TSX off 248 points on fears recovery stalled November 3, 2009
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The Toronto stock market lost more than 200 points Wednesday on concerns about the strength of the economic recovery.
The S&P/TSX composite index closed down 248.2 to 10,805.3. It has lost ground in each of the last four trading sessions. All sub-indices fell, with the energy group down almost three per cent as the December crude contract on the New York Mercantile Exchange finished down $2.09 at $77.49 a barrel.
The S&P/TSX was down more than 200 points at midday.
The drop came despite a report from the American Petroleum Institute that crude oil supplies fell by 3.5 million barrels for the week ending Oct. 23.
In New York, the Dow Jones Industrial Average fell 119.48 to settle at 9,762.69.
Traders were discouraged by data out of the U.S. showing an unexpected drop in the sales of new homes last month, down 3.6 per cent to 402,000. The average sale price of $204,800 US was 9.1 per cent lower than a year earlier but 2.5 per cent higher than in August.
S&P/TSX Energy Sub Index 3-month chart
Orders for U.S. durable goods ? such as appliances ? rose one per cent last month, the U.S. Commerce Department reported, but orders from August were revised down to reflect a drop of 2.6 per cent.
The Canadian dollar ended down 1.08 cents at 92.72 cents US.
Gold finished at $1,029.90 an ounce, down $4.80 US.
Recovery fears drag markets lower October 2, 2009
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The Toronto Stock Exchange main index lost more than 300 points Thursday as North American financial markets lost ground on concerns about the strength of the economic recovery in the United States.
U.S. stocks ? which have been on a rally for seven months ? fell the most in a month as jobless claims rose and manufacturing slipped. Citigroup Inc. was more than six per cent lower and CIT Group was off more than 12 per cent in New York. The Dow Jones Industrial Average closed down 203 points to 9,509.3.
In Canada, stocks fell for a second day on concerns that exports to the United States ? Canada’s biggest trading partner ? might be affected by a slowing of the American recovery. Bombardier was down 2.1 per cent and Suncor fell by four per cent.
The Standard and Poor’s/TSX composite index fell 323.2 points on the day, or roughly three per cent, to 11,071.8. The benchmark had added 9.8 per cent in the quarter that ended Wednesday, gaining 19 per cent over the previous three months.
Natural gas prices tumbled after statistics from the U.S. government showed there is more gas in storage than at any time on record. The records go back to 1975. The November contract finished at $4.47, down 37 cents on the New York Mercantile Exchange. Oil rose 21 cents to $70.82 US a barrel.
The dollar fell 1.19 cents to 92.21 cents US after soaring 1.28 cents on Wednesday.
Auto industry recovery depletes inventories September 24, 2009
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Strong auto sales have led to a boost in production as inventories fall to record lows.(Paul Sancya/Associated Press)
The auto industry continues to gain traction, with inventories in some parts of the world at record low levels, according to the latest Global Auto Report released by Scotia Economics.
Sales in the U.S. last month jumped almost 50 per cent thanks to the cash for clunkers program, which offered buyers lucrative incentives for scrapping their old gas guzzlers. But the report notes that even when the cash for clunkers sales are excluded, U.S. sales climbed to a nine-month high.
The U.S. sales performance in August was so strong that U.S. dealer inventories fell to a record low of 30 days supply. The normal inventory level is 65 days. “Inventories are currently 20 per cent less than the previous low in August 1983,” Scotiabank economist Carlos Gomes said.
Inventories of Canadian-made models in the U.S. are very low ? especially for Toyota Corollas, Honda Civics and Chevy Camaros. Gomes said the stock of Corollas at U.S. dealerships was “virtually non-existent” at the end of August. The Corolla was the most popular car picked in the cash for clunkers program.
Production is rising around the world as a result of low inventories. “Current production plans will add roughly two percentage points to U.S. overall economic activity in the second half of 2009,” the report says. In Canada, the increase in auto assembly activity is expected to add “at least a percentage point” to economic growth in the third and fourth quarters.
But the report notes that output would need to rise at least 20 per cent above current schedules before inventories return to normal levels.
