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Showing posts from October, 2011

IPPI +5.3%

Industrial Production Price Index was up again -- the above 5.3% is on a YoY basis... on the bright side the strength of the CAD +3% "moderated" the IPPI.  Bottom line, over the past year Oil and Coal price rose 30%, Metals and Chemicals both rose by 8% and vegetables and feed were up nearly7%.  Try telling Canadian manufacturers that inflation is not a problem!
On the bright side, IPPI is basically back to its 2008 level (2002 was 100), 2008 was 115, and we are back at that level.  The truth is that input cost inflation is high, and it is surprising how little of this inflation has ended up in the CPI (or core CPI) at 3.2% and 2.2% respectively. However, it makes some sense as Canadian companies have been investing heavily, high Capex translates into more efficient production (usually) so that some of these costs have been absorbed there.
Overall, inflation pressures are rising in Canada, the trend in the IPPI will translate into higher CPI (eventually).  The BoC has so fa…

Canadian GDP rise 0.3% in August

This is a case of good headline, but dig a little and the news is not so great, mainly because Energy accounts for 100% of the GDP growth in August.  It was also a dominant component in July (not so much in June).  The reality is that manufacturing is down, but building is up a little.

However, the overall news is that Canada's economy is essentially operating at stall speed in July and August.  Not a huge surprise as employment and income have both lagged (again the headline was great, but the underlying data was So So).

On the interest rate front, there is no pressure for Canadian interest to go anywhere (either up or down) the futures curve is virtually flat.  There is little reason to lower rates, since the problem is external demand, and there is little reason to raise rates -- again because inflation is external -- mostly energy prices and commodities.  The BoC stands aside.

The big news is that the Federal government has decided to remain on path to reduce expenditure -- as…

Guilty Pleasure: Quebec Politics

Until recently Quebec politics had fallen into a predictable funk, where politicians could recycle 20 year old speeches with impunity since the debate had become kabuki theater (set in stone).  There is a new sheriff in town and Quebec politics is now exiting!  First, was long in coming wake up of the "non-separatist" segment of the population.  For us, Quebec's problems have nothing to do with the independence discussion, but everything to do with the societal choices that we must make today.

It started a decade ago with the "lucides" ex-politicians stating frankly the critical challenges that face Quebec, which will define us as a society; these challenges have nothing to do with our place in or out of Canada.  The process moved along with an ex-PQ MNA forming a "movement" to recast the discussion away from separation, and the final element was the destruction of the Bloc Quebecois in Ottawa.  
Since then, both main Quebec parties: Liberals and Par…

Canadian labor market looks tight

Ok so I usually stay far away from quoting Canadian banks (sometime I "steel" their diagrams), but one of my competitor has had interesting things to say about Canadian productivity and the labor market, fundamentally original research on complex topic.  As an example their take on Canadian productivity is that it doesn't compare to the US because of very important difference.  Don't agree with all their arguments, but they have a valid point on certain aspects.
The bank of Canada has taken a position that the Canadian labor market is still relatively "slack", but this bank takes a very different view, especially because part time work is such a small percentage of the workforce (yeah you read that right).  They take the view that in fact the labor market is tight (for full time employment).
Their chart is below:


(Source: Da Bank, BLS, StatsCan)


The implication is that the BoC has less room to operate than is implied by the futures market (no rate hike for b…

Funny:

(Source:  Jim Bianco)

And the question was:  How big of a hole is the Euro in?

Discounting Property prices is illegal in Shanghai

I can hardly believe this is true, but this article states that it is now illegal in Shanghai to reduce condo prices by more than 20%.  Apparently China Overseas Land cut some of its prices by 30%, this was found the be illegal by the Communist Party of Shanghai (they still control the place).

Makes you think.  I guess that they will only allow prices to fall once China Overseas is bust...

Got to love communism, its the opposite of what happened in the U.S.  In China companies have to support the prices of goods they sold to citizen.  In America, the government supports the right of corporations to screw the citizen.  Man, I think I've misunderstood this capitalism/communism thing!

