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Two Olympic Investments in Canada

February 18, 2010 by Seeking Alpha  
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Original Article from Seeking Alpha Long Investment

Wall Street Cheat Sheet submits:

One of your favorite posts was when I covered Brazil in “Bright Signs of an Early Carnival for Traders Utilizing Brazilian ETFs“. So, with the Winter Olympics in full throttle, I want to shine the light on some safe and steady Canadian investments.

As of Thursday morning, the U.S., Germany and France lead the Olympics with the most medals per country, respectively. Meanwhile, this year’s Olympics host, Canada, is tied for 4th place. Canada may not be placing first in the Olympics, but they are economically benefiting from the attention on Vancouver and the wallets being opened in surrounding areas right now.

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Canada by the Numbers

February 18, 2010 by Seeking Alpha  
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Original Article from Seeking Alpha Dollar Currencies

Marc Chandler submits:

Canada reported an acceleration in inflation and strong capital inflows at the end of last year.
The Canadian dollar, like the other major currencies, is recovering against the US dollar in the North American morning. The US dollar approached the CAD1.05 objective noted yesterday and has turned back to retest the CAD1.04 area. Although minor penetration is possible, we are more inclined to expect continued range trading today as the hourly momentum indicators are already over-extended.
Consumer prices were 1.9% above year ago levels last month, the highest since November 2008, representing a 0.3% increase on the month. More importantly from a policy making point of view, the core rate rose to 2.0% from 1.5%. The Bank of Canada has promised no rate hikes before mid-year, though the stickiness of core inflation warns of a risk of a BOC hike in Q3.
In terms of capital inflows, Canada reported that foreign investors bought C$11.2 billion of Canadian assets (bonds, stocks and money market) in December, which was almost twice what the consensus had forecast and caps off a record year of inflows ($109 billion). Bond demand tends to be the driver, accounting for almost 90% of the monthly inflow and around 80% of the annual inflow. Note that some of the bonds bought by foreign investors were dollar-denominated issues by provincial governments and businesses. Foreign investors bought C$1.2 billion of Canadian equities in December. For all of last year foreign investors bought C$26.2 bln of Canadian equities from the crisis depressed C$2.75 bln in 2008. Reports suggest the commodity and financial sectors were the main equity attractors.
Disclosure: No positions

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Economic Trends in China, The U.S. and Canada

February 1, 2010 by Seeking Alpha  
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Original Article from Seeking Alpha Dollar Currencies

Arjun Rudra submits:

Dr. Gary Russell has been teaching Economics and related subjects in Canada for many years. Since 2001, he has been teaching Economics and Business Administration at several universities in China. In the process, he has conducted considerable research in cultural differences as they apply to business and investment in China. In 2007 he participated in the International Anti-corruption Conference in Athens, Greece. Over the years he has been honing his expertise on how to negotiate with Chinese business and government. He is the founder of the Russell Research website.

Q: Dr. Russell, in a general sense, what is your opinion of the Chinese economy at the moment? The media has been reporting recently that there have been calls for the withdrawal of stimulus into the Chinese economy given that it has grown 10%+ since last year, what are your thoughts on this?

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On Canada’s First Time Making an Initial Bond Offering in Euros

January 9, 2010 by Seeking Alpha  
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Original Article from Seeking Alpha Dollar Currencies

It’s a well-known North American story by now, Canada’s relative economic strength among developed nations. We’ve been touting the country’s virtues since the middle of the last decade, attracted first by a unique, efficient and investor-friendly legal structure that resulted in low costs of capital for businesses and generous yields for investors.

As we got deeper into the companies we cover, we also developed a better understanding of Canada’s financial system, what makes its economy tick, the way its government works.

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Diversification and Canada’s Reserve Holdings

January 8, 2010 by Seeking Alpha  
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Original Article from Seeking Alpha Dollar Currencies

Marc Chandler submits:

