A Tale of Two Economies...

[lektrode]

Re: A Tale of Two Economies...

Well, on the US side of the border the competition in retail and consumer products seems brutal, but not all the news is negative. .....
....
For now at least, iTulip's "Fortress America" might be more "Fortress Middle America". I happened to land at Minot, ND to clear US Border Service Customs and Immigration on my way to Oshkosh in late July. This airport in the middle of freaking nowhere was a beehive of activity with a remarkable amount of new commercial hangar/office space recently completed (all of it occupied) and another large commercial hangar under construction.....

and/or the 'intermountain west', as things in SLC seem to be bubbling or should say percolating along pretty well too - const co's complaining about (skilled) labor shortages etc - and the UDOT even requesting comment on a complete rebuild of the airport, commencing sometime over the next couple years - not that it needed much, but guess they like to stay on top of this stuff (vs other places i'm all too familiar with....)

suspect that all the mining activity - esp over in NV - is making the picture brighter than it might o/w be (hightech mfg is apparently doing quite well too)

[GRG55]

Re: A Tale of Two Economies...

Good thing ice hockey season isn't far off...the Canadian economy would seem to need the boost...

Bank of Canada holds rate, warning recovery is losing momentum

September 4, 2013

OTTAWA — Two months into the job, the new governor of the Bank of Canada now appears to be hedging his bets on when the long-promised, business-driven recovery will kick into gear.

Stephen Poloz and his policy team are cautioning that although the global economy is expanding “broadly as expected, its dynamic has moderated.”

And that, they say, is “delaying the anticipated rotation of demand in Canada towards exports and investment.”

Or, as one economist put it: The Great Rotation seems to be going “counter-clockwise,” falling back on housing and consumer spending in the absence of anything else...

[GRG55]

Re: A Tale of Two Economies...

Maybe Target needs to start selling ice hockey equipment, like Canadian Tire...

Target struggles with lower-than-expected Canadian results, cuts outlook

The Globe and Mail
Published Wednesday, Aug. 21 2013, 7:54 AM EDT
Last updated Wednesday, Aug. 21 2013, 1:00 PM EDT

U.S. discounter Target Corp. is struggling with lower-than-expected results at its new Canadian stores, forcing it to lower its full-year outlook and tweak marketing efforts to lure more shoppers...

From the "We'll Make It Up On Volume" file:


Target to open 23 more stores, including its first in Que. and N.S.

The Canadian Press

Published Friday, September 6, 2013 10:06AM EDT
Last Updated Friday, September 6, 2013 10:37AM EDT

MISSISSAUGA, Ont. -- Discount retailer Target says it is opening 23 additional stores in Canada, including its first stores in Quebec and Nova Scotia. The stores are scheduled to open this fall, and include 14 opening on Sept. 17 and nine opening on Oct. 18...

[GRG55]

Re: A Tale of Two Economies...

A thread for Canucks (and displaced Canucks), on a USA centric site, to watch the Canadian economy, and see if we really are all that independent from our cousins south of the border after all...
[As I like to remind my English-born mother-in-law, Canada will never be a truly independent nation until we get the Queen off our money ]

Three random items to start the confusion.

From the "Technically Canada Doesn't Have an Economy When There's No Hockey" file:

Things are pretty tough when an economy is so dependent on a bunch of overpaid, heavily padded, entertainers playing in taxpayer funded ice palaces. "The Canadian Economy" is thanking gawd they are finally back to work. Let's hope they keep giving 110% to make up for the lost time. And that Vancouver doesn't lose to Boston in the Cup final again. Or the next round of Vancouver riots will subject us to more "broken window" economic theory than we really need

Economy grows at fastest rate in seven months

The Globe and Mail

Published Thursday, Jan. 31 2013, 12:28 PM EST

Last updated Thursday, Jan. 31 2013, 7:23 PM EST

The Canadian economy expanded at its fastest pace in more than half a year, but the bigger picture is still one of slow growth...