RIP -- A stupid CDS instrument

So around 10pm EST Europe's leaders came up with a plan.  They announced a 50% "hair cut" on Greek debt (in fact this applies to public bonds and bank loans only -- sovereign exposure is excluded.  Total write-down is about Euro 150 billion (or about 1/3 of Greece's total debt burden)).  It's a start!

On another front, the International Swap and Derivative Association (ISDA) agreed that the 50% hair cut was not a credit event, because the write-down was voluntary.  The impact is that all these financial institutions that bought (or sold) credit default swap on their sovereign exposure found out last night that these instruments are worthless (if a 50% write-off is not a credit event, what is?).  These were always stupid financial instruments, it assumed that governments would not react to instruments that allowed the financial world to bet against the government's (worse) behavior.  Last night sovereign credit default swaps died, they will not be missed.
Ano…

Canadian House Prices -- Gravity further delayed!

Initial impression is that this is too good to be true, but the National Bank - Teranet House Price Index is as precise as can be, measuring the change in price on "house-pairs" which takes in consideration renovations and other expenses.  As such (and looking back on the previous three months) it is as exact a measure of the change in house price across the nation.


The index shows a further 0.9% increase in the prices of Canadian homes, the 9th straight month of increase.  The regional level is somewhat different (here) but the trend is persistent.  Canadian houses are now "expensive" when compared to average (or median income), Canadian are clearly taking the view that low financing costs are here to stay.  They may be right, but again external factors could change all this.
There is no doubt that the Canadian banking sector is healthy because of the healthy housing sector. Funny enough the data seems to be indicating that there seller/buyer levels are more or les…

Yes a solvency crisis for the sovereign but also a liquidity crisis for the banks

Euro 30,000 billion (Americans would say 30 trillion) that's the amount of wholesale financing currently on Europe's bank balance sheet.  European banks rely far more on wholesale market for their funding -- a consequence of their very high leverage.  The problem is that for the past 5 months the wholesale funding market is essentially closed.  
Some will have heard of the LIBOR rate that has exploded, and that the Federal Reserve has expanded the dollar lending operations for European banks.  The problem is far more severe, because the closure of the wholesale market means that banks have to refinance Euro 800 billion in maturing obligation every single month.  Obviously, this is impossible, so European banks are cutting lending (with the obvious economic consequences), they have also been losing deposits to European sovereign institutions -- Siemens transferred several billions to the ECB.
The implications is this liquidity crunch very serious:  Businesses will be refused e…

Greek write down, ECB & Disagreement

Over the past few days the ECB has been spoiling for a fight, arguing vehemently that a write down of 60% was unacceptable.  I could not understand their position, at first I thought that ECB was protected, but it turns out they bought ordinary bonds on the market -- so they have to face the same write down as commercial investors.  Moreover, it didn't make sense, that the ECB would be against such a necessary move -- Greece cannot support its current level of debt, its a fact.
Turns out the reason for the ECB's position is due to its own viability:  Turns out that the ECNB has just a bit more than Euro 5.1 billion in capital. it obtain an increase about 12 months ago (to Euro10 billion), but the money is coming in three tranches... over the 2010, 2011 and 2012 fiscal year.  It is also back loaded, so the bulk of the increase is only available in 2012.  
Guess what, the write down of Greek bond of 60% would deplete its capital dramatically... the loss for the ECB  in a 60% wr…

Oil Prices, Recession & CAD

Many oil market analysts have argued that a backwardated market is a bullish signal because it suggests tightness at the front end of the market. The other side of the debate (which is where we land) is that a backwardated market is one in which market players believe prices tomorrow will be weaker than they are today. The last time we were in a backwardated market was in late September/early October 2008 when prompt oil prices were trading between $90 and $100 per barrel. Three months later we touched a low of $32.40.
 Ok so the bread and butter of the CAD is oil prices -- specifically oil prices priced in the WTI (don't know why there is high correlation with that index -- and not Brent or West Coast...).  Barckwardation is an anomalous condition in physical commodities it can be caused by two distinct reason:  funny enough at either extreme of the economic cycle.  First high spot price are based on a view that supply is tight, in a rising demand environment (Economic growth) wi…