Canada reports its international reserves on a weekly basis and today it reported the figures for the week ending Dec. 31. The US absorbs a little more than 80% of Canada’s exports. While this would seem to offer a prima facia case for not diversifying reserves, Canada has long diversified its reserves.
Canada’s reserve assets include dollar, euro, yen, gold, SDRs and its IMF reserve position. Taking these all into account, about 44% of Canada’s reserves were in US dollars at the end of 2009 and, as of the end of June, the dollar accounted for about 52% of Canada’s reserves.
Did Canada dump dollars in H2 09? Even though some observers will jump to that conclusion, the fact of the matter is that Canada actually held about $651 million more at the end of the year than it did at midyear. The euro holdings rose in value by $191 million. However, over the course of H2 the euro appreciated by about 2% against the US dollar and, given Canada’s euro holdings, a 2% increase in dollar terms is worth about $370 million. The fact that the value of Canada’s euro holdings did not rise by as much would suggest that either Canada used a different valuation adjustment or it may have sold euros. That latter seems unlikely, especially given that Canada is rising 2 billion euros via a 10-year bond offering (reportedly priced at 2 bp above benchmark mid-swap rates).
A better explanation for the dollar’s decline as a share of Canadian reserves would focus on the fact there was a large SDR allotment Q3 09 that boosted overall reserves. If one were to only to look at Canada’s currency reserves, the dollar’s share edged marginally higher in H2 09 to 56% from 55.6%.
Nevertheless, the overall point remains valid. Canada has diversified its reserves away from dollars and its overall reserves are valued at $54.35 billion. This is rather typical, in the sense that, with the notable exception of Japan, industrialized countries generally carry lower levels of reserves than developing countries.
Reserves are highly concentrated in about 10 countries. These 10 countries account for $5.45 trillion in currency reserves, while world reserves are around $7.7 trillion (~70%). The idea that countries are trapped with the dollar, i.e., that there is no alternative, is simply not true for ll but 10 countries.
Disclosure: No positions

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O Canada! Just What an Investor Needs

January 7, 2010 by Seeking Alpha  
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Original Article from Seeking Alpha Long Investment

Christopher Pavese submits:

We gave a series of lectures to finance students at Appalachian State University last fall which focused on applying a macroeconomic framework to security analysis. After a few sessions reviewing various leading indicators of the economy and the implications for portfolio construction, we concluded with a brief case study. The presentation below was the conclusion of our work with ASU where we summarized our bullish stance on Canada and our related thesis for our largest individual equity position at the time. Thanks to David Rosenberg at Gluskin Sheff who obviously provided us with much of the visual ammo for our discussion points.

The constructive view we then expressed on our northern neighbor remains strong today as Canada’s vast supply of natural resources is the primary driver of this long-term secular trend. Factors that are unlikely to change anytime soon. Don Coxe recently highlighted several pillars of our bullish thesis in this month’s issue of Basic Points:

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Events to Watch: US Personal Income and Spending, Canada GDP

December 22, 2009 by  
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ersonal income probably increased +0.5% mom in November, the strongest gain in 6 months, after a +0.2% gain last month. The +0.6% rise in aggregate worked hour as reported in the payroll report suggested encouraging growth in private sector salary.
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Canada Next to Raise Rates?

November 3, 2009 by Seeking Alpha  
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Original Article from Seeking Alpha Dollar Currencies

Market Blog submits:

By David Parkinson

It doesn’t seem to matter how loudly Bank of Canada Governor Mark Carney yells. He keeps getting drowned out by the Reserve Bank of Australia.

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Canada GDP (for August) Disappoints

October 30, 2009 by Seeking Alpha  
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Original Article from Seeking Alpha Dollar Currencies

Marc Chandler submits:

Canada reported that August GDP contracted by 0.1%, whereas the consensus expected a 0.1% increase. Small change for sure, but the sign is wrong. And it likely prevents the Canadian dollar from recovering from the recent slide that has brought it to a 4 week low against the otherwise sagging US dollar. Although the US reported a 3.5% expansion in Q3 GDP yesterday on a preliminary basis, it is not clear that the Canadian economy has exited from its recession. The economy was flat in July before the 0.1% contraction in Aug. The weakness in the report was noteworthy in the oil and gas extraction sectors that contracted 2.3%. Manufacturing remains in the doldrums, contracting 0.7%. Some may attribute the weakness in manufacturing to the strength of the Canadian dollar, but the soft demand may be a bigger culprit. What strength there was in the Canadian economy stemmed from the fiscal assistance.
Many investors recognize that Canada is in better fiscal shape than the US, but the risk is this is being exaggerated somewhat. Yesterday S&P cut the province of Ontario’s credit rating a notch due to the fiscal deterioration. Canada’s national budget deficit is about 6% of GDP and the government debt is about 64%.

The Canadian dollar’s downsize momentum see at the end of last week and earlier this week has eased. The US dollar has found a near-term base near CAD1.0630-50. As this was just tested, the rule of alternation now suggests the upper end of the new range may be tested–this is seen near CAD1.0820-50. The data underscores the idea that Canada is lagging behind others in the recovery and in the ability to normalize policy. Key reports next week include employment and IVEY PMI for Oct and are expected to softened from the Sept readings.

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Events to Watch – Eurozone Inflation, Unemployment, Canada GDP and US Personal Income & Spending

October 29, 2009 by  
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Personal income should have eased to +0.1% in September as the weak employment report suggested softening in employee compensation during the month. Personal spending is expected to have dropped -0.5% after rising +1.3% in September. As the cash for clunker program ended, unit auto sales dropped -35%. The decline triggered…
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