China is boosting spending on all kinds of natural resources - oil and mining acquisitions by at least half this year to take advantage of lower valuations after prices slumped. The nation’s sovereign wealth fund this week spent $2.75 billion on commodities companies and approximately $60 billion in the past year.
“China sees it as ‘We’re going to use the resources for several decades, so therefore our pricing expectations are different,’” Goodyear said. There “will be resource needs ahead, and they will want access to these resources in the years ahead.”
Chinese companies will step up the pace of overseas mergers and acquisitions in a “new wave” of deals.
This bodes very well for Canadian natural resource companies, and, in turn, for Canada as a whole. It goes along with my much repeated theme that "Canada has the goods that the rest of the growing world needs". Canada should be able to ride this secular wave that should last for at least another decade.
Another point of interest here is the simple little fact that one by one, Canada's mining companies are disappearing - either by way of merger with another or by take-over. With fewer companies to choose from, prices should...
Copper prices have doubled and oil has jumped 54 percent this year as China boosted imports to fuel its stimulus spending needs.
http://www.bloomberg.com/apps/news?pid=20602013&sid=ayAyMtVos3tQ
Wednesday, September 30, 2009
Thursday, September 24, 2009
Smaller, Regional Banks tell tale
Ninety-four banks have failed so far this year. 94 now gone and the pace of bankruptcies have not yet slowed. This, in my mind, gives us a good indication of the true current health of the US economy.
FDIC weighs extraordinary steps, including loans from banks, to shore up insurance fund
WASHINGTON (AP) -- The Federal Deposit Insurance Corp. is weighing several costly -- and never-before-used -- options as it struggles to shore up the dwindling fund that insures bank deposits.
Ninety-four banks have failed so far this year. Hundreds more are expected to fall in coming years largely because of souring loans for commercial real estate.
Bank failures since the financial crisis struck have drained the fund to its lowest level since 1992, at the peak of the savings-and-loan crisis. The fund insures deposit bank accounts of up to $250,000.
"Lots of banks are going to require more capital, and (Bair is) trying to rob from the rich and give to the poor,"
The agency is considering borrowing billions from healthy banks. Alternatively, it may impose a special fee on the banking industry.
Each option carries risk: Drawing money from healthy banks would take dollars out of the private sector, making that money unavailable for investment in the weak economy. But charging the whole industry a fee to replenish the fund could push weaker banks toward failure.
http://finance.yahoo.com/news/FDIC-weighs-extraordinary-apf-3266069115.html?x=0
FDIC weighs extraordinary steps, including loans from banks, to shore up insurance fund
WASHINGTON (AP) -- The Federal Deposit Insurance Corp. is weighing several costly -- and never-before-used -- options as it struggles to shore up the dwindling fund that insures bank deposits.
Ninety-four banks have failed so far this year. Hundreds more are expected to fall in coming years largely because of souring loans for commercial real estate.
Bank failures since the financial crisis struck have drained the fund to its lowest level since 1992, at the peak of the savings-and-loan crisis. The fund insures deposit bank accounts of up to $250,000.
"Lots of banks are going to require more capital, and (Bair is) trying to rob from the rich and give to the poor,"
The agency is considering borrowing billions from healthy banks. Alternatively, it may impose a special fee on the banking industry.
Each option carries risk: Drawing money from healthy banks would take dollars out of the private sector, making that money unavailable for investment in the weak economy. But charging the whole industry a fee to replenish the fund could push weaker banks toward failure.
http://finance.yahoo.com/news/FDIC-weighs-extraordinary-apf-3266069115.html?x=0
Monday, September 21, 2009
If we had only listened to Shania
She got it right.
A few years ago Shania came out with a song (lyrics below) about the excesses of spending, making money and greed that created the financial collapse we are all a part of. It's like she had a crystal ball, one that many did not heed to. Mortgages, credit card excesses – she sang about it all!
