Through Blackmont Capital, we will be gaining an impressive roster of over 180 first-rate investment advisors with assets under administration of approximately $9.4 billion, as well as adding a new dimension to our business with Blackmont`s sales and trading group and its research and investment banking operations."
CI was also saying that if the banks -- and not other fund managers -- were its competitors, it would have to become more like the banks to compete.
So what`s changed and why would CI Financial now be a possible seller? Well, the investment dealer business, while steady, hasn`t turned out to be a gold mine for CI and the supposed benefits haven`t materialized.
Read the full article here.
On Bay Street, there is at least a real deal a day: Companies, governments and investors are either raising money or buying or selling something, all of which normally requires the assistance of a broker. Then there are rumoured deals -- some of which do end up becoming real.
So what are we to make of the talk that Australia`s Macquarie Group, which defines itself as a "global provider of banking, financial, advisory, investment and funds management services," is set to make another acquisition in Canada? The chat is that a few weeks after closing its $116-million acquisition of Calgary-based Tristone Capital Global, Macquarie is in talks to acquire Blackmont Capital, an investment dealer with operations in both the institutional and retail markets. Blackmont, which also has an asset-management capability -- through KBSH Capital Management -- was acquired by CI Financial in early 2007 for $251-million.
At the time of that purchase, CI said, "The acquisition of Rockwater continues our strategy of expanding CI`s distribution capabilities and building increased scale in our asset management business.... Through Blackmont Capital, we will be gaining an impressive roster of over 180 first-rate investment advisors with assets under administration of approximately $9.4 billion, as well as adding a new dimension to our business with Blackmont`s sales and trading group and its research and investment banking operations."
CI was also saying that if the banks -- and not other fund managers -- were its competitors, it would have to become more like the banks to compete.
So what`s changed and why would CI Financial now be a possible seller? Well, the investment dealer business, while steady, hasn`t turned out to be a gold mine for CI and the supposed benefits haven`t materialized.
Read the full article here.
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`Barrelling Toward Collapse`
Chris Hedges, the American author and Pulitzer Prize winner, does not care much for the popular notion of optimism, the idea that every situation has a silver lining or a neat solution. It is far better, he said, given the awful state of his country, to be realistic.
"I was a war correspondent for many years and we never used the words optimism or pessimism," said the former New York Times reporter, who spent 20 years covering conflicts in Latin America, the Middle East and the Balkans. "Either you had a realistic and sober understanding of what weapons were at the end of that road, and the capacity of those people at the end of the road to use them and kill you, or you didn`t last long. The first capacity, the most important element that creates a capacity for change, is the acknowledgement of what`s real."
And what`s real, in the grim and steely-eyed Hedges world view, is that America, in its morality, its culture and economy, is crumbling.
"It would be a gigantic step in U. S. culture to at least acknowledge what we`ve become and what`s happening to us," said Mr. Hedges, in Toronto recently to promote his book, Empire of Illusion: The End of Literacy and the Triumph of Spectacle. "Until that happens, there is no hope for any positive change into a direction that can sustain the country."
He does not swagger when he relates his time under fire or when outlining his dark vision of the country he clearly loves. Instead, he relates those experiences and his rather dire predictions in a matter-of-fact fashion -- similar to the way a university professor might lead a graduate seminar. (In fact, Mr. Hedges taught at Princeton University for a time.)
Read the full article here.
Chris Hedges, the American author and Pulitzer Prize winner, does not care much for the popular notion of optimism, the idea that every situation has a silver lining or a neat solution. It is far better, he said, given the awful state of his country, to be realistic.
"I was a war correspondent for many years and we never used the words optimism or pessimism," said the former New York Times reporter, who spent 20 years covering conflicts in Latin America, the Middle East and the Balkans. "Either you had a realistic and sober understanding of what weapons were at the end of that road, and the capacity of those people at the end of the road to use them and kill you, or you didn`t last long. The first capacity, the most important element that creates a capacity for change, is the acknowledgement of what`s real."
