• Tag Archives Canada
  • Playing the Part in NAFTA Negotiations

    As the fourth round of NAFTA negotiations comes to an end, the agreement’s survival has once again been brought into question. US President Donald Trump has threatened to strike a new deal with just Canada. Mexico downplayed the threat, saying it would walk away from negotiations if the new terms brought by the US put it at a disadvantage. For their part, the Canadians have been quiet, keeping their cards much closer to their chests.
    All this commotion belies the fact that no NAFTA member is likely to walk away from the deal. The economic realities and commercial interests that led to its formation in the first place still incentivize cooperation, no matter how much any side postures.
    Still, at first the glance, the United States appears to have the upper hand. It boasts the largest economy in the world and accounts for about a quarter of global gross domestic product. Exports account for only roughly 12% of its GDP, according to the Department of Commerce, so the US has the benefit of a strong consumer class to boost economic activity when international demand is low. Easy access to such a large and vibrant consumer market has enabled Mexico and Canada to build up their economies without having to trade much with each other. In Mexico, on the other hand, exports account for about 38% of GDP, and about 81% of those go straight to the United States. Exports account for 31% of Canada’s GDP, according to the World Bank, about 76% of which go to the US. Exports are simply more important to the Canadian and Mexican economies than they are to the US’s.

    This post was published at Mauldin Economics on OCTOBER 16, 2017.

  • 13/10/17: Debt Glut and Building Dublin

    Just back from Ireland, a fast, work-filled trip, with some amazing meetings and discussions, largely unrelated to what is in the ‘official’ newsflow. Some blogposts and articles ahead to be shared.
    One thing that jumps out is the continued frenzy in building activity in Dublin, predominantly (exclusively) in the commercial space (offices). Not much finished. Lots being built. For now, Irish builders (mostly strange new players backed by vultures and private equity) are still in the stage where buildings shells are being erected. The cheap stage of construction. Very few are entering the fit-out stages – the costly, skills-intensive works stage. And according to several sector specialists I spoke to, not many fit-out crews are in the market, as skilled builders have not been returning to the island, yet, from their exiles to the U. S., Canada, Australia, UAE, and further afield.
    Which should make for a very interesting period ahead: with so many construction sites nearing the fit-out stages, building costs will sky rocket, just as supply glut of new offices will start hitting the letting markets. In the mean time, many multinationals – aka the only clients worth signing – have already signed leases and/or bought own buildings on the cheap. Google owns its own real estate (hello BEPS tax reforms that stress tangible activity over imaginary revenue shifting); Twitter has a refurbished home; Facebook is quite committed to a lease (although it too might take a jump into buying); and so on. Tax inversion have slowed down and Trump Administration just re-committed to Obama-era restrictions on these, while Trump tax plan aims to take a massive chunk out of this pie away from Ireland. So demand… demand is nowhere to be seen.

    This post was published at True Economics on Friday, October 13, 2017.

  • It’s Over for Sears Canada

    Brick and mortar meltdown. Sears Canada hired the same leading bankruptcy advisory firm on June 12 that had represented Target Canada in its insolvency proceedings. Ten days later, it filed for bankruptcy protection to restructure its capital and its operations, shutter dozens of it 225 stores and lay off nearly 3,000 employees, but planned to continue operating. Today it said that the restructuring efforts failed, and that it would seek court approval to liquidate, shutting all its remaining stores and laying off its remaining 12,000 employees.
    Retailers are notoriously difficult to restructure. Once they’re this deep in trouble, after years of losses, they own few assets and are burdened with debts, as everything has been sold or pledged to creditors. Their suppliers, who’ve been burned too many times, are getting skittish. Lenders are getting desperate. And acquirers can be impossible to find. Most retailer bankruptcies start out as restructurings but end as liquidations.
    To stay alive while losing money for years, Sears Canada has sold off most of its real estate holdings, and the most valuable assets are already gone. What’s left are C$1.1 billion ($880 million) in liabilities.

    This post was published at Wolf Street on Oct 10, 2017.