Bixi

I live in the old port of Montreal (yeah where the tourist go, and walk around as if they were in Disneyland...) and since my office is downtown I used the Bixi bikes to get to a from work (about 1.7km each way).  This method of getting to work ends today as the weather is becoming increasingly cold.

Since May I have made 217 trips and covered more than 300km -- total savings a measly 21 liters of fuel (had I driven).  The real challenge is to use back roads, the problem is that some streets are rather dangerous, not in the morning (I usually arrive at the office before rush hour) but in the evening, when people are tired and aggressive!.

Anyway, total cost for the Bixi was $72 -- not a bad investment and a fun way to go to work.

CAD near parity... again

Well I guess the loonie Yo-Yo continues its game, with the risk-on strategy, and oil prices near $90/bbl it is a sign that things are getting pulled up, as is the CAD (granted all currencies are doing good against the USD), just take a look at the Euro that has been hovering near 1.4 and the Yen that just hit an all time hi of 76 against the greenback.
The CAD is within 40 bps over being at parity again, as a rule of thumb, parity is a big barrier (up or down) for the CAD, so it may muck around this level for a few days, it may well fall back, it could also power through, although that is unlikely because the CAD as been on a tear of late.  In September we were flirting with .94 now we are at .9962.
BTW this should help to reduce inflation pressures (although higher oil prices is a problem).

The weekend in review -- Canadian style

Autumn in Canada usually brings good excuses to stay at home and watch old movies.  The trees bear of leafs and the usual gray skies allow procrastination. Although this year the weather has been unusually balmy -- we are expecting a high of 15c today.
Canadian economic news is slow, not much going on.  The one item of interest it seems that Mark Carney is a shoe-in as the new head of the FSB (the guys who decided on the banking capital).   The Canadian banking system (which was laughed at during the early part of the past decade), proved that Too Big to Fail can work -- if well regulated.  Canada has six banks that account for 95% of all deposits, effectively control the banking system.  Yet all theses banks are profitable (less so this day -- still) and risk averse.  There is no concept of Level 3 assets, and Canadian banks have no equivalent to the FASB157 (where banks can dictate the value of their assets).  So that was the big news, confirmation, that Carney was now in line to t…

US money supply up 30%

Very scary headline, the US money supply growth is out of control.  Although the US economy is not in recession its not exactly on fire.  The 30% growth in 4 months  can only have (eventually) one outlet:  Inflation.  It may take a while because the US economy is a service economy and there is tremendous labor slack, but it will happen.

The most amazing thing, of course, is that the FED is taking the money out of the hands of savers into the hands of the borrowers.  Maybe the Tea Party is right to be pissed after all, they are getting screwed -- hard!

See this bit in ZeroHedge here

Canadian Inflation: Not good at 3.2%

So the data is in, and headline CPI inflation is not good at all, in fact even the Core CPI is higher -- below the 2% threshold but at 1.9% (1.5% last month) this is at the upper limit (I would say a little beyond) what the Bank of Canada wants (in fact the BoC has a 1% -- 3% target CPI band).  
Headline inflation has been (two months running) above the target set by the BoC some years ago, bottom line energy prices are much higher than they were a year ago (14%), but so is everything else.  Canada's reality is that, very much like the U.S., it is a service economy, a labor is much tighter in Canada -- strike threats are in the air all the time (in the case of Air Canada literally) because the labor market -- while not drum tight -- is still getting tighter.  Just an FYI gasoline prices in September 2011 were 22% higher than a year earlier.  No graph today, they are meaningless -- prices are rising and the BoC's hands are tied.  Only actor that has some room to maneuver is fi…

