THE BAD NEWS
Driving down sales
We knew it was coming but that doesn’t make it any easier. With America’s cash for clunkers program finished, the hangover is setting in. In September, automobile sales plunged 10.4 per cent. That in turn dragged U.S. retail sales down 1.5 per cent, the worst decline since retail sales fell 3.2 per cent last December. We’re feeling the effect in Canada, too. Factory sales dropped 2.1 per cent in August, due largely to declining automobile shipments.
Out of house
Someone forgot to tell the banks things are improving in the U.S. housing market. A record number of homeowners were forced into foreclosure in the third quarter. More than 930,000 homes received a default notice or were repossessed, a jump of 23 per cent from the year before, according to research firm RealtyTrac. One out of every 136 U.S. homes received a foreclosure filing during the quarter.
Red cards
Major U.S. credit card companies reported a larger than expected increase in late payments in September. The data suggests Americans are still struggling with job losses and that the number of bad loans may increase in the coming months. Bank of America wrote off 14.5 per cent of its card loans, the highest rate among credit card issuers.
SIGNS OF THE TIMES
- Hoteliers in Hawaii are facing a double whammy as occupancy rates slump to a 15-year low just as the number of new or renovated rooms is on the rise. Investors sank boatloads of cash into Hawaiian resorts during the last real estate boom, but hotels are no longer generating enough cash to pay for the loans. The numbers of visitors to the state has fallen over 10 per cent in the past two years. It’s all left the hotel industry teetering on the brink.
- The 427-year-old Tour d’Argent restaurant in Paris is cleaning out its 450,000-bottle wine cellar, considered one of the best in the world, and is putting 18,000 bottles up for auction. Among the treasures: a 1788 cognac that’s expected to go for as much as US$4,500. The sale is expected to raise US$1.5 million as demand for rare and pricey bottles comes roaring back after falling off dramatically last year.
LATEST INTELLIGENCE
Canada’s economic recovery is under threat by the soaring loonie, which continues to hover around US95 cents. Driven in part by the weak U.S. greenback, the surging Canadian dollar is putting exporters at a competitive disadvantage just as demand for their products sputters back to life.
“The latest surge is indeed likely to put a heavy dampener on Canada’s fledgling economic recovery.”—Douglas Porter, deputy chief economist, BMO Capital Markets
“The message to manufacturers in Ontario is they’re going to have to position themselves to live with this.”—Avery Shenfeld, chief economist, CIBC World Markets
“The last thing the Bank of Canada is going to want is a stronger Canadian dollar.”—Craig Alexander, deputy chief economist, TD Bank
“The Canadian dollar will trend well past par to the U.S. dollar. It has no choice… because of the inherent strength of the Canadian economy.”—Dennis Gartman, economist and editor, the Gartman Letter
“An orderly decline in the U.S. dollar is necessary to a sustained rebalancing of the global economy.”—Sherry Cooper, chief economist, BMO Capital Markets
“There is now an increased focus on parity. We can get there very quickly.”—Camilla Sutton, currency strategist, Scotia Capital
Pages: 1 2
