May 4, 2018

David Dodge: “we are shooting ourselves in the foot”

  • David Dodge, past Governor of the Bank of Canada, says there are currently two issues: “One, we in Canada have been shooting ourselves in the foot. Number two, the world outside is changing and creating a number of uncertainties for investment in Canada, both public and private investment.”
    • Dodge warns that Canada is losing ground when it comes to global competitiveness.
    • Regulatory uncertainty and U.S. tax cuts are deterring investments into Canada.
  • Suncor CEO Steve Williams said Canada is no longer a good place to invest and warned that regulatory confusion has led to an “exodus” of big energy players from Canada’s oil sands.

Canada GDP

  • Canada’s real GDP rose 0.4% in February M/M, vs 0.3% estimate, largest increase since May 2017.
    • Alberta’s GDP grew 4.9% Y/Y, fastest expansion among the provinces.
    • BC expanded by 3.9%, fastest since 2005. ON rose 2.8% in 2017.
  • BoC Governor Stephen Poloz expects the nation’s high household debt levels will persist, reiterating that rates will continue to rise.

Pot Concerns

  • Realtors say cannabis cultivation inside houses may cause mold, fungus, and property damage.
  • Members of the Senate’s Aboriginal Peoples Committee recommend holding back on legalizing cannabis for up to a year to address harmful effects on Indigenous communities.
  • In 2017, 5 million Canadian’s aged 15-64 spent close to $6 billion on cannabis (medical and non-medical use), around $1,200/person.
    • Highest per capita consumption was 27.1 grams in NS, 24.6 in BC, 24.1 in AB.

U.S. employment data

  • U.S. added 164,000 jobs in April vs 193,000 expected.
    • Unemployment rate 3.9% vs 4.1% (first time below 4% since December 2000).
    • Average hourly earnings up 2.6% Y/Y vs 2.7% expected.

Oil

  • AB currently needs between 100,000 to 300,000 bpd of new pipeline space.
  • AB has oil rail terminal loading capacity of about 600,000 bpd and is currently shipping about 100,000 bpd due to rail backlog.
  • Gasoline prices in Vancouver reached $1.62/ltr ($4.77/gallon), highest in North America.
    • Vancouverites pay more than any other major oil-producing country except Norway.
  • Russia’s crude shipments to Europe were down 19% in 2018 Y/Y to 1.86 million bpd, offset by increase in shipments to China by 43% in Q1 to 750,000 bpd.

Tidbits

  • Whistler’s benchmark property prices surpassed those of Vancouver, making it Canada’s craziest housing market. Townhouse $1 million, detached $1.67 million.
  • India has joined the U.S. and China as one of the world’s top 5 biggest military spenders.
  • Federal Reserve officials left interest rates unchanged, acknowledging inflation is close to target.
  • Kraft Heinz Co. is issuing a limited number of digital tokens called Bacoins exchangeable for the company’s bacon. A Bacoin is traded for 11 slices of bacon.
  • Facebook unveils its plan to add a dating service, which is built with privacy in mind.
  • Iran has the technical capability to enrich uranium to a higher level than it could before the multinational nuclear deal was reached.