Canadian economy heading for recession

[mentalfloss]

Loonie tumbles further on surging U.S dollar, weak data - The Globe and Mail
Home - The Globe and Mail

The loonie continued its tumble on Tuesday in the wake of plummeting oil, a robust US dollar, and less than inspiring PMI data. The Canadian Dollar slid as low as 78.27 US cents at 10:05 am before leveling off to close at 78.68 cents, down .0035 cents or another .44% from Monday’s close.

The loonie has been under pressure all week as oil has been beleaguered by oversupply concerns including an increase in US crude stockpiles and a possible Iranian deal that would lift sanctions and bring even more oil to market. Monday’s crude prices saw the biggest one-day loss in three months.

A growing Canadian trade deficit and less than stellar June purchasing data put added pressure on the loonie. All eyes will now be on Friday’s June unemployment figures which will weigh heavily on the Bank of Canada’s July 15 interest rate decision.

The US Dollar continues to benefit from the ongoing Greek bailout crisis as a perceived safe haven for the risk averse. As investors await the next chapter in the Greek debt drama, the euro has struggled to find its footing. This coupled with an uptick in US manufacturing activity in June has further fueled a surging dollar.

In emergency meetings on Tuesday, Greek Prime Minister Alexis Tsipras has suggested that the original bailout package from international creditors could, in fact, still be on the table with “some changes” but German Chancellor Angela Merkel sounded less than optimistic suggesting that Greece was days from collapse and that there was nothing new to discuss. While the ECB has continued provide liquidity assistance, they have also limited access to cash. A Wednesday morning conference call has been set to discuss new proposals from Tsipras as Greek banks will remain closed an eighth business day.

Sources have confirmed that US President Barack Obama called Chancellor Merkel on Tuesday and urged her to convince European leaders and creditors to avoid a Greek exit from the Eurozone.

Loonie tumbles further on surging U.S dollar, weak data - The Globe and Mail

 

[Walter]

Loonie tumbles further on surging U.S dollar, weak data - The Globe and Mail

Analfloss gets a woody reading this stuff from lefty rags. Yes, The Gob and Puke is a lefty rag.

 

[mentalfloss]

Canada Stocks Fall to 6-Month Low as Oil Slumps on China Concern - Bloomberg Business
Bloomberg Business

Canadian stocks fell to the lowest since January, as oil prices slid amid a rout in Chinese equities raising concern that growth will slow in the world’s second-largest economy.

Royal Bank of Canada and Toronto-Dominion Bank fell at least 1.1 percent to lead lenders lower. WestJet Airlines Ltd. slumped 6.2 percent, the most in two years, after second-quarter load factor, a measure of capacity efficiency, declined. Encana Corp. lost 5.5 percent as crude traded near a three-month low.

The Standard & Poor’s/TSX Composite Index fell 212.43 points, or 1.5 percent, to 14,412.07 at 4 p.m. in Toronto, the lowest since Jan. 20. The benchmark Canadian equity gauge capped its second slide of at least 1.5 percent in the past two weeks.

All of the 10 industries in the gauge retreated on trading volume 3.5 percent higher than the 30-day average today. Royal Bank and Manulife Financial Corp. led financial services companies lower by 1.2 percent. The industry accounts for about a third of the S&P/TSX.

Canadian equities joined a selloff in U.S. and Asian equities. U.S. stocks tumbled to a four-month low after Federal Reserve minutes showed officials were concerned crises in China and Greece would damp domestic growth. The New York Stock Exchange suspended trading for 3 1/2 hours due to a computer malfunction as trading continued on other venues.

A rout in China’s stock markets threatened demand in the world’s largest buyer of commodities. China is Canada’s largest trading partner after the U.S.

Teck Resources Ltd. declined 6.3 percent, to an April 20009 low, as iron ore slumped 10 percent to the lowest level since at least 2009.

Suncor Energy Inc. lost 1.5 percent and Encana retreated 5.5 percent as energy producers slumped 1.7 percent as a group. Oil futures for August delivery slipped 1.3 percent to $51.65 a barrel in New York. U.S. crude stockpiles gained 384,000 barrels in the week ended July 3, according to a government report.

