October 6, 2016

Thursday’s action saw the S&P 500 about unchanged while Toronto was down 0.1%.

Canadian Western Bank was up 2.6%.

Walmart fell 3.2% as it plans to build fewer new stores and to spend more on e-commerce.

AutoCanada was up 4.5% to $24.61.

American Express was down 3.8% due to a negative opinion from a stock analyst at Nomura.

Statistics Canada reported a strong increase in building permits in August. In Alberta there was a strong increase in single family home permits as the number was over 1000 for the first time since January.

Reaction to the new mortgage rules continues and there are reports that certain non-bank mortgage lenders have stopped offering new mortgages or even renewals. If that continues the impact could be quite large. Credit and debt is truly the grease of the economy. I remain curious about where the Bank of Canada got its 4.64% figure for a conventional five year mortgage rate. I understood this was a report based on the average of bank posted rates. But I just checked and the rate was stuck at precisely 4.64% for 10 of the past 12 months. The exception was July and August when it was at 4.74%. That kind of stability seems very strange if it is based on an average of bank posted rates. (Or do the big banks change their posted rates that infrequently?) I have emailed the Bank of Canada late today and asked for the source of their number. It seems to me that this was a sleepy and meaningless little data stream until the government suddenly decided that all CMHC mortgages would have to stress test based on this formerly obscure data series.

In the U.S. initial jobless claims this week were at 263,000 (this is a four week smoothed figure) which is the lowest since 1973. Given the population growth this is remarkable. Despite many denials and much skepticism, the U.S. economy is doing relatively well.

CNN is focusing coverage on Hurricane Matthew. That is to be expected. It looks to be a very bad storm particularly because of the way it is going to skirt up the Atlantic coast rather than hit and move inland.

I was watching for coverage the night the same Hurricane hit Haiti and I could find none. Not on CNN and not even on the weather channel! There are 263 known deaths in Haiti and still very little news coverage on that. (And what coverage there is finally tonight seems more as a warning to America than much real interest about Haiti) I think this lack of coverage on Haiti points out the incredible extent to which the United States focuses on the United States. For better or for worse, the American media does not focus much attention outside the country. (And especially not when it has the American election to consume it full time.) Given the extent to which America focuses on America it is conceivable that it will indeed cut back on trade treaties. America is a country that truly can get by without much international trade if it really wants to. America focuses so much on America mostly because it can. Canada, has no such luxury. I generally consider trade to be a good thing overall. But there is no doubt that millions of American workers as individuals have been hurt by free trade. And they are angry about it. A better answer is to continue free trade and to work on a better distribution of income. But the anti-free-trade forces may win.