Vehicle sales in Canada remained strong in August, with annualized sales of 1.51 million units. Scotia Economics has boosted its 2009 sales forecast to 1.45 million cars and light trucks and says sales could come in higher than that because several automakers have introduced their own cash for clunkers incentives in Canada.
As rosy as sales and production forecasts are for Canada and the U.S., the bounce-back in some overseas markets is even more impressive. Sales in several emerging markets are at record levels, led by an average 55 per cent year-over-year increase in China, India and Brazil.
Economy on the right path to recovery: Carney September 23, 2009
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Bank of Canada governor Mark Carney says the country’s economy is on the right path to recovery “but it’s a very long road.”
In an exclusive interview with Peter Mansbridge, Carney said the economy is performing as the central bank projected when it said growth would start to return in the second half of the year.
Carney said that initial return to growth is being prompted by fiscal and monetary policy ? that is, expanded government spending coupled with low interest rates.
“We?re at, if you will, the easy bit of the growth, and it?s a little early right now to say that we are seeing that self-sustaining private sector growth that is going to carry us up, that?s going to prevent that second dip,” Carney said.
He added that it is also too much to say if the economy is expected to go back into retreat.
Carney added that the economy in the United States ? our biggest trading partner ? is going to be choppy over the next 12 to 18 months.
The U.S. economy, Carney said, has had a big shock, and that the potential of that economy has slowed down. The U.S. will have to become “more of an exporter than an importer, the private sector will rely less on debt and more on income, and all of that will add up to a more difficult environment for Canadian businesses in the U.S,” Carney said.
Peter Mansbridge’s interview with Bank of Canada governor Mark Carney will be broadcast on Mansbridge One on One on CBC and CBC Newsworld.
Europe’s recovery gains strength September 16, 2009
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Europe’s GDP will decline by four per cent, a contraction consistent with earlier forecasts, the European Union said Monday.
But the organization that governs the continent says the recovery is growing in strength, reducing the chances of backsliding in the remaining months of 2009.
“Both business and consumer confidence indicators have continued to improve in recent months across almost all sectors and countries, which also bodes well for the near-term outlook,” said the EU in releasing its September interim forecast.
New forecast, no new number
The EU released its latest update which indicated that the European economy is on a trajectory similar to the one predicted in May.
The group, however, figured that the actual GDP shrinkage would be limited to the first three months of 2009, when the Euro area economies, which include France, Germany, The Netherlands, Spain and Italy, retreated by 2.5 per cent.
‘09 GDP growth (%) Sept. forecast May forecast
EU -4.0 -4.0
Germany -5.1 -5.4
France -2.1 -3.0
Source: European Union
The EU said the same group of economies would expand marginally in the third and fourth quarters of the year.
Germany, France shrink less
Interestingly, Germany, the continent’s largest economy, and France will post smaller declines than posited back in the May forecast.
The EU is now predicting that Germany’s GDP will shrink by 5.1 per cent in the year versus 5.4 per cent in the earlier forecast.
As well, France’s economy will recede by 2.1 per cent, almost a full percentage point better than the three per cent drop the EU anticipated in the spring.
On the negative side, however, the economies of Spain and Italy will decline at rates at least half a percentage point worse than the EU predicted in May.
In addition, the Netherlands, often ranked as one of the more competitive economies in Europe, faces a contraction one percentage point higher than initially expected, 4.5 per cent versus 3.5 per cent in the spring forecast.
The Dutch economy is overly exposed to global trade, the EU said. Since many countries have stopped buying foreign goods, the Netherlands has experienced a sharp drop in trade, the union said.
Europe’s recovery gains strength September 14, 2009
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Europe’s GDP will decline by four per cent, a contraction consistent with earlier forecasts, the European Union said Monday.
But the organization that governs the continent says the recovery is growing in strength, reducing the chances of backsliding in the remaining months of 2009.
“Both business and consumer confidence indicators have continued to improve in recent months across almost all sectors and countries, which also bodes well for the near-term outlook,” said the EU in releasing its September interim forecast.