Check out the song at:
www.youtube.com/watch?v=0SAdIveCzXc
Artist: Twain Shania
Song: Ka-Ching
We live in a greedy little world
That teaches every little boy and girl
To earn as much as they can possibly
Then turn around and
Spend it foolishly
We've created us a credit card mess
We spend the money we don't possess
Our religion is to go and blow it all
So it's shoppin' every Sunday at the mall
All we ever want is more
A lot more than we had before
So take me to the nearest store
Can you hear it ring
It makes you wanna sing
It's such a beautiful thing--Ka-ching!
Lots of diamond rings
The happiness it brings
You'll live like a king
With lots of money and things
When you're broke go and get a loan
Take out another mortgage on your home
Consolidate so you can afford
To go and spend some more when you get bored
All we ever want is more
A lot more than we had before
So take me to the nearest store
Can you hear it ring
It makes you wanna sing
It's such a beautiful thing--Ka-ching!
Lots of diamond rings
The happiness it brings
You'll live like a king
With lots of money and things
Let's swing
Dig deeper in your pocket
Oh, yeah, ha
Come on I know you've got it
Dig deeper in your wallet
Oh
All we ever want is more
A lot more than we had before
So take me to the nearest store
Can you hear it ring
It makes you wanna sing
It's such a beautiful thing--Ka-ching!
Lots of diamond rings
The happiness it brings
You'll live like a king
With lots of money and things
Can you hear it ring
It makes you wanna sing
You'll live like a king
With lots of money and things
Ka-ching!
A few years ago Shania came out with a song (lyrics below) about the excesses of spending, making money and greed that created the financial collapse we are all a part of. It's like she had a crystal ball, one that many did not heed to. Mortgages, credit card excesses – she sang about it all!
Check out the song at:
www.youtube.com/watch?v=0SAdIveCzXc
Artist: Twain Shania
Song: Ka-Ching
We live in a greedy little world
That teaches every little boy and girl
To earn as much as they can possibly
Then turn around and
Spend it foolishly
We've created us a credit card mess
We spend the money we don't possess
Our religion is to go and blow it all
So it's shoppin' every Sunday at the mall
All we ever want is more
A lot more than we had before
So take me to the nearest store
Can you hear it ring
It makes you wanna sing
It's such a beautiful thing--Ka-ching!
Lots of diamond rings
The happiness it brings
You'll live like a king
With lots of money and things
When you're broke go and get a loan
Take out another mortgage on your home
Consolidate so you can afford
To go and spend some more when you get bored
All we ever want is more
A lot more than we had before
So take me to the nearest store
Can you hear it ring
It makes you wanna sing
It's such a beautiful thing--Ka-ching!
Lots of diamond rings
The happiness it brings
You'll live like a king
With lots of money and things
Let's swing
Dig deeper in your pocket
Oh, yeah, ha
Come on I know you've got it
Dig deeper in your wallet
Oh
All we ever want is more
A lot more than we had before
So take me to the nearest store
Can you hear it ring
It makes you wanna sing
It's such a beautiful thing--Ka-ching!
Lots of diamond rings
The happiness it brings
You'll live like a king
With lots of money and things
Can you hear it ring
It makes you wanna sing
You'll live like a king
With lots of money and things
Ka-ching!
Friday, September 18, 2009
Prince Harry's inheritance
Princess "D" legacy lives on...
England’s Prince Harry turned 25 this week when he’ll be entitled to the part of the inheritance left to him by his mother Princess Diana of Wales, writes Laura Elston in the Independent.
Princess Diana had an estate of £21 million ($35 million CAD$), but more than £8 million was paid in inheritance tax, leaving almost £13 million ($20 million CAD$) split between Harry and his brother, Prince William.
England’s Prince Harry turned 25 this week when he’ll be entitled to the part of the inheritance left to him by his mother Princess Diana of Wales, writes Laura Elston in the Independent.
Princess Diana had an estate of £21 million ($35 million CAD$), but more than £8 million was paid in inheritance tax, leaving almost £13 million ($20 million CAD$) split between Harry and his brother, Prince William.
Thursday, September 17, 2009
Jobs and the economic impact
One of the more unusual aspects of the current economic downturn is the steady erosion in jobs. While employment always lags the economy and markets in times of rebound, the erosion of jobs in this cycle is like nothing seen in the post-war period. Until jobs show recovery, a major housing recovery will not occur, and deficits will rise.
