Tag Archives: commodities

BOC chops rate in race for bottom

If you’ll recall you’ve been warned many times by a number of government talking heads that rates could go up at any time.

Today the Bank of Canada finally took action and cut rates by a quarter from 1% to 0.75%.

Speaking to reporters, Mr. Poloz said the oil price drop is “unambiguously bad” for the Canadian economy, prompting the bank to take out what he called an “insurance policy” against future risks, such as weak inflation and a household debt squeeze. But he denied the move was calculated to send the Canadian dollar lower.

“Market consequences will be what they are,” he said.

The rate cut sent the loonie plummeting below 81 cents (U.S.).

Mr. Poloz, who acknowledged that oil dominated the bank’s discussions leading up to Wednesday’s rate decision, said he’s ready to cut rates again if prices fall further.

“The world changes fast and if it changes again, we have room to take out more insurance,” he said.

The rate move, which few analysts anticipated, is an attempt by Mr. Poloz to shield highly indebted Canadian households from an oil-induced hit to their jobs and incomes – signs of which are already evident in Alberta.

In the comments section here, Dave asked the question: How much of the BC economy is tied to Oil and Alberta?

I would like to know how much of a hit the damage to Alberta will be to BC. It seems to me that everybody underestimates the economic impact. I think our statistics don’t capture the role of Alberta in our economy. I think I read that Westjet estimated 5,000 people in the Okanagan work in the oil patch. And that’s just them trying to estimate things for their benefit (i.e. people who buy plane tickets). How many work from home on their computers? Or only make a few trips per year and don’t get picked up the radar? How many work in the Okanagan but for companies that service the oil patch? Add it all up and there is a LOT of employment related to Alberta.

 

Investors bet against Canada

Why is everybody picking on us?

Investors are betting against our dollar, equities, even our bank stocks.

Markets also see further declines for the loonie, which was quoted buying 84 U.S. cents at 11:35 a.m. and has dropped 8.4% against its U.S. counterpart over the past year. Wagers against the currency outnumbered those for it — so-called net shorts — by 17,087 positions as of Jan. 6, the most since Dec. 5,  according to data from the Washington-based Commodity Futures Trading Commission.

For Merrill Lynch, the risk is the slowdown in the oilsands will seep into a housing market “already saddled with near-record levels of household leverage.”

Canada’s ratio of household debt to disposable income rose to a record 162.6% between July and September, according to data released last month. Benchmark interest rates of 1% have fanned a house-buying frenzy that sent 2014 sales up 6.7% in Toronto and 16% in Vancouver.

Read the full article in the Financial Post.

Friday Free-for-all! The Late Edition.

It’s the weekend again, but not just any weekend, this is the relaxing weekend in the midst of holiday and vacation land.

But it is Friday, and that traditionally means it’s Friday Free-for-all time here at VCI.

This is our open topic discussion thread for the weekend, here are a few recent links to kick off the chat:

RBC: healthy 15% drop
Soft landing is?
Oil nosedives, what about stocks?
Zinc, Wood, is all good
An order of Canada for Carney
Some debt numbers

So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent holiday!

Friday Free-for-all!

Do like traditions?  Well every friday we have a tradition of rounding up the news and running an open topic discussion thread for the weekend.

It’s that time again!

Here are a few recent links to kick off the chat:

Tsur: 10% drop next year
Bottom call thread
Another rate hold another warning
Lets not pay off the debt
Inventory chart updated
Don says no to bubble burst
Toronto leads in hirise construction
Why don’t we do it in the road?
The all-leverage plan
Commodities to collapse?

So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!

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