CSI Blog & Newsroom

“Making the announcement, Peter Englund, permanent secretary of the Swedish Academy, called her a ‘master of the contemporary short story’. The 82-year-old, whose books include Dear Life and Dance of the Happy Shades, is only the 13th woman to win the prize since its inception in 1901,” an article from BBC News’ website wrote earlier today. The article continued, “‘I knew I was in the running, yes, but I never thought I would win,’ Munro told Canadian media. Presented by the Nobel Foundation, the award – which is presented to a living writer – is worth eight million kronor (£770,000). Previous winners include literary giants such as Rudyard Kipling, Toni Morrison and Ernest Hemingway.” Read the full article here.

“He craves Cap’n Crunch cereal for a late night snack, chills out with Diana Krall and rocks out to the Guess Who when the mood strikes. Meet Canada’s new central banker, Stephen Poloz,” Kathleen Harris wrote in a CBC news article posted earlier in the week. Harris continued, “In a wide-ranging exclusive interview — his first since taking the reins as the Bank of Canada’s new governor — Poloz spoke about monetary policy and revealed a diverse taste in music and his favourite comfort food during a sit-down with CBC News Network’s Power & Politics host Evan Solomon. ‘I am a former DJ and much older than my predecessor, so I like to listen to Guess Who tracks, so something like Albert Flasher would get me up and running,’ he said. ‘But these days more often I’m likely to listen to Diana Krall.'” After having to give up our ‘rock star’ governor Mark Carney to England it seems we’re trying to find the cool in Poloz, but for more serious matters the interview continued with notes on what we can expect in the near future for our central bank. “Poloz delivered his debut monetary report earlier today and announced that the Bank of Canada is keeping its benchmark interest rate at one per cent – the same level it has held at for nearly three years. The governor projected a “choppy” economy ahead due to unusual factors like the Alberta floods and a construction strike in Quebec. Poloz told Power & Politics that Canadian consumers have shouldered the load during the economic crisis, buffering the downturn by buying houses, cars and other big-ticket items. Now, he hopes businesses can soon begin to rely on increased demand from beyond Canada in order to invest in more equipment and churn growth.” Read the full article here.

“Federal Reserve Chairman Ben S. Bernanke is putting investors on notice that the central bank is prepared to begin phasing out one of the most aggressive easing programs in its century-long history later this year,” Craig Torres and Jeff Kearns wrote for Bloomberg late last week. The writing team continued, “The Fed will probably taper its $85 billion in monthly bond buying later in 2013 and halt purchases around mid-2014 as long as the world’s largest economy performs in line with Fed projections, Bernanke told reporters yesterday in Washington after a two-day meeting of the Federal Open Market Committee. ‘The vast, highly unprecedented, highly accommodative monetary policy stance that’s been so supportive of the recovery has begun to turn,’ said Michael Gapen, senior U.S. economist for Barclays Plc in New York and a former economist in the Fed’s Division of Monetary Affairs. “The markets for the next several years or more will have to deal with the withdrawal of that support.’ Stocks and Treasuries tumbled at the prospect of a wind-down in bond buying that’s swollen the Fed balance sheet to a record $3.41 trillion in an attack against the worst joblessness since the Great Depression. While citing waning risks to the economy, Bernanke said curbs to bond buying hinge on gains in the labor market and a pickup in growth.” Read the full article here. | Raymond Matt, CFP, CLU, TEP, CHS

“President Franklin D. Roosevelt set the standard for the first 100 days in office with an unprecedented whirlwind of legislative activity that sought to make good on his pledge for ‘action and action now’ to combat the Great Depression,” Michael Perino wrote for Bloomberg online late last week. Perino continued, “June 16 marks the 80th anniversary of that era, which came to a close when Roosevelt signed the Banking Act of 1933. That groundbreaking financial reform is more commonly known for its Democratic co-sponsors, Senator Carter Glass of Virginia and Representative Henry Steagall of Alabama. These days, it is mostly remembered for just one of its provisions, the separation of commercial and investment banking, designed to wall off customer deposits from the risk-taking inherent in securities underwriting. The debate over the 1999 repeal of that reform still rages. Yet in 1933, the most controversial feature of Glass-Steagall was the creation of federal deposit insurance, which has been wildly successful and has virtually eliminated the repeated bank runs that swept the country in the decades before the bill’s passage. Even the ardent free-marketeer Milton Friedman called it ‘the most important structural change in the banking system’ of the New Deal. Read the full article here. | Raymond Matt, CFP, CLU, TEP, CHS