Of significant concern is that fact that past recessions saw employment recovery in a rebounding manufacturing sector. Those jobs are gone, and aren't coming back.
Keep in mind these observations concern the US and not necessarily Canada. However, an anemic US consumer will have an impact on the goods and services Canada sells to our neighbor.
The most important take-away from this observation is the simple little fact that the US consumer accounts for some 80% of the country's economy. So with a high unemployment rate and no wage increase - the writing is on the wall for the foreseeable future.
Monday, September 14, 2009
To save or to spend: a conundrum or simply a matter of sentiment?
In Canada the “savings” trend for the average person has been on a decline for decades. There was a time when the previous generation, and the ones before that – would save some 5 to 10% of their family’s net income. Great for thinking ahead – planning for retirement or just saving for a rainy day. But this prudent habit nearly all but ended in recent years until the financial meltdown and great recession of 2008-09.
Now the fear is that savings rates will escalate at a rapid pace – swinging the pendulum too far to the other side – and this excessive savings means that there will be less spending. Less consumer spending, of course, has a substantial negative impact of the economy. Therein lies the conundrum.
"The recession is confusing a lot of consumers who on the one hand are told to save money for a rainy day but on the other are encouraged to spend to help boost the economy."
It's a conundrum economists call "the paradox of thrift," which means that too much savings can lead to an overall drop in consumption and threaten a nation's economic growth.
"Saving is good, but at the same time ... consumption is good," said CIBC World Markets economist Krishen Rangasamy.
Rangasamy said savings rates typically fall when the economy is strong and rise when it's weak. Consumption rates run in the opposite directions.
When times are good, Rangasamy said people feel comfortable with the rising price of their homes and stock portfolios and spend more.
"They think 'Why do I need to save when I am getting richer?"' he said.
On the flip side, when a recession hits, there's a change in mindset.
"That encourages people to save for the future," he said, which in turn weighs on consumption, which in turn contributes to a weaker economy and higher job losses.
Rangasamy said the key to a solid economy is a balance of both saving and spending.
"Zero per cent savings is not good and neither is 40 per cent," he said
Canadians' savings rate was 4.5 per cent in the April-June quarter, according to Statistics Canada. That is up from 3.4 per cent for same time last year and well above the 1.9 per cent savings rate in the second quarter of 2007.
The savings rate was 6.1 per cent in 2001, when the last economic downturn hit. That's the highest it has been since 1996.
Consumer confusion: Save more, or spend more to help Canada's economy
By Brenda Bouw, The Canadian Press
Now the fear is that savings rates will escalate at a rapid pace – swinging the pendulum too far to the other side – and this excessive savings means that there will be less spending. Less consumer spending, of course, has a substantial negative impact of the economy. Therein lies the conundrum.
"The recession is confusing a lot of consumers who on the one hand are told to save money for a rainy day but on the other are encouraged to spend to help boost the economy."
It's a conundrum economists call "the paradox of thrift," which means that too much savings can lead to an overall drop in consumption and threaten a nation's economic growth.
"Saving is good, but at the same time ... consumption is good," said CIBC World Markets economist Krishen Rangasamy.
Rangasamy said savings rates typically fall when the economy is strong and rise when it's weak. Consumption rates run in the opposite directions.
When times are good, Rangasamy said people feel comfortable with the rising price of their homes and stock portfolios and spend more.
"They think 'Why do I need to save when I am getting richer?"' he said.
On the flip side, when a recession hits, there's a change in mindset.
"That encourages people to save for the future," he said, which in turn weighs on consumption, which in turn contributes to a weaker economy and higher job losses.
Rangasamy said the key to a solid economy is a balance of both saving and spending.
"Zero per cent savings is not good and neither is 40 per cent," he said
Canadians' savings rate was 4.5 per cent in the April-June quarter, according to Statistics Canada. That is up from 3.4 per cent for same time last year and well above the 1.9 per cent savings rate in the second quarter of 2007.
The savings rate was 6.1 per cent in 2001, when the last economic downturn hit. That's the highest it has been since 1996.
