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The Next Domino: CANADA
The Federal Reserve has kept its zero interest rate policy (‘ZIRP’) for several years (and much longer than originally anticipated) whilst the European Central Bank seems to be getting serious about doing ‘better’ and has now reduced the deposit rate at the ECB to -0.30%. It’s already remarkable a central bank doesn’t seem to have any problem to reduce interest rates into the negative territory, but now Canada is considering making the same step as well.
Source: tradingeconomics.com
Even though Canada’s benchmark interest rate is still relatively ‘high’ at 0.5%, the governor of the Central Bank of Canada has now hinted at a negative interest rate as well. That’s interesting, but not really surprising when you look at the current situation of the mining sector and the oil and gas sector, which have been important backbones of the Canadian economy for quite a while.
The gold and copper price aren’t really giving mining companies a lot of hope and not only have the corporate tax payments from the sector been reduced, several mines have announced layoffs, reducing the employment rate in Canada. That’s tough luck, but the oil and gas sector might be in an even worse shape, and especially the province of Alberta will be in for a lot of pain in 2016 (and we would honestly be extremely surprised if the GDP in Alberta would increase ). Unfortunately this will create a ripple-effect throughout the entire Canadian economy and the Toronto Stock Exchange has lost 17.5% since April of this year which is more than three times as much as the loss of the Dow Jones Index in the same time frame.
Source: stockcharts.com
Just have a look at the oil and gas price, and it shouldn’t surprise you the majority of the oil and gas producers is ‘underwater’ and won’t generate a profit this year. To make things even worse, some companies won’t even be able to generate a sufficient amount of operating cash flow to fund the sustaining capital expenditures to keep the oil and gas production at a stable level. And the remark made by John Arnold about the US oil and gas sector is also pretty much valid for the Canadian energy sector. Once the ‘good’ hedges will start to unwind, the sector will be in a lot of pain.
Source: stockcharts.com
And what do you think will happen next? Indeed, several oil and gas exploration and production companies will be unable to avoid bankruptcy and this could result in a domino-effect in the Canadian economy. Not only will the GDP decrease, the unemployment rate will increase and more and more people will be unable to make their mortgage payments. The Bank of Canada expects its economy to grow by 2% in 2016, but we are afraid that’s an overly optimistic stance and only based on the weak Canadian Dollar which obviously enhances the export numbers. Just have a look at how the junior oil index is behaving (the next chart is the Junior Oil Index ETF, issued by the Bank of Montreal).
Source: stockcharts.com
Long story short, if the Central Bank of Canada doesn’t do anything (literally ‘anything’), Canada could be in for a shocking 2016 if the oil and gas prices don’t recover. 2015 was alright as the majority of the O&G companies had some decent hedges in place and the weakening Canadian Dollar also helped the sector, but the total amount of hedged volumes as well as the hedge prices will go down from next year on and the entire sector will be in a lot of pain.
So the Canadian central bank very likely won’t have any other option but to reduce the interest rate to at least incentivize banks to not withdraw credit facilities from these oil and gas companies. Should the central bank do nothing, Canada will be in an extremely horrible shape from next year on, and the GDP reductions might actually spiral out of control as a vicious circle cannot be excluded at this point.
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If you knew what the fuck you were talking about it would be a pleasure to respond. Since you don't, and you are clearly an idiot, I won't say anything more than 'read up on it'.
Oil and gas is not the "main sector" of the Canadian economy.
It appears the following are two of Canada's top 3 industries:
As these both support each other, and in turn support the main industry which is retail, rents etc. And as these 3 are
Inextricablylinked, and further support the rest of the economy .. I would hope that if the afore mentioned main industries aren't making money, the rest of the economy is capable of working on it's own. This is the private part of the equation, I don't think government will do particularly well either, with less tax receipts.
Most of the manufacturing is directly supportive of the O&G sector.
Pumps, pipes, drills, heavy duty equipment, portable housing, sheet metals, structures and so on. Why wouldn't the products needed for the O&G and mining sectors be manufactured close to where they're needed?
Sure, Canada still builds some cars... for now. GM is on the way OUT.
Canadians really do believe their shit doesn't stink!
Hoping that everyone one else can make do alright when the ones who actually bring money into the country are wiped out is very unrealistic - No house/company/government can survive for long with no real cash coming in and lots going out - As our biggest trading partner is the U.S. then one could presume that Canada is going white water rafting in the future.
Yeah, well, Americans 'know it all' and 'are never wrong', don't you know.
At seven pm a main hatchway caved in, he said
Fellas, it's been good t'know ya
The captain wired in he had water comin' in
And the good ship and crew was in peril
Canadian economy is mostly service sector and is affected by exchange rate more than commodity prices. Exchange rate is highly favorable at the moment. Mining, oil and gas account for less than 8% of GDP. Service sector accounts for nearly 80%. Another ZH guest fail article of which there have been LOTS over the last year.
