Economics...

[Dallasaurora]

[Frankzao]

MTS likes to beat the non-males?

[Dallasaurora]

Is that so ?

[MazdaMomma]

Nope, not allowed to be mad at me unless I give you a reason to be.....

 

 

than can be arranged tho

[mts]

HA

[Dallasaurora]

ha ha, i'm sure.

[MazdaMomma]

wanna bet?

[mts]

[MazdaMomma]

[Dallasaurora]

Said I was sure.

[mts]

[Dallasaurora]

what ?

[mts]

[Dallasaurora]

and...?

[mts]

anything else?

[Dallasaurora]

no. carry on.

[mts]

I shall

[Frankzao]

[Troutman]

Damn drunks.

[Dallasaurora]

so ?

[MazdaMomma]

[mts]

E-Rant for the Week ending May 4th, 2007

 

 

 

The TSX was up 137.88 to close at 13,769.89

 

The DOW was up 143.68 to close at 13,264.62

 

 

 

Opening thoughts

 

 

 

Perspective is always a problem. It takes time and effort to develop a sense of what is really going on. If you listen to the media the Canadian market is being bought by foreigners. There are some opportunistic business leaders who are using this sentiment to push their own agenda making the story that much more real. According to Crosbie and Co. between 2003 and 2006 foreigners bought $210 billion of Canadian assets while Canadian companies bought $225 billion in foreign assets. We just might be holding our own. So cheer on Thompson Corp as they chase after Reuters and cheer on Gerry Shwartz as he takes a run at Chrysler. Even take a moment to congratulate Great West Life for successfully taking over Putnam Investments of Boston. If our politicians created a slightly more competitive environment Canada would make quite the mark on the global scene. If they start trying to restrict this kind of activity then they wear the responsibility of hobbling the economic strength of Canada.

 

 

 

 

 

Last week

 

 

 

* The Canadian Banks announced this week they are creating a rival stock exchange system called Alpha to compete with the TSX. Citing lack of choice and high fees the banks have united in this endeavor. Lack of choice and high fees. Where have I seen that before? I wonder if our friends at the bank have ever been told that their customers were upset with lack of choices and high fees? Just wondering. This development will have little effect on the individual investor. I will predict that while the bank feels the fees are too high, they feel that your fees are just fine. Do not look for any great savings.

* The Tories green plan appears to be a flop. Now I have not read it but I have observed the reactions. The greens, including the uber green Al Gore hate it. Now this group is seldom happy unless they are eating humanly harvested whole foods in a field of flax seeds so this on its own is not a true indictment. When the organization representing Canadian CEO’s approves of the plan then I know it is bunk. This is the equivalent of announcing a sheep protection program that the wolves approve of. I did take one course on basic logic in University and I believe that qualifies me to say the Tory green plan is off target.

* The US economy continues to flirt with this sweet spot it has drifted into all of the economic charts say the next chapter is inflation. April jobs numbers came out showing 88,000 new jobs. This was below forecasts, lowest number in four years and unemployment edged up to 4.4%. On top of that wages barely moved. This all indicates an economy cooling off on its own. While things may continue to moderately worsen the lack of major bad news continues to astound. We may have the economic equivalent of a perpetual motion machine.

 

* I thought I was wrong to have beaten up on Tim Horton’s as I did when the IPO was launched. To be honest the fact that there has not been a prolonged and consistent share price decline does prove me wrong, for now. I did however get a bit caught up in the hype over recent results. All appeared to be going well as they announced that per store sales are climbing modestly and their steady organic growth in the US is consistent if not inspiring. I expected all of this. However the profit per share is down due to the dilution of earnings with the recent public offerings. I also expected this part. This is what makes it a good business but not necessarily a good stock. The actions of management recently have diluted the value of the steady earnings making the stocks less attractive. I fear that if they have done it before they may do it again. I still believe in the coffee, not the stock.

 

 

 

Next Week:

 

 

 

* The US Federal Reserve meets Wednesday to set interest rates. There is no movement planned. They recently removed their bias for tightening so they currently do not even have a thought of making a move. They are officially in neutral.

* Takeover news will dominate other financial news this week. If all of the big boys are buying companies at premiums to the public prices there must be good value out there somewhere.

 

 

 

Quotations

 

 

 

Any intelligent fool can make things bigger, more complex, and more violent. It takes a touch of genius and a lot of courage to move in the opposite direction.

 

 

 

Albert Einstein

 

 

 

Don’t let the opinions of the average man sway you. Dream, and he thinks you’re crazy. Succeed, and he thinks you’re lucky. Acquire wealth, and he thinks you’re greedy. Pay no attention. He simply doesn’t understand.

 

 

 

Robert G. Allen

 

 

[mts]

 

No gain for shoppers from strong dollar

TAVIA GRANT AND ROMA LUCIW

 

Globe and Mail Update

 

June 12, 2007 at 6:25 PM EDT

 

Consumer goods from BlackBerrys to Honda Accords are more expensive than they should be because retailers are slow to cut prices to reflect the strong Canadian dollar, an economist said Tuesday.

