July 27, 2012

GLOBAL CENTRAL BANKS

  • Current options for consideration by central banks include doubling-down on previous policies, absorbing some of the credit risk of new lending and charging commercial banks to pay for parking cash with the central banks. In the case of the Federal Reserve, possibly buying Mortgage Backed Securities as well.
  • ECB and BOE meet July 30th, Federal Reserve meets July 31st and August 21st.
  • Spain has conceded it might need a full EU/IMF bailout worth €300 billion if its borrowing costs remain unsustainably high (over 7%).
  • ECB President Mario Draghi said that the ECB “will do whatever is necessary to preserve the Euro”.
  • Germany’s Bundesbank is still resisting the ECB buying bonds.
  • It is speculated that the Bank of England may be considering Bank of Canada Governor Mark Carney to become their next Governor.
  • IMF says that China may refrain from stepping up its monetary stimulus or increase spending as there is currently sufficient growth.

TIDBITS

  • National Bank Financials’ Economics and Strategy Group took top spot for US dollar to Canadian dollar currency exchange rate forecasting in Bloomberg Markets magazine. They were the only Canadian financial institution to be included amoung the top 5.
  • Canadian Premiers are taking the lead on health-care reforms. PEI Premier Robert Ghiz pointed out that the federal government provides about 20% of the costs. They are also exploring more bulk-purchasing options, including equipment.
  • More than 50% of Canadian car buyers are taking out loans longer than 6 years.
  • CP Rail expects to ship 70,000 carloads of crude in 2013 from regions such as the Bakken of North Dakota up from 13,000 carloads in 2011.
  • Samsung sold approximately 50 million phones in the most recent quarter compared to 26 million for Apple. The two companies are set to go to a jury trial in the US with respect to patents.
  • US Q2 GDP rose 1.5% YoY vs 2% YoY in Q1.
  • US food inflation may rise 3% to 4% in 2013 because of the drought in the US. This will impact many companies such as McDonald’s, General Mills, Coca-Cola and grocery stores.
  • A Wall Street Journal/NBC News poll shows 50% of US voters say that Obama has a background and set of values they can identify with compared with 42% for Romney. 43% say they have a less favourable opinion of Romney after seeing, reading, or hearing something about him or his campaign.