Overpaid leeches providing domestic government services to Canadians don't count you moron!
The country doesn't make anything that can't be made cheaper in Mexico. There is no demand for the resources Canada has abundantly and the private debt is at 170%.
Why so hard on ZH, bro? Just because ZH is lumping Canada into the same context as Brazil and Venezuela? It's perfectly true.
Canada has NOTHING to offer! Not even cheap housing, great climate or opportunity! Get out while you still can.
Who do they service?
This^^^is a prime example of your typical Canadian. Whether he is or not, and is why Canadians are finally going to get their asses kicked severely in 2016.
Negative interest never made any sense to me. Oh well.
Canada in many ways in like Australia. The Australian financial guys and politicians are still saying that they'll continue to avoid a recession next year and that rebalancing out of commodities will continue. Their full of shit.
Australian housing market is already flashing red in several cities, exports to China remain way down due to commodities (mainly iron ore), etc. My cousin was in the Australian military for 10 years, was in Afghanistan and Iraq, did some private security work in Qatar, and now is home in Sydney. Works for a firm that handles yachts and does the diesel engines rebuilds. The market was doing well until earlier this year but as the market started to sag this summer so did orders especially on anything new. Mainly been refurbishments but even that has started to drive up too. Ditto occupancy rates in Syndey and Melbourne unless the sky high rents have fallen.
I am made some nice coin betting agianst Australia and going to continue to do so at least through the early part of next year until the market catches up a bit where the Australian economy really is at. I see them having at least a 2 year rough patch if not more.
There are people who think Australia is a good play the next year? Must be some of the zerotards who seem to be prevalent now.
Trudeau Is Legalizing MariaHuchee...
This Is the secret plan to boost GDP.
Just think all tourists coming in with Foreign Fiats...
Big cities Smokin' And Boomin...
Yes Pierre, We Have A Plan...
I live in TX, not a ridiculous trip to buy legal weed in CO. But why? I can buy primo weed cheaper from my local negro dealer and only have to sweat getting stopped and searched for a 10 mile trip. I imagine his better grades are coming from CO as it is. As soon as the kids are gone, building a greenhouse and withdrawing from the world.
OH CA...NA...DUH
"OH CA...NA...DUH, EH"
There, fixed it for you.
"OH CA...NA...DUH, EH?"
There. I think that's it.
rocks, trees, oil, maple syrup and hockey
who give a shit?
You forgot BC Bud, and corn for methanol.
All ok. The thousands of militant Muslims being flown in by Canadian air force will pick up the slack.
Face it, BC Bud contributed to the derangement that elected President Butthead twice and now our chickens have come home to roost with the election of Prime Minister Beavis. It must have been the second hand smoke drifting across the border.
Meanwhile, the Canadian banks are making around 5 billion dollars per QUARTER on a population of about 30 million. No one is talking about this. They aren't seeing the problem. It's as if the people are all brainwashed to believe the banks are the givers of life to the economy as opposed to them really being the vampire squid on the face of the Canadian population.
It is getting so you can't even use the toilet without a loan from a bank here in Canada but the people are too dense to see the problem
Canadian banks will go down with the Canadian housing bubble, count on it.
The entire country will be gutted and laid to waste before the banks are touched
Canadian banks rule the country, their word is law, they don't give a damn about anything but their bottom line
Because people are too stupid to understand basic math... $500,000 for a shitty 50 year old house with huge property taxes? Where do I sign???????? Canada is a joke
I'm as bearish as the next when it comes to Canadian housing, especially in major city centers. However, the weakening currency, low (and going lower) interest rates and net positive migration flows may be enough to keep housing afloat. In Ontario specifically, they're looking at increasing the size of the green belt which will only increase density and prices.
In the case of condos in Toronto, prices have stayed flat over the past 2 years, but the curreny has declined 30-35% (resulting in a 30-35% decline in condos in USD).
That said, as cheap as housing is on a "monthly" basis, anything can happen once the job losses start coming in.
Chris
Outdoor Advertising
Once it pops, you can't stop it. Fractional reserve system collapses. They can print, but inflation in Canada is already higher then they say
Trudeau knows importing refugees will keep housing afloat. That's why he is sending military jets to bring Syrians over instead of using CAF jets to bomb the Radicals.
Holy fuck, Canada will be lost soon like UK.