And what`s real, in the grim and steely-eyed Hedges world view, is that America, in its morality, its culture and economy, is crumbling.
"It would be a gigantic step in U. S. culture to at least acknowledge what we`ve become and what`s happening to us," said Mr. Hedges, in Toronto recently to promote his book, Empire of Illusion: The End of Literacy and the Triumph of Spectacle. "Until that happens, there is no hope for any positive change into a direction that can sustain the country."
He does not swagger when he relates his time under fire or when outlining his dark vision of the country he clearly loves. Instead, he relates those experiences and his rather dire predictions in a matter-of-fact fashion -- similar to the way a university professor might lead a graduate seminar. (In fact, Mr. Hedges taught at Princeton University for a time.)
Read the full article here.
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Oil slides on weak U.S. Job Report
DATA - Oil fell more than one per cent Friday after U. S. employment figures raised doubts about the strength of the economic recovery.
U. S. unemployment in September rose to its highest rate since June 1983, with payrolls dropping 263,000 against market expectations of a 180,000 fall, the U. S. Labor Department said, bringing unemployment to 9.8 per cent. "Compared to previous recessions, the pace of the current recovery can only be characterized as glacial," said Mike Fitzpatrick, vice-president at MF Global in New York.
U. S. crude futures finished down 87 cents at $69.95 US a barrel. London Brent crude lost $1.12 to $68.07 a barrel.
Read the full article here.
DATA - Oil fell more than one per cent Friday after U. S. employment figures raised doubts about the strength of the economic recovery.
U. S. unemployment in September rose to its highest rate since June 1983, with payrolls dropping 263,000 against market expectations of a 180,000 fall, the U. S. Labor Department said, bringing unemployment to 9.8 per cent. "Compared to previous recessions, the pace of the current recovery can only be characterized as glacial," said Mike Fitzpatrick, vice-president at MF Global in New York.
U. S. crude futures finished down 87 cents at $69.95 US a barrel. London Brent crude lost $1.12 to $68.07 a barrel.
Read the full article here.
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Tories will revivie Coalition fears in push for Majority
Now that Iggy is no longer iffy in his official government opposition, the prospect of parliamentary elections becoming the corporate equivalent of an annual general meeting is no longer in much doubt.
Sadly, seemingly unavoidably, off we go for the second vote in a year with only the date and the precise trigger providing the suspense for this insane $300-million ego-stimulus package.
Given the drift of most polling, the inevitable result would seem pre-ordained as either a minority government under Conservative or Liberal rule.
But hold on a second. The Conservatives would have you believe there`s a third option--and ringing the alarm against that prospect will be the big fear factor in their campaign strategy.
Bear with me here, but they`re going to warn voters to beware the Liberal coalition.
Read the full article here.
Now that Iggy is no longer iffy in his official government opposition, the prospect of parliamentary elections becoming the corporate equivalent of an annual general meeting is no longer in much doubt.
Sadly, seemingly unavoidably, off we go for the second vote in a year with only the date and the precise trigger providing the suspense for this insane $300-million ego-stimulus package.
Given the drift of most polling, the inevitable result would seem pre-ordained as either a minority government under Conservative or Liberal rule.
But hold on a second. The Conservatives would have you believe there`s a third option--and ringing the alarm against that prospect will be the big fear factor in their campaign strategy.
Bear with me here, but they`re going to warn voters to beware the Liberal coalition.
Read the full article here.
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Gold hits Record High on `Plan` to ditch Dollar
LONDON (AFP) - The price of gold struck an all-time high at 1,038.65 dollars an ounce here on Tuesday as the dollar fell on a reported plan by Gulf states to stop using the greenback for oil trading.
Gold reached the level in late afternoon trade on the London Bullion Market, beating the previous record high of 1,032.70 dollars an ounce struck in March, 2008.
"Gold prices hit an all-time high as the dollar weakens," said Barclays Capital precious metals analyst Suki Cooper.
"The dollar weakness appears to be related to ... (reported) secret talks about oil being priced in a basket of currencies including gold rather than the dollar, which has added to concerns about the future role of the dollar in international financial markets."
