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Tuesday, Feb. 09, 2016 3:59PM EST
Maybe I shouldn’t tell you this.
The economy in Alberta is in rough shape.
The effects are acute in Calgary, where oil patch layoffs are the order of the day due to the collapse in crude prices. It’s hitting many families hard.
The nervousness about it at city hall is palpable, as shown last week when the city’s manager and chief administrative officer, Jeff Fielding, told a committee that reporting by certain news outlets was making the situation even worse. In essence, investors in major financial centres are getting wind of this.More »
Monday, Feb. 08, 2016 6:43PM EST
If Venezuelan oil minister Eulogio del Pino seems more than a little harried these days as he trudges from Moscow to Riyadh in search of a deal to trim oil production, it is understandable.
Mr. del Pino, a media-shy engineer who also heads the troubled state oil giant Petroleos de Venezuela SA, is on a desperate mission. Without a co-ordinated reduction of supply by fellow members of the Organization of Petroleum Exporting Countries, and key non-members such as Russia, crude prices are likely to remain weak and Venezuela’s prospects even bleaker.More »
Sunday, Feb. 07, 2016 8:00PM EST
Two big Canadian economic reports at the end of last week – employment and trade – told us a couple of important things about Canada’s economy. One is that, despite what you might have heard, both indicators were pretty good, suggesting that the economy is getting back on track. The other is that after a volatile period filled with worrisome headlines, businesses are hesitant to come along for the ride.More »
Sunday, Feb. 07, 2016 7:00PM EST
If there is a silver lining in the oil price collapse for Canada, it is that our neighbour and closest trading partner should be a winner.
The United States is a net oil importer and a huge guzzler. Lower gasoline prices are putting roughly $100-billion (U.S.) a year back into the pockets of consumers, who represent more than 70 per cent of the world’s largest economy.More »
Sunday, Feb. 07, 2016 5:49PM EST
Friday, Feb. 05, 2016 8:27AM EST
Brian Lee Crowley
It’s 1993 all over again.
In that year, the Chrétien Liberals swept out of office a decade-old Tory regime whose legacy they despised. Yet sometimes governments you detest nonetheless do things that are in the national interest. That presented the Chrétien Liberals with the dilemma of what to do about the North American Free Trade Agreement their predecessors had negotiated with the U.S. and Mexico.More »
Thursday, Feb. 04, 2016 4:00PM EST
Someone at OPEC misunderstood the message from Moscow last month when rumours circulated that Russia might fall in line with cartel policy. The oil price surged briefly in the hope that Russian oil producers would reduce output in collaboration with Saudi Aramco, but the whisperers were looking at the wrong commodity and the wrong policy.More »
Thursday, Feb. 04, 2016 5:00AM EST
More than 20 years ago, back in 1994, the federal government released the report of the Advisory Group on Working Time and Distribution of Work. (Disclosure: I served as the labour adviser.) The central message of the report has been pretty much ignored by governments ever since, even though it is more relevant today in a slow-growth world where good jobs are hard to find.More »
Wednesday, Feb. 03, 2016 6:02PM EST
As Prime Minister Justin Trudeau’s visit to Alberta this week puts the focus squarely on the ailing provincial economy, it’s easy to forget that Alberta actually isn’t the province hurting the worst from oil’s demise.
Last week, debt-rating agency Standard and Poor’s lowered Newfoundland’s credit rating to single-A from single-A-plus, citing the deterioration of the provincial government’s budget as a result of “the fall in oil prices, significant expected increase in debt and now-low economic prospects.” It also slapped a “negative” outlook on the rating – implying that, unless conditions improve, a further downgrade could still be down the road.More »
Wednesday, Feb. 03, 2016 5:31PM EST
As their vital oil revenues sink to intolerable levels, hard-pressed governments from Riyadh to Moscow are looking to peddle some of the family jewels to fill gaping holes in their budgets. Most of the proposed deals should come with flashing signs reading: Beware of autocrats who embrace capitalism when the cash stops pouring in from their usual channels.More »
Tuesday, Feb. 02, 2016 12:39PM EST
University of California professor Brad DeLong’s “Economics and the Age of Abundance” highlighted the new economic study of global production growth – a new-ish school of thought that attributes much of the economic malaise in the developed world to a technology-driven “too much of everything.”