  • Trade Wars Escalate: Trump Admin Hikes Tariffs On Bombardier To 300%

    In a decision that’s bound to infuriate the leaders of Canada and the UK, the US Commerce Department on Friday tacked on an additional 80% tariff against Bombardier C-Series Jets imported from the US’s northern neighbor, adding to a 220% preliminary levy authorized last week. The ruling is the culmination of a long-running feud between Boeing and Bombardier; Boeing accused its rival in April of benefiting from anticompetitive government subsidies. US customs will now begin imposing the now 300% combined tariff, potentially complicating Delta Air Lines’ pending purchase order of 75 C-Series jets, a deal that would’ve been worth some $5 billion to Bombardier. As the National Post noted, the decision will make it effectively impossible for Bombardier to sell its planes in the US. It also has important ramifications for the aerospace industry in both Canada and the UK, and also casts doubt on Bombardier’s future after a rocky stretch of thin sales.
    “The United States is committed to free, fair and reciprocal trade with Canada, but this is not our idea of a properly functioning trading relationship,” Commerce Secretary Wilbur Ross said in a statement. “We will continue to verify the accuracy of this decision, while do everything in our power to stand up for American companies and their workers.”
    Bombardier hasn’t responded to the decision, but last week said the 220% tariff was “absurd and divorced from the reality about the financing of multibillion-dollar aircraft programs” and that it would push for the decision to be reversed in the coming months. Bombardier has long maintained that Boeing can’t justify its claim of being harmed by the C-Series since it doesn’t manufacture any jets of comparable size.

    This post was published at Zero Hedge on Oct 6, 2017.

  • This Could Be a No-Brainer Gold Buying Opportunity

    Last week I was pleased to be the keynote speaker at the Denver Gold Show in beautiful Colorado Springs, Colorado. Attendance was strong, sentiment was up and my presentation on quant gold investing was very well received.

    It’s these quantamentals that went into the creation of our newest quant ETF, our first to launch in Canada. As I’ve explained before, our firm uses quantamentals in our gold investing process, combining old-fashioned, bottom-up stock picking with big data and machine learning. This allows us to screen for the best possible producers with the most attractive balance sheets. We prefer miners that have a proven track record of sustainable profitability even when precious metal prices are down.
    On Friday, I was thrilled to be back in my hometown of Toronto, where Galileo team members and I had the privilege of opening the Toronto Stock Exchange. The TSX, as you may know, has a long history of being the world’s premiere marketplace for mining stocks, and in 2016, 57 percent of the world’s financing for mining companies was done on the TSX. It’s only fitting, then, that our new ETF is traded there.
    I urge you to listen to the ETF Trends webcast in which Tom Lydon and I discuss the gold market today and the factors we use in picking the strongest gold stocks.

    This post was published at GoldSeek on Tuesday, 3 October 2017.

  • Another Potential Game Changer for Gold Supply: Chinese Oil Imports Convertible to Gold

    There are clear supply pressures coming to the gold market, so the last thing it needed was a new source of demand. But that’s exactly what it’s about to get, and as you’ll see, it could potentially push supply into a strained predicament. If this new development catches on it could lead to some fireworks in the gold market.
    This source of demand comes from China’s announcement that oil exporters to China will accept yuan as payment. This is normally done in dollars (hence known as the petrodollar system). The yuan is not well established internationally yet, so as an incentive, China will offer its exporters the option to convert their yuan into gold. This will essentially result in a new source of gold demand, one not currently present in the market.
    So how much gold are we talking about? Let’s run the numbers…
    China’s imports in 2017 have averaged 8.55 million barrels of oil per day. This is already 14% more than last year, and has made them the world’s largest crude oil importer. Every report I’ve read says imports will continue to grow by double digits. A launch date for the program hasn’t been finalized, but let’s assume 9 million barrels per day starting next year.
    The one-year forecast for a barrel of crude oil is $60 (it’s $59 as I write). That equates to $540,000,000 per day. At a $1,300 gold price, that means 415,384.6 ounces of gold per day could potentially be converted. That’s a whopping 151,615,384 ounces per year.
    Not all of that would be converted, of course. But consider that many of the countries that export oil to China aren’t exactly friends of the US, and some are outright enemies, so the conversion rate would probably be greater than if it were all coming from Canada or Norway, or countries that already have a lot of gold. Further, conversions would almost certainly rise in a crisis, especially if Mike is right about the coming monetary shift.

    This post was published at GoldSeek on Friday, 29 September 2017.