Consumer confusion: Save more, or spend more to help Canada's economy
By Brenda Bouw, The Canadian Press
Thursday, September 10, 2009
Seniors flock to reverse mortgages?
We don’t have to look very far to see - or to hear - stories about how many retirees and pre-retirees are looking for alternatives to replace some lost retirement income.
In the US - the new economic stimulus bill signed into law recently by President Obama raises the loan limits for reverse mortgages, which will expand the amount of home equity that seniors can either turn into retirement income or use to offset investment losses.
The number of 60-yearolds in Canada will double in the next 25 years. Will this increase in demand by seniors carry over to changes in the reverse mortgage rules here in Canada?
A reverse mortgage is simply an advance on the value of your home that accumulates interest. The accumulated debt does not need to be paid off until you die, sell the home or move out of the house. If you qualify, and are over age 62, you can get up to 40% of the value of your home and you can do whatever you want with the money. So a $500,000 home qualifies for at most a $200,000 loan.
The average CHIP client is 73 and stays in his or her home 10 to 12 years.
http://www.canada.com/nationalpost/columnists/story.html?id=51521fbf-2e25-436a-ad47-fe3dc593b67e
In the US - the new economic stimulus bill signed into law recently by President Obama raises the loan limits for reverse mortgages, which will expand the amount of home equity that seniors can either turn into retirement income or use to offset investment losses.
The number of 60-yearolds in Canada will double in the next 25 years. Will this increase in demand by seniors carry over to changes in the reverse mortgage rules here in Canada?
A reverse mortgage is simply an advance on the value of your home that accumulates interest. The accumulated debt does not need to be paid off until you die, sell the home or move out of the house. If you qualify, and are over age 62, you can get up to 40% of the value of your home and you can do whatever you want with the money. So a $500,000 home qualifies for at most a $200,000 loan.
The average CHIP client is 73 and stays in his or her home 10 to 12 years.
http://www.canada.com/nationalpost/columnists/story.html?id=51521fbf-2e25-436a-ad47-fe3dc593b67e
Wednesday, September 9, 2009
Market Summary: Sept. 9, 2009
Banks, golds pull TSX lower; N.Y. up as Fed says economy stabilizing
By Malcolm Morrison, The Canadian Press
TORONTO - The Toronto stock market broke a four-session winning streak Wednesday, pressured by bank stocks while gold stocks fell as bullion backed off from the US$1,000 an ounce level.
The S&P/TSX composite index closed down 105.13 points at 11,000.17, more than wiping out a 88-point gain Tuesday that took the TSX to its highest close this year.
The financial sector lost 1.73 per cent, continuing a deterioration in the sector since the major banks reported earnings last month.
"I think what you're seeing basically is just general profit-taking from some of these financials," said Eric Brass, equity analyst at MFC Global Investment Management.
"Some of these stocks are up over 100 per cent since their lows, so I think people are just taking their money off the table to a degree."
The Canadian dollar moved lower following three days of gains which pushed the loonie more than two U.S. cents higher, moving down 0.13 of a cent to 92.51 cents U.S.
The US dollar fell against other major currencies and gold — which is typically bought as a safe haven asset — at times topped $1,000 an ounce before settling just short of that mark.
Tom Phillips, president of TS Phillips Investments in Oklahoma City, said investors are buying gold because they are nervous about the economy and rising deficits but don't want to miss more gains in the stock market. The S&P 500 index has jumped 50 percent from a 12-year low in early March.
Oil prices pushed higher for a second straight day Wednesday on continued weakening of the U.S. dollar and as investors awaited the outcome of an OPEC meeting that is expected to result in no change in production levels. Benchmark crude for October delivery climbed $1.15 to US$72.25 a barrel on the New York Mercantile Exchange.
The latest move up comes a day before the Bank of Canada makes its scheduled announcement on interest rates.
The central bank is widely expected to leave rates unchanged at 0.25 per cent, but is expected to address the sharply appreciating currency, following up previous comments that the high loonie could derail an economic recovery.
By Malcolm Morrison, The Canadian Press
TORONTO - The Toronto stock market broke a four-session winning streak Wednesday, pressured by bank stocks while gold stocks fell as bullion backed off from the US$1,000 an ounce level.