 

It means Canadians are paying at least 8 per cent more, on average, for goods than Americans and may help explain why Canada has the highest rate of core inflation in the industrialized world, said Douglas Porter, deputy chief economist at BMO Nesbitt Burns Inc.

 

"I was a little surprised at the consistency with which there is quite a considerable gap" between Canadian and American prices, he said.

 

He published a draft report Tuesday, entitled The Price is Wrong, after buying a birthday card that was $5 (U.S.) in the United States and $8 (Canadian) in Canada. He complained to the clerk and was met with a blank expression.

 

 

Videos

The Price is Wrong BMO's Douglas Porter says Canadians pay too much, despite soaring loonie

 

 

 

• Higher labour costs casting a shadow
• Canada a land of mediocrity, Conference Board says
• Inflation not culprit in bond yield rise

Other consumers might relate. The newest Harry Potter book is 13 per cent more expensive in Canada, while a Honda Accord is 14 per cent, or almost $3,000 more.

 

And that's comparing prices back when the loonie was 88 cents (U.S.) — 6 cents lower than where it is now. Using today's exchange rate, prices are a whopping 16 per cent higher than in the U.S.

 

Yet prices between the countries should be similar, given that the currency now trades in the 94-cent range.

 

"I think this helps explain one of the reasons why corporate profits have been at a record high as a share of national income in the last couple of years," Mr. Porter said.

 

In theory, a runup in the currency should make imported goods cheaper and damp down inflation. That's happening a bit, but "not nearly as much as could have been expected," he said.

 

Inflationary pressure is why the Bank of Canada may soon boost borrowing costs. If retailers were charging fair prices based on current exchange rates, however, core inflation would be 0.5 of a percentage point lower — or right in the central bank's comfort zone, lessening the need for higher rates, Mr. Porter said.

 

The persistent gap is angering consumers.

 

"We've been following this for eight months, for everything from produce to electronics and cars, and have yet to find any part of the chain saying there are savings being passed on to the consumer from the rise of the dollar," Bruce Cran, president of the Consumers' Association of Canada, said in an interview from Vancouver.

 

"I think the retailers have failed consumers in the market at the moment. The retailers, the distributors and the manufacturers are all cutting their own throats because people are going to the U.S. to buy those goods."

 

Merchants across the border don't mind the extra business.

 

Rick Izzo, vice-president and general manager of Superior Auto Sales Inc. near Buffalo, N.Y., said his lot is bustling with Canadian shoppers. "All of these cars are available in Canada, but people are saving money by buying them through us."

 

Depending on the type and age of the car, Canadians are saving between $1,000 (Canadian) and $30,000 by purchasing these vehicles in the United States, he said.

 

Retail consultant Len Kubas of Kubas Consultants said the premium Canadians are paying might have been justified five years ago, but not any more. "When I see the price on books and greeting cards set at a 40-per-cent premium even when the dollar has risen, that just drives me crazy."

 

Derek Nighbor, vice-president of national affairs for the Retail Council of Canada, said that because the average Canadian retailer buys merchandise three to six months ahead of time, currency fluctuations are not immediately visible on price tags of general merchandise.

 

The Canadian dollar has risen 30 per cent in the last three years.

 

 

[mts]

The TSX was up 212.13 to close at 14,118.70

 

The DOW was up 203.06 to close at 13,611.68

 

 

 

E-rant

 

 

 

Opening thoughts

 

 

 

The buy out of BCE and other companies has an uncomfortable ripple’s. For those who are long time shareholders the forced sale of a share can have a couple of uncomfortable side affects. If this action triggers a large capital gain it can affect other forms of retirement income. The elimination of a company like BCE can take a stalwart dividend paying stock out of your portfolio. People need a way to replace that income source and plan for the taxes. There are very few places in town that are licensed to trade securities that also offers full planning service who can deal with these issues. We are one of them.

 

 

 

Last week

 

 

 

We set a record for building permits in the month of March. Wow. The Canadian economy continues to confound experts with its shear raw power. Much of the growth is in Alberta and BC but the rest of the country is growing as well. It appears that the great Canadian economic ride is far from over.

The Chinese stock market appears to be as bi-polar as always. Friday was the largest one day gain in six months, countering an almost equal drop on Thursday. These are like 700 point moves on the TSX or Dow. Imagine having that as your local stock market.

Another piece of the Canadian economic juggernaut doubled expectations this week. Over thirty four thousand new jobs were created. Over 62,000 full time jobs were created offsetting losses in the part time market. This makes an interest rate hike this week likely. On the gender front women accounted for most of the full time job growth and most of the part time job losses.

As I suggested last week a strong building permit number and a strong jobs report would push the Loonie over 95 cents. Well it did. We keep being unreasonably successful like this and there is more in store. Watch as the products we buy from other countries get cheaper, even oil will look cheaper as it is priced in USD.

Next Week:

 

 

 

Expect the bank to raise the overnight lending rate by 25 bps on Tuesday. This may influence the longer term rates higher and drive mortgage rates a bit, but that is not a sure thing.

Some earnings news starting to dribble in, US reports on its trade deficit (we get to learn how big numbers can get) and CMHC will announce housing starts. Not a bad week for the summer, lots of fun.

 

[Troutman]