  • UK Slams Tariffs On Bombardier: “This Is Not What We Expect From A Long-Term Partner”

    It appears the Commerce Department’s preliminary ruling, issued late last night, to slap a 220% tariff on Canadian aircraft manufacturer Bombardier could trigger an all-out trade war between the UK and Canada (on one side) and the US (on the other) as public officials in the UK and Canada blasted the ruling and threatened retaliation should the sanctions, which still need to be approved by the US International Trade Commission, become permanent.
    Earlier today, the Commerce Department ruled that Bombardier’s jets should face the levy because the company received anticompetitive government subsidies. The ruling comes after Boeing said the Bombardier C-Series jet would not exist without hundreds of millions of dollars in launch funding from the governments of Canada and Britain, or a $2.5 billion equity infusion from the province of Quebec and its largest pension fund in 2015. Boeing brought the complaint after Delta Air Lines agreed in April 2016 to purchase 75 C-Series jets, an order worth some $5 billion.

    This post was published at Zero Hedge on Sep 27, 2017.

  • Loonie Loses All ‘Surprise Rate Hike’ Gains As Canada’s Poloz Gets Cold Feet

    The Canadian Dollar is tumbling – erasing all the gains following September’s surprise rate-hike – as in his first speech since the, Bank of Canada Governor Stephen Poloz warns there is no ‘predetermined path for interest rates’ and said the central bank will proceed ‘cautiously’ as it assess the performance of the economy from here on.

    This post was published at Zero Hedge on Sep 27, 2017.

  • 077: The reason why ICOs have been going through the roof…

    First it was Pets.com, and all the unbelievably stupid Internet businesses in the 1990s.
    Investors were so eager to buy dot-com stocks, all you had to do was put an ‘e’ in front of your business or product and you’d immediately be worth millions.
    It didn’t matter that most of these companies didn’t make any money. Investors kept buying.
    Later on after the dot-com bubble burst, another big craze developed in junior mining stocks – shares of small exploration companies looking for big mineral deposits.
    The epicenter of the junior mining industry is in Vancouver, Canada, and the stock exchange there (TSX-V) throttled to record highs.

    This post was published at Sovereign Man on September 22, 2017.

  • Yesterday’s “Watershed” Central Bank Announcement Which Everybody Missed

    In what may have been a watershed moment in monetary policy – which awkwardly was missed by almost everyone as a result of the concurrent launch of the latest North Korean ballistic missile which immediately drowned out all other newsflow – late on Thursday, the Bank of Canada held a conference on inflation targeting and monetary policy titled “Bank of Canada Workshop ‘Monetary Policy Framework Issues: Toward the 2021 Inflation-Target Renewal” in which, in a stunning shift of monetary orthodoxy, BoC Senior Deputy Governor Carolyn A. Wilkins said that Canada was open to changes in the BoC mandate.
    WILKINS: OPEN TO LOOKING AT `SENSIBLE’ ALTERNATIVES TO MANDATE Or in other words, lowering or outright abolishing the central bank’s inflation target, or explicitly targeting financial conditions and asset prices.
    While still early in the process, the BOC may be setting a precedent, one which other DM central banks may have no choice but to follow: If the Bank of Canada is going to look at alternatives to their mandate (with an emphasis on inflation), it – as several trading desks have suggested – could become the first central bank to officially change its mandate to reflect financial conditions that are too loose in the context of the current low r-star lowflation environment.
    In practical terms, this would mean that instead of seeking chronically easier conditions to hit legacy inflation targets around ~2.0% while inflating ever greater asset bubbles, one or more central banks could simply say that 1.5% (or less) is sufficient for CPI and call it a day, in the process soaking up record easy financial conditions and bursting countless asset bubbles. In the context of a “new supply paradigm” in retail (where even FOMC members now blame Amazon for lack of inflation) and energy (same but with OPEC) which appears to be gaining traction within central banks, as well as frustration with distortion in asset markets, It would make much sense for the Fed to lower the inflation target to 1.5%, declare victory, and normalize policy.
    Why? Because as several banks noted after the BoC conference, we know that central banks world-wide are concerned about the size of their balance sheets and associated dysfunctionality in government and other bond markets, and the ever-increasing risks from the ultimate unwind as the QE programs continue to grow in a war against inflation where the victory looks increasingly Pyrrhic. Furthermore, negative rates have caused money markets to become dysfunctional and less efficient, which could be a structural issue “if the temporary was allowed to become permanent.”

    This post was published at Zero Hedge on Sep 15, 2017.

