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US Fed and Government out of sync on policy

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https://www.investing.com/analysis/fed-frontruns-fomc-risk-of-further-us-dollar-losses-200532190

investing.com news item Kathy Lien

Today, we saw the Federal Reserve “front-run” Wednesday’s FOMC announcement by extending its $2-trillion+ lending programs another three months to the end of the year. According to the central bank, it was necessary to “provide certainty that the facilities will continue to be available to help the economy recover.” But, in reality, it is worried about the economy and feels more companies will need to tap this lifeline. These actions send a strong signal to investors that come tomorrow, we’ll get a more cautious tone from the Fed. We are not looking for any monetary policy changes, but with extra unemployment benefits expiring and COVID-19 cases rising, the central bank will be forced to look past the improvements in the economy since June.

The table below shows broad-based improvements in the U.S. economy since the last Fed meeting. Had virus cases stabilized with no significant upticks over the past month, the Fed would be talking about the improving recovery and how the worst is over. Unfortunately, that’s not the case right now and instead, the two greatest threats to the U.S. economy are things the Federal Reserve has no control over – the rapid spread of coronavirus in the U.S. and the government’s fiscal response.

A few weeks ago, Chairman Jerome Powell warned law-makers not to become complacent as the U.S. economy remains extraordinarily uncertain. Since then, the outlook worsened, extra unemployment benefits expired and the packages that Congress are discussing could fail to impress. For all these reasons, we expect nothing but ongoing dovishness from the Fed along with a pledge to keep monetary policy accommodative for the foreseeable future. Last month, they said rates will remain at zero through 2022.

The U.S. dollar has fallen extensively ahead of the rate decision. Treasury yields also moved sharply lower, which tells us that investors are positioning for dovishness. How the greenback trades tomorrow will depend on Powell’s tone. Back in June, he said a second-half recovery is likely, but with virus cases rising rapidly, his outlook will certainly change. Considering that the market expects cautiousness, we may not see a big dollar move post FOMC – unless the central bank mentions that negative rates are back on the table, which could unleash a fresh round of U.S. dollar selling.

Written by Colin Henderson

July 28, 2020 at 13:35

Posted in Uncategorized

While European Markets Slip Ahead Of The ECB, China has the answer

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China has a simple formula for addressing market concerns when the market goes the wrong way. Simply change the message and viola!

See the bold quote below (bolding mine).

… and yes we have land in Florida to sell to you.

by CMC Marketsuk.investing.comJuly 16, 2020 09:34 AM

While US markets finished higher for the fourth day in a row, markets in Asia have come under pressure after the latest economic data out of China painted a rather mixed picture of the economic outlook in the world’s second biggest economy.

China Q2 GDP showed a 11.5% rebound, more than reversing the -10% fall in output seen in Q1, suggesting a nice v-shaped recovery in economic activity. The annualised number recovered to 3.2% from -6.8%.

If you had any doubts about the accuracy of China’s GDP numbers before this morning’s announcement, these figures only serve to reinforce that scepticism, as they appear to completely diverge from most of the data that has come out of China since April. In terms of the trade data, both imports and exports have been weak, while retail sales have also struggled.

Retail sales have declined in every month, by -7.5%, -2.8% and -1.8% in June, and with the Chinese consumer now making up around half of China’s economic output, I would suggest these numbers in no way reflect the real picture regarding China’s economy at this moment.

Written by Colin Henderson

July 16, 2020 at 07:48

Posted in Uncategorized

Bank of Canada sees economy shrinking 7.8% this year; holds rates steady

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REPORT ON BUSINESS

Bank of Canada sees economy shrinking 7.8% this year; holds rates steady

The Bank of Canada projected that the Canadian economy will shrink by 7.8 per cent this year, as it crawls its way out of the deep hole of the COVID-19 crisis.

The forecast, the central bank’s first in six months, came as the bank announced its latest policy decision, holding its key interest rate steady at a record-low 0.25 per cent and leaving its large-scale bond-purchase programs unchanged. The bank reinforced that it intends to keep both policies in place far into the economic recovery.