The dollar`s future as the world`s top currency was thrown into doubt on Tuesday as a report said Arab states had launched secret moves with China and Russia to stop using the greenback for oil trading.
Read the full article here.
LONDON (AFP) - The price of gold struck an all-time high at 1,038.65 dollars an ounce here on Tuesday as the dollar fell on a reported plan by Gulf states to stop using the greenback for oil trading.
Gold reached the level in late afternoon trade on the London Bullion Market, beating the previous record high of 1,032.70 dollars an ounce struck in March, 2008.
"Gold prices hit an all-time high as the dollar weakens," said Barclays Capital precious metals analyst Suki Cooper.
"The dollar weakness appears to be related to ... (reported) secret talks about oil being priced in a basket of currencies including gold rather than the dollar, which has added to concerns about the future role of the dollar in international financial markets."
The dollar`s future as the world`s top currency was thrown into doubt on Tuesday as a report said Arab states had launched secret moves with China and Russia to stop using the greenback for oil trading.
Read the full article here.
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Loonie jumps to Highest Levels in a Year
TORONTO (Reuters) - The Canadian dollar rose to its highest level in a year against the U.S. currency on Tuesday morning thanks to soaring commodity and equity prices and after Australia`s central bank raised its key cash rate.
The Canadian currency touched a high of C$1.0564 to the U.S. dollar, or 94.66 U.S. cents, its highest level since October 1, 2008, on a string of factors set off by the Reserve Bank of Australia`s decision, making it the first of the Group of 20 central banks to raise interest rates as the global financial crisis eases.
"We`ve had a perfect storm this morning for the Canadian dollar," said Camilla Sutton, currency strategist at Scotia Capital.
"If Australia is now viewing their market and the Asian market as growth returning to trend, that`s positive for commodities. That, by default, would be positive for Canada."
The rate hike set off speculation on which central bank may raise rates next. Scotia Capital economists said the possibility of Canada following sooner than expected is "precisely nil" in their view.
Read the full article here.
TORONTO (Reuters) - The Canadian dollar rose to its highest level in a year against the U.S. currency on Tuesday morning thanks to soaring commodity and equity prices and after Australia`s central bank raised its key cash rate.
The Canadian currency touched a high of C$1.0564 to the U.S. dollar, or 94.66 U.S. cents, its highest level since October 1, 2008, on a string of factors set off by the Reserve Bank of Australia`s decision, making it the first of the Group of 20 central banks to raise interest rates as the global financial crisis eases.
"We`ve had a perfect storm this morning for the Canadian dollar," said Camilla Sutton, currency strategist at Scotia Capital.
"If Australia is now viewing their market and the Asian market as growth returning to trend, that`s positive for commodities. That, by default, would be positive for Canada."
The rate hike set off speculation on which central bank may raise rates next. Scotia Capital economists said the possibility of Canada following sooner than expected is "precisely nil" in their view.
Read the full article here.
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Hot Real Estate could prompt Canada Rate Hikes: TD
TORONTO (Reuters) - Excessive real estate strength in Canada from ultralow mortgage rates could push the Bank of Canada to raise interest rates sooner or more aggressively than forecast, according to a TD Economics report on Tuesday.
The possibility is worth watching closely, the economics arm of Toronto-Dominion Bank argued, although it also said the most likely scenario is that the real estate market will moderate and inflation will remain in check.
The Bank of Canada has pledged to keep its interest rates unchanged at 0.25 percent until mid-2010, unless it sees a threat of inflation spinning out of control.
TD pointed to recent statements by the central bank that hinted that it would seek to lean against signs of emerging asset bubbles and that it is also monitoring developments in home prices.
In a recent speech, Bank of Canada Governor Mark Carney deemed the strength in existing home sales as "temporary", reflecting "pent-up demand" and improved affordability.
Read the full article here.
TORONTO (Reuters) - Excessive real estate strength in Canada from ultralow mortgage rates could push the Bank of Canada to raise interest rates sooner or more aggressively than forecast, according to a TD Economics report on Tuesday.