  • Canada’s Hunt for Taxes – Trudeau’s Destruction of the Canadian Economy

    The Canadian Prime Minister Justin Trudeau is doing his best to send Canada into the Dark Age. He is clearly a Marxist and has targeted small business which creates 70% of all employment. He said ‘I want to be clear,’ at the Liberal party’s recent caucus gathering in Kelowna. ‘People who make $50,000 a year should not pay higher taxes than people who make $250,000 a year.’
    These people who always seek to run governments have ZERO real world experience and totally fail to understand the economy no less how society functions. They believe that they can just decree some law and everything will function to the desires.

    This post was published at Armstrong Economics on Sep 14, 2017.

  • Terrorists In Germany’s Parliament?

    Even as Germany is increasingly cracking down on criticism of Islam, it appears prepared to give a genuine Islamic terrorist group the opportunity to win seats in its parliament…
    In a remarkable decision taken at the end of August, Germany’s Interior Ministry declined to bar the Popular Front for the Liberation of Palestine (PFLP) — listed as a terrorist organization by the US, Canada, the European Union, and Australia — “from campaigning as a political party in the September general election to the Bundestag.”
    Yes, the PFLP — on a joint list with the Marxist-Leninist Party — plans to field candidates in this month’s elections in Germany and run for Parliament.

    This post was published at Zero Hedge on Sep 11, 2017.

  • Bank of Canada Shuts Out Free Market Economists from Key Policy Conference

    Next week’s Bank of Canada policy conference appears set to deliver standard talking points. Not a single free market economist has been invited and a BOC spokesperson confirmed that the alternative-financial press is also being shut out.
    The BOC event, titled Monetary Policy Framework Issues: Toward the 2021 Inflation Target Renewal , takes place during a critical time for Canada’s central bank.
    Bank of Canada economists emerged from the 2008 financial crisis red-faced, after having failed to predict the event in advance, despite the clear warning signs and having some of the country’s most respected practitioners on staff.
    The BOC then had to bail out Canada’s big five banks, whose solvency the monetary authority is charged with overseeing.
    Questions regarding Poloz’s ‘trickle down’economics
    Things do not appear to have improved much under the reign of Stephen Poloz, its current Governor.
    The Bank of Canada ranks last among the G-7 central banks in terms of its gold holdings, this during a time of record high Canadian household debts and one of the planet’s biggest housing bubbles.
    There are also increasing questions regarding Mr. Poloz’s ‘trickle down’ economics strategy, which consists of leveraging ‘considerable economic stimulus’ to boost asset prices, in the hope that a resulting ‘wealth effect’ will trickle down to the poor and the young.

    This post was published at GoldSeek on Friday, 8 September 2017.

  • Toronto’s Housing Sales Bubble Bursts as Bank of Canada Raises Rates

    This is a syndicated repost courtesy of Snake Hole Lounge. To view original, click here. Reposted with permission.
    Canada’s Central Bank, the Bank of Canada, recently raised its lending rate to 1.25%, matching the US Federal Reserve rate.

    This post was published at Wall Street Examiner by Anthony B Sanders ‘ September 8, 2017.

  • Bank of Canada Raises Interest Rates … Again

    For the second time in less than two months, the Bank of Canada has raised interest rates.
    On Wednesday, the central bank raised its overnight lending rate by a quarter per cent to 1 per cent.
    The move surprised many who weren’t expecting a rate increase until later this Autumn.
    Just like last time, the rationale behind higher rates was centred around the Bank of Canada’s belief that the economy is growing faster than expected.
    Bank of Canada Governor Stephen Poloz said, ‘The level of GDP growth is now higher than the bank expected.’
    Of course, this assumes that GDP measures anything.
    The Canadian loonie surged after the announcement, climbing to 82 cents U. S.

    This post was published at Ludwig von Mises Institute on September 7, 2017.

  • Toronto Home Price Bubble Descends into Bear Market

    With surprise rate hike, Bank of Canada turns against housing market.
    Home sales in the Greater Toronto Area, the largest housing market in Canada, plunged 34.8% in August compared to a year ago, to 6,357 homes, with sales of detached homes and semi-detached homes getting eviscerated:
    Sales by type:
    Detached houses -41.6% Semi-detached houses -37.3% Townhouses -27.5%: Condos -28.0%. Even as total sales plunged, the number of active listings of homes for sale soared 65% year-over-year to 16,419, with 11,523 new listings added in August, according to the Toronto Real Estate Board (TREB).
    ‘The relationship between sales [plunging] and listings in the marketplace today [soaring] suggests a balanced market,’ the report explained, adding hopefully:
    ‘If current conditions are sustained over the coming months, we would expect to see year-over-year price growth normalize slightly above the rate of inflation. However, if some buyers move from the sidelines back into the marketplace, as TREB consumer research suggests may happen, an acceleration in price growth could result if listings remain at current levels.’