FUCK THIS IS JUST LIKE RED DAWN IN THE BEGINNING EXCEPT IT IS RUSSIA "STANDING ALONE" AGAINST THE NWO! HOW FUCKED UP IS THAT>
How much will 30 people living in a one bedroom apartment boost the real estate sector or will Syrians be different from Somali Muslims?
https://www.google.ca/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja...
immigration numbers for CAD for the last 8 years
It's time to get a Russian wife. I did and never been happier
UPDATE
From the loveme.com web site.
I get one response to my ad per hour - from the Ukraine. Bar none, the Ukraine leads.
Little to NO responses from anyone in Russia. I get 3-4 a day from China - but the Ukraine must be a shit hole, for so many women to respond/want out.
I have to laugh sometimes when I compare avatars to the comments being made.
Seriously, I've heard the same from many others here and I'm glad you've found domestic bliss.
For my third wife I got an American. Much better than the first two Canadians. Keep up the good work down there.
You've wrote something I have never seen written, nor did I ever have a paradigm for expecting to see it in any form.
You should check out our Puerto Riican and Dominican women. The Hot/Crazy ratio is off the charts, but man are they sexy!!!!
True connoseuirs of beauty in the NYC area know all about the mixed Latino-Indian and Latino-Guyanese women. Very, very pretty and sexy!
I have been banging the desk with the heel of my shoe since oil broke the Alberta Tar Sands B/E of $65/bbl. The BEST way to profit is shorting the shit out of the Five Big Banks but also Home Trust the subprime lender that will be the biggest casualty of them all. The independent Canadian brokers are all levered up too so Canaccord and GMP will be under pressure bigtime.
The Canuck banks are the best spin doctors of em all and have the GUV.MENT in their pockets but they are all up to the eyeballs in energy loans with res-mortgages choking them even more.
OH! Canada is going to be EW! Canada...
http://www.bnn.ca/News/2015/11/11/CMHC-chief-paints-bleak-picture-of-ris...
The CMHC is the party most responsible for that bleak picture.
But they'll still have free health care
Winning!
Free Healthcare in CANADA means you have to wait in line for months before a foreign 'doctor' will see you for 6.2 seconds before booking you for twenty million 'tests' that the subcontractors make a fortune on by billing the taxpayer through the Gubbermint. Frankly, one is best off praying to God, Jesus Christ, and the Bible, not to get sick or fall ill.
My GP retired two years ago and I have still not got a new GP. This means that if I get ill, or injured, I have to visit Emergency at the local hospital and wait for 12 hours on average to see a foreign doctor for 6.2 seconds.
Free Healthcare in CANADA costs money to wait in line. Furthermore, they charge $20 for parking at the hospital and $120 for parking on the street near the hospital. Pretty soon it will be cheaper to suicide.
You forgot to mention that most Canadian Hospitals are 25 years behing the US in medical technology. There isn't even a single Proton Centre in the planning stages let alone in operation. It takes months or longer to get an MRI.
Indeed...
The healthcare is fucked, but that has been discussed. What interests me in Canada is the....
parking.
Our test case will be the Edmonton International Airport and various hostpitals int eh vicinity.
There are a few farms around Edmonton International...they originally built it way out of the city on purpose. The town of Leduc is to the South and East but still not quite on the edge.
Parking is $15 for 90 minutes....WTF? Canada is short of space?
At Singapore Changi Airport Terminal 3, full day parking, if you leave your car over night, is S$22. WTF?
Are they kidding in Canada? Short of space? Its worse around the University and Royal Alexandra Hospitals, its C$20 for an hour.
Where is the RCMP? Where are the anti-combines investegators?
WTF?
Squid
when you pay 80% of your income in various forms of taxes, nothing is free. But, of course the government wants to keep as many slaves alive as is possible.
well, if you do take the suicide route, dont fuck it up, take a couple of bankers , and maybe a poltician with you.
>>>Well, if you do take the suicide route, dont fuck it up, take a couple of bankers, and maybe a poltician with you.
Exactly.
If you're a unemployed demoralized white guy with no prospects, do NOT take it out on some poor visible minority dude. Aim high! Finance guys into the cross-hairs!
I have already taken down thousands of banks, banksters, traders, politicians, central banks, shaddow banks, investment houses, and the 'Gorilla of Wall Street'. I don't have to do anything to take the remainder down except wait a few more weeks for the hangers on to implode. Old Yeller, Bernanke, Paulson, Geithner, Summers, Greenspan, et cetera, are my footstool, and are no match for moi. I thought shadow banking slowed up the controlled demolition a bit, but I read today that they are now out of money too. This means that I beat the MIC, American Hegemony, CIA, NSA, the Five Eyes of blindness, and the cocksucking FED, plus the cocksucking de Rothchild Bank motherfuckers, all in less than one hour just like the Bible said.
Now it's Hell n' Purgatory time for the whole lot of them, and their greedy progeny.
Could you maybe do something about Bieber?