...Construction activity was flat in the month – reflecting a drop in residential construction. Accommodation and food services declined amid fewer foreign tourists, while the arts-and-entertainment sector “continued to reel from the hockey strike,”...

Thank gawd hockey season is about to start. I don't see there's any other strategy to revive the Canadian economy now that property markets are slowly going bust across the land and the Canadian $ refuses to crater against its American counterpart (always a favoured event among Canadian "industrialists"...as if we actually have any of those left).



If we can't flip overpriced Vancouver crack shacks to one another what on earth are we going to do Brad Lamb and his Bentley might have to get a real job. The gin and Jaguar set (realtors) in Kerrisdale might have to trade down to Pimms and a Prius. Horrors...

Bank of Canada cuts forecast due to weak exports, investment

OTTAWA and TORONTO — The Globe and Mail
Published

Tuesday, Oct. 01 2013, 12:08 PM EDT

Last updated

Tuesday, Oct. 01 2013, 6:50 PM EDT

The Bank of Canada’s senior deputy governor is striking a much less optimistic tone than his boss, indicating the central bank will not be raising interest rates any time soon.

That was the message as the central bank warned Tuesday that it’s slashing its near-term forecast for economic growth in Canada as it awaits an “elusive” rebound in exports and business investment.

Belatedly falling into line with most private-sector forecasts, the central bank now says gross domestic product will grow at an annual pace of just 2 per cent to 2.5 per cent in the second half of the year.

The bank’s previous forecast was for annual growth of 3.8 per cent and 2.5 per cent in the third and fourth quarters, respectively.

Senior deputy governor Tiff Macklem made the downgrade in a Toronto speech Tuesday, sounding more downbeat than Bank of Canada Governor Stephen Poloz did just two weeks ago in Vancouver.

“We need a rotation in demand towards exports and business investment,” Mr. Macklem said in his first speech since June, when he lost out to Mr. Poloz in the race for the central bank’s top job. “Unfortunately, this rotation has proven elusive.”

Adding to the less-optimistic outlook is the U.S. government shutdown, triggered by a congressional standoff over spending priorities. “The uncertainty that this ongoing brinkmanship is creating is not helpful,” Mr. Macklem acknowledged.

The central bank had also expected the initial impact of the June Alberta floods and the Quebec construction strike to be worse. As a result, it underestimated second-quarter growth, which came in at nearly 2 per cent compared with the 1 per cent it had forecast. The bank’s next quarterly monetary policy report on Oct. 23 is expected to contain more details on the bank’s new outlook.

CIBC World Markets chief economist Avery Shenfeld said it will likely take until at least the second half of next year for the economy to gather any sustained momentum, suggesting the Bank of Canada won’t raise its key interest until early 2015. The overnight rate has been held at 1 per cent since September 2010.

With inflation subdued and the business climate so uncertain, the central bank appears content to leave its key rate unchanged for some time still.

In his speech, Mr. Macklem said that in “broad strokes” the bank expects consumers and the government sector to contribute about 1.5 per cent of growth going forward. The other key drivers – exports and business investment – must contribute as well if the economy is to reach its full potential, he explained.

But as Mr. Macklem pointed out: “In the past year, net exports and investment made no contribution to growth.”

Canada’s GDP must expand by at least 2.5 per cent a year just to keep up with the natural growth of production capacity.

Mr. Macklem went on to deliver a sobering analysis of what he characterized as a “gut wrenching” period for Canada’s hard-hit export sector since the Great Recession. The country, he explained, has lost a huge share of global trade in the 2000s, and its coveted piece of the massive U.S. market.

The country also lost 9,000 exporters between 2008 and 2010 – or 20 per cent of its pool of exporters.

Mr. Macklem blamed the rise of China, but also Canada’s skewed “trade geography.” He said the country has been over-exposed to slower-growing countries, such as the U.S. and Europe, and underexposed to fast-growing emerging markets.

He also said fading competitiveness of Canadian business, mainly due to the higher Canadian dollar and lagging productivity, has hurt exports.

[GRG55]

Re: A Tale of Two Economies...