Close to home, the negative effects of technological advances on the economy are clear. At first, the domestic oil patch benefitted tremendously from the development of Steam Assisted Gravity Drainage (SAGD) and other extraction processes. But the rapid progress in U.S. shale oil extraction techniques created an oversupply of oil that threatens a significant segment of the Alberta energy industry with bankruptcy. Elsewhere in the commodity space, Chinese over-investment in steel and aluminum caused a collapse in global prices.More »
Monday, Feb. 01, 2016 5:00AM EST
Lost in the drama of the Bank of Canada’s interest-rate decision last month was a potentially meaningful change in how the central bank is talking about inflation. How meaningful? At this point, that’s anyone’s guess.
The decision whether to cut was a close one, with the central bank weighing the role of the plunging dollar and the waiting game for Ottawa’s promised infrastructure spending. But buried within the bank’s quarterly monetary policy report (MPR) that accompanied the big rate announcement, keen central-bank watchers noticed something eyebrow-raising about the bank’s discussion surrounding inflation.More »
Sunday, Jan. 31, 2016 4:23PM EST
If the Keystone XL pipeline was a measure of Barack Obama’s environmental record, Energy East is destined to become a test of Justin Trudeau’s economic cred.
Many Canadians may wish the country was not a natural resource powerhouse.
But we are. In many ways, it’s the family business.
Commodities such as lumber, nickel, wheat and oil make up roughly 20 per cent of the economy. They represent an even larger share of the exports and investments that help sustain Canada’s envied standard of living.More »
Friday, Jan. 29, 2016 6:26PM EST
It’s been a bad week for Abenomics, the stimulus strategy that propelled Japanese Prime Minister Shinzo Abe to power three years ago with the promise of defeating entrenched deflation, reviving Japan’s moribund economy and restoring its lustre as a global power.
First, Economy Minister Akira Amari, the key cabinet minister steering his boss’s reform agenda, including the Trans-Pacific Partnership trade deal, resigned in the face of bribery allegations.More »
Wednesday, Jan. 27, 2016 6:12PM EST
Falling oil prices are making life miserable for Canadian producers and everyone else connected to the energy sector. But the global glut and continuing price weakness may have a silver lining: It makes it easier for Western governments to wean themselves off the crude pumped out of the ground by authoritarians, despots and armed thugs. And one of the key beneficiaries would be Canada.More »
Wednesday, Jan. 27, 2016 5:27PM EST
Let’s be clear: Stephen Poloz isn’t worried about inflation. But he’s worried that you’re worried about inflation.
Last week, when the Bank of Canada’s governor chose not to cut interest rates again despite a clearly weakening economic backdrop, he left the distinct impression that the plunge of the Canadian dollar played an important role in the decision. In many media and economists’ reports on the rate announcement, the shorthand was that Mr. Poloz is concerned about the sinking loonie’s rising impact on inflation – specifically for imported goods, as the currency’s purchasing power sinks.More »
Wednesday, Jan. 27, 2016 5:00AM EST
One of the positive world developments in 2015 was the restoration of more normal political relations between the United States and Cuba. After nearly six decades of fruitless stalemate, this change is one more step in clearing the way for the eventual transformation of Cuba’s economy.
I have been to many Caribbean nations, but never Cuba, until recently. Earlier this month, I got to see Cuba, in what could be one last glimpse before it begins to really change. Canada can play an active role in the transformation.More »
Tuesday, Jan. 26, 2016 6:22PM EST
When Federal Reserve chief Janet Yellen and her fellow policy-setters finally ended months of uncertainty and raised interest rates by a slim quarter of a percentage point in mid-December, they knew they were taking a divergent path from other major central banks.