Enbridge Inc., with a market capitalization of C$50.3 billion, has overtaken Suncor at C$49.5 billion as the largest energy company in the S&P/TSX by that measure, according to data compiled by Bloomberg.

Investors are also watching developments in the Greek debt crisis, where Greece faces a Sunday deadline to reach a deal with the European Union as leaders talked openly about a Greek exit from the euro. Greece’s banks are almost out of cash and its economy is grinding to a halt.

Canada Stocks Fall to 6-Month Low as Oil Slumps on China Concern - Bloomberg Business

 

[JLM]

Canada Stocks Fall to 6-Month Low as Oil Slumps on China Concern - Bloomberg Business
Bloomberg Business

Canadian stocks fell to the lowest since January, as oil prices slid amid a rout in Chinese equities raising concern that growth will slow in the world’s second-largest economy.

Canada Stocks Fall to 6-Month Low as Oil Slumps on China Concern - Bloomberg Business

Why the incessant obsession with all this doom and gloom? Have you not taken steps to at least partially insulate yourself from it? I'd guess you have as much knowledge as virtually anyone to be able to do that.

 

[mentalfloss]

Nah, I'm fine.

I just care about others.

 

[petros]

BS you aren't fine. You're scared sh-tless.

 

[JLM]

BS you aren't fine. You're scared sh-tless.

Nothing to be scared about, Pete, as long as "all your eggs aren't in one basket". What's going to happen is going to happen. While I have your attention I should feel you out. Is it the right time now to convert some fixed income accounts to equities?

 

[mentalfloss]

Recession watch: Fear and loathing in Canada's economy
Macleans.ca - Canada's national weekly current affairs magazine

Listen to Jason Kirby read his column, or subscribe to Maclean’s Voices on iTunes or Stitcher for on-the-go listening:

There are a lot of things the Harper government thinks Canadians should be fearful of: homegrown terrorism, marauding gangs of thugs, Justin Trudeau. There is one threat, however, the government is adamant we not worry about: the R word.

The question of whether Canada will tumble into recession dogs Finance Minister Joe Oliver wherever he goes these days, yet his response has been bullishly consistent: “We’re not in a recession,” he assured us the other day. “We expect solid growth for the year.”

If he says so. Instead, many private sector economists now believe Canada is already in recession—defined as two back-to-back quarters of declining growth. We know the economy shrank through each of the first four months of the year. And while we won’t have a definitive answer from Statistics Canada about the second quarter until September, GDP growth will have to have been robust in May and June—defying evidence to the contrary—for Canada to dodge the bullet.

Macquarie recession chart

So, accepting that we are likely already in recession, the question becomes: How bad could it get? Canada’s economy is at a crucial juncture, one that will determine whether this will be a short, shallow contraction, or something deeper and longer-lasting.

It comes down to psychology. Fear of a recession can easily become self-fulfilling. If households, businesses and investors feel the outlook for the economy is darkening, they’re likely to tighten their belts. That means consumers make fewer purchase, such as homes and cars, and forgo vacations and meals out. It means less financing for entrepreneurs. It means businesses cut back on purchases of machinery and even on hiring. (This week, a Statistics Canada survey revealed that companies are slashing their capital-spending plans for 2015, the first decline since 2009.) All these decisions to hunker down have a debilitating effect on economic activity.

So far, the standard measures of consumer confidence are holding up. The Bloomberg Nanos Canadian Confidence Index, for instance, continues to hover near its 2015 high. But at the same time, Canadians have a hunger for information about the recession right now, suggesting that fear of a downturn is real and mounting. That’s clear from this chart, which shows the frequency with which Canadians are suddenly googling the word “recession.” (Click image to open full size.)

KIRBY_CHART_web

(And here’s the Google Trends interactive chart.)

The search engine’s trend tool (which measures interest in search terms relative to their all-time peaks) is an excellent gauge of what’s on people’s minds, and the recent spike in “recession” searches may be an indicator of what’s to come. (Sidenote: A similar spike in January 2008 coincided with the start of the U.S. recession, yet, at the time, bankers, politicians and many economists were still claiming a recession could be avoided.)