New forecast, no new number
The EU released its latest update which indicated that the European economy is on a trajectory similar to the one predicted in May.
The group, however, figured that the actual GDP shrinkage would be limited to the first three months of 2009, when the Euro area economies, which include France, Germany, The Netherlands, Spain and Italy, retreated by 2.5 per cent.
‘09 GDP growth (%) Sept. forecast May forecast
EU -4.0 -4.0
Germany -5.1 -5.4
France -2.1 -3.0
Source: European Union
The EU said the same group of economies would expand marginally in the third and fourth quarters of the year.
Germany, France shrink less
Interestingly, Germany, the continent’s largest economy, and France will post smaller declines than posited back in the May forecast.
The EU is now predicting that Germany’s GDP will shrink by 5.1 per cent in the year versus 5.4 per cent in the earlier forecast.
As well, France’s economy will recede by 2.1 per cent, almost a full percentage point better than the three per cent drop the EU anticipated in the spring.
On the negative side, however, the economies of Spain and Italy will decline at rates at least half a percentage point worse than the EU predicted in May.
In addition, the Netherlands, often ranked as one of the more competitive economies in Europe, faces a contraction one percentage point higher than initially expected, 4.5 per cent versus 3.5 per cent in the spring forecast.
The Dutch economy is overly exposed to global trade, the EU said. Since many countries have stopped buying foreign goods, the Netherlands has experienced a sharp drop in trade, the union said.
Europe’s recovery gains strength September 14, 2009
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Europe’s GDP will decline by four per cent, a contraction consistent with earlier forecasts, the European Union said Monday.
But the organization that governs the continent says the recovery is growing in strength, reducing the chances of backsliding in the remaining months of 2009.
“Both business and consumer confidence indicators have continued to improve in recent months across almost all sectors and countries, which also bodes well for the near-term outlook,” said the EU in releasing its September interim forecast.
New forecast, no new number
The EU released its latest update which indicated that the European economy is on a trajectory similar to the one predicted in May.
The group, however, figured that the actual GDP shrinkage would be limited to the first three months of 2009, when the Euro area economies, which include France, Germany, The Netherlands, Spain and Italy, retreated by 2.5 per cent.
‘09 GDP growth (%) Sept. forecast May forecast
EU -4.0 -4.0
Germany -5.1 -5.4
France -2.1 -3.0
Source: European Union
The EU said the same group of economies would expand marginally in the third and fourth quarters of the year.
Germany, France shrink less
Interestingly, Germany, the continent’s largest economy, and France will post smaller declines than posited back in the May forecast.
The EU is now predicting that Germany’s GDP will shrink by 5.1 per cent in the year versus 5.4 per cent in the earlier forecast.
As well, France’s economy will recede by 2.1 per cent, almost a full percentage point better than the three per cent drop the EU anticipated in the spring.
On the negative side, however, the economies of Spain and Italy will decline at rates at least half a percentage point worse than the EU predicted in May.
In addition, the Netherlands, often ranked as one of the more competitive economies in Europe, faces a contraction one percentage point higher than initially expected, 4.5 per cent versus 3.5 per cent in the spring forecast.
The Dutch economy is overly exposed to global trade, the EU said. Since many countries have stopped buying foreign goods, the Netherlands has experienced a sharp drop in trade, the union said.
OECD sees signs of ‘broad economic recovery’ September 12, 2009
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The world economy is showing definite signs of recovery, according to data released Friday by the Organization of Economic Co-operation and Development.
The Paris-based OECD said its composite leading indicator of 29 economies rose to 97.8 in July from 96.3 in June.
“Clear signals of recovery are now visible in all major seven economies, in particular in France and Italy, as well as in China, India and Russia,” it said.
“The signs from Brazil, where a trough is emerging, are also more encouraging than in last month?s assessment.”
The OECD said Canada’s reading improved from 96.4 in June to 97.7 in July. That was still 2.2 percentage points below last July’s level.
The composite leading indicator tries to identify turning points in economic activity about six months before the change actually takes place.
Canada to outperform, CIBC says
Canada will lead the U.S. and other G7 economies in growth next year, CIBC World Markets said Friday. But the growth will be small and the recovery lengthy, it said.
