CSI Blog & Newsroom

“The US Federal Reserve is expected to announce the end of its quantitative easing (QE) programme later,” Andrew Walker wrote in a BBC News online article today.

Walker continued, “The Fed’s main policy making committee is meeting in Washington, where it is discussing whether to stop buying financial assets with newly created money. It has been gradually cutting back the scheme, which began in 2008, since late last year.  The markets are expecting that the asset purchases will finally cease. If they are right, it will mark the end of an extraordinary experiment in economic policy.  It started in November 2008 amid the financial crisis and fears that the US, and the rest of the world, might be facing another great depression.” Read the full article here. | Raymond Matt, CFP, CLU, TEP, CHS

“A new report issued by the C.D. Howe Institute says the federal government could create tens of thousands more jobs in the next three years if it stopped worrying so much about a tiny deficit and decided in favour of some stimulus spending,” a Canadian Press article wrote. The article posted on CBC News’ website yesterday continued, “The report written by McMaster University economics professor William Scarth argues that keeping the deficit at 0.5 per cent of GDP for the next three years could lower the unemployment rate by 0.4 per cent. That would amount to about 75,000 additional jobs if the increase in government spending were done efficiently, such as on infrastructure. Coincidentally, the Canadian economy has created only 72,000 jobs over the past 12 months. The report notes that such a change in strategy would mean keeping the federal deficit at about $10 billion over those three years, but Scarth argues that is insignificant economically because it would mean missing the stated target of reducing national debt-to-GDP to 25 per cent by 2021 by a single percentage point.” Read the full article here.

“Bank of Canada holds interest rate at 1% – again,” reads the headline for Pete Evans’ article posted on the CBC News website yesterday.

“Canada’s central bank decided to keep its benchmark interest rate at one per cent today, the same level it has been at for almost four years,” Evans writes.

Evans continues, “The Bank of Canada announced in its latest policy decision on Wednesday that it will keep its target for the overnight rate — the yardstick against which most consumer loans are based — steady at one per cent.

Although most economists were expecting no change in the rate, the choice of wording is often closely scrutinized to see if the central bank is leaning toward a rate hike or a cut, if and when it does decide to act. Instead of suggesting rate hikes are in the offing, the bank softened its tone and suggested it’s in no hurry to hike rates if and when it chooses to act. ‘The bank is neutral with respect to the timing and direction of the next change to the policy rate, which will depend on how new information influences the outlook and assessment of risks,’ the bank said.” Evans also points out in his article, “The economy is expected to reach full capacity around mid-2016,” a quote from a Bank of Canada statement. Read the full article here.

“A suite of positive economic news this week makes it more likely that the U.S. will raise interest rates sooner than most experts have been anticipating,” Pete Evans wrote in a CBC News article late last week. Evans continued, “On Thursday, the U.S. Commerce Department unveiled data showing the American economy added another 288,000 jobs in June. That’s the fifth straight month that the figure has come in better than was expected, and the strong job gains are pushing the stubbornly high unemployment rate lower. ‘Since February, this has now become a textbook jobs expansion,’ said Patrick O’Keefe, director of economic research at the consultancy CohnReznick. ‘It is both broad and accelerating.’ America’s jobless rate is now at 6.1 per cent, the lowest it’s been since September 2008, which is before bank failures such as Bear Stearns and Lehman Brothers kicked off a worldwide recession from which the global economy is still recovering.” Read Evans full article here.  

“When Canada’s banks reopen for business on July 2, they will begin formally operating as informants for the United States Internal Revenue Service — the IRS,” James Fitz-Morris wrote for the CBC news website today. Fitz-Morris continued, “Financial institutions in Canada will be required to ask all new and existing clients opening a new account questions such as where they were born, and possibly where their parents were born. Those who indicate they have a connection to the U.S. will have their files sent to the Canada Revenue Agency — which will automatically pass them along to the IRS. Canadian citizens who decline to answer the new set of questions could have their personal banking information passed along to Uncle Sam to determine if they are a ‘U.S. person.’ Or, the bank could refuse to open an account for those who refuse to answer the questions. All U.S. citizens and ‘resident aliens’ (green card holders) are required to file U.S. taxes every year — regardless of where they live. Eritrea is the only other country in the world with a similar law.” Read the full article here.

