23-Apr-2010

goldman_sachs

Focus on the Bank of Canada (BoC)

+ The BoC signaled it may be the first in the Group of 7 to increase borrowing costs, joining India and Australia.

+ Poor productivity, the low absolute level of US demand, and a weak US dollar will continue to impact Canada’s economic capacity. The BoC expects a return to full capacity by the Q2 2011.

+ BoC projected growth rates: 3.7% in 2010, 3.1% in 2011, and 1.9% in 2012.

+ Markets are anticipating a BoC rate increase of 0.25% on June 1, 2010.

China Update

+ China produces 46.5% of the world’s steel, followed by Japan at 7.1%, Russia at 4.9%, and the US at 4.7%.

+ Senior officials have indicated that “all regions and related agencies must fully recognize the harm of overly fast rises in property prices, and effectively enforce policies decided by the central government and take resolute measures to contain property prices.

Follow up on Goldman Sachs

+ Questions are being asked: 1) Why was the announcement made prior to market close last Friday? and 2) Was this politically motivated?

+ All the trades were done between sophisticated buyers, banks and a hedge fund, not with the public.

+ The consensus is that the maximum loss for Goldman Sachs will be between $2-3 billion, which is only about half of Goldman’s earnings for last quarter.

For more information on Step 9 – “In the red zone” Governments Force Turnover, click here