In an economic report, the bank says the “relative resiliency” of the Canadian consumer will play a big role in helping Canada outperform other economies.
Canada’s financial system and mortgage market were in better shape than most, so this country was better able to absorb the shocks that rattled financial markets.
CIBC economists say that left Canadian consumers able to take advantage of the low interest rate environment engineered by the Bank of Canada. The central bank on Thursday left its key overnight interest rate at just 0.25 per cent.
“Canadians can count their blessings, from a sounder financial system, a federal government that can afford to run deficits after years of fiscal rectitude, and a household sector that, while facing sharply increased bankruptcies, has been less beaten up on housing and job prospects,” CIBC World Markets chief economist Avery Shenfeld wrote.
Export growth to fade in 2010
Still, CIBC economists see 2010 growth at a tepid 2.0 per cent as export growth fades because of a strong Canadian dollar and U.S. protectionism. Still, that will be a half-percentage point better than the U.S. growth next year and more than twice as good as most Eurozone economies.
Canada’s economy won’t return to robust health until 2011, with a forecast growth rate of 3.8 per cent.
The CIBC report says just over half of the output growth in the second half of this year and all of next year will be due to government spending, with the biggest impact of the stimulus taking place in 2010.
After that, interest rates around the world will likely begin rising again as the recovery takes hold. Shenfeld says even then, Canada will be in better shape than most to deal with higher rates.
“Even under the now more pessimistic outlook from the finance minister, the erosion in Canada’s federal debt-to-GDP ratio is nothing like the debt wall hit in the early 1990s, and miles below what could end up being an 80 per cent debt-to-GDP ratio for the U.S.,” he said.
Finance Minister Jim Flaherty revealed Thursday that the federal deficit in the current year would come in more than $5 billion higher than previously thought. He also said the country would not emerge from a deficit position until 2015 ? two years later than forecast.
Recession prophet sees slow recovery September 7, 2009
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An economist credited with predicting the global financial crisis said Friday he expects a slow recovery for advanced economies, with quicker, robust growth in the developing world.
New York University Prof. Nouriel Roubini said he doesn’t expect a “V-shaped” recovery, where the recovery phase is just as dramatic as the descent. Instead, he predicts a slower, “U-shaped” economic recovery with the risk of a relapse recession (also known as a “W-shaped” recovery) if governments don’t time the end of stimulus packages correctly.
New York University economist Nouriel Roubini, shown in April speaking at the Council on Foreign Relations in New York, forecasts a slow economic recovery for the developing world.(Mark Lennihan/Associated Press)
“I believe that the basic scenario is going to be one of a ‘U-shaped’ economic recovery, where growth is going to remain below trend ? especially for the advanced economies, for at least two or three years,” he said at the Ambrosetti Forum on Italy’s Lake Como. The annual conference brings together top political and business figures.
“Within that ‘U’ scenario I also see a small probability ? but a rising probability ? that if we don’t get the exit strategy right we could end up with a relapse of growth and therefore with a double-dip recession,” he said.
Roubini said that “it is very tough not to make a policy mistake” between the opposite risks of ending the stimulus too soon ? and sending the economy back into recession ? or too late, which could mean unsustainable budget deficits. Of the two, he said, waiting too long seemed riskier.
“Whether that’s highly likely or not, I don’t know. I think it certainly is a rising risk,” said the prominent economist, among the few experts to predict the current crisis. In April, Roubini said the Canadian economy was likely to fare better than others. “Canada may recover sooner than others, but it will be painful even [here],” he told CBC News at the time.
He credited the country’s sound banking system for his optimism. It’s a theory that’s gained prominence as Canada’s economy has shown signs of improvement over the summer. Shares in Canada’s major lenders have just about doubled since a trough in March.
‘The road ahead is going to be at best bumpy, if not worse than that.’?Economist Nouriel Roubini
In April, he still saw no end to the recession. “Not any time soon, certainly not this year,” he told CBC News. “We may get out of it by the end of next year, if we are lucky.”