    This post was published at Wolf Street on Sep 6, 2017.

  • We Looked into the Effects of Hurricane Harvey and Here’s What We Found

    Unless you’ve been away from a TV, computer or smartphone for the past week, you’ve likely seen scores of pictures and videos of the unprecedented devastation that Hurricane Harvey has brought to South Texas and Louisiana. As a Texan by way of Canada, I’d like to take a moment to reflect on the human and economic impact of this storm, one of the worst natural disasters to strike the U. S. in recorded history.
    Below are some key data points and estimates that help contextualize the severity of Harvey and its aftermath.
    $503 Billion
    In a previous Frank Talk, ’11 Reasons Why Everyone Wants to Move to Texas,’ I shared with you that the Lone Star State would be the 12th-largest economy in the world if it were its own country – which it initially was before joining the Union in 1845. Following California, it’s the second-largest economy in the U. S. A huge contributor to the state economy is the Houston-Woodlands-Sugar Land area, which had a gross domestic product (GDP) of $503 billion in 2015, according to the U. S. Bureau of Economic Analysis. Not only does this make it the fourth-largest metropolitan area by GDP in the U. S., but its economy is equivalent to that of Sweden, which had a GDP of $511 billion in 2016.

    This post was published at GoldSeek on Wednesday, 6 September 2017.

  • The Week’s Key Events: All Eyes On The ECB

    With the US markets closed today, market events this week will be dominated by G10 central bank meetings, among which the ECB stands out, but also notable will be the RBA, BoC and Riksbank. Consensus does not expect policy changes yet. There is also a busy calendar for the UK (PMIs, housing, IP and trade balance) along with GDP/IP releases elsewhere. In EMs, there will be monetary policy meetings in Brazil, Poland and Malaysia. Brazil BCB is expected to cut rates by 100bp.
    Central bank preview:
    The ECB remains trapped between a strong(er) EUR and a rapidly shrinking universe of monetizable bonds; as a result Draghi will emphasize the impact of a strong EUR on inflation dynamics but will refrain from disclosing the destiny of QE after the 2018 expiry. Given the recent EUR appreciation, the ECB will prefer waiting for the September FOMC before committing on QE. Most sellside desks call for the October meeting where BofA expects a 6m QE extension at 40bn/month. The RBA is also expected to remain on hold with communication potentially getting more interesting now that forecasts and Parliamentary testimony are out of the way. On the longer term, the domestic housing market in particular to have a more significant influence on monetary policy with the balance of risks favoring rates up. For the BoC, unexpectedly strong economic growth, below neutral o/n rates and the Fed on a hiking cycle means that the Canada should follow with a hiking cycle as well. This said, low inflation and inflation expectations along with CAD appreciation do not argue for urgency. As a result while some have said the BOC’s meeting is “live”, most expected the central bank to remain on hold in September and hikes +25bp in October.

    This post was published at Zero Hedge on Sep 4, 2017.

  • FX Week Ahead: Cue The ECB To Disappoint; Buying Time For Fed To Catch Up?

    After another ‘interesting’ non farm payrolls report, we start the week on a quiet note as the US observes the Labour Day holiday and Canada day speaks for itself. Plenty of volatility to expect thereafter though, as it is the ECB’s turn to manage market expectations, which so far show little sign of moderating as EUR longs are keen to hold positioning into a much expected tapering signal.
    After the weaker US jobs report, which we will cover (briefly) later, we saw a well timed news report that the ECB are in no rush to make a decision next week and that plans for adjusting the APP may not be ready until December. There is no questioning the fact that the governing council want to temper the EUR rally, as they observed the ‘FX overshoot’ in their last meeting minutes. Since then, the spot rate has been ramped up past 1.2000 but with limited hang time above here, and the US data induced return higher was stopped short of this psychological level before the news-wires hit. Back under 1.1900, it looks to be another reluctance pullback, and one which now depends largely on the USD, as EUR proponents can only see one way for policy to go from here and do not seem to be too concerned as to where entry levels are!

    This post was published at Zero Hedge on Sep 3, 2017.