New air agreements with Japan, China will boost Canadian economy

By Chuck Chiang, Vancouver Sun October 6, 2013 9:40 AM


Last month, top Canadian immigration and military officials spoke in Vancouver, stressing Canada’s active push to become more of a player in the international arena — especially in the Asia-Pacific region.

Last week, a trio of announcements demonstrated that Canada is putting the plan into action. While most of the attention has been on Prime Minister Stephen Harper’s visit this week to Southeast Asia, it may two other developments that will pay more immediate dividends.

Harper and two top ministers travelled to Southeast Asia late last week, first for talks in Malaysia, then moving on to the Indonesian island of Bali for the 21st APEC Leaders’ Meeting. After that, International Trade Minister Ed Fast will make separate trips to Singapore and China to wrap up this week’s diplomatic efforts.

Ottawa has put its focus on international trade as a way to inject new energy into Canada’s economy, and the statistics show there is room for improvement. The Bank of Canada says the Canadian share of global exports fell from 4.5 per cent in 2000 to the current figure of 2.5 per cent.

Canada is also in its 19th straight month of running a trade deficit, something that Ottawa undoubtedly would like to reverse.

While Harper’s visit to Malaysia and Indonesia may lay the groundwork for future trade agreements (critics are divided on how effective the trip will be), two less-prominent deals — both involving the airline industry — may pay much quicker dividends.

First was the announcement last Thursday of an expanded air transport deal that would allow Canadian carriers to service Tokyo’s Haneda Airport, starting next April.

Canada already has an “open skies agreement” for direct services to and from Japan, but the opening of Canadian flights into Haneda could significantly increase Canada’s appeal to Japanese and international tourists alike.

The main strength of Haneda — as opposed to Tokyo’s other airport, Narita International — is its proximity to the city’s business core. Tokyo, like many major Asian cities, has multiple airports — usually an older one close to the city, and another larger, newer facility further out that allows for greater capacity and expansion. (Haneda is 14 kilometres from Tokyo’s central business district; Narita is 58 kilometres away.)...

...The second announcement came from Air Canada and Air China. The two carriers said last week they will expand their code-sharing agreement, allowing travellers easier access through their domestic airlines.

The deal works through Air Canada’s hub at YVR and Air China’s base in Beijing. Canadians will be able to travel on Air China flights coded as AC (Air Canada) from Beijing to six Chinese cities (Guangzhou and Xian among them), while Chinese travellers get access to Air Canada’s flights from Vancouver to six Canadian cities (Toronto, Calgary, etc.) through Air China’s CA booking system.

Canada issued 235,000 visitor visas to Chinese citizens last year — a record high. An easier, more seamless way for Chinese travellers to visit Canada will more than likely add significantly to that number...

[c1ue]

Re: A Tale of Two Economies...

New air agreements with Japan, China will boost Canadian economy

I've always wondered why there isn't more incentivization using fuel prices in air travel.

It is my understanding that fuel is the largest single cost in operating an airplane; a liquid fuel exporter like Canada - with a large transportation consumer right next to it (more or less) would seem like a nice opportunity.

Perhaps a refinery issue?

I don't think it is a hub vs. direct flight issue since many airlines hub anyway.

[GRG55]

Re: A Tale of Two Economies...

Natural gas job losses add up

Calgary Herald; October 4, 2013

Producer Taqa North Ltd. is cutting staff for a second time this year, continuing an industry trend of reorganizing to reduce operating costs and deal with persistently low natural gas prices.
On Thursday, the Calgaryheadquartered oil and gas company owned by Abu Dhabi National Energy Co. (called Taqa) confirmed it would add to the 50 job cuts it announced in January, without giving an exact number...

...The reductions come the same week that Calgary-based Encana Corp., Canada's largest gas producer, cut five senior executive positions to simplify its organizational structure as it focuses its spending on fewer oil and gas plays in Canada and the United States. It trimmed seven per cent of total staffin the first half of 2013 and more job losses are widely expected.

