My ritual every morning is to load up on some high octane coffee and surf the web for economic news.  I’ve conditioned myself to expect some negative articles about the mortgage industry, and thanks to Canada’s major newspaper I’m rarely disappointed.  Our industry has taken so many body blows that we’re qualified to perform for the WWE.  Go ahead, suplex me off the top ropes.  It can’t be any worse than the predictions of doom and gloom and specifically that the housing industry is the greatest threat to Canada since confederation. Well, imagine my shock when I read the Globe and Mail’s Report on Business last Friday.  The headline bellowed, “Labour market shakes off winter blues.  Economy creates 82,300 jobs in March, its best month since recession, as unemployment rate falls to 7.2 per cent”.  I double checked, it really was The Globe.

To be clear there wasn’t a single sentence in the article about the importance of the housing and mortgage sector, and the millions of direct and indirect jobs the housing and mortgage sector creates.  Let’s not let facts get in the way of a good story.  At least we’re not being blamed for something.  Maybe I’m becoming cynical but one day I expect to read that global warming, Iran’s nuclear capabilities and the Leafs failure to make the play-off is a result of consumer debt levels in Canada, as well as over inflated home values.  So it’s big news when we can get through a day without being held accountable for… well…  just about anything that goes wrong with the economy.

There was plenty of good news of Friday.  On the employment front some 82,300 jobs were created last month.  The overall unemployment rate fell to 7.2 per cent.  The pace of hiring is clearly picking up and corporate Canada is far more optimistic about our recovery, as well for our neighbours South of the boarder and in Europe.  You know the news is good when the manufacturing sector in Ontario is showing signs of growth.  And you we’re skeptical about the Easter Bunny.   What’s really refreshing about our economic growth is who’s leading the way.  Not the usual suspects.  All hail the new king, Saskatchewan!  You want to live and experience an economic boom…move to Regina.  The unemployment rate there is 3.9 per cent.  Last year Regina’s GDP growth was 6.1 per cent.  The average price of a bungalow is $315,000.  For prosperity go west young man, just not all the way west.  This is a great success story.  Good people deserve good fortune.

 So we should all bask in the glow of this good news for as long as it lasts.  I see the markets have gone into the tank since Friday because of poor job growth numbers in the US.  It seems that economists were expecting much better job numbers in the U.S.; economists have been having a tough go of it recently.  Our actual job growth numbers came in eight times greater than what economists were calling for.  I wonder if this is the same group of economists who called on the Finance Department to change the mortgage rules because the sky was falling.  Here’s a suggestion for them; they should set aside their data and cognitive skills and use something a little more reliable, like tarot cards.

 Until next time.

 Cheers.

Plenty has been written about federal budget which was handed down by the Conservative Government last week.  The reality is that’s only been four days, and yet the fallout, criticism and navel gazing has been rather muted.  The opposition played their role and provided reporters with negative sound bites but by all appearances their collective protests have had little impact.   Why is that?  Is it because they’re ineffective?  Do people not care?  I think the answer is that the Tories managed expectations extraordinarily well, and they provided everyone with a lesson in shaping the narrative. 

For over a year now the PM has stated, in no uncertain terms, that the government had to manage its affairs more efficiently.  Cuts were coming, and the only question was how much?  For over a year the press has been reporting that federal agencies would be required to cut 5% of their operating budget.  Your highest fixed overhead costs are salaries, therefore, job cuts were on the way.  The budget didn’t disappoint, just over 19,000 jobs will be made redundant.  That’s a fair bit of bloodletting but the reaction seems to be, “oh well, it had to be done”.  There’s no doubt that the government tapped into the mood of the electorate, pensions and salaries being too generous, but I am surprised at the lack of reaction.  You have to give the Tories credit for managing this message.  How do you criticize the Tories when they’ve been saying all along that they would do this?  How dare they keep their word?