“Are free-trade agreements protectionist? It sounds like a silly question, but it’s always worth asking of regional (as opposed to global) trade pacts — like the ones the U.S. is seriously considering with the European Union and the Pacific Rim,” Evan Soltas wrote today for Bloomberg’s online news site. Soltas continued, “Economists are often mocked for free-trade worship, but they’re skeptical when appropriate. Jacob Viner, a University of Chicago economist, argued in 1950 that free-trade agreements don’t necessarily promote free trade. Trade deals have two effects, he said: They create trade by lowering the cost of international exchange, but they also divert it by the selective reduction of barriers. Whether the first or the second effect predominates determines whether the deal is good or bad.” Read the full article here. | Raymond Matt, CFP, CLU, TEP, CHS

“Royal Bank of Canada, the country’s largest mortgage lender, is raising its rates and analysts say other banks are likely to follow suit, leaving the threat of a mortgage rate war firmly in the past,” Tara Perkins, The Globe and Mail real estate reporter wrote for the publication at the end of last week. Perkins continued, “The special rate on RBC’s four-year closed mortgages will now rise 10 basis points, to 3.09 per cent, while its five-year special rate will rise 20 basis points to 3.29 per cent. (A basis point is 1/100th of a percentage point.) The posted rate on a one-year mortgage is going up fourteen basis points to 3.14 per cent, while the posted rates on two- and three-year mortgages are each rising by 10 basis points, to 3.14 and 3.65 per cent respectively. The new prices take effect June 10. Mortgage rates became a major point of contention earlier this year when some lenders ratcheted theirs down to all-time lows, and received a scolding for doing so from Finance Minister Jim Flaherty, who has been trying to cool off the housing market. When Manulife Bank cut its posted rate on five-year fixed-rate mortgages to 2.89 per cent in March it received an angry phone call from Mr. Flaherty’s office and quickly pumped its rate back up to 3.09 per cent. Bank of Montreal allowed a special rate of 2.99 per cent to expire amid the controversy. At an event in Halifax on Thursday Mr. Flaherty said the banks are now being very ‘prudent in not reducing their rates.'” Read the full article here. | Raymond Matt, CFP, CLU, TEP, CHS

“The Bank of Canada now has plenty of ammunition to justify (at long last) removing its tightening bias when it issues its latest interest-rate policy statement Wednesday morning. But it won’t. The reasons may be sound, but the timing is not,” David Parkinson wrote for The Globe and Mail published online early last week. Parkinson’s article continued, “First, the sound reasons – some of which are hot off the presses. On Tuesday, the Bank of Canada published monthly data showing that household credit in April posted its slowest year-over-year growth in 17 years. Outstanding balances in both mortgage and non-mortgage debt declined; mortgage debt is now growing at its slowest pace since 2001. The overall pace of household credit growth is now 4.1 per cent year over year – roughly half of what it was three years ago, and down from 5.4 per cent a year earlier. Clearly, the efforts by the Canadian government and the Bank of Canada to cool household debt – considered by both to be the biggest risk to Canada’s financial stability – are working. Also on Tuesday, Statistics Canada reported that corporate profits in the first quarter slumped 1.2 per cent from the fourth quarter, and 3.3 per cent from a year earlier. The lack of profit momentum bodes poorly for both employment and business investment, suggesting tenuous traction for economic growth in the coming months.” Read the full article here. | Raymond Matt, CFP, CLU, TEP, CHS

