5833 replies to this topic

[LJ]

If interest rates dont keep pace with the US then expect a lowering dollar....1.60 here we come

 

US 30 year fixed interest rate just dropped to it's lowest point since April last year.

[spanky123]

There are actually many very good arguments against austerity. As long as your economy is growing faster than your debt you are better off than if you try to pay it down. Canada is doing well on that front, the US is not, with spiraling debt to GDP

 

At the Federal level Canada is doing well, when you consider all levels of Government we are near the top of the most indebted countries (per capital) in the world. The reason is that the Feds have been downloading costs for decades. Source is the IMF 

Edited by spanky123, 08 February 2019 - 07:58 PM.

[Mike K.]

Considering Canada's economic growth is grinding to a halt, I suspect the Bank of Canada might reconsider its rate trajectory.

 

The BoC was ready for this eventuality, hence the rapid rise in rates when the going was relatively good.

[lanforod]

I could see them staying the course for a while rather than the original forecast of more hikes. We'll learn more tomorrow.

[rjag]

I could see them staying the course for a while rather than the original forecast of more hikes. We'll learn more tomorrow.

 

Looks like no rate increases for a while, this doesnt bode well when the US economy is firing on all cylinders and their T-Bills are yielding nearly a full % point more on their 10 year bills...its a sure sign of lack of confidence in Canada 

[Mike K.]

The only saving grace for the Canadian economy is a return to a Conservative government. The Liberals scared away the global investment community, tarnished Canada's image before the global energy sector and created political upheaval that could see the country's economic engine (Alberta) pursue a separatist course.

The animosity towards Quebec and Ontario is extreme in Alberta, and when I say extreme, I mean frothing-at-the-mouth extreme. Albertans are furious over the SNC situation after how the federal government has treated hundreds of thousands of Albertans negatively affected by the energy debacle.

[rjag]

https://moneytalks.n...e-be-surprised/

 

Go figure – some analysts were surprised that economic growth ground to a near standstill in December despite the efforts by government to derail the real estate sector, oil and gas while interest rates and taxes rose.

 

 

 

https://omny.fm/show...economic-growth

[spanky123]

The biggest issue we have is that despite an 8 year economic run, the best the Liberals can do is a $10B deficit and that is without delivering on the infrastructure or military spending which were the rationale for the deficits in the first place. What happens to that deficit once we slide into recession?

[Mike K.]

^what happens will be the Conservative's problem.

[Mike K.]

Rate stays at 1.75%. By year’s end I wouldn’t be surprised if we’re at 1.25% by 2020.

[spanky123]

Rate stays at 1.75%. By year’s end I wouldn’t be surprised if we’re at 1.25% by 2020.

 

Wouldn't be surprised. Note that our Provincial and Federal Governments are still forecasting 2.5%+ economic growth this year. Wonder what the budgets look like if those numbers were brought in line with the BoC estimates or what happens to housing prices when rates drop and the Government eases mortgage rules to keep the transfer taxes coming in.

Edited by spanky123, 06 March 2019 - 08:19 AM.

[Mike K.]

There are murmurs now that the BoC will drop its key rate to between 1.25 and 1.50 by early 2020. The loonie could also fall to below 70 cents over that time frame.

[tjv]

guaranteed the loonie will sink below 70 cents, might even see a 60 cent dollar.  If that happens expect everything you buy to skyrocket - cars, food, gas, electronics, etc, etc because ultimately its all priced in US dollars!

 

although here are the major banks forecasts last updated March 3rd:

[lanforod]

Was stuff so expensive from 1998 to 2003 when the rate was close to 60 cents?

[Mike K.]

Manufacturers adjust their pricing to make it palatable for Canadian consumers, and Canadian manufacturers also see a boost in business as they’re better positioned to compete with imports.

It all works out.

[tjv]

^so auto makers don't increase their prices if our dollar falls?  what about things like oranges, electronics or anything for that matter grown or manufactured outside our borders?  Distributors just tell them we paid $x CAD last year and that's all we are paying this year?  Good to know

 

I'll give you an example heavy construction machinery, both used and new, increased by around 25% when the Canadian dollar sank.  Costs were immediately, and without hesitation, passed on by increasing charge our rates

Edited by tjv, 19 March 2019 - 01:29 PM.

[lanforod]

Historically, the CAD hovers around 75 cents USD. We had some 'good' (depends on your perspective) years where it was at or above par, but that isn't normal.

[Victoria Watcher]

as with a lot of things if the movements are gradual things work out mostly well. rapid movement one way or the other can be painful. however even that creates some wins for some both ways.

[Mike K.]

^so auto makers don't increase their prices if our dollar falls? what about things like oranges, electronics or anything for that matter grown or manufactured outside our borders?

For sure they increase prices, but they also introduce incentives like free options, bigger cash incentives, etc.

Also, it depends how sustained a major currency discrepancy is.

Our natural currency exchange with the USD is 80 cents. Over the last 30 years the liberals drain the dollar and Conservatives stack it up.

[spanky123]

Was stuff so expensive from 1998 to 2003 when the rate was close to 60 cents?

 

Big difference in economies in 20 years. The biggest impact will come from the fact that the workforce and business is far more global now. 20 years ago there wasn't even the thought of someone telecommuting to a job 2,000 km away.

 

There are winners and losers. The winners are workers who have the skills that allow them to live in Victoria but work for global firms. Those workers get paid in USD. The losers are local businesses who cannot compete with those wages. Already we are seeing that in tech, finance, and professional services. Most local companies cannot recruit the staff they need to grow their businesses as they cannot compete on wages.