The possibility is worth watching closely, the economics arm of Toronto-Dominion Bank argued, although it also said the most likely scenario is that the real estate market will moderate and inflation will remain in check.
The Bank of Canada has pledged to keep its interest rates unchanged at 0.25 percent until mid-2010, unless it sees a threat of inflation spinning out of control.
TD pointed to recent statements by the central bank that hinted that it would seek to lean against signs of emerging asset bubbles and that it is also monitoring developments in home prices.
In a recent speech, Bank of Canada Governor Mark Carney deemed the strength in existing home sales as "temporary", reflecting "pent-up demand" and improved affordability.
Read the full article here.
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Canada`s IT Industry to create 84,000-plus skilled Jobs by the end of 2013
MONTREAL - Canada`s information technology industry will create more than 84,000 highly skilled jobs over the next four years, a recent study says.
The sector will also help create more than 1,000 new businesses between the end of this year and the end of 2013, said the study by global research firm IDC and Microsoft Corp.
The study said most of the new companies will be small and locally owned organizations and the jobs will require a high level of skill.
"Countries that foster innovation and invest in infrastructure, education and skills development for their citizens will have a major competitive advantage in the global marketplace," Microsoft CEO Steve Ballmer said in a statement on Monday.
It says software spending represents nearly 20 per cent of Canada`s total IT spending, and 62 per cent of IT employees either create, distribute or service software.
Read the full article here.
MONTREAL - Canada`s information technology industry will create more than 84,000 highly skilled jobs over the next four years, a recent study says.
The sector will also help create more than 1,000 new businesses between the end of this year and the end of 2013, said the study by global research firm IDC and Microsoft Corp.
The study said most of the new companies will be small and locally owned organizations and the jobs will require a high level of skill.
"Countries that foster innovation and invest in infrastructure, education and skills development for their citizens will have a major competitive advantage in the global marketplace," Microsoft CEO Steve Ballmer said in a statement on Monday.
It says software spending represents nearly 20 per cent of Canada`s total IT spending, and 62 per cent of IT employees either create, distribute or service software.
Read the full article here.
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`Defying Gravity`
Household credit is "defying gravity," growing at the fastest pace of any recession since the Second World War when adjusted for inflation, a new report from CIBC World Markets shows.
A booming real-estate market that has sent outstanding mortgages surging 7.8% year-over-year in August is the primary driver, accounting for almost 70% of the 7% increase in overall household credit, said Benjamin Tal, senior economist at CIBC World Markets.
That is in stark contrast to the 1991 and 2001 slumps, when mortgage growth ground to a halt on an inflation-adjusted basis, the report notes.
"During a recession, usually mortgage markets go down, but this time it hasn`t and the reason is affordability, driven by low interest rates," Mr. Tal said. "The Bank of Canada cut interest rates to stimulate the economy, and it`s working."
In the first six months of 2009, total debt rose by $44-billion but interest payments on debt actually fell by $3-billion.
Read the full article here.
Household credit is "defying gravity," growing at the fastest pace of any recession since the Second World War when adjusted for inflation, a new report from CIBC World Markets shows.
A booming real-estate market that has sent outstanding mortgages surging 7.8% year-over-year in August is the primary driver, accounting for almost 70% of the 7% increase in overall household credit, said Benjamin Tal, senior economist at CIBC World Markets.
That is in stark contrast to the 1991 and 2001 slumps, when mortgage growth ground to a halt on an inflation-adjusted basis, the report notes.
"During a recession, usually mortgage markets go down, but this time it hasn`t and the reason is affordability, driven by low interest rates," Mr. Tal said. "The Bank of Canada cut interest rates to stimulate the economy, and it`s working."
In the first six months of 2009, total debt rose by $44-billion but interest payments on debt actually fell by $3-billion.
Read the full article here.
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Hot Real Estate Market could trigger Rate Hikes: TD
OTTAWA -- The possibility exists that the Bank of Canada may have to break its conditional pledge on interest rates should the housing market continue its red-hot performance, economists at Toronto-Dominion Bank said Tuesday.