That being said the Tories may step on a few land mines  over the budget.  Many of the 19,000 plus civil servant jobs to be cut are here in Ontario.  This won’t help an already beleaguered  Ontario economy.  Moreover, the Minister Finance has got into a war of words with his provincial Liberal counterpart, Dwight Duncan.  There’s no love lost between these two, and I guess all is fair in love and war.  But Ontario gave the Conservatives a majority, and Ontario’s vote will be critical to the Tories if they want another majority mandate.   If it wasn’t for the 905 and 416 area code voting for the Tories, we would have another minority government.  There’s little doubt that the Federal and Provincial Liberals will play this up.  It’s happening already.  The Federal Liberal talking points are that this was a Western Canadian based budget, and voters west of Ontario are the benefactors.  Political regional warfare?  You can count it.

Ontario aside, the most common theme in the press was that the budget wasn’t bold enough.  I guess there was an expectation that something draconian was on the way.  Once again, if you get in front of the message and position it effectively, people’s reaction is “it wasn’t really that bad”.  And if you push out certain things, like those under the age of 54 today will now have to wait until they’re 67 years old to receive Old Age Security, people will say I’ll worry about that later.  To deflect some of the criticism over contentious issues the government threw the voters a few bones in this budget.  Like cross boarder shopping.  This is especially helpful for those who lie through their teeth and do not declare everything.  You know who you are.  You’re the person who recites a silent prayer when you’re talking to the customs agent, asking the lord for help and begging your ever merciful god to ensure that you don’t get pulled into that special room and have your bags checked.  Good news!   Effective June 1st – if you’re out of the country between 24 to 48 hours, the exemption increases from $50 to $200.  Trips between two and seven days will see an increase in the tax exemption rise from $400 to $800.  That’s a lot of shoes! 

The highlight of this budget was saying farewell to the penny.  This annoying and useless coin is being taken out of circulation.  I had no idea that the removal of the penny will save the government $11 million annually.  The government is recommending that commercial transactions be rounded off to the nearest five cent interval.  This is a great start but there’s other currency we should take out of circulation, like the $50 and $100 bill.  If no one accepts them, why have them?  Just my two cents worth.

Until next time

Cheers.

Finally there’s a sign of a federal budget, and me thinks if this was a “good news” budget we wouldn’t have had to wait until March 29th to hear the glorious details.   Pundits are speculating that there’s a difference of opinion between the PM and Minister of Finance.  They’re both in agreement that austerity measures are necessary but the difference of opinion appears to be about degrees of pain.  The thought is that the PM wants deep cuts now, and hopefully the voters will have forgotten by time the election comes around.  The Minister of Finance is focusing on today, and he’s concerned deep cuts may negatively impact an already shaky economy.   Who’s going to win this debate?  My money is on the guy who sits in the big chair. (more…)

If you thought there was over exposure of all things Leafs today, you ain’t seen nothing yet.

In short order a good number people in Canada are going to become angry.  There will be moments when people in Vancouver, Calgary, Edmonton, Winnipeg Montreal and Ottawa will want to put their foot through their collective TV.   Mobile devices may be thrown from balconies or car windows.  Some will rage at the never ending hyperbole.  I bare no responsibility for creating this anger but I feel compelled to apologize simply because of where I am located geographically.  My god, you’re about to live in a world where it’s all Leafs…all the time!

By now you’re aware of the unholy alliance coming together to purchase MLSE (Maple Leaf Sports & Entertainment).  Two bitter rivals, Rogers and Bell, came together to purchase the Ontario Teachers’ Pension Fund stake in MLSE.  Rogers and Bell purchased 37.5% each, for a cool $530 million.  (more…)

The Fed’s still have concerns about Europe and the impact it may have for the global economy, and Canada specifically.  Well they should, and it’s the Fed’s responsibility to worry about such issues.

It’s not sophisticated or scientific but it can’t hurt to keep our fingers crossed when it comes to the economy.  Markets rallied in a big way yesterday, due in part to a number of central banks around the world making moves to ensure liquidity, and it will be interesting to see if this is just another crest of a roller coaster ride the market has been on for some time now.  There was also encouraging news about the Canadian economy. (more…)