Following are the highlights from a telephone conversation with Jean-Francois Perrault, Chief Economist Scotiabank and John Webster, President and CEO Scotia Mortgage Corporation which took place on Thursday, April 9, 2020 at 4:30 p.m.
First, it’s not all bad news. While I’ll have to include some unpleasant information in order to provide a complete picture, that is not the focus.
There’s a document floating around the internet from Goldman Sachs. Have you seen it? It’s a private client summary regarding the coronavirus. 1,500 companies dialed in to this call.
For the record, Goldman Sachs has said the summary text was not authorized by them and it contains erroneous information which was not used during the call. Still, there seems to be a consistent message here. I wanted to share this with everyone because I do believe in much of what is being said. Have a read. It’s a summary but a bit lengthy. I strongly recommend reading the entire summary as the message in the end is positive and is in line with historically recovery patterns.
Rates have been rising gradually over the past six months following several years of historically-low rates. There should be no surprise that rates are rising – it was bound to happen. But, we can be thankful they’re not predicted to spike. It’s much easier to deal with – and plan for – gradual increases.
Benjamin Tal, Deputy Chief Economist of CIBC World Markets Inc, spoke last week about his predictions for rates and a bunch of other economic indicators. I’ve been following him for 15 years now. He’s one of the few economists whom I respect, as his forecasts have proven very accurate. So, let’s pay attention!
You gotta love the media. Yesterday, the Bank of Canada Governor gave a speech and announced a change in contingency plans should we fall into another financial crisis… like the US-made global recession in 2008.
But if you read the headlines, you would think the sky has fallen. All I kept seeing were headlines claiming “Canada could see Negative interest rates. Below zero interest rates. Canada would consider negative interest rates… ” Wow, talk about misleading the public.
Okay, so here’s what he really said, and this is straight from the Bank of Canada website…I quote… “We don’t need unconventional policies now, and we don’t expect to use them. However, it’s prudent to be prepared for every eventuality,” Governor Poloz said in a speech today to the Empire Club of Canada.
He went on to say that he believes that our economy is on target to rebound for 2017.. and here’s another direct quote. “The Bank is forecasting increasing annual growth in 2016 and 2017, with the Canadian economy expected to reach full capacity around mid-2017.”
I think this is pretty clear. The ‘worst case scenario’ plan has changed.. and the BOC govr expects our economy to rebound in the next 12 to 18 months. Hope this helps to clarify the message. Keeping it real.. and keeping it simple.
Your best interest is my only interest. I reply to all questions and I welcome your comments. Like this article? Share with a friend.
The article pointed to a semi-annual report that is put out by the Bank of Canada entitled, Financial System Review December 2014. That headline is an attention grabber.. And like most media headlines, it’s not the full story. In fact, it’s not an accurate reflection of what the Bank of Canada report had to say. If you look at Stephen Poloz’s (Bank of Canada Governor) comments, he says “there is some risk that the housing market is overvalued, and our estimates fall in the 10 to 30 per cent range”.