"The Bank of Canada will likely be watching developments in Canadian real estate quite closely," say economists Craig Alexander and Grant Bishop. "If surging existing home sales do not cool, the bank may be inclined to respond."
The Bank of Canada, in its effort to revive the economy, has pledged to keep its policy rate at a historic low, 0.25%, until June 2010. This has drawn homebuyers into the housing market, as there is the belief that this will be as good as it will get in terms of borrowing costs.
The TD prediction comes hours after Australia`s central bank surprised markets and raised its benchmark rate by 25 basis points – a sign it believes the economy is in recovery mode.
While raising rates may not be his preferred option, the TD report said Mark Carney, the Bank of Canada governor, has hinted in recent remarks that he is prepared to "lean" against so-called prevailing wisdom when undertaking future decisions regarding monetary policy. That could mean, they suggest, raising rates even though inflation is not hovering near the central bank`s 2% target.
Read the full article here.
OTTAWA -- The possibility exists that the Bank of Canada may have to break its conditional pledge on interest rates should the housing market continue its red-hot performance, economists at Toronto-Dominion Bank said Tuesday.
"The Bank of Canada will likely be watching developments in Canadian real estate quite closely," say economists Craig Alexander and Grant Bishop. "If surging existing home sales do not cool, the bank may be inclined to respond."
The Bank of Canada, in its effort to revive the economy, has pledged to keep its policy rate at a historic low, 0.25%, until June 2010. This has drawn homebuyers into the housing market, as there is the belief that this will be as good as it will get in terms of borrowing costs.
The TD prediction comes hours after Australia`s central bank surprised markets and raised its benchmark rate by 25 basis points – a sign it believes the economy is in recovery mode.
While raising rates may not be his preferred option, the TD report said Mark Carney, the Bank of Canada governor, has hinted in recent remarks that he is prepared to "lean" against so-called prevailing wisdom when undertaking future decisions regarding monetary policy. That could mean, they suggest, raising rates even though inflation is not hovering near the central bank`s 2% target.
Read the full article here.
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- Mar 24, 2009
- Messages
- 16,743
Be Careful with Wording of Home Inspection Clause
The home inspection condition appears in almost every residential real estate transaction, yet it is surprising how many buyers and sellers do not really understand what the condition means and what their rights are once the condition is inserted.
I have received many emails from buyers and sellers on this subject. Some of the questions are as follows:
Does a home inspection condition give a buyer an automatic right to cancel the agreement?
Is the seller entitled to a copy of the home inspection report?
If the report shows only minor problems, is the seller entitled to just fix the problems and force the buyer to complete the transaction?
Read the full article here.
The home inspection condition appears in almost every residential real estate transaction, yet it is surprising how many buyers and sellers do not really understand what the condition means and what their rights are once the condition is inserted.
I have received many emails from buyers and sellers on this subject. Some of the questions are as follows:
Does a home inspection condition give a buyer an automatic right to cancel the agreement?
Is the seller entitled to a copy of the home inspection report?
If the report shows only minor problems, is the seller entitled to just fix the problems and force the buyer to complete the transaction?
Read the full article here.
- Joined
- Mar 24, 2009
- Messages
- 16,743
Check on Insurance before You submit an Offer
If you have ever had difficulty making a claim to your insurance company, for any loss, then you understand that insurance coverage needs to be researched and understood clearly before you buy any policy.
This is especially true when buying home insurance. Besides the fine print, there are many factors that can affect not only your ability to make a claim, but your ability to obtain insurance coverage at a reasonable premium.
Many buyers leave the insurance coverage for their new homes to the last minute, thinking that it is only a matter of paying the required premium. As a result, certain issues arise:
How much insurance do you really need?
What does the fine print say – especially about water damage?
Read the full article here.
If you have ever had difficulty making a claim to your insurance company, for any loss, then you understand that insurance coverage needs to be researched and understood clearly before you buy any policy.