In February, Calgary-based Talisman Energy Inc. announced 90 Calgary layoffs as it moved to chop administrative costs due to reduced spending on dry gas plays.

In a report this week, Calgary investment bank Peters & Co. noted oil well completions in Canada in the third quarter ended Monday were up one per cent from the same period last year to 2,244 - and gas well completions were down eight per cent at just 292.

The average Alberta AECO spot price was $2.45 per thousand cubic feet in the quarter, slightly higher than $2.30 in the same period of 2012 but 31 per cent lower than $3.54 in the second quarter, it added...




Glencore, Vale discuss merger of nickel operations in Ontario

The Globe and Mail
Published Friday, Oct. 11 2013, 10:39 AM EDT
Last updated Friday, Oct. 11 2013, 7:22 PM EDT

Glencore Xstrata PLC and Vale SA have convened “exploratory” talks aimed at combining their respective nickel operations in Sudbury, Ont., in a move aimed at cutting costs, sources close to Glencore said.

Declining nickel prices have forced the companies to consider the move, the source said. Prices for nickel traded on the London Metal Exchange have fallen by more than a quarter from this year’s high of nearly $19,000 (U.S.) a tonne in February to less than $14,000 a tonne now.

Vale has controlled its share of nickel operations in the Sudbury Basin, several hundred kilometres north of Toronto, since the Brazilian company bought Inco Ltd. for $20.3-billion in 2006. Xstrata, which was bought by Glencore earlier this year, paid $18.2-billion for Falconbridge Ltd. the same year, in order to bolster nickel holdings as the metal was hitting record highs...

...Efforts to merge Sudbury nickel operations date back decades, the most recent of which started in 2003, when Inco and Falconbridge started talks to merge the two companies. Those talks led to a failed attempt to combine the two after Xstrata and Vale began bidding for the two Canadian companies.

Many of the Sudbury nickel mines are so close to each other that some operate side-by-side, with shared shafts and elevators.

“Nickel has become a financial catastrophe for Vale in Canada,” said John Tumazos, research analyst at Very Independent Research LLC. “Also, the CAD has strengthened since Vale acquired Inco, making it more expensive to pay wages. Meanwhile, nickel prices have fallen about 75 per cent since 2007.”

[GRG55]

Re: A Tale of Two Economies...

Canada-EU free trade agreement announcement expected in Brussels

The Canadian Press
Published Friday, October 18, 2013 6:02AM EDT
Last Updated Friday, October 18, 2013 6:42AM EDT

BRUSSELS, Belgium -- After four painstaking years of opaque negotiations, the lid will finally be peeled back Friday on Canada's contentious free trade negotiations with Europe.

Then, another potentially equally painful process begins -- selling the agreement to Canada's provinces and territories and as well as the 28 member countries of the European Union.

The provinces, Europe's two-dozen-plus countries, plus insiders from agriculture, pharmaceuticals, the financial services, auto industries and other key business groups have circulated in a tightly-sealed tent, where their intertwined and often competing interests swirled and collided.

The results of that closed-door horse trading are to be laid bare in Brussels later Friday after Prime Minister Stephen Harper's plane touched here in the darkened hours of the early morning.

Later in the day, Harper will meet with European Commissioner Jose Manuel Barroso so they can publicly trumpet their breakthrough -- an agreement in principle with the possible revelation of details of the comprehensive pact that aims to link the two economies...

...The road to Friday's events was marked by give and take, which will leave a trail of winners and losers.

Some of the latter are already making noise. Canadian dairy farmers say they are "angered and disappointed" over a deal they call a "giveaway."

The breakthrough came when Canadian negotiators agreed to allow a doubling of the EU quota on cheese exports to Canada from four per cent of the total to eight. In return, Canada won greater access for Canadian beef and pork producers.

Canadian beef and pork farmers are smiling, because they see a potential increase of exports by up to $1.3 billion...

...For at least the last month, Harper and Barroso have shepherded the negotiations toward their endgame.

The need for that final, top-level political push became inevitable five weeks ago after Harper emerged from a 45-minute meeting with Barroso on the margins of the G20 summit in Russia.

