Skip to main content

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 before 2013).  Canada is still a few percentage points away from the "overheating" zone but is getting closer.  Moreover, the Canadian labor market poorly reflect regional disparities.  Carney and friends must be "praying" for a European/Chinese/American economic slow down.  Otherwise, the BoC will have to take action.

It would seem that the 4am "resolution" in Europe has taken the risk of severe recession in the region to "after Christmas.  Everyone is going to pat themselves on the back after this latest effort.  Next year European governments will figure out that when government expenditure falls in an economy where it accounts for nearly half of GDP, then GDp doesn't rise, it falls.  The banks' liquidity problems are still present (hence the strength of the Euro -- as they repatriate cash).  America is depressed but sales of "stuff" is rising -- depletion of savings! While China -- no one knows.


Popular posts from this blog

Trucker shortage? No a plan to allow driverless rigs

There are still articles on how America is running out of truckers -- and that its a huge problem, except its not a problem, if it was a problem salaries would rise to so that demand would clear. Trucking is one of those industry where the vast majority of participants are owner/operators and therefore free agents.

Salaries and cost are extremely well know, "industry" complains that there are not enough truckers, yet wages continue to fall... Therefore there are still too many truckers around, for if there was a shortage of supply prices would rise, and they don't.

What there is though is something different; there is a push to allow automatic rigs to "operate across the US", so to encourage the various authorities to allow self driving rigs you talk shortage and hope that politicians decided that "Well if people don't want to work, lets get robots to do the work" or words to that effect.

This has nothing to do with shortage of drivers, but every…

Every punter says oil prices are on the rise: Oil hits $48/bbl -- lowest since September 2016

What the hell?

How could this be, punters, advisors, investment bankers all agreed commodity prices  in general and oil prices in particular are on the rise...its a brave new era for producers and exporters -- finally the world is back and demand is going through the roof, except not so much!

What happened?  Well energy is complicated, the world operates in a balance -- 30 days of physical reserves is about all we've got (seriously) this is a just in time business.  So the long term trend always gets hit by short term variations.

Global production over the past 12 months has risen by somewhat less than 1.5% per annum.  As the world market changes production becomes less energy intensive (maybe), but the reality is that the world is growing more slowly -- America Q4 GDP growth was around 1.9% (annualized) Europe is going nowhere fast (the GDP growth in Germany is overshadowed by the lack of growth in France, Italy, Spain (lets say 27 Euro members generated a total GDP growth of 1.2…

Paying for research

This morning I was reading that CLSA -- since 2013 proudly owned by CITIC -- was shutting down its American equity research department -- 90 people will be affected!

Now the value of a lot of research is limited, that is not to say that all research is bad. In fact, I remember that GS's Asia Aerospace research was considered the bible for the sector.  Granted, there was little you could do with the research since the "buy" was for Chinese airlines...that were state owned.  Still it was a vey valuable tool in understanding the local dynamics.  It seems that the US has introduced new legislation that forces brokers to "sell" their research services!  Figures of $10,000 an hour have been mentioned...

Now, research can be sold many times; if GS has 5000/6000 clients they may sell the same research 300x or 400x (I exaggerate) but this is the key -- Those who buy the research are, I presume, prohibited from giving it away or selling it, at the same time the same rese…