While the Fed embarked on its first tightening cycle in nearly a decade, signalling confidence in the U.S. economic recovery, worried monetary minders in Europe, Japan, China and Canada were either loosening policy or holding fire amid deteriorating economic and trade conditions.More »
Tuesday, Jan. 26, 2016 5:22PM EST
Alberta Premier Rachel Notley’s pledge to tinker with the province’s oil and gas royalties is what most struck fear deep into the hearts of the business set.
Conditions in the energy sector were grim when her New Democrats took power last spring, promising to make sure that Albertans got their fair share of spoils from the province’s massive resources. Since then, they have become much grimmer as crude oil crashed below $30 (U.S.) a barrel, a price at which most projects lose money.More »
Tuesday, Jan. 26, 2016 5:00AM EST
Federal and provincial ministers will be meeting early in March to discuss how best to move forward with coherent policies aimed at reducing greenhouse-gas emissions. Despite plenty of enthusiasm from the new federal government and a few provinces, the task ahead is daunting, and hard work will be required to sort through the many complex details.More »
Sunday, Jan. 24, 2016 5:38PM EST
Bank of Canada Governor Stephen Poloz may not be having much fun minding monetary policy these days as the economy stumbles and his options narrow. But things could always be worse, as his embattled Russian counterpart, Elvira Nabiullina, can no doubt attest.
The Bank of Russia chief and her fellow directors will hold their first policy meeting of the year on Friday against a grim backdrop of recession, double-digit inflation and a battered currency. Despite deepening economic woes exacerbated by low oil and gas prices, the bank is expected to leave its key rate at 11 per cent amid concerns about inflation and extreme volatility in the currency market.More »
Sunday, Jan. 24, 2016 5:26PM EST
Breathe in. Breathe out.
Doesn’t that feel better?
China’s economy is not imploding. The world is not engulfed in a 2008-style crisis. And Canada is not a failed petrostate.
You might be forgiven for thinking otherwise amid the overwhelming sense of doom gripping financial markets of late.
It’s worth remembering that the stock market and the economy are not the same thing. Yes, stocks can be a predictor of economic shifts, but they’re not an ideal leading indicator. Nor is the Canadian dollar, for that matter.More »
Friday, Jan. 22, 2016 6:30PM EST
DAVID PARKINSON And BARRIE McKENNA
Last winter, not long after Bank of Canada Governor Stephen Poloz stunned financial markets with an unexpected interest rate cut – perhaps the defining moment of his tenure as head of the central bank – he was asked whether he was enjoying his time in an economic hot seat that had just gotten considerably hotter. His response: “I’m loving it.”More »
Friday, Jan. 22, 2016 5:11PM EST
Stocks go up and down, but alarm bells really started to go off when the Toronto Stock Exchange’s S&P/TSX composite index briefly fell below the 12,000 mark this week.
That left the TSX back to roughly where it was 10 years ago. For Canadian investors, it’s a grim reminder of a lost decade.
Stocks will inevitably rebound, as they did in a big way Thursday and Friday.More »
Friday, Jan. 22, 2016 4:31PM EST
Canada’s mayors, bless their hearts, do critical work in areas that directly affect everyday lives – from keeping buses running to making sure the garbage gets picked up.
Determining national policy on energy and trade isn’t part of the job, though. Mayors contribute to development decisions by airing their citizens’ concerns at hearings – and those concerns need to be heard – but they don’t get final say.More »
Friday, Jan. 22, 2016 12:22PM EST
BRIAN LEE CROWLEY
The part of international trade that gets all the attention is goods and services. Canada has negotiated free trade deals with South Korea, the European Union and the Trans-Pacific Partnership, and now there is talk of a deal with China. In every case, the fans of free trade tout the benefits of opening foreign markets to things Canadians make. But as desirable as that is, it may not be the most valuable kind of trade. And the most valuable kind of trade does not necessarily involve the countries with which we have been signing trade deals.More »
Wednesday, Jan. 20, 2016 9:07PM EST
When the Bank of Canada decided Wednesday to hold off cutting interest rates until it sees the details of the new Liberal government’s infrastructure spending plans in the federal budget, it essentially lobbed the ball for stimulating Canada’s flagging economy into the government’s court. That leaves Ottawa with a dilemma: Should it be focusing on near-term economic stimulus, or maximizing the long-term benefits of its ambitious infrastructure program?More »
Wednesday, Jan. 20, 2016 6:00PM EST
Here is Wall Street’s view of the great oil-and-mining slump: Run for the hills! This is ugly and going to get uglier!