Harper said that "significant gaps" remained between the two sides.

On Friday, the public will presumably be able see how the two leaders were able to narrow those gaps - and whether they can sell the compromise on both sides of the Atlantic.

[GRG55]

Re: A Tale of Two Economies...

Looks like we are giving away "your" oil...

Alberta and China sign deal to increase energy trade

October 18, 2013 9:49 am

Edmonton – The Government of Alberta has signed an agreement with China to increase energy trade between the two jurisdictions.

The province says the agreement on Sustainable Energy Development is a framework to set out concrete actions to strengthen trade ties.

It was signed by Alberta Energy Minister Ken Hughes and China’s National Energy Administration Chief Wu Xinxiong.

“In the eyes of China, I believe we represent a tremendous supply of energy they would be very pleased to have access to in the future,” says Hughes...

...The agreement is the first of its kind between the Chinese central government and a sub-national government of Canada, and it’s aligned with the existing Natural Resources Canada and National Energy Administration agreement.

The province hopes the sale of Alberta’s natural gas to China could be one of the benefits of the deal.

“My understanding is that the Chinese government is certainly pressuring the Chinese state-owned enterprises to reduce the amount of pollution that they’re generating to secure sources of natural gas as soon as they possibly can.”

The deal was signed in the presence of Chinese President Xi Jinping and Canadian Governor General David Johnston. The province believes President Jinping’s attendance represents the significance of the agreement...

[lakedaemonian]

Re: A Tale of Two Economies...

Does Canada possess a visa system that parallels the US?

Specifically the US EB-5 Visa.

The reason I ask is, if so, any idea how many have been issued to Chinese in the last 5-7 years?

I just came across an article off-line that stated US EB-5 visa's issued to Chinese went from circa 60-70 a year around 2006 to circa 700-800 in 2010 and circa 2400 in 2013 so far. (All numbers/years approximate but close).

I know there's a lot of focus on very frothy real estate prices in places like Vancouver, but I wonder what's happening with small/medium business valuations?

The trajectory of EB-5 Visas issued to ethnic Chinese is quite interesting.

The base is still fairly small(but would safely assume a minimum of single digit billions), but if the trend continues.......

Interesting indicator.....I wonder what value should be placed on it?

[aaron]

Re: A Tale of Two Economies...

The Chinese carry inflation with them in their back pockets. Wherever they go, they spend a lot of money. If, as I expect, the 3000 Chinese coming here are millionaires and billionaires, and this continues for some time, we will likely see quite a bit of inflation.

Just buy the stuff they will buy over the next 10 years. Hint: Chinese like real assets.

[Fiat Currency]

Re: A Tale of Two Economies...

Anybody seeing reshoring in the US where they are ?

How U.S. reshoring will force Canadian manufacturers to innovate — and change the very nature of the sector

Earlier this year, consulting company Alix Partners released a report that showed the United States had reached cost parity with Mexico as a preferred near shoring location, and that it would reach similar parity with China by 2015.

In lay terms, that means it costs American companies no more to keep their production on home turf than it does to offshore it to traditionally low-cost locales in the far east.

The cost difference between locating operations in the U.S. or overseas has been rapidly shrinking over the past few years, leading U.S. companies to repatriate approximately 50,000 manufacturing jobs between 2010 and 2012. A report released last year by the Boston Consulting Group showed 37% of manufacturing companies with revenues of $1-billion or more were considering re-shoring their operations.

But the re-shoring phenomenon isn’t bringing back the same jobs that offshoring had taken away. Rather, it’s shifting the very core of the continent’s manufacturing sector away from low-skill assembly and production to high-skill research, engineering, development and design, and marketing and management roles.

In Canada, re-shoring is less pronounced — namely because few Canadian companies have taken advantage of global supply chains — yet a shift in manufacturing is still evident.

“Whatever trickle of business that comes back to Canada, there will be upgrades in skills and technology and I believe those will have to come from higher levels of people that have been let go out of the manufacturing sector or new entrants,” says Markus Biehl, an associate professor of operations management and information systems at the Schulich School of Business.

