One of Canada's top housing experts is warning policymakers could trigger a recession if they overshoot in their campaign to cool the market. CIBC Deputy Chief Economist Benjamin Tal said in new report the Bank of Canada could cause a severe economic slowdown by raising interest rates too far, too fast. He thinks there's an even bigger risk out there … and that's why he's calling on OSFI to reconsider new stress test standards. Watch for our interview with Tal during the noon ET hour.
CANADA COY ON NAFTA
While the Americans were content to release 14 pages of objectives for NAFTA 2.0, Canada is playing it coy. “We want to negotiate the best position for Canada…I’m not seeing where there’s a huge advantage to laying out a, ‘we don’t agree with this, we do agree with this, we have this objective’ because that puts us in a position where we’ve started with some information that might not be where we want to start,” Finance Minister Bill Morneau told CTV News late yesterday. Nevertheless, there are calls from the federal opposition parties for the Liberals to shed some light on their strategy. BNN will weigh the pros and cons of laying out Canada’s cards. We’ll also have highlights from that Morneau interview, and look forward to perspective from former Finance Minister Joe Oliver this afternoon.
TORONTO’S MAYOR CALLS FOR VIGILANCE ON FINANCIAL SERVICES
John Tory made the case for shielding Canada’s banks if the Americans achieve their objective of improving access for financial services firms in the new NAFTA. “One might argue that [U.S. financials] are the dominant ones globally and we’re the ones that are in need sometimes of protectionism as big as some of our banks are,” he told BNN yesterday afternoon. Tory called for “vigilance” on the file, while adding he hasn’t seen anything that “immediately causes me to start lighting my hair on fire.”
AMERICANS FLAG INVASION OF FOREIGN HOMEBUYERS...FROM CANADA
Here's a different narrative. The U.S. National Association of Realtors has released a detailed analysis of foreign buyers; and while China clung to the top spot, the NAR noted a "massive hike" in Canadian buyers. The total value of home purchases by Canadians reached US$19 billion in the 12-month period ending in March, compared with US$8.9 billion a year earlier. The NAR's chief economist is attributing the buying spree to better affordability south of the border.
OTHER NOTABLE STORIES:
-IBM shares are trading almost 3 per cent lower in the pre-market after yet another quarter of revenue erosion. A basic question to consider: how much patience will investors have for Ginni Rometty’s strategy?
-CSX shares also drifting lower in the pre-market even after CEO Hunter Harrison led the railway to a second-quarter profit beat as he brings his signature precision railroading to the company. There’s a conference call at 8:30 a.m. ET today.
-Tahoe Resources announced late yesterday its credit facility has been doubled to US$300 million. CEO Ron Clayton said the company is “extremely pleased to have the ongoing support” of its lenders amid turmoil in Guatemala.
NOTABLE RELEASES/EVENTS
-Notable earnings: CP Rail, Morgan Stanley, Qualcomm, American Express
-Notable data: Canadian manufacturing sales (8:30 a.m. ET), U.S. housing starts (8:30 a.m. ET)
-9:00 a.m. ET: U.S.-China Comprehensive Economic Dialogue in Washington, featuring senior government officials (closing news conference at 5:00 p.m. ET)
-3:40 pm. ET: Justin Trudeau and Social Development Minister Jean Yves Duclos hold media avail in Quebec City
-4:00 p.m. ET: Finance Minister Bill Morneau speaks to the media in Tamworth, Ontario
-Council of the Federation meeting concludes in Edmonton. Today’s agenda items: cannabis, opioids, criminal justice. Closing news conference at 3:30 p.m. ET.
Every morning BNN's Managing Editor Noah Zivitz writes a ‘chase note’ to BNN's editorial staff listing the stories and events that will be in the spotlight that day. Have it delivered to your inbox before the trading day begins by heading to www.bnn.ca/subscribe.
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