What I'm reading

The FT has a "profile" of what's going on with Rick Perry hereThe "new Pepsi" in economics Nominal GDP as a policy tool worth the read here  Don't know if he's crazy about this theory -- it may work, but there are real issues here too!Proof that Ron Paul is running for his next gig:  FoxNews hereBronte Capital continue to rip the reverse take-over crowd hereMy first job, was in 15 September 1987, went for 4 weeks of training, my first "in office" day was on October 19th 1987.  Terrible storm overnight (London) with most Tube lines running "short" service.  Arrived in the office to see the Dow Jones down 20% -- asked my boss "is this normal?"  here

North American median Income...growth

I've been thinking about this for a while, I've often written that there are fundamental difference between Canada and the U.S. and these are widening (despite what the Conservative government thinks) rather than narrowing.  
First, is the nature of the Canadian economy:  small and open energy and resource export driven economy.  Canada is no Qatar or Kuwait, where energy is 99% of its exports, it is far more balanced that  that, energy exports are important but not dominant, but it remains that Canada's strength lays in "heavy things that hurt when you drop them".  Socially Canada is more homogeneous, and the Caucasian majority doesn't feel threatened...it is important to note that in the U.S. the Caucasian majority is only a few years away from no longer being the majority [BTW I'm not inferring any preference here, but note that the U.S. Tea party was mostly "Angry Whites" -- realizing that their "position" in America's economic…

Toronto Real Estate

According to the Globe and Mail, 60% of new condo buyers in Toronto are investors.  The game is the same everywhere, you invest in a condo project, with progress payments (initially very low) on a $500k condo the initial payment may be $50k, the idea, for the investors is to hold on to the property until its close to completion, and then "flip it" to a owner-occupier, usually generating a very nice yield on the $50k investment (maybe a doubling over 24 months), not bad in a rising market.

The problem is obvious, with so many condo projects being built  there is a finite number of "real owner-occupiers.  The result, those early buyer start by dumping their project, with the usual consequences on the market at large.


Why OWS has already won

Simple, they've changed the conversation in Washington!  Whereas a month ago the conversation was about cutting spending, and how Americans were paying too much taxes, the conversation is how much of a raw deal "99%" of Americans have had over the past 30 years...

Call it a first victory in a long battle, but, as an example, it is amazing how last night's GOP debate was different from its previous incarnations, granted they are still in cuckoo land for most of what they are talking about, but already some of the conversation has changed, consider how far crazy they were in their last debate,  it shows that even the GOP is waking up to a new reality -- why would Rush Limbaugh be so pissed off otherwise!

Loan officers say: Canada is doing Ok

Interesting times in Canada!Late last week the Bank of Canada issued its Senior Loan Officers Survey, a quarterly affaire that tracks where the lending market is going.Of course in Canada with 6 large lending institutions the information is unusually helpful – it is a real source of help in understanding what lenders “believe” the market to be doing.First off, the demand for loans remains strong, and condition continue to be favourable, competition is the problem, there’s too much of it keeping standards loose (the same for pricing), although the improvement has “diminished... not too sure what to make of that “negative” statement.The BoC seems to be of the opinion that lending standards remain reasonable and seem to have nicely rebounded from the lows of 2009.
The Canadian bond market is saying a similar story with a strong probability that 2010 record $78 billion in new issuance will be “beat”.As of last week the Canadian market has seem issues totalling C$61 billion vs. $55 billio…

Iphone -- I broke down

Huge day!  I finally broke down and bought an iphone.  The reason; well its cool technology, it works well and frankly I don't have a home number anymore -- so I was relying on the office provided cell phone (a bad idea).

