The Big Picture
U.S. deficit looms as recovery takes hold
U.S. President Barack Obama nominated Ben Bernanke for a second term as Federal Reserve (the Fed) Chairman, praising him for leading the Fed through “one of the worst financial crises that this nation and this world has ever faced.” The same day, a grim U.S. budget forecast US$9 trillion in additional debt over the next decade, up $2 trillion since the last forecast, because of plunging tax receipts, soaring spending and a sluggish recovery. U.S. consumer confidence rose unexpectedly in August after two consecutive months of declines. Consumer expectations of where the economy will be in six months rose to its highest level since the recession began in December 2007.
In Canada, retail sales jumped 1% from May to June, but remain 4.4% lower than a year ago. The Bank of Canada (the BoC) warned again that it is prepared to intervene to stop the sharp rise of the loonie from derailing the economic recovery. The BoC has not intervened in foreign exchange markets in more than 10 years.
All eyes will be on Japan this Sunday as voters take to the polls. Expectations are for the opposition Democratic Party to oust the ruling conservative Liberal Democratic Party for only the second time in its 54-year history.
Markets
Investors weigh issues
Markets were choppy as U.S. bank concerns undermined improving consumer confidence, jobless and housing data. In Canada, the Royal Bank reported record profits while earnings from the Bank of Montreal, TD Bank and the Bank of Nova Scotia also beat expectations.
As the iPhone prepares for its debut in China – the world’s largest cell phone market – Apple is investigating reports from France of iPhone screens exploding, apparently because of overheated lithium ion batteries. Meanwhile, analysts speculate that Apple is working on a new multimedia tablet that will let people access movies and TV, games, the Internet and books. Toyota will slash production by 580,000 vehicles – 6% of global capacity – despite capturing 19% of the 700,000 U.S. auto sales generated by the “cash for clunkers” program.
Topic: Estate Planning for Business Owners
Highlights of webcast:
Estate plan should be for personal and business, sensitive issues to consider, tools available to create a comprehensive estate plan
Pina Melchionna – National Director, Will and Estate Planning Services
Recorded: August 2009
Click here: http://events.startcast.com/events6/107/C0018/Default.aspx
Topic: Economic Update and Outlook – Speaks at end of 3rd Quarter 2009 and what is expected for the remainder of 2009
Highlights of webcast:
Fiscal stimulus to temporary lift growth, signs of recovery vs correction, factors of a sustainable recovery
Derek Holt -Vice President Scotia Capital Economics
Recorded: August 2009
Click here: http://events.startcast.com/events6/107/C0023/Default.aspx
The big picture
China key to global recovery
The global economic recovery has begun, but sustaining it will require stepping up U.S. exports to Asia, says the International Monetary Fund’s chief economist. In an IMF report, Olivier Blanchard predicted that consumer spending, which accounts for 70% of the U.S. economy, will not return to pre-crisis strength quickly. He called on China to reduce the trade imbalance and import more goods from the U.S.
Federal Reserve Chairman Ben Bernanke declared Friday that the U.S. economy is on the verge of a long-awaited recovery after enduring a brutal recession and the worst financial crisis since the Great Depression. The U.S. housing market showed encouraging signs in July. Although new-home construction and permits fell, single-family-home starts remained strong, rising 1.7% in July after a 17.8% surge in June. Sales of U.S. existing homes rose to their highest level in nearly two years as cheaper prices and the availability of tax credits continued to entice buyers. In Canada, inflation is at a 56-year low, with declines in the price of gas, cars and shelter partly offset by higher food costs. With consumer spending remaining weak, some economists say it could take two years of recovery before companies begin to raise prices.
Markets
Stocks tumble, then rebound
World markets rallied following steep losses on Monday, when fresh concerns about a U.S. economic recovery sent indexes around the world tumbling. Stocks rose after a rebound in Chinese equities and an uptick in U.S. manufacturing offset a disappointing weekly jobs report.
Canada is not likely to block sale of Nortel, says the Globe and Mail, since the government is only required to review foreign takeovers for businesses over $312 million – Nortel’s balance sheet assets are $149 million. Oil is on track for a strong gain this week as the price per barrel approaches the highest levels since October 2008 when it closed at $75.22. The $US 3 billion cash-for-clunkers program will shut down on Monday, the government said Thursday. As of Thursday, the program has recorded more than 457,000 dealer transactions worth $1.9 billion in rebates. Meanwhile, Hyundai Canada will offer up to $1,000 on clunkers traded in for new vehicles. Ten months after its initial rescue deal with UBS, Switzerland sold its 9% stake in its largest bank for US$5.1 billion, making a profit of US$ 1.1 billion on its investment.