The S&P/TSX composite index closed down 105.13 points at 11,000.17, more than wiping out a 88-point gain Tuesday that took the TSX to its highest close this year.
The financial sector lost 1.73 per cent, continuing a deterioration in the sector since the major banks reported earnings last month.
"I think what you're seeing basically is just general profit-taking from some of these financials," said Eric Brass, equity analyst at MFC Global Investment Management.
"Some of these stocks are up over 100 per cent since their lows, so I think people are just taking their money off the table to a degree."
The Canadian dollar moved lower following three days of gains which pushed the loonie more than two U.S. cents higher, moving down 0.13 of a cent to 92.51 cents U.S.
The US dollar fell against other major currencies and gold — which is typically bought as a safe haven asset — at times topped $1,000 an ounce before settling just short of that mark.
Tom Phillips, president of TS Phillips Investments in Oklahoma City, said investors are buying gold because they are nervous about the economy and rising deficits but don't want to miss more gains in the stock market. The S&P 500 index has jumped 50 percent from a 12-year low in early March.
Oil prices pushed higher for a second straight day Wednesday on continued weakening of the U.S. dollar and as investors awaited the outcome of an OPEC meeting that is expected to result in no change in production levels. Benchmark crude for October delivery climbed $1.15 to US$72.25 a barrel on the New York Mercantile Exchange.
The latest move up comes a day before the Bank of Canada makes its scheduled announcement on interest rates.
The central bank is widely expected to leave rates unchanged at 0.25 per cent, but is expected to address the sharply appreciating currency, following up previous comments that the high loonie could derail an economic recovery.
Financial literacy: Old vs. Young
Old dogs, new tricks
Financial literacy is a hot topic these days. But teaching it is usually something aimed at kids and young adults. This Wall Street Journal article makes a compelling case that the people who actually need to take personal finance 101 classes a
That may strike you as odd. After all, the older we get the more experience we have. Presumably that includes knowing how to handle money.
True enough, but what differentiates people in their 20s and their 70s when it comes to personal finance is that people in their 20s have time on their side. They can rack up giant credit card debt, learn from their mistakes, and slowly pay the bills off. They can make a lousy stock buy and not lose any sleep over their retirement–still 40-odd years away.
Seniors and aging boomers, on the other hand, don’t have the luxury of time to make mistakes. Also, seniors have more wealth accumulated so a mistake can cost them tens of thousands of dollars, if not their life savings. No wonder scam artists and the Ponzi set tend to target people who are 50-plus. They actually have money to lose. A lot of it, in fact.
If we’re going to teach kids in school how to handle money, we might also offer a couple of refresher courses on money, investing and (most importantly) preserving wealth to seniors as well.
From MoneySense Blog, Aug 20, 2009
By: Rob Gerlsbeck
Quote of the Day
"Most people have the will to win, few have the will to prepare to win."
Bobby Knight
Financial literacy is a hot topic these days. But teaching it is usually something aimed at kids and young adults. This Wall Street Journal article makes a compelling case that the people who actually need to take personal finance 101 classes a
That may strike you as odd. After all, the older we get the more experience we have. Presumably that includes knowing how to handle money.
True enough, but what differentiates people in their 20s and their 70s when it comes to personal finance is that people in their 20s have time on their side. They can rack up giant credit card debt, learn from their mistakes, and slowly pay the bills off. They can make a lousy stock buy and not lose any sleep over their retirement–still 40-odd years away.
Seniors and aging boomers, on the other hand, don’t have the luxury of time to make mistakes. Also, seniors have more wealth accumulated so a mistake can cost them tens of thousands of dollars, if not their life savings. No wonder scam artists and the Ponzi set tend to target people who are 50-plus. They actually have money to lose. A lot of it, in fact.
If we’re going to teach kids in school how to handle money, we might also offer a couple of refresher courses on money, investing and (most importantly) preserving wealth to seniors as well.
From MoneySense Blog, Aug 20, 2009
By: Rob Gerlsbeck
Quote of the Day
"Most people have the will to win, few have the will to prepare to win."
Bobby Knight
Subscribe to:
Posts (Atom)