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Japan

Focusing on Canada with the drama that is unfolding in Japan is near impossible.  Figuring out the economic impact (never mind the untold human carnage) is near impossible.  What we know, is that Japan's economy will be on its knees for some time, that Nuclear power is in the dog house -- and that Japan will need to use different sources of power to create electricity.

The first natural source of energy for Japan is LNG, already a very big importer of LNG from Malaysia and Indonesia demand is bound to increase, Canada is a major producer of natural gas -- lots of our "classic" oil business is in fact natural gas.

Lumber industry will do remarkably well, once reconstruction starts a new in the summer.  Canada is already gearing up with exports to China, Japan shouldn't be too much of stretch.

The unknown are when the world's second largest economy grinds to a halt, what happens.  this is not an "Indonesia" 2004 it is something else entirely.  One thing for sure the BoC will keep interest rate at their current level for some time...

On Canadian news:

(1) Statistics Canada reported that capacity utilization is at 76.4%, down from 84.3% in Q4 2006, of course the problem with this data is that the denominator (available capacity) is estimated by StatsCan on an annual basis.  It doesn't make much allowance for "capacity destruction" .

(2)  Employment report shows that nearly 80,000 jobs were added in the past 3 months in manufacturing -- its says something about the strength of the Canadian dollar being of somewhat secondary importance.

(3) CAD is moving back towards parity with the USD, only 50c  away from parity.   Oil prices here are the main driver, off by 3% overnight to $97/bbl.

Again these figures only discuss what happened in the past, the tragedy in Japan makes the situation difficult to judge.

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