In addition, U.S. firms that are moving actual production back onto American soil are implementing advanced manufacturing processes through robotics and automation — a trend likely to spell trouble for their Canadian competitors who are already less productive, less innovative and less ambitious in their pursuit of cost efficiencies via global logistics.

From Prof. Biehl’s perspective, much of Canadian manufacturing is still rooted in more traditional production functions that require little skill and can be offshored at anytime.

“In Toronto, we have manufacturers who make margarine tubs — a low value item that is low risk and low capability. That is something that you can easily purchase from somewhere else. Why do we do that here? Maybe someone can eke out a living, but that doesn’t contribute much to our manufacturing sector.”

Observers predict there will be a significant contraction in the volume of manufacturing jobs and that the remaining jobs will be require much greater degrees of skill and training.

“There’s going to be a lot of jobs in terms of making robots — engineering, repairing, all that kind of stuff,” says Walid Hejazi, associate professor at the Rotman School of Management, who likens the plight of Canadian manufacturing to that of the agricultural sector after the industrial revolution.

Michael Bloom, vice-president of organizational effectiveness and learning at the Conference Board of Canada, says the jury is still out as to whether or not the new manufacturing sector will yield a comparable number of jobs to those lost in the downturn but there’s little question a shift is taking place.

“We’re seeing traditional manufacturing line jobs going steadily down in the automotive sector,” he says. “On the other hand, if you look at high-value-add areas of the technology sector, you can see other jobs being created that are manufacturing but not high volume.”

Just how closely Canada’s manufacturing renaissance will shift along the lines of the U.S. is yet to be seen. From Mr. Bloom’s perspective, much of that will depend on the extent to which Canadian companies integrate themselves in the global supply chains of the world’s multinationals. It will also depend on the pace at which Canadian companies innovate.

That’s a practice a select few Canadian businesses have picked up and most are not in the manufacturing sector. “I would see it happening in other sectors, but not in manufacturing,” says Prof. Biehl. “Pharmaceuticals is highly knowledge intensive; telecom is also highly knowledgeable; and then our banking sector is also quite innovative — not necessarily toward consumers but on the B2B side of things.”

Prof. Biehl points to Germany as a successful case study of a jurisdiction with high labour costs and an unfavourable currency value that has succeeded in exporting its wares to the world.

“Not only do they sell their products but they’re able to customize their products to the demands of the customers, but also then provide services like installation, maintenance and trouble shooting through highly experience technicians or engineers… it’s a whole package they’re selling, not just a machine.”

[GRG55]

Re: A Tale of Two Economies...

Anybody seeing reshoring in the US where they are ?

Nothing that a sub-90 cent Loonie can't fix, eh...

[photon555]

Re: A Tale of Two Economies...

When the Petro-Dollar agreement collapses and the dollar loses it's Reserve status, americans will be competing with the rest of the world for "our" oil. After a dollar devaluation, why would a Dakota oil producer sell their product to americans for three dollars when they can get a six dollar equivalent overseas? In a global economy energy goes to the highest bidder.

The only reason increased domestic production might increase energy security would be if the government is willing to nationalize the natural resource, and force it's sale at a lower than market price after a dollar devaluation. That won't happen except under very extreme circumstances.

[jk]

Re: A Tale of Two Economies...

When the Petro-Dollar agreement collapses and the dollar loses it's Reserve status, americans will be competing with the rest of the world for "our" oil. After a dollar devaluation, why would a Dakota oil producer sell their product to americans for three dollars when they can get a six dollar equivalent overseas? In a global economy energy goes to the highest bidder.

The only reason increased domestic production might increase energy security would be if the government is willing to nationalize the natural resource, and force it's sale at a lower than market price after a dollar devaluation. That won't happen except under very extreme circumstances.

1. the cost of transport gives an advantage to local consumers.
2. there is already a law in the u.s. forbidding the export of crude oil. only refined products may be exported. i'm sure this law can be modified as deemed necessary by tptb.