This isn’t to say there’s a straight line between fear and recession. If that were the case, the U.S. would surely have suffered another bout in 2011. Anxiety was high and recession warnings abounded. Standard & Poor’s had cut America’s credit rating in the face of rising deficits and slowing growth, the spreading sovereign debt crisis dominated headlines, and Americans were losing faith in their country’s ability to recover. But, in the end, the U.S. economy powered through. (Another sidenote: Even in 2011 when U.S. recession forecasts were rampant, Americans weren’t as focussed on the R-word as Canadians are now.)

Yet there are huge differences between the U.S. then and Canada now, and they don’t bode well for us. Manufactured political crises such as the debt-ceiling debates heightened American uncertainty at the time, and masked genuine improvements. Yet, in Canada, the oil crash that began in mid-2014 and—after a three-month respite—has resumed its plunge in recent weeks, poses a real and ongoing threat to our resource-heavy economy.

WTI 2015

Meanwhile, non-energy exports, which were supposed to save our Canadian bacon, have crumpled.


U.S. households and businesses had also made real progress repairing their shattered balance sheets. Canadian consumers, by contrast, are maxed out. Our economy, with its overreliance on household consumption, has been living on borrowed time and money. Even if the Bank of Canada cuts rates next week, as many expect, the effect will be muted.

When FDR uttered his famous line in 1933 that Americans had nothing to fear but fear itself, the country was in the depth of the Great Depression, seized by “nameless, unreasoning, unjustified terror.” There truly was nowhere to go but up. The same can’t be said of Canada, with its teetering housing market and record household debt levels.

Canadians are right to be afraid of a recession. But that fear is also likely to make things even worse.

Recession watch: Fear and loathing in Canada's economy

 

[petros]

If you read the entire posts they give both yays and nays with yays ignoring specific seasonal shifts.

 

[Tecumsehsbones]

Analfloss gets a woody reading this stuff from lefty rags. Yes, The Gob and Puke is a lefty rag.

Unlike the neutral, unslanted sources you use.

 

[petros]

Meanwhile, non-energy exports, which were supposed to save our Canadian bacon, have crumpled

.
Why? All the incentives are in place. Who is holding it back?

 

[mentalfloss]

Dat biased Reuters


Bank of Canada survey shows low oil price still hurts economy | Business | Reuters

 

[mentalfloss]

Canadian economy sheds 6,400 jobs, unemployment rate steady - The Globe and Mail

 

[captain morgan]

I hate it when that Dutch Disease flares up.... Just when you think that all the penicillin and meds have done their job, that nasty itch reappears

 

[mentalfloss]

You and petrifiedos should hold a seminar on Dutch disease and fossil fuel subsidies.

 

[captain morgan]

Dutch disease is crippling our economy.... Those folks in the Netherlands have a helluva lot to answer for.

Say, how's the ole wind generation of electricity in Ontario going these days?

 

[petros]

Dutch disease is crippling our economy.... Those folks in the Netherlands have a helluva lot to answer for.

Say, how's the ole wind generation of electricity in Ontario going these days?

ON Algonquin keeps investing in SK. 2 more batches of whirly gigs to fuel SK, MT and ND fracking.

http://www.cbc.ca/m/news/canada/sas...er-utilities-to-add-more-wind-power-1.2989294

 

[mentalfloss]

IMF slashes outlook for Canadian economy

As uncertainty in Greece and China's stock market crash wallop global confidence, and more economists here in Canada predict a recession, the IMF is cutting its outlook for the world economy and taking an axe to its Canadian forecast.

The International Monetary Fund now expects the global economy to grow 3.3 per cent in 2015, a drop of 0.2 percentage points from its April forecast. For 2016, it maintained its 3.8 per cent prediction.

The IMF turned especially gloomy when it came to Canada. It now expects the economy to grow just 1.5 per cent in 2015 versus its prediction in April of 2.2 per cent.

"A setback to activity in the first quarter of 2015, mostly in North America, has resulted in a small downward revision to global growth," wrote the IMF in a release Thursday.

Both the U.S. and Canada had treacherous first quarters. U.S. GDP shrank 0.2 per cent between January and March, but likely due to one-time factors such as the harsh winter weather and port delays. Canada's economy contracted 0.6 per cent in the first quarter, the first contraction in four years and the largest since 2009. That, of course, was the consequence of a dramatic drop in oil prices and subsequently a huge pullback in business investment.