Even now, amid the cautious optimism being spread by some politicians and economists, Roubini warned against expecting the end of the economic crisis too soon.
“There is now this belief that the crisis is over, the conditions in financial markets are fine, that banks are doing OK,” he said. “I think too many people are hopeful that everything is fine, and unfortunately the road ahead is going to be at best bumpy, if not worse than that.”
Roubini is widely credited with being among the first economists to predict the credit crisis that stifled worldwide business activity, doing so as far back as 2005.
His pessimism amid a sea of optimism earned him the moniker “Dr. Doom.” He is also credited with foreseeing the stock market crash of 1987.
With files from The Associated Press (more…)
Asian markets fall as investors leery of recovery prospects May 24, 2009
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Asian stocks wilted Friday as the possibility of credit rating downgrades for major economies and bleak unemployment figures in the U.S. added to fears the recent massive rally was built on shifting sands.
After piling into battered markets over the past two months, running up gains of 30 per cent or more from Asia to the U.S., investors are increasingly hard pressed to justify hopes that a global economic recovery is around the corner.
In the U.S. and Europe overnight, markets were unnerved by a credit agency’s warning about the British government’s debt ratings. The threat of a downgrade could signal similar problems for the United States and other big economies staggering under a growing mountain of debt as they try to spend their way out of recession.
An employment report from the world’s biggest economy was equally dispiriting. Though the number of newly laid-off workers seeking unemployment benefits in the U.S. fell 12,000 to 631,000 last week, continuing claims rose to 6.7 million — hitting a new record for the 16th consecutive week in data going back to 1967.
‘No consensus’
The unrelenting bad news and recent losses on Wall Street were leading many investors to reassess their expectations about the economy and the recent rally, analysts said.
“It seems the markets are at a crossroads. What were seeing today is a lot of confusion,” said Kirby Daley, senior strategist at Newedge Group in Hong Kong. “The markets here are trying to digest what is truly happening in the U.S. and trying to balance that with Asia.”
“There is no consensus view right now, and that’s leaving investors confused,” he said.
In Tokyo, Japan’s Nikkei 225 stock average gave up early gains to drop 38.84 points, or 0.4 per cent, to 9,225.81, while Hong Kong’s Hang Seng index was off 241.83, or 1.4 per cent, at 16,957.74. Elsewhere, South Korea’s Kospi slipped 1.3 per cent and Australia’s benchmark was down 1.4 per cent.
Among the few gainers, Taiwan rose 0.3 per cent and Malaysia’s index rose 0.5 per cent.
Stocks in Tokyo were also pressured by a strong yen, which hurts profits of the country’s brand name exporters.
Toyota Motor Corp., the world’s No. 1 automaker, dropped 2.2 per cent, Sony Corp. shed 2.0 per cent and Japan’s top chipmaker Toshiba Corp. fell 1.2 per cent.
British rating cut?
The far-reaching consequences of the global recession were underlined Thursday by Standard & Poor’s warning that Britain’s credit rating may be cut because of rising debt. That would raise the cost of borrowing for the British government, which is taking a big role in bailing out that country’s stricken banks, and could mean similar warnings for other debt-laden governments.
Analysts said the S&P warning shows there are limits to how much debt governments can take on even when it’s part of efforts to revive staggering economies. And even after governments pumping hundreds of billions of dollars into economies around the world there are still questions about how soon a rebound might take hold.
Those fears and weak data reined in Wall Street on Thursday.
The Dow fell 129.91, or 1.5 per cent, to 8,292.13, after earlier falling as much as 201 points. The Standard & Poor’s 500 index fell 15.14, or 1.7 per cent, to 888.33, and the Nasdaq composite index fell 32.59, or 1.9 per cent, to 1,695.25.
Stock futures pointed to modest gains Friday in the U.S. Dow futures rose 20, or 0.2 per cent, to 8,315 and S&P futures were steady at 888.70.
In oil, crude stayed above $61 US a barrel in Asia. Benchmark crude for July delivery was up 48 cents to $61.53 a barrel midday in Singapore in electronic trading on the New York Mercantile Exchange.
