Canadian GDP unexpectedly shrinks

https://www.bloomberg.com/news/articles/2018-03-29/canada-economy-unexpectedly-shrinks-in-january-on-oil-shutdowns

“GDP contracted 0.1 percent during the month, Statistics Canada reported Thursday in Ottawa, weighed down by sharp declines in oil production and real estate.”

“Canada is widely expected to slow this year as highly indebted households pare spending.”

“Another drag on January output was falling real estate activity as new mortgage qualification rules kicked in, particularly in Toronto. Real estate agents and brokers saw their output drop 13 percent in January, the largest monthly decline since November 2008 for the industry, as home sales slumped.”

If only Canada would finally accept a fair trade deal with President Trump and stop harming their citizens!

Decline in oil production.

It’s because the environmentalists are out in full force… continually opposing pipelines and LNG facilities. Watching all the capital investments head to the Permian and Eagleford is depressing. US has built 10x the pipeline length of Keystone during the Obama administration is energy self-sustaining at this point. Therefore, we have to find alternative markets or just stop importing oil from the Middle East and use our own.

http://business.financialpost.com/commodities/energy/america-has-built-the-equivalent-of-10-keystone-pipelines-since-2010-and-no-one-said-anything

Make Ontario Great Again!

… on the next episode of ‘How Much Can We Borrow? No Actually. We’re Asking’

SAD NEWS

also this:

https://www.ctvnews.ca/canada/aging-vancouver-home-listed-for-6-98m-1.3851997

Poutines, still amazing! Canada, eh

Prime Minister Trudeau should go on an aggressive marketing campaign for Lululemon, the primary export of the nation, along with William Shatner narrated ebooks. If there’s anything the world needs more of, it’s yoga bunnies in tights. Imagine the benefit to third world countries and those who are less fortunate in general.

are canadian banks a good buy or still lots of downside?

Canadian banks are safer than US or European banks. They have the best capital buffers, and maybe more importantly, they don’t have a culture of risk taking. From my experience, they will go out of their way and pay a lot of money to hedge a lot of positions that other banks will just carry.

I suspect Candian banks’ return on assets are not as high as say JPM or Citi, since the Canadians don’t like risk and don’t have big investment banks (maybe someone here knows). However, they are probably safer in volatile markets as a result.

Canada should look into privatizing health care, should at least give it a try. Only thing they have in Canada now is red cross

As ohai said, they are more risk averse with better capital buffers. Downside is not huge unless they start taking large losses on the loan portfolios, mortgages or oil sands companies start blowing up. The Canadian market has been tidily divied up for a long time so they are looking outward for growth. TD, BMO, RBC have really sought to expand their interests in the US and this is becoming an increasingly larger proportion of their revenue. RBC probably has the biggest IB arm of the 3 (BMO also pushing on this front), but for most Canadian banks, PnC will always be the priority. Scotia is the up and comer but heavily tilted towards LATAM. CIBC and National are kind of dead in the water. Decent dividends across the board but see them as steady gainers rather than big winners. They are good stocks to pick up on the cheap (not now) and forget/sit on for a long time.

so no one is worried about the mortgages on their books?

trying to get in b4 PA warns us about the canadian mortgage collapse

Banking is less competitive up there. They charge fees for everything. They’ve historically done well but there is growing concerns Canada may have their first banking crisis soon enough

There is some concern but more in terms of property valuations - you can see the sales volume and pricing is dropping from 2016/17 highs. I’m not an expert on the latest US/CAN differences but off the top of my head the requirements are stricter here (higher downpayments, individual stress testing, foreign buyer rules, and mandatory mortgage insurance for those purchasing with less downpayment). General indebtedness of the average Canadian is a concern at this point though, especially in a ‘forced’ raising rate environment.

All the major NA news sources have been talking about the property bubbles in Toronto and Vancouver so I don’t think you’re inb4 anyone at this point.

There’s probably some issue there, but I doubt that a lot of Canadian lenders are repackaging mortgage securities to the extent that AIG and Washington Mutual were doing. The other thing about the US market crash is that the effect reverberated through the whole world and compounded every negative move. This won’t happen to the same extent if* Canada implodes.

*If except for Toronto. That place is sure to implode.

^ I think you mean Vancouver first.

yeah. toronto’s not that bad. people actually have incomes in toronto, as opposed to vancity. van is basically a chinese puppet state at this point. toronto has already cooled to fairly reasonable valuations.

canadian banks actually have lesser capital buffers than many foreign banks as they were not forced to raise their buffers following 2008. key differences are canadians can’t walk away from their house (so canada won’t experience cascading prices that occurred in the US in 2008), owners have 20%+ equity or are forced to take on mortgage insurance which is basically an official bailout business for the banks, the banks have large wealth management and insurance businesses that generate positive cash flow and offset cyclical downside, canadian banks have meaningful foreign exposure (e.g. TD has 33% revenues from the US, RY has 25% from the US).

the average LTV of the uninsured mortgages on the banks’ balance sheets is close to 50% at current market prices (already down ~15-20% in TO for example). so even with widespread defaults, they should easily be able to recoup the full mortgage value.

unless there has been widespread fraud in the system that makes these numbers fraudulent, the banks are absolutely rock solid. same can’t be said about the third-party borrowers in Canada’s mortgage system but the banks are effectively protected by the state and its regulations.

Much like its people, Canada’s banks lack the enterprise of their US counterparts. Neither sophisticated nor demure, they are the wallflowers of the business prom; hoping to get into Betsy’s pants but always playing the friend.

they still have Whistler/Blackcomb

mla im coming after you