Here’s the Bank of Canada perspective: Oh, calm down. By 2020, you’ll hardly remember this kerfuffle.
These are, granted, rather liberal translations, but they do capture the essence of a striking and important contrast in attitudes.More »
Wednesday, Jan. 20, 2016 4:38PM EST
With a plunging Canadian dollar, collapsing oil prices, slumping stock markets and signs that the economy stalled in the last quarter of 2015, it is easy to think that we are on the cusp of economic disaster. But the state of the Canadian economy, while indeed dismal, does not justify alarmist pronouncements that threaten to make things even worse by undermining consumer and business confidence.More »
Wednesday, Jan. 20, 2016 5:00AM EST
In a way, this is where Greg Stringham came in.
Mr. Stringham, energy’s inside man, is retiring from his executive post at the Canadian Association of Petroleum Producers after two decades, four royalty reviews, numerous pipeline battles and three industry downturns. Now, oil prices are in the tank.
“When I started this 20 years ago the price of oil was $25 [U.S.] a barrel. I thought I would leave with it slightly higher but it might actually get back to that point,” Mr. Stringham says. “The more things change, the more they stay the same – although the production was 400,000 from the oil sands when I started here and now we’re at almost 2.4 million barrels a day, so that has changed.”More »
Tuesday, Jan. 19, 2016 5:37PM EST
As crude oil continues its deep slide, it’s hard to distinguish whether market fundamentals, or sentiment about market fundamentals, is driving the price drop, FirstEnergy Capital Corp. says.
Analyst Martin King gave an energy market update to a standing-room-only audience of oil and gas executives and white-collar workers at Calgary’s Petroleum Club Tuesday. Attendees joked whether the large crowd was a result of intense industry interest in the forecast or the free hot breakfast.More »
Tuesday, Jan. 19, 2016 5:04PM EST
Central bank interest rate decisions don’t get much more suspenseful than this.
The Bank of Canada will issue its latest policy announcement Wednesday morning (10 a.m. ET), in a true nail-biter of a decision as the country’s struggling economy has been hit by a new wave of slumping oil prices to start the year. The market has see-sawed over the past week on whether the central bank will cut its key interest rate for the third time in a year, but as of late Tuesday, bond traders were split almost right down the middle, pricing in a 54-per-cent chance of a cut. It’s too close to call.More »
Tuesday, Jan. 19, 2016 4:26PM EST
Will a 60-cent Canadian dollar be a fitting end to Canada’s burst carbon bubble?
Just as soaring oil prices, and soaring oil sands production, lifted the loonie to parity and for a while even a premium against the greenback, plunging oil prices and the risk of bankruptcies in the sector have already pushed the currency to a 13-year low with a growing number of foreign exchange traders believing it’s on course to retest the all-time low of 61.7 cents against the U.S. dollar set back in 2002.More »
Tuesday, Jan. 19, 2016 3:22PM EST
If the Bank of Canada cuts its key interest rate on Wednesday in response to dismal economic conditions, don’t expect the big banks to follow with similar reductions to their prime lending rates.
Robert Sedran, an analyst at CIBC World Markets, figures that banks will cut their prime rates by just 5 or 10 basis points if the Bank of Canada cuts its overnight rate by 25 basis points. (There are 100 basis points in a percentage point.)More »
Monday, Jan. 18, 2016 4:00PM EST
Amid rising fears of a hard landing for the Chinese economy, global financial leaders gathered in Hong Kong to call for a rush of infrastructure spending to cushion the blow to world markets.