“The other day, my accountant called me with bad news. I have to write a cheque for $593.12 to the U.S. government,” Margaret Wente wrote for The Globe and Mail yesterday. I was floored. I’m Canadian. I have a Canadian passport. I haven’t lived in the United States since I was 14. I pay a pile of taxes here. Why should I pay money to a foreign power? ‘It’s a new investment tax,’ he said. ‘It’s supposed to help pay for Obamacare.’ Welcome to the nightmare of U.S. citizens abroad. There are hundreds of thousands of us in Canada, and millions more worldwide. Most of us are law-abiding people. But the U.S. government is treating us like tax cheats. It also says that any ‘U.S. person’ (meaning anyone born in the United States, or even anyone with American parents) must keep filing U.S. tax returns, forever – or else. This news has come as a nasty shock. Take the case of Carol Tapanila, a former American who lives in Calgary. Her developmentally disabled son, now an adult, is also deemed to be American, even though he was born in Canada. As she put it in an interview with the CBC, ‘he’s entrapped.’ Trying to figure out how to comply with U.S. tax laws has already cost her tens of thousands of dollars, and she’s had to pay taxes on her son’s disability savings plan, which the U.S. government has called an ‘offshore trust.'” Read the full article here.

…or so said chief economist of Canadian Imperial Bank of Commerce Avery Shenfeld, wrote Mark Gilbert for bloombergview.com last Friday. “When Canada’s Mark Carney became governor of the Bank of England last year, Avery Shenfeld, the chief economist of Canadian Imperial Bank of Commerce, described him to me as the Ringo Starr of central banking: ‘He may not be the best drummer in the world, but he’s joining the best band.'” Gilbert wrote. Gilbert continued, “The U.K. economy is roaring ahead, on track for the fastest growth of any Group of Seven nation this year and with employment climbing at a record pace — and Carney’s drumming skills are about to be sorely tested. Having suggested a year ago that interest rates would probably stay on hold until at least late 2016, he sprung a surprise in his annual Mansion House speech last night: ‘There’s already great speculation about the exact timing of the first rate hike and this decision is becoming more balanced,” he said. “It could happen sooner than markets currently expect.’ So the March or April or May 2015 increase economists and traders had penciled in for the Bank of England’s official rate to climb from its current record low 0.5 percent level becomes a 2014 affair.” Read Mark’s full article here.      

“In 2003 Kathleen Wynne was told she would never be able to defeat Progressive Conservative cabinet minister David Turnbull,” Robert Fisher wrote in a CBC online news article early this morning after the Ontario liberal leader won yesterday’s provincial election. Fisher continued, ‘She did. In 2007, she heard the same thing when then-Progressive Conservative leader John Tory decided he’d run against her in Toronto’s Don Valley West riding. But, she defeated him. In 2011, Wynne faced another high-profile Conservative and despite the talk she was vulnerable, she defeated her too. So when former premier Dalton McGuinty stepped down, many Liberals approached Wynne, asking her to consider a run for the leadership of the party. She did consider it and she ran, even though there were Liberals who privately worried that, while they liked the idea of a female leader, she could win the leadership but not the province in a general election because she is a lesbian. With an open and impassioned convention speech, Wynne became Liberal leader — and last night, Ontario’s first elected female premier. Her choice to go public on what could have easily remained a private issue has now ended that debate. The election result has also ended the debate over the other debate — the televised one — and Wynne’s uneven performance. It seems to say: you can lose the leaders debate but win the election.” Read the full article here.

 “Bank of Canada governor Stephen Poloz says the Canadian housing sector is vulnerable because of high housing prices and high levels of household debt, but says he continues to believe it is on course for a soft landing,” a CBC news online article wrote today. The article continued, “Speaking in Ottawa Thursday, Poloz said Canada’s financial system is vulnerable to a sharp correction in housing prices. ‘The most important domestic risk is a sharp reduction in house prices,’ he said at a news conference following the release of the central bank’s semi-annual review of the financial system. ‘If it were to happen, its impact on the economy and financial system would be severe,’ Poloz said. His statement comes a day after the Organization for Economic Co-operation and Development told Canada it was concerned that rising home prices were widening inequality and the International Monetary Fund warned that high house prices might be a threat to global growth. Poloz said the probability of a sharp correction is small and, if it comes, it will be caused by external factors, such as a sudden failure of the economic recovery that seems to be underway in the world economy.” Read the full article here.

“With only one day left to campaign and polls pointing to a tight two-way race between the Liberals and Progressive Conservatives, Ontario leaders are making a hard, final push ahead of Thursday’s vote. The final day of campaigning comes as allegations of dirty tricks begin to surface,” a CBC news article wrote today. The article continued, “On Tuesday, the PCs had to apologize after voters in two ridings — one in Ottawa, another in London — received letters containing false information about where to vote. The Liberals accused the Tories of ‘voter suppression,’while the PCs said the letters were sent in error. The Tories were furious over a Liberal campaign flyer issued in Vaughan by candidate Steve Del Duca. The flyer featured an image of PC Leader Tim Hudak laughing maniacally as he walks away from a hospital exploding in the background. The ad takes its inspiration from the Batman movie The Dark Knight, with Hudak in the role of the Joker.” Read the full article here.