“The Governing Council will hold the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2 per cent inflation target is sustainably achieved,” it said. “In addition, to reinforce this commitment and keep interest rates low across the yield curve, the bank is continuing its large-scale asset purchase program at a pace of at least $5-billion per week of Government of Canada bonds.”

In its quarterly Monetary Policy Report (MPR) Wednesday, the central bank estimated that the Canadian economy lost “about 15 per cent” of its economic activity in the second quarter compared with end-of-2019 levels, as containment measures for the pandemic were at their height. However, it noted encouraging signs of a rebound now under way, with economies reopening in Canada and many other parts of the world.

The bank estimated that real gross domestic product plunged 13.1 per cent in the second quarter, on top of a 2.1-per-cent contraction in the first quarter. It said it expects a bounceback of 7.1 per cent in the third quarter, reflecting the rapid return of activity as containment restrictions continue to be lifted. The forecast assumes that “about 40 per cent” of the drop in output in the first half of the year will be recouped in the third quarter.

However, it cautioned, this early rebound “is expected to give way to a recuperation phase during which the pace of the recovery will moderate, as the pandemic continues to affect confidence and the economy undergoes widespread adjustments, including in the energy sector,” it said.

“As a result, Canada’s economic output will likely take some time to return to its pre-COVID-19 level. Many workers and businesses can expect to face an extended period of difficulty.”

The bank estimated that the inflation rate – a key measure for the central bank, which relies on an inflation target of 2 per cent to guide its interest-rate policy – fell to -0.1 per cent in the second quarter. The bank forecast that even as the economy recovers, inflation would be a thin 0.4 per cent in the third quarter, and just 0.6 per cent for the year as a whole, before picking up modestly to 1.2 per cent in 2021.

Normally, the bank updates its forecasts every quarter in the MPR, but it opted against issuing specific projections in the April report, which came out at the height of the crisis, citing deep uncertainties. Then-governor of the bank, Stephen Poloz, whose term expired in early June, said at the time that providing specific forecasts would provide “false precision” for a highly unpredictable situation.

Tiff Macklem, who took over from Mr. Poloz six weeks ago, will hold a news conference Wednesday to discuss the report and its economic outlook. In his short time on the job, Mr. Macklem has generally struck a more cautious tone than Mr. Poloz, who had been relatively optimistic about the potential for a strong post-COVID recovery.

The bank referred to its new outlook as a “central scenario,” rather than a projection, emphasizing its continued heightened uncertainty surrounding the numbers. The central scenario assumes that there is no widespread second wave of COVID-19, either within Canada or globally, and assumes that the pandemic will have run its course by mid-2022.

Under this scenario, the bank sees the Canadian and world economies rebounding on the second half of 2020 as virus containment measures ease. However, it assumes that continued physical distancing and uncertainty will “continue to restrain economic activity” through 2022.

“Uncertainty around this scenario is considerable,” the bank said. “There are a multitude of scenarios both stronger and weaker than the central one presented here. Yet overall, the risks appear to be tilted to the downside, largely because of the potential for a second wave of the virus.”

Official consumer price index data released by Statistics Canada showed that the year-over-year inflation slumped to -0.2 per cent in April and -0.4 per cent in May, as prices plunged for some products, such as gasoline and travel services, amid a dearth of demand at the height of the economic shutdown. But the Bank of Canada believed the data overstated true consumer prices, as the lockdowns had resulted in dramatic shifts in buying patterns. It noted that a new joint analysis from Statscan and the Bank of Canada released earlier this week, which produced an “adjusted” price index to account for these consumer shifts, put the inflation rate near zero for both months.

“Statistics Canada and the bank will continue to update this new index to calculate an adjusted CPI inflation measure through the recovery period. The difference between the two measures of inflation may dissipate if the changes in consumption patterns reverse,” it said.

Nevertheless, the bank expects inflation pressures to be highly muted for a long time, amid weakened demand. It said that at least so far, there is only “limited evidence” of firms raising prices to reflect increased costs of doing business under the pandemic.

