Skip to main content

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.  

Comments

Post a Comment

Popular posts from this blog

Ok so I lied...a little (revised)

When we began looking at farming in 2013/14 as something we both wanted to do as a "second career" we invested time and money to understand what sector of farming was profitable.  A few things emerged, First, high-quality, source-proven, organic farm products consistently have much higher profit margins.  Secondly, transformation accounted for nearly 80% of total profits, and production and distribution accounted for 20% of profits: Farmers and retailers have low profit margins and the middle bits make all the money. A profitable farm operation needs to be involved in the transformation of its produce.  The low-hanging fruits: cheese and butter.  Milk, generates a profit margin of 5% to 8%, depending on milk quality.  Transformed into cheese and butter, and the profit margin rises to 40% (Taking into account all costs).  Second:  20% of a steer carcass is ground beef quality.  The price is low, because (a) a high percentage of the carcass, and (b)...
Post a Comment
Read more

Spray painting Taylor Swift G650 aircraft (updated)

 First, a bit of paint will not harm anyone.  These climate activities are going to learn two things in the next few days:  (1) Trespassing at an airport is a felony almost anywhere in the world.  That means criminal prosecution.   (2) removing paint from an aircraft is expensive.   So these climate activists are about to find out the reach of the British criminal system and it will not be pleasant, the UK has very strict laws about that, I would be surprised if cleaning the aircraft of all the paint will cost less than $100,000.     I am sure that when they planned (premeditation) this little show they had a very valid logic to doing this.  Tonight, they are probably realizing the depth of their troubles.   I understand that in the UK it's a minimum one-year jail sentence.    Also, good luck travelling with a criminal trespass charge against you.  I am relatively certain that the airline industry will ...
Post a Comment
Read more

Janet Yellen from China supporter to Hawk...

There is rarely serious news in the world these days, it seems that most newspapers are filled with headlines and little else, and then Ms Yellen went to China.  Secretary Yellen has long been known in the Biden administration as the voice of moderation when dealing with China, yet as her trip which concluded yesterday a hawk was born:  She warned the Chinese against dumping goods in the United States.    fighting words! The American administration is very concerned about the lack of Chinese domestic consumption.   Even before the COVID-19 epidemic, there were already the beginning signs of a slowdown, automobile sales were off.   China is facing domestic deflation (a clear sign of collapsing demand) China imports few consumer goods, they import raw materials and intermediary goods.   It seems that the American administration is concerned that the Chinese administration will dump consumer goods abroad to keep its manufacturing machinery ...
Post a Comment
Read more