April 15, 2016 noon eastern

Markets are modestly weaker this morning. Oil is down 3.5% to $40.

Bombardier is up 13% on rumors that a deal to sell 75 C Series jets to Delta is close. It’s welcome news although the jets will apparently be sold at half of list price and at a loss. I am tempted to reduce my position but I will likely wait for whatever bounce comes from the expected announcement of an investment by the Federal government. Longer term this company is in an industry that apparently needs government aid (“pay to play”) which is a recipe for poor to negative returns. Basically, investors and government put in money which creates jobs. Customers get planes below cost. Investors, based on past history, simply lose their investment. (Bombardier’s  common equity has a “value” of NEGATIVE $4 billion according to its own books.) Employees and plane buyers should be thankful for investors and government subsidies.

The Bombardier pref share that I follow is up 5.4% to $12.86. I have some faith in this as an investment since I don’t expect the company to go bankrupt. But it has its risks as well.

Statistics Canada reports that non-residential building construction declined in the first quarter.

“In Alberta, spending in commercial building construction was down 6.9% to $1.7 billion in the first quarter, marking the fourth consecutive quarterly decline. This was a result of lower investment in most commercial categories, particularly warehouses and office buildings.” The wonder here is that the decline is only 6.9%. I would have expected a far larger decline. The again, the population of Alberta is still growing at least slowly and so far many parts of the economy are not much affected by the energy price declines. The reality is that people and businesses are never affected equally. Many people and businesses have been absolutely decimated. Meanwhile, the majority of people remain unaffected and even benefit from the lower gasoline and natural gas prices. And many businesses are not very much affected. The notion that Albertans are a monolithic population that sinks or swims together based on oil prices is more false than true. However, over time the effects continue to spread to more people and businesses.

Statistics Canada also reports that in Canada, “Manufacturing sales decreased 3.3% to $51.2 billion in February, following three months of consecutive gains.” Given that results can fluctuate due to reporting errors and due to issues with seasonal adjustments we should not read too much into this report unless a down trend is confirmed in subsequent months.