So now I have the new iphone 4s. BTW I didn't order the thing, i just walked into a store and bought it!  Strange, I heard stories of people waiting for months for their new phone.  Finally, the SIRI function is "way cool"


Dinner Saturday Evening

Ok so Saturday I went to a dinner party in the Laurentians (North of Montreal), the weather was simply terrible, BTW now used to GPS, not having one at hand is a complete nightmare, using Maps in the car is dangerous (especially when driving alone, at night in the rain).
Anyway, I arrive at the dinner and meet a bunch of new people, very pleasant, lots of wine being drunk, having a ball no doubt about it.  One of the guest, is a big cheese in one of Montreal's premier money mangers (didn't know that at the time), anyway I speaking to our host and explaining that the market is largely rigged against the small, that the market is in a secular bear market (because of demographics and deleveraging) and that the model portfolio today should include lots of fixed income and stocks that pay high dividend and that are counter cyclical (or at the very least not related to consumer discretionary businesses).
Not making a big fuss about all this, but I do point out that most of the trad…

Mark Carney -- Tells it as it is!

Last night an Globe and Mail article made its way to my desk, it was all about a suddenly very chatty Mark Carney.  As the article implies central bankers are normally not very chatty -- manly because every one of their utterance can move markets.

Of late, Mr. Carney has been seen "storming out" of a meeting with the CEO of JPM and four days ago Mr. Carney said some hard things in Europe to Europeans.  He gave a detailed interview in the Figaro (terrible search engine, cannot find the article), spoke to journalists.  At any rate read the Globe and Mail article (here) is very interesting, gives additional links.

Should Mr. Carney become the head of the FSB (he would retain his role as governor of the Bank of Canada) he will be a strong voice to make the world financial system stronger.

Occupy Wall Street -- A banker's perspective

The whole financial mess (the continuing saga with PrimeX) that began in earnest in 2008 has finally created demonstrations in America!  One has to wonder why it took so long.  American banks were "rescued" by the U.S. government, and the next day, effectively, accused the government of having too much debt.  Moreover, U.S. banks that were in 2008, deemed Too Big To Fail, are bigger than ever, because the "Treasury" backstop  ensures that they cannot go bankrupt.  
Over the weekend, OWS said:  what would happen if we took all our money out of Bank of America?   The bank's answered "F-you we don't care".  What other business in the world can afford to alienate one million customer with impunity?  Their basic "beef" is with Socialism for the banks and capitalism for everyone else! Banks (and bankers) got bailed out and the rest of America got screwed.   They see no relief from their government;   it is well know that both houses of Congre…

Canada's TIC report: On track, more or less!

The magic figure this month is $7.8 billion, that the capital inflow (mostly into T-bills).  Last month, the bulk of capital inflow was money market so this is a shift in the type of assets being purchased.  Interestingly, stocks investment inflow remain at "depressed" levels (still growing but getting very small).
One reason, is that foreign investors have already reached their equity capital allocation target for Canada (ok its possible -- and make more sense than other options), and are seeking safety in Canada's T-bill market.  As usual, the bulk of this fixed income is in the form of federal instrument (as opposed to provincials). This supports the thesis that foreign investors are "parking" their cash in Canada (rather than investing in Canada), looking for safety rather than income.  
Again the preference for ultra liquid T-bills (instead of T-bonds) speaks volume as to foreign investors' risk appetite.  One more headache for  the Bank of Canada.
Fi…

Canadian manufacturing up for a second month

The big contributor to growth was:  Sale of transport equipment (+7%) in July it was up 3.5%.  Food and Energy both played important role in the growth of manufacturing (oil in particular is seeing higher volume after the June/July shut downs).


(Source: StatsCan)

Grand total sale growth was 1.4% -- highest level since early 2008. On a provincial level the big "winner" was Quebec with manfuacturing sales up 3.5% -- this may have something to do with the Aerospace sector (very variable shift in sale from month to month).