“The path for CPI inflation over the next year largely reflects the influence of energy prices. The dramatic decline in these prices in March and April will hold inflation down until early 2021. After that, the inflation outlook depends primarily on the speed and strength at which demand and supply recover,” the bank said. “Firms report that capacity could return quickly as the economy reopens and containment measures are lifted. They expect the recovery in demand to be more muted, especially in the services and energy sectors.”

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Written by Colin Henderson

July 15, 2020 at 11:08

Posted in Uncategorized

Barclays Future Themes

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Written by Colin Henderson

July 15, 2020 at 08:00

Posted in Uncategorized

BBC- Fertility rate- ‘Jaw-dropping’ global crash in children

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This graphic from the report can be summarized that the world population is dropping everywhere except Africa and Middle East.

Here is the UN report behind the headline. Real wonk stuff with tons of statistics.

Written by Colin Henderson

July 15, 2020 at 07:46

Posted in Uncategorized

Facebook suspended by all Canadian Banks

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in a move that happens to highlight the ‘Canadian way”, Canadas banks collectively suspended use of Facebook in July.

Canadian lenders Royal Bank of Canada (TO:RY), Toronto-Dominion Bank (TO:TD), Bank of Nova Scotia (TO:BNS), Bank of Montreal (TO:BMO), National Bank of Canada (TO:NA) and Canadian Imperial Bank of Commerce (TO:CM) all said they will pause advertising on Facebook platforms in July.
Desjardins Group, Canada’s largest federation of credit unions, also said on its website on Thursday it will pause advertising on Facebook and Instagram for the month “barring any exceptional situations where we need to communicate with our members or clients.”
Most cited their commitments to inclusion and diversity.

Reuters Canada

By Nichola Saminather
TORONTO (Reuters) – Canada’s biggest lenders confirmed on Friday they had joined a widespread boycott of Facebook Inc (O:FB) begun by U.S. civil rights groups seeking to pressure the world’s largest social media platform to take concrete steps to block hate speech.

More than 400 brands have pulled advertising on Facebook in response to the “Stop Hate for Profit” campaign, begun after the death of George Floyd, a Black man who died in police custody in Minneapolis on May 25.

Canadian lenders Royal Bank of Canada (TO:RY), Toronto-Dominion Bank (TO:TD), Bank of Nova Scotia (TO:BNS), Bank of Montreal (TO:BMO), National Bank of Canada (TO:NA) and Canadian Imperial Bank of Commerce (TO:CM) all said they will pause advertising on Facebook platforms in July.

Desjardins Group, Canada’s largest federation of credit unions, also said on its website on Thursday it will pause advertising on Facebook and Instagram for the month “barring any exceptional situations where we need to communicate with our members or clients.”

Most cited their commitments to inclusion and diversity.
Facebook has opened itself up to a civil rights audit and has banned 250 white supremacist organizations from Facebook and Instagram, a spokesman said by email. Its investments in artificial intelligence mean it finds nearly 90% of hate speech it takes action on before users report it, he added.
BMO said it is continuing its “ongoing dialogue with Facebook on changes they can make to their platforms to reduce the spread of hate speech.”

RBC said one way to help clients and communities is to stand against “misinformation and hate speech, which only make systemic racism more pervasive.”

Written by Colin Henderson

July 3, 2020 at 14:15

Posted in Uncategorized

A Crisis Like No Other

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An Uncertain Recovery

Global growth is projected at –4.9 percent in 2020, 1.9 percentage points below the April 2020 World Economic Outlook (WEO) forecast. The COVID-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated, and the recovery is projected to be more gradual than previously forecast. In 2021 global growth is projected at 5.4 percent. Overall, this would leave 2021 GDP some 61⁄2 percentage points lower than in the pre-COVID-19 projections of January 2020. The adverse impact on low-income households is particularly acute, imperiling the significant progress made in reducing extreme poverty in the world since the 1990s.