“This year’s iteration of the annual Canadian Telecom Summit, which kicks off on Monday, is pretty wanting in the consumer representation department. Public Interest Advocacy Centre director John Lawford, who is sitting in on a couple of panels, is perhaps the lone voice of the public—Wind Mobile’s two representatives could maybe be included—in what is otherwise an industry love-in,” Peter Nowak wrote for Canadian Business, published online today. Nowak continues, “The agitators over at Open Media, meanwhile, confirm they weren’t invited to take part, which is too bad because that definitely would have made for some entertaining proceedings. The event also isn’t welcoming to the average Joe, with tickets coming in at a whopping $2,542.50—a price tag specifically designed for corporate expense accounts. Still, some meaningful news sometimes comes from the event. This year, Rogers is kicking things off with ‘Connected for Success,’ a pilot project that will give some of the most disadvantaged residents of Toronto access to cheap broadband. In conjunction with Toronto Community Housing, the company will provide qualifying residents connections of 3 megabits per second and 30 gigabytes of usage for $9.99 a month. Microsoft and Compugen are also joining in on the project, providing computers at $150 a pop. Some training and technical support will also be included through the Rogers Youth Fund and Rogers Tech Essentials website.” Read the full article here. | Raymond Matt, CFP, CLU, TEP, CHS

“From what’s now in the public domain – this information can and likely will change – serious questions have been raised about whether at least a couple of Conservative senators were claiming public expenses while doing partisan party work,” Jeffrey Simpson wrote for The Globe and Mail today. Simpson’s article continued, “Senators Pamela Wallin and Mike Duffy were among the star attractions at Conservative riding association meetings. Their previous television celebrity status guaranteed good turnouts and earned lots of money for party coffers. The former journalists became partisan tub-thumpers and, as such, were exceedingly useful to the party. It’s just that the costs of doing political road show work shouldn’t be paid for by the general public. If they were, it would be another example of the Conservative Party sailing close to the wind when it comes to the ethics and legality of doing politics. As long ago as the 2006 election, the Conservative machine was engaged in something that became known as the ‘in and out’ affair. The party transferred money to 67 riding association that then sent the money back to headquarters in order to claim a 60-per-cent rebate from the elections agency. This money ostensibly was for local electoral purposes, whereas in fact it helped buy national television advertising time. Elections Canada blew the whistle on the ‘in and out’ scam, which was defended vigorously by Conservative headquarters. Eventually, the party settled out of court, pleading guilty and returning $230,198. Among those involved were the party’s chief money man, Senator (of course) Irving Gerstein, and its chief campaign organizer, Senator (of course) Doug Finley, recently deceased.” Read the full article here. | Raymond Matt, CFP, CLU, TEP, CHS

“Mark Carney oversees his last interest rate decision this morning, but he won’t be making waves. The Bank of Canada was never expected to hike its benchmark rate from its emergency low of 1 per cent. The question is whether it will change the language that accompanies the decision at 10 a.m. ET. The central bank has for some time now indicated that the next move in the overnight rate will be up, not down, no matter how far off that may be,” The Globe and Mail business writer Michael Babad reported today online. Babad’s article continued, “Some observers, however, believe it’s time to drop that signal given such tame inflation, now at just 0.4 per cent, but a still uncertain outlook. That’s not expected to happen, though, in the last decision under Mr. Carney as central bank governor. ‘Given this mix of subdued inflation and strengthening economic growth, we expect the bank to maintain its mild tightening bias especially given that this will be the last meeting before Stephen Poloz takes over as head of the central bank,’ said assistant chief economist Paul Ferley of Royal Bank of Canada. ‘To that end we look for the bank to hold the overnight rate at 1 per cent, and reiterate that rates are likely to stay low for ‘a period of time,’ after which ‘some modest withdrawal of stimulus will likely be required.’ The central bank’s policy statement this morning, added Derek Holt and Dov Zigler of Bank of Nova Scotia, will probably ‘draw a balance’ between caution over such low inflation and optimism over what’s believed to have been stronger-than-expected economic growth in the first quarter of the year. Economists expect a report from Statistics Canada Friday to show that gross domestic product expanded at an annual pace of 2.3 per cent to 2.5 per cent in the first three months of the year. They also don’t expect any change in interest rates until late next year or early 2015. Read the full article here. | Raymond Matt, CFP, CLU, TEP, CHS