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What a weekend!

Canadian Economic news:

New residential construction:  +197k (target +200k)
April job creation:   +109k (target +43k)


The local news continues to be good; internationally the air of normality is somewhat strange.  Nothing has really changed; the Greek mess is still around, and if anything this newest bailout reduces the pressure on the Greeks to do the hard things.  The US regulator is freaking out that a country such a Greece could cause such a mess (2.4% of Europe’s GDP), looking at their own house the Americans must be getting worried, since the U.S. government deficit at 11.6% is in the same ballpark as Greece’s, we seem to be lurching from one catastrophe to another – 18 months ago it was U.S. mortgages, now its Europe, the crisis cycle seems to be accelerating (Steve Roach of MS Asia this AM on CNBC).  But in Canada new residential building was roughly in line with expectation, Canada’s economy is humming along, with new job (full time as opposed to part time) being creating across the country.  The manufacturing sector also appears to be pulling its weight (unlike the U.S. were temp worker and census workers account for nearly 100k of the new jobs – birth death model for another 60k), so Canada appears to be a within a harbor of calm while the maelstrom rages beyond our shore.  

Following Europe’s massive sovereign intervention. The TSX60 rose by 2.3% (now 1.8%) after falling 5% last week, so in one session ¼ of last week’s correction was erased.  The question that all Canadians are asking is what next?  It’s all very well for the Economist to write nice-ish things about us “Less Bad” and aside from a few factual errors (like the size of our government debt – its 89% vs 36% which only includes Federal debt and excludes provincial debt), the story of Canada is that of natural resources, and these are falling in price


On the currency front, the Euro is back where it was Friday evening, turns out that even $1 trillion is not enough to convince "speculator" that Europe is back in business.  One effect of the European intervention has been to strengthen the Canadian dollar back to “near parity”  -- it went off the rails last week when a “flight to quality” affected the global market.  However, oil prices are still substantially (12%) off their high of two week ago, trading below $76bbl which should have a depressing trend on the CAD.  If our story holds true and the CAD is a Petro-currency, then it holds that parity should not be the next target for the CAD, but rather the 94-95 range (or as traders express it the 105-04 range]

Finally we had snow again, on Mothers’ Day.  

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