As with the April 2020 WEO projections, there is a higher-than-usual degree of uncertainty around this forecast. The baseline projection rests on key assumptions about the fallout from the pandemic. In economies with declining infection rates, the slower recovery path in the updated forecast reflects persistent social distancing into the second half of 2020; greater scarring (damage to supply potential) from the larger-than-anticipated hit to activity during the lockdown in the first and second quarters of 2020; and a hit to productivity as surviving businesses ramp up necessary workplace safety and hygiene practices. 

For economies struggling to control infection rates, a lengthier lockdown will inflict an additional toll on activity. Moreover, the forecast assumes that financial conditions—which have eased following the release of the April 2020 WEO—will remain broadly at current levels. Alternative outcomes to those in the baseline are clearly possible, and not just because of how the pandemic is evolving. 

The extent of the recent rebound in financial market sentiment appears disconnected from shifts in underlying economic prospects—as the June 2020 Global Financial Stability Report (GFSR) Update discusses—raising the possibility that financial conditions may tighten more than assumed in the baseline.

Written by Colin Henderson

July 1, 2020 at 13:43

Posted in Uncategorized

Shopify- simple for people and keeping the complexity hidden

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Forbes

New Data Shows Shopify Was A Godsend For Mom And Pop During Coronavirus – Forbes

68-year-old Jan Buerge was days away from losing everything. For 35 years, she has run World’s Window in Kansas City, a store that sells artisanal items from around the world. In March, she was forced to close her doors because of coronavirus.

But she didn’t give up. She just needed a plan, and fast. She snapped pictures of her remaining items. And quickly got them online with the help of her husband and nephew. Within three days, business was booming. Buerge was shipping baskets made from South African telephone wires and metal plaques made in Haiti to customers around the nation.

Buerge didn’t do it alone. As I’ll show you, a once “hated” stock has been a savior for millions of mom-and-pop shops across America. It handles all the “plumbing” of online selling… Like payments, shipping, and marketing… and it’s poised to rocket higher in the years ahead…

I’m Talking About Shopify (SHOP)

Shopify helps entrepreneurs create and manage their own online stores. Its easy-to-use website rescued tens of millions of these small businesses, just like Buerge’s.

In fact, merchants with Shopify stores recouped 94% of lost in-person sales with online orders. So for every dollar lost to coronavirus, these businesses recovered 94c thanks to Shopify.

And have you checked out Shopify’s stock recently? It’s soared around 90% since the lockdowns started, as you can see here:

Source: RiskHedge Source: RiskHedge

Today Shopify Is a Wall Street Darling

But a couple of years ago, it was totally hated. Think about what Shopify was trying to achieve… run an online marketplace where smaller businesses could sell their goods. That’s stepping into Amazon’s (AMZN) territory. And how could a tiny startup compete with an 800lb. gorilla like Amazon?

Most investors thought Shopify would be out of business in a year or two. But here’s the thing: folks who bought Shopify in 2016, when it was out-of-favor, are sitting on 3,500% gains today. It was the perfect “hated” stock play.

Source: RiskHedge Source: RiskHedge

How did Shopify Compete with Amazon?

Selling goods online is a tough business. You have to build the website, rent servers to handle all the internet traffic, and collect payments. You have to ship your products, accept returns, and run marketing campaigns. Just setting up an online store is a full-time job and will set you back thousands of dollars at a bare minimum.

So most small businesses looking to sell online chose to partner with Amazon. In fact, roughly two-thirds of goods sold on Amazon come from independent sellers.

Amazon handles all the not-so-fun parts of selling online… but it comes at a cost. Selling on Amazon is like placing your products on another retailer’s shelves. It’s almost impossible to build your brand, and the online gorilla takes a chunk of your sales.

Shopify is the anti-Amazon. It gives businesses the tools to build their own online store. Think of Shopify like an invisible partner that allows you to build your own brands.

You wouldn’t know it from looking at their websites, but The Economist, Penguin Books, Unilever, Red Bull, Heinz, Budweiser, Pepsi, and Nestle are all examples of online stores powered by Shopify.