This is especially true when buying home insurance. Besides the fine print, there are many factors that can affect not only your ability to make a claim, but your ability to obtain insurance coverage at a reasonable premium.
Many buyers leave the insurance coverage for their new homes to the last minute, thinking that it is only a matter of paying the required premium. As a result, certain issues arise:
How much insurance do you really need?
What does the fine print say – especially about water damage?
Read the full article here.
- Joined
- Mar 24, 2009
- Messages
- 16,743
Home Sales are up, now come the Renos
Canada`s "phenomenal housing rebound" will set the stage for a recovery in the home-renovation sector, National Bank analyst Jim Durran said in a research note Wednesday.
While home-owners remain conservative when it comes to big-ticket purchases, they are poised to spend more on improving their properties, "especially with the assistance of government renovation tax credits, which have finally started to gain some headway supported by a recent advertising push," Mr. Durran said.
"Resale activity has been up on a year-over-year basis for June, July and August, and the year-over-year rate of decline in housing starts has begun to moderate," he said.
Because of the stronger-than-expected real estate recovery, Mr. Durran said he has increased his earnings estimate for home-improvement retailer Rona Inc. (RON-T15.960.311.98%) to $1.13 a share for fiscal 2009 from his earlier estimate of $1.08.
Rona earned $1.44 a share in 2008 but, like other retailers, was hammered by the recession.
Read the full article here.
Canada`s "phenomenal housing rebound" will set the stage for a recovery in the home-renovation sector, National Bank analyst Jim Durran said in a research note Wednesday.
While home-owners remain conservative when it comes to big-ticket purchases, they are poised to spend more on improving their properties, "especially with the assistance of government renovation tax credits, which have finally started to gain some headway supported by a recent advertising push," Mr. Durran said.
"Resale activity has been up on a year-over-year basis for June, July and August, and the year-over-year rate of decline in housing starts has begun to moderate," he said.
Because of the stronger-than-expected real estate recovery, Mr. Durran said he has increased his earnings estimate for home-improvement retailer Rona Inc. (RON-T15.960.311.98%) to $1.13 a share for fiscal 2009 from his earlier estimate of $1.08.
Rona earned $1.44 a share in 2008 but, like other retailers, was hammered by the recession.
Read the full article here.
- Joined
- Mar 24, 2009
- Messages
- 16,743
Household Credit defying Gravity
Household credit is defying gravity in Canada, expanding by more than 7 per cent year over year, a new analysis says.
"On an inflation adjusted basis, credit is rising at the fastest rate seen in any economic recession in the post-war era," Benjamin Tal, senior economist with CIBC World Markets, wrote in report published Tuesday.
The main driver is low interest rates. Even as Canadians added $44-billion to their total debt in the first half of the year, interest payments fell by $3-billion. In fact, interest payments as a share of disposable income now stand at 7.7 per cent, the lowest rate since 2006 and significantly below the more than 10 per cent during the 1991 recession, Mr. Tal said.
"This in a nut shell is the reason for the strong rebound in real estate activities in the Canadian mortgage market."
National home sales were up 18.5 per cent year-over-year in August, with the average home price rising 11 per cent, according to the Canadian Real Estate Association.
Read the full article here.
Household credit is defying gravity in Canada, expanding by more than 7 per cent year over year, a new analysis says.
"On an inflation adjusted basis, credit is rising at the fastest rate seen in any economic recession in the post-war era," Benjamin Tal, senior economist with CIBC World Markets, wrote in report published Tuesday.
The main driver is low interest rates. Even as Canadians added $44-billion to their total debt in the first half of the year, interest payments fell by $3-billion. In fact, interest payments as a share of disposable income now stand at 7.7 per cent, the lowest rate since 2006 and significantly below the more than 10 per cent during the 1991 recession, Mr. Tal said.
"This in a nut shell is the reason for the strong rebound in real estate activities in the Canadian mortgage market."
National home sales were up 18.5 per cent year-over-year in August, with the average home price rising 11 per cent, according to the Canadian Real Estate Association.
Read the full article here.