'Likely' in recession

With Statistics Canada reporting negative output in April and the second-worst trade deficit ever, more economists in this country are using the dreaded "r" word for the second quarter. Strictly speaking, a recession is defined as two straight quarters of negative growth.

"It is likely the economy was in recession in the first half of the year," said TD senior economist Randall Bartlett.

Capital Economics and the Bank of America have both predicted a recession as well.


....more...

http://www.cbc.ca/m/news/business/imf-slashes-outlook-for-canadian-economy-1.3144690

 

[CDNBear]

When is slow or low growth, considered recessive?

Oh ya, when desperation strikes, lol.

 

[mentalfloss]

Where’s the debate on our dire fiscal future? - The Globe and Mail
Home - The Globe and Mail

What will the future look like in British Columbia and the rest of Canada? There are a host of imponderables, except one.

British Columbia’s population, like the country’s, will be much older. Aging will be the dominant underlying factor here and across Canada, its impact unfolding incrementally but irreversibly.

Aging will produce one change that no political party wants to tackle, certainly not in the federal campaign now under way: Governments of whatever stripe will need more money but will find their revenues shrinking.

B.C.’s population, for example, now has 31 people 65 years old or over for every 100 working-age persons. In a decade, the ratio will be 41 to 100. Ten years later, in 2035, the ratio will be 48 to 100, according to a recent paper from the Business Council of British Columbia’s policy analysts Jock Finlayson and Ken Peacock.

Put matters another way. The number of people in B.C. over 65 is growing at four times the rate of the number of people 25 to 64 years of age.

Fewer people working within the overall population means – at current rates of taxation – less revenue for government. Argue Messrs. Finlayson and Peacock: “Absent a major windfall from new resource development, demographic projections suggest that the province may need to explore ways to make the tax system less vulnerable to ‘revenue erosion’ linked to population aging and a slowdown in the growth of the work force.”

Other parts of Canada will be hit harder than B.C. In the Maritimes and Quebec, the population is already older than in the rest of Canada. Their dependency ratio – older people out of the work force as a share of the total population – is already higher than elsewhere, and will get worse faster.

Governments will not be easily shielded from the twin challenges of revenue erosion and higher costs for health care and old-age support.

Perhaps people should work longer. Terrific idea for some, but the average age of retirement in Canada has actually declined by one or two years. The average retirement age is below where it was in the early 1980s, report Mr. Finlayson and Mr. Peacock.

Get more women into the work force. Yes, but female participation rates in Canada are on the high side by international standards. Get more aboriginals into the work force. Absolutely, but that will be a slow process. Improve Canada’s productivity, low by world standards. Absolutely again, but the productivity bugbear has been holding Canada back for a long time. It’s hard to imagine turning it around quickly, if at all.

Campaigning politicians always promise higher economic growth. Alas for them, for reasons largely beyond their control, economic growth is going to be slower in the next decade than in previous ones. Lower taxes have been the preferred policy for stimulating growth under the federal Conservatives. Yet look at the first two quarters of this year – negative growth, with a forecast for all of 2015 likely at or below a feeble 1.5 per cent.

Canada is a storehouse of natural resources that have always provided a healthy share of natural wealth. Two factors call this into question.

First, natural resource projects are now wrapped in tangles of regulations, environmental opposition and aboriginal claims. Trying to get approval in B.C. for major projects costs a fortune for the proponents.

Second, world commodity markets have softened after a decade of boom. Bauxite and potash prices are fine, but those for oil, natural gas, many minerals and even some agricultural products have slumped. The boom days are over, quite likely for quite a while.

B.C.’s Liberal government had banked heavily on liquefied natural gas as a new source of large and sustained revenue. It isn’t going to happen. Next week, the legislature will be debating an agreement between the government and the consortium led by Petronas of Malaysia.

That project might go forward – although predictably another aboriginal group has popped up objecting that it was not adequately consulted – because the developers have both upstream gas and will build the LNG facility.

Other projects will be stillborn, because Asian buyers have been signed up by Australian and U.S. producers. B.C. came too late to the LNG party.

The sharply older population will reshape society and put enormous pressures on governments. Will anyone talk about it during the campaign?

Where’s the debate on our dire fiscal future? - The Globe and Mail