And Now Shopify Runs Websites for Over One Million Mom-and-Pop Shops

Here’s how it works: The company offers a simple tool that helps anyone set up a custom online store for as little as $29/month. Shopify can even fulfill your orders, which means it holds your inventory at its warehouses and ships your products. You don’t have to maintain software or servers. You don’t need to hire expensive programmers or be into coding yourself. You don’t have to bother with shipping.

In minutes, you can have a full-fledged online store that’s running on autopilot under your business name, just like Amazon. It’s like getting a fully furnished retail store with trained sales clerks all for a few bucks. You just put your products on the shelves, hang a storefront sign, lean back, and watch sales come in.

And Shopify’s business is booming. In 2012, it had just 42,000 merchants. Today, more than 1,000,000 businesses around the globe have set up an online store with Shopify. Businesses sold $60 billion worth of goods through its platform last year. For perspective, that’s a 600% jump in sales since it was “hated” back in 2015.

And get this: Shopify is now the world’s 15th largest retailer—online or offline. It sits just behind DIY superstore Lowe’s.

Shopify Is Opening Up the World for Entrepreneurs

Take Jan Buerge and her artisanal store for example. Only folks living in Kansas can visit her store. But with her Shopify-powered store, now she can sell to folks all over America. By handling all the “plumbing” of online selling like… payments, shipping, and marketing, it leaves Jan free to focus on finding unique artisans around the world.

Shopify is the world’s most disruptive retailer that most investors aren’t paying attention to. This is a stock to own for the long term as it cements itself as the “anti-Amazon.”

Get my report “The Great Disruptors: 3 Breakthrough Stocks Set to Double Your Money”. These stocks will hand you 100% gains as they disrupt whole industries. Get your free copy here.

Shopify inks partnership with Walmart as it prepares to battle Amazon.com – Yahoo Canada Finance

Written by Colin Henderson

June 24, 2020 at 09:12

Posted in Uncategorized

Fed Implementation notes 2020-06-09

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fomc_fed-20200610

fed notes: my take — continue QE at same pace

  • Financial conditions improved
  • Monitor economy
  • No action – back to the markets to evaluate

June 10, 2020

Federal Reserve issues FOMC statement

For release at 2:00 p.m. EDT

Share The Federal Reserve is committed to using its full range of tools to support the U.S. economy in this challenging time, thereby promoting its maximum employment and price stability goals.

The coronavirus outbreak is causing tremendous human and economic hardship across the United States and around the world. The virus and the measures taken to protect public health have induced sharp declines in economic activity and a surge in job losses. Weaker demand and significantly lower oil prices are holding down consumer price inflation. Financial conditions have improved, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.

The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term. In light of these developments, the Committee decided to maintain the target range for the federal funds rate at 0 to 1/4 percent. The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.

The Committee will continue to monitor the implications of incoming information for the economic outlook, including information related to public health, as well as global developments and muted inflation pressures, and will use its tools and act as appropriate to support the economy. In determining the timing and size of future adjustments to the stance of monetary policy, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressure and inflation expectations, and readings on financial and international developments.

To support the flow of credit to households and businesses, over coming months the Federal Reserve will increase its holdings of Treasury securities and agency residential and commercial mortgage-backed securities at least at the current pace to sustain smooth market functioning, thereby fostering effective transmission of monetary policy to broader financial conditions. In addition, the Open Market Desk will continue to offer large-scale overnight and term repurchase agreement operations. The Committee will closely monitor developments and is prepared to adjust its plans as appropriate.

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; Richard H. Clarida; Patrick Harker; Robert S. Kaplan; Neel Kashkari; Loretta J. Mester; and Randal K. Quarles.

Implementation Note issued June 10, 2020

Written by Colin Henderson

June 11, 2020 at 07:03

Posted in Uncategorized

New report highlights threats to uniquely Canadian plants and animals


New report highlights threats to uniquely Canadian plants and animals

June 4, 2020

“The consequence of our failure to protect these endemic species is extinction.”