Looking at manufacturing inventory, there has been a slight rise, but the inventory to sale has decline to lower levels.  This should reflect itself in new hiring and growth of production going forward -- assuming that the order backlog data is correct (it is actually rising slightly -- a lot if aerospace in included...).  Good data for Canada (at the manufacturing level at least),


Iphone 4S

OK so this morning I was listening to the news, apparently in Montreal's sole Apple store there was a 200 people line up to snag the new Iphone 4s.  Lets be clear here, the phone that Apple sells in its store is unlocked and so full priced (about $700 each) and look exactly like the "old" Iphone. You got to give it to Jobs/Apple to create this kind of frenzy for a product and which you can get at any phone store (for $100 + 3 year contract) where you have to explain that your phone is better than the old one...

On a separate note yesterday the internet was very sluggish.  Turns out it was not a local phenomena, apparently, and I have a hard time believing this was true, it was due to the release of iSO5 (also by apple), its new operating system -- again most if not all the changes are "under the hood"...massive number of Apple users were downloading the software (takes about 60 minutes)

Strange world we live in, Kudos to Apple.

Thursday Already

To quote on of the good guys:  "We follow the bouncing ball of Risk on, Risk off.."  The past 10 days saw no real reason for a 100 pts bounce in the S&P500 (or a 1,000 point on the Dow Jones), so today we get a 1% correction on "no news" (OK so Chinese trade data came out...nothing really that big except trade deficit with China rose again (all time high)).
On the other hand looking at the hard data is scaring the crap out of me!  One of my favorite bloggers, Bruce Krasting (a fellow bear) has a couple of graph that are worth a look, but bottom line the PrimeX disaster of last week is now explained by the death of new issuance in the sub-prime market.  Issuance has gone from $60 billion a quarter to ZERO in Q3/11 (look at the chart below), that's how much sub investment grade bonds have been issued in the past four weeks.
This is a liquidity crisis in the making, if you look at the SME market you notice that the primary reason for a terrible business enviro…

Oil Prices & Oil Demand

The IEA provided some interesting data last week (its mostly boring stuff with some interesting "nuggets").  First, the IEA doesn't see a marked reduction on global energy demand -- so oil prices so stay "stable" assume that America doesn't declare war on Iran (that little spat could end badly -- very easily).   Now what every one knows now the non-OECD countries (e.g. the non-rich world) accounts for 50% of all oil demand but overall energy demand by non-OECD countries already (in BTU terms) already exceeds that of the OECD countries (55% for those interested), and demand in those countries unchanged growing by 5% per annum, while OECD countries oil consumption for OECD countries is largely unchanged for the past 25 years.

As far as the IEA is concerned its see's no significant reduction in energy demand for 2012/2013 period (despite the risk or recession in Europe and America), as any contraction in demand by OECD countries will be more than made up …

Manna from Heaven – Foreign Direct Investment?

FDI has been, since I trained as an economist, the best form of investment that a country could hope to obtain.Money invested for the long term that will result in job growth and revenues increases – even it turns out when the FDI is in the form of buying already existing companies it appears.
There is no doubt that Canada has a problem because the greatest bulk of foreign investments into Canada is either TSX60 companies or sovereign t-bills or bonds – highly liquid investments that can exit at the first sign of trouble (or better opportunity elsewhere).Over the past 30 months (in fact shortly after the financial crisis) investors have looked at Canada favourably, its banks seem solid, and well capitalized, the housing market seems to be doing ok (in fact better than ok, it’s on fire!) which has resulted in more than $100 billion a year in investments (about 8% of GDP). We know that the Bank of Canada is concerned with all this "hot money", and how to minimize the risk it …

Today -- an ultra short term prediction

So what's up this morning?  Well the whole banking sector is doing OK today -- Societe Generale's share price are up 5% today, the US futures are also up...the USD is in free fall after last night's Senate vote to punish China for an undervalued currency, and Obama's job bill failed in the Senate -- so every analyst will now revise growth estimates for Q4 and Q1/2012.  I would say that the GOP/Republicans strategy is really paying off!  Make sure that the economy is in free fall before November 2012 -- then they can fix it (again huge amount of sarcasm here).
The S&P500 is fooling around 1,200 it may have another 50 pts to go (target range 1250) but after  that down has to be the trend.  The CAD is tracing back toward parity and will maintain this trend as long as oil price continue to rise.  This morning WTI is around $86/bbl and the CAD is just shy of 1.5c of parity (10 days ago it was 5c lower).  
Since last nights votes were 100% politics and 0% policy observe…