As slowing growth sparks concern that has driven markets worldwide toward bear territory, companies, governments and even individuals with big savings accounts should pour money into new foundations for growth, said executives and bankers gathered at the Asian Financial Forum on Monday.More »
Sunday, Jan. 17, 2016 6:23PM EST
A year ago at this time, Bank of Canada Governor Stephen Poloz stunned the financial markets with a surprise interest-rate cut in the teeth of a tumbling oil price and a slumping economy. Now, with oil’s renewed slide threatening to derail Canada’s 2016 economic prospects, the markets are steeling themselves for a repeat performance from Mr. Poloz this week – though it’s far from a sure thing.More »
Sunday, Jan. 17, 2016 6:11PM EST
For much of the economy, it hardly matters what Stephen Poloz and the Bank of Canada do on Wednesday.
One of the key lessons of the past year is that monetary policy isn’t a cure-all. On its own, it won’t get Canada out of its slow-growth rut. Two interest rate cuts in 2015 kept cheap credit flowing and helped send the Canadian dollar skidding lower, but they didn’t stop the economy from stalling. One more cut this week won’t alter the economic outlook or change the direction of commodities prices.More »
Friday, Jan. 15, 2016 4:57PM EST
JEFFREY JONES And JEFF LEWIS
World and U.S. oil prices cratered to below $30 (U.S.) a barrel on Friday with no sign of stopping, as fears spread that shaky economic growth and the lifting of sanctions against OPEC member Iran would deepen a global supply glut.
U.S. benchmark West Texas intermediate (WTI) oil and Brent crude sank nearly 6 per cent to about $29.42 a barrel, and several analysts warned that the worst is yet to come. Oil tumbled amid uncertainty about the timing and volume of Iranian crude expected to hit the already oversupplied global market in the coming weeks and growing questions about demand, especially in China.More »
Friday, Jan. 15, 2016 4:45PM EST
There are some obvious downsides to the sub-70-cent (U.S.) dollar.
A winter break in Florida may now be out of reach. So too is that California cauliflower at the grocery story.
But there are also benefits, particularly for Canadian exporters.
It’s not just about manufactured goods. A wide array of high-value services, once destined primarily for domestic consumption, are now readily traded globally – everything from financial and accounting services to engineering, architecture, information technology, communications and scientific research.More »
Friday, Jan. 15, 2016 5:00AM EST
Near my home in downtown Calgary, a century-old schoolhouse reminds us how societal concepts around gender have changed. Two entrances on the same side of the building, one for boys and one for girls, are marked in sandstone. They weren’t kidding. In 1912, it was improper for school-aged boys and girls to use the same door.More »
Thursday, Jan. 14, 2016 5:00AM EST
The federal government can actually run deficits of $24-billion a year out to 2020 and that would leave the debt-to-GDP ratio at today’s level (31 per cent), which is still less than half the average for the Organization for Economic Co-operation and Development.
Now, if Ottawa had the desire in the coming federal budget to bring the debt-to-GDP ratio in line with the OECD average of 72 per cent (the accounting is slightly different here, as it puts Canada at 40 per cent rather than 31 per cent, but this is simply for illustrative purposes, so just ignoring this for now), that would mean the government could run deficits in excess of $40-billion on average over a five-year span.More »
Wednesday, Jan. 13, 2016 6:22PM EST
If a 70-cent (U.S.) Canadian dollar instinctively sounds too low, that is probably because it is. But that raises the question: What is a fair, or even optimal, level for our beaten-down currency?
“It’s not a dumb question, but it’s a tricky question,” Carleton University economics professor Nicholas Rowe says.More »
Wednesday, Jan. 13, 2016 8:31AM EST
The recent global climate change agreement in Paris sets out a process for reducing carbon emissions over the coming decades–one that is based principally on transparency and collective accountability. The agreement reinforces the need to rely less on hydrocarbons with significant carbon emissions, and more on low-carbon sources of energy. Although there are no targets per se in the Paris agreement, there is a collective understanding that energy sources and uses with lower carbon emissions will define the future.More »