BCA: Canada Upbeat Jobs Report

Monday, September 7th, 2009

BCA Research Reports on Canada’s upbeat jobs report:

The Canadian economy continues to show signs of gradual improvement.

“Domestic activity has picked up from the depressed levels in H1 2009, as evidenced by the leading economic indicator and sentiment survey’s. Part of this rebound can be attributed to a leveling off in the pace of job losses over the past few months. Today’s release showed that overall employment increased by 27,000 (from -44,500), although all of the gains came from part-time work.”

“This is consistent with business survey’s that suggest employers are becoming more upbeat about future sales prospects. Importantly, employment among private sector employees increased in August, the first increase in this group since September 2008. Statistics Canada noted today that “the trend in employment has changed recently. Since employment peaked in October 2008, total employment has fallen by 387,000 (-2.3%). Over the last five months, however, employment has fallen by 31,000, a much smaller decline than the 357,000 observed during the five months following October 2008.”

“Bottom line: The Canadian economy still faces headwinds from a strong currency and weak demand from its main trading partners but the underlying trend is towards further improvement. We continue to favor the Canadian dollar versus the U.S. dollar.”

Source: BCA Research

Tags: Bca Research, Bottom Line, Business Survey, Canada, Canada Jobs, Canadian Dollar, Canadian Economy, Decline, Depressed Levels, Five Months, Future Sales, H1, Job Losses, Jobs Canada, Leading Economic Indicator, Part Time Work, Private Sector Employees, Rebound, Sales Prospects, Sentiment Survey S, Statistics Canada, Trading Partners
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Canadian Dollar: Good But Not Great Data

Monday, September 7th, 2009

Aside from U.S. data this morning, we also had a few important releases from Canada. Canadian employment printed much stronger than expected earlier in this morning and just a few minutes ago, IVEY PMI beat expectations. Last month, manufacturing activity expanded by a faster rate with the IVEY PMI index rising from 51.8 to 55.70, marking the third consecutive month of growth. Aside from the drop in the employment component, the details of the report were encouraging. The contraction in employment was in line with the weakness that we saw beneath this morning’s Canadian employment numbers and is part of the reason why the Canadian dollar has struggled to rally.

Canadian Employment: Weakness Beneath the Headlines

This morning’s Canadian employment numbers were very strong. The market had anticipated the fourth month of job losses but instead Canadian employment rose by 27.1k, the first month of job growth since April. In contrast to the U.S. who reported the 20th consecutive month of job losses, in that same time, Canada only saw 11 months of net job losses and they were not even consecutive.

Part of the reason why the Canadian economy has been so resilient is because of the rebound in oil prices and demand from China. However weakness beneath the headlines is capping the gains in the Canadian dollar. First, the rise came primarily from the service sector and exclusively in part time work while full time employment actually fell by 3,500. So far this year, full-time jobs have decreased 403,700 while part-time jobs have risen 101,100.

When a labor market recovery is driven by part time and not full time hiring, it is definitely not all that positive. The manufacturing sector is also extremely important in Canada and so the lack of improvement in the sector is certainly discouraging.

Tags: Canada, Canada Canadian, Canada Employment, Canadian Dollar, Canadian Economy, Canadian Employment, China, Contraction, Employment Numbers, Few Minutes, Full Time, Headlines, Job Losses, Manufacturing Sector, oil, Oil Prices, Part Time Jobs, Part Time Work, Rebound, Service Sector, Time Canada, Time Employment
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1930s Déjà vu

Monday, September 7th, 2009

The excerpts below come courtesy of David Rosenberg, chief economist and strategist of Gluskin Sheff & Associates.

“An old contact of ours at Merrill Lynch pointed out these articles from the Wall Street Journal after the initial post-crash rally that took the market up some 50% from the interim lows. Sounds eerily similar to what we hear today:

August 28, 1930:

There’s a large amount of money on the sidelines waiting for investment opportunities; this should be felt in market when “cheerful sentiment is more firmly entrenched.” Economists point out that banks and insurance companies “never before had so much money lying idle.”

September 3, 1930:

Market has now reached resistance level where it ran out of steam on July 18 (240.57) and July 28 (240.81). Breaking through this level would be considered a highly bullish signal. General confidence that this will happen based on recent market action; many leading stocks have already surpassed July highs. Further positive technicals seen in recent volume pattern (higher on rallies and lower on pullbacks), and in continued large short interest.

Some wariness based on recent good rally recovering all of drought-related break; some observers advise taking profits on at least part of long positions, to be in position to rebuy on good pullbacks.

Most economists agree business upturn is close; peak in business was reached July 1929, so depression has lasted about 14 months. “Those who have faith and confidence in the country and its ability to come back will profit by their foresight. This has also been the case over the past half century.”

Harvard Economic Society points to steady rise in bond prices as favorable for stocks. Says there is “every prospect that the [business] recovery … will not long be delayed,” although fall period may not be strong as expected. Notes worldwide decline in business, but 1922 recovery demonstrates U.S. due to “great size, natural advantages, and diversity of conditions … can lift itself out of depression without the stimulus of improved foreign demand.”

“We only know now with perfect hindsight what these pundits did not know back then - that there was another 80% of downside left in the bear market.” Source: David Rosenberg, Gluskin Sheff & Associates - Lunch with Dave, September 4, 2009.

Tags: Bond Prices, Bullish Signal, Business Recovery, Chief Economist, David Rosenberg, Economic Society, Foresight, Gluskin Sheff, Initial Post, Insurance Companies, Lows, Merrill Lynch, Pullbacks, Resistance Level, Short Interest, Technicals, Upturn, Wall Street Journal, Wariness, Worldwide Decline
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WealthTrack’s Great Investors: A Conversation with Jason Zweig and Nassim Taleb

Monday, September 7th, 2009

This week on Consuelo Mack WealthTrack, two unconventional thinkers share their wisdom with us. She talks to Nassim Taleb, “The Black Swan” author and well known Cassandra, about his unconventional, and as it turns out prescient, approach to investing, and Jason Zweig, author of “Your Money and Your Brain” explains the new field of neuroeconomics and how to apply it. This is good viewing material.

Note: The transcript of this interview is not available yet, but will be posted here as soon as it arrives.

Source: Wealthtrack, September 4, 2009.

Tags: Black Swan, Brain, Cassandra, Consuelo Mack Wealthtrack, Investing, Investors, Jason Zweig, Money, Nassim Taleb, Neuroeconomics, Swan, Unconventional Thinkers, wisdom
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