Last week Dexia this week Erst Bank

Some readers will remember that last summer (June 2011) Europe performed a stress test on its financial institutions.  Some will even remember that Dexia came rated very high scores (very safe) on certain scales Dexia was Europe's best capitalized bank -- the results so far this week is that the whole mess of a bank is being sold, and taken over by the French and Belgian governments.
Last night Austria's largest bank reported losses of Euro 1.6 billion.  Aside from getting screwed by the Hungarian government -- Erst had been writing Hungarian mortgages in Euro in a Forint denominated country.  The reason was that Euro interest rates were low, while the Forint interest rates were high... of course this could only end well (sarcasm).  When the Forint was devalued against the Euro (because the economy is in trouble) those who had taken a Euro loan were screwed, so the government came to the borrower's rescue, and made the F/X contracts "illegal".  Erst should have …

Comparing costs of health Care

From today's Globe and Mail:



Montanans will spend almost $8-billion (U.S.) for health care this year, while Saskatchewanians will spend $4.5-billion. That is a whopping difference. But spending is just part of the story.In Montana, more than 280,000 people under the age of 65 had no health insurance last year, according to Families USA. Another 55,000 insured residents still faced “catastrophic” out-of-pocket health expenses – meaning more than $14,000. Private health insurance does not come cheap: The average premium for a family was $13,770 a year, double what it was five years earlier, according to the Kaiser Foundation.

 The state of Montana is the same size (population) with the same ethnic mix and industry as Saskatchewan.  A population of 1 million in both places, the G&M found that the total health care expenditure for Montana was nearly twice that of Saskatchewan, but more importantly, a quarter of the population is not covered (by choice or because the cost of insuranc…

A quicky on Tuesday morning

Found this chart on the interweb last night -- in a nutshell it talks about Median Household Income Index.  If the index had been set at 100 at the turn of the new millennium, today it would be 89, down 11 over the last 10 1/2 years. (Source: here)
Take into consideration that during this period there has been some  (not much) inflation during this period.  the whole "Occupy Wall Street" demonstration makes a certain amount of sense.  although the exact same data is not available for Canada, during the 2005 to 2010 period, Canadian Median Household Income grew 13%.  this is reflected in the health of Canada's economy.
Moreover, although this is an after tax number it is not a after health care cost in America -- where health care costs have risen dramatically (on average 7.5% p.a. between 2000 and 2010).

Confusing Indicators of growth

Reading a number of report on forecast growth in the US economy, first is Bruce Krasting who has a good following and the other Artemis Capital Management.  Looking at their analysis produces two very divergent forecast:
Krasting is taking the view that the recent data (employment in particular) would lead to believe that 3% growth is on the cards for the U.S. economy.  Krasting has not fully bought the story (he's a bear like me) but data is data and as an ex-FX trader is agnostic on sentiments, he looks at hard numbers.
Artemis looks at different market factors, asset correlation, market volatility (especially the overall surface) and finally hard data on money supply -- which have been spiking of late.  He reads a risk of recession.
Part of the problem is that indicators are all over the place, as in all recessions.  Usually when looking at part recession we only remember the elements that "caused" the recession, forgetting data that did not fit that story -  because…

CAD short term direction

The CAD is back trading in the 95/95 zone, but then oil prices that were all the way down to $75 last week are now around $83 (WTI), so it makes sense.  My guess is that the Canadian employment numbers will make the loonie more attractive to foreign investors (again).

It may play around this range for a few weeks -- the direction of the CAD is 100% driven by exogenous economic events.  Europe seems to be coming apart (Dexia) and that could be bad for everyone around.  What happens of the Dexia crisis spills over into France (BNP, SocGen).