Canada is home to over 300 different plant and animal species that live nowhere else on Earth. Unfortunately, the first comprehensive survey of these uniquely Canadian species shows that many could be vulnerable to extinction.

These are the findings of a new report by the Nature Conservancy of Canada (NCC) and NatureServe Canada. Entitled Ours to save: The distribution, status and conservation needs of Canada’s national endemic species, the report will be released to mark Canadian Environment Week. To see the report and associated maps, visit http://www.natureconservancy.ca/ourstosave.

The organizations collaborated with experts across the country to catalogue Canada’s own species. It is being called a critical step in stemming global biodiversity loss.

The report identifies 308 plant and animal species, subspecies and varieties that are endemic to Canada, meaning they are only found here. Many are already at risk nationally and of global conservation concern. Identifying these species and the places where they live is an essential effort in protecting them from extinction. Mammals listed include eastern wolf, which lives in Algonquin Park, and the high Arctic’s Peary caribou. Birds include a unique subspecies of northern saw-whet owl that lives in BC and Harris’s sparrow, the only songbird that breeds exclusively in Canada. Invertebrates, such as the tiny Maritime ringlet butterfly, make up almost half of the species listed in the report. A variety of flowering plants are also included, such as Gulf of St. Lawrence aster and Lake Louise arnica.

The highest numbers of plants and animals that are unique to Canada are found in British Columbia, Quebec, Alberta and Yukon. The report also identifies 27 key concentrations of endemic species that occur in every province and territory, including within the Avalon Peninsula (NL), north shore of Prince Edward Island, St. Lawrence River Freshwater Estuary, Waterton, Vancouver Island and the Mackenzie Delta. Most of these species need more conservation efforts.

The results of this report will be used by NCC and other groups, individuals and landowners to prioritize conservation actions and to inspire public support for species and habitat protection in Canada.

Quotes

“No other nation can protect this group of all-Canadian species. Their conservation is completely up to Canadians. Protecting these species is Canada’s priority in the fight against global biodiversity loss. The consequence of our failure to conserve them is their extinction.” – Dan Kraus, senior conservation biologist, Nature Conservancy of Canada

“Many of Canada’s national endemic species have restricted ranges, which makes them particularly vulnerable to habitat loss, climate change and invasive species. This report provides decision-makers with critical information in understanding where conservation investments could be directed in order to safeguard these uniquely Canadian species.” – Patrick Henry, executive director, NatureServe Canada

Provincial breakdown of Canada’s endemic species:

British Columbia: 105
Quebec: 57
Alberta: 54
Yukon: 43
Newfoundland and Labrador 40
Saskatchewan: 36
Northwest Territories: 32

Manitoba: 31
Nunavut: 29
Nova Scotia: 28
Ontario: 28
New Brunswick: 17
Prince Edward Island: 7
Images

Images of various endemic species can be found at http://www.natureconservancy.ca/ourstosave.

About

The Nature Conservancy of Canada (NCC) is the nation’s leading not-for-profit, private land conservation organization, working to protect our most important natural areas and the species they sustain. Since 1962, NCC and its partners have helped to protect 14 million hectares (35 million acres), coast to coast to coast. To learn more, visit http://www.natureconservancy.ca.

NatureServe Canada functions as a network of provincial and territorial Conservation Data Centres (CDCs) to develop, manage and distribute authoritative information critical to the conservation of Canada’s biodiversity. Data held by NatureServe Canada are widely used by federal and provincial agencies, private industry, researchers and conservation organizations to improve the management, use and conservation of biological resources in Canada. To learn more, visit http://www.natureserve.ca.

Learn More
Follow us on Twitter: twitter.com/NCC_CNC | twitter.com/NCC_CNCMedia
Find us on Facebook

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Media Contact:
Andrew Holland
National Media Relations Director
Office: 1-877-231-4400 | Mobile: 506-260-0469
andrew.holland@natureconservancy.ca

Patrick Henry
Executive Director
NatureServe Canada
613-986-1535
phenry@natureserve.ca

Written by Colin Henderson

June 4, 2020 at 08:51

Posted in Uncategorized

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