Election night in Ontario

The Liberals won a minority government -- short one seat to have a majority.
This campaign was amazing for one fact, Ontario has fixed date election calendar, removing the advantage to the sitting government to set an optimal date for the election, and the Conservatives started the campaign with a 20% lead.
The blew-it, plain and simple.  First major disaster was the leader of the conservative who said: "wouldn't it be great if all three levels of governments were conservative!"  Toronto voters unanimously said: NO!  That was a stupid move if I've ever seen one, first off, because Torontonian that had voted in the conservatives (Tom Ford)  on the promise to "Cut waste" discovered that there was not that much waste after all, so he starting cutting the meat:  Library etc...Toronto was not amused, the same way Canadians are not amused by the Federal Government's Omnibus Crime Bill that no one in the justice system wants (judges, police, lawyers etc), the…

Canada post +60k in new jobs

Go figure!  Just a few weeks ago all was doom and gloom in Canada.  The consensus was that for September 16,000 jobs were created -- well they were wrong by a factor 3.  In September Canada created more than 60,000 jobs (its as if the U.S. had created 600,000 jobs).  
The immediate impact is that the rate of unemployment fell by 0.2% from 7.3. to 7.1% (BTW strict comparison with U.S. unemployment would reduce the unemployment rate by 1%).

The bulk of new jobs were in private sector -- in fact public sector job levels are back to their September 2010 level... (up 14k).  The growth in labor was greatest in Ontario and Alberta, with British Columbia seeing the greatest percentage surge.
These figures are certain to give some strength to the CAD, and reduce the pressure on Mark Carney the Governor of the BoC to cut interest rate.  Canada's economy is humming along, right now.  The one sector that is slowing is construction, but this could be a seasonal thing more than anything else.�…

I never agree with Anne Coulter...but

I am not the first to note that the vast difference between the Wall Street protesters and the tea partiers: To name three:  The tea partiers have hobs, showers and a point. Of course Ms. Coulter refers to the Tea party 2.0 -- the very first version was a bunch of guys in tri-horn hats screaming that they had enough, (of what exactly it depended on who you spoke to).  The real fear here is that what the GOP did to the Tea Party 1.0, that Democrats will do the Wall Street Protesters 1.0 -- transform them in a nation wide vocal anti-Wall Street movement. I remember the Democrats making fun of the Tea Party 1.0 -- they were not finding it so funny when the 2010 elections came around.  Now imagine the same thing, but reverse the outrage!

Building Permits -- a sagging story

Construction in Canada is slowing -- but then there is a seasonal aspect to this in Canada.  However, the most important factor here is the dramatic drop in Commercial construction -- down nearly 21%.  This statistic is both true in the private as it is in the public segment of the industry.


(Source: StatsCan)

The impact of a drop in construction (of such magnitude) is certain to impact GDP -- however that impact will be small, as construction is only about 3.5% of Canada GDP -- a 20% drop will translate into a much smaller change in the overall GDP.

It is hard to figures out what this all means, permit are

I was not a fan of Apple& Other tidbits

I was not a fan of Apple computers, I never understood the fetish that it caused among its users.  First, you have to understand that I was of the first generation of PC.  For me a computer was not a thing of beauty, it was a tool I used every single day, many hours a day.  The very last thing I wanted to do was to have a computer at home. 
I purchased my first home computer while living in Asia -- in late 1999, and only because I was starting a consulting business, and needed a computer! Then in 2002 I bought my first Ipod, and I immediately understood what made Apple better -- it was the user interface.  Four years ago, fed up of my every two year purchase of "Gray Boxes" that seem to fail with great regularity I bought a Mac mini -- again the interface blew me away.  Two years ago I bought an Ipad, and "magical" was the first word they came from my mouth -- this was the computer device I always dreamed of (I of the star trek generation)!  
Mr. Jobs, who died ye…