The dripping of the oil spill in the Canadian economy


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  • GM closes Oshawa plant
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  • What to expect in the GDP report
  • The Canadian bank will make a profit
  • Trump meet in Xi G20

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The crisis in the Canadian oil market leads to the economy of "dew drops", which threatens even deeper trouble.

Oil-seal manufacturers have already retired and economists cut forecasts for the forecasts of the Alberta economies, whose properties naturally affect the country.

At this stage, many support their wishes for OPEC producers and their allies to convene at the beginning of December to agree on delivery capacity. Do not realize that President Donald Trump is trying to lower its prices and support Saudi Arabia in other areas, but the group is expected to agree to production.

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Oil prices again fell after Friday's decline, but Brent crude oil remained below $ 60 a barrel, while West Texas's intermediate product, the United States benchmark was just over US $ 51.

Although the world oil prices have fallen, most of the priorities are West Canada Select, or WCS, a blend of oil-grade bitumen and heavy oil that has suffered from an exceptional discount for Brent and WTI.

"The longer the rise in Canadian oil prices will continue, the greater financial damage to Alberta and thus the national economy," said Douglas Porter, chief economist at the Bank of Montreal.

"The wisdom gained is that the WCS will come in the coming months, but in the meantime, we will continue to grow growth forecasts to drop-drift until recovery is reflected in the real world," he added.

Last week BMO lowered its forecasts for Alberta's economic growth to 1.7 percent from 2.1 percent in the new projection, "which is probably about lower than the price of oil did not go into the tank over the past two months." Porter said.

Toronto-Dominion Bank's economist Omar Abdelrahman and senior economist Brian DePratto lowered the production surplus by half a percentage point in the fourth quarter, but Canada will get it back when the WCS reduction is reduced next year.

This would mean next year only "no impact" on the expansion of the economy, albeit "a bit more significant" for Alberta, and a modest hit for Saskatchewan. Production cuts are expected to be up to half a percentage point in Canada's fourth-quarter growth and 0.1 percentage points from what would otherwise have been anticipated during the first quarter.

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Albera's growth alone could be 0.2-0.3 percentage points throughout 2019.

But look, if it does not cure.

"If current pricing affects, the impact on real activity, revenue and public revenue would rise quickly," said Abdelrahman and DePratto.

"In this case, Alberta's economy would be a difficult hit and the national Canadian growth could be reduced by as much as 0.5 percentage points relative to our present baseline," they have added.

"At the same time, the producers have resorted to fewer than ideal measures in response to this, perhaps the most immediate short-term support comes from producers recently announced temporary production plants estimated to exceed 160,000 barrels a day, and in November and December, to gradually balance existing glut."

They have also raised rail freight to store numbers in order to reach pipeline border constraints.

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The "tremendous" WCS discounts lasting only a few months, Abdelrahman and DePratto said that the difference between WTI will narrow to US $ 25 in the next quarters.

It is clear that oil spill is a threat to prospects, said Canadian economist Stephen Brown, chief economist at Capital Economics.

"At a time when writing was $ 51, WTI is dangerously close to a drop below $ 50, which is believed to start causing serious pain to the Canadian oil industry," he said in his report.

"Even though WTI remains just over $ 50, the decline in Western Canada's $ 15 per barrel is consistent with the decline in production before the end of the year."

Earl Sweet, the chief of BMO's financial risk, believes that the oil cartel and its allies, group observers call OPEC +, weaken supply enough to keep prices moderate and that WTI's average US $ 62 per barrel next year.

This is down from BMO's earlier $ 65 bundle. And, as Mr Sweet said, it is clearly below $ 73 a barrel based on the WTI, Brent and Dubai raw material averages that the International Monetary Fund calculates at Saudi Arabia's tax rate.

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"In Canada, producers will continue to face a very large reduction in world oil prices due to the hard challenges ahead of Alberta's transport capacity," Mr Sweet said, repeating many observers' complaints about pipeline delays.

"As Alberta oil production continues to grow, seemingly endless delays in projects targeting expanded pipeline capacities in the United States (Keystone XL) and the Pacific Coast (Trans Mountain) have led to the accumulation of local supplies," he added, as TD economists also expects The WCS gap will be narrowed next year, though it will remain high as more oil is transported by rail and Enbridge Inc. will supplement one of its pipelines.

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Oshawa waits for GM announcement

Oshawa Ont., A long time at General Motors in Canada, is currently in the Tenterhooks when it expects automated manufacturer's announcement that it closes its production facility.

Like Robert Fife and Eric Atkins's report by Globe and Mail, GM is ready to announce global restructuring, which would see Oshawa shut down.

GM told the Prime Minister's offices and the Ontario premiere on Sunday night.

GM's announcement, which was maintained during the financial crisis with the help of the US and Canadian governments, intends to reveal details at around 10:00 am ET.

The activity employs some 2,500 people.

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Board Games 2018

See who the tops and trails The Globe and Mail's annual report on Canadian business management.

For 17 years in succession The Globe Business Report has classified the work of the Board of Governors using strict management criteria designed to exceed mandatory rules by regulators.

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What to watch this week

Define a symbiotic relationship: the Canadian economy and its large banks.

Both are on Wednesday this week when Statistics Finland reports the third quarter of economic growth and the big banks are starting to publish quarterly results.

"Growth rose in the second quarter, but the pace has slowed down since then," Royce Mendes, chief economist at CIBC World Markets, told reporters on gross domestic product in the third quarter on Friday

"Household consumption seems to be showing higher levels of interest rates," he added.

"Even the housing market, which is also lowered by stricter mortgage-linked standards, even a positive contribution to the net market is reflected in the fact that imports are declining more than exports, and nothing more constructive for the Canadian economy."

Analysts generally expect the report to show that the economy grew in July-September at an annual rate of 1.8 to 2 percent, and in September alone only 0.1 percent.

Friday's reading is reflected in expectations about whether the Canadian central bank could raise its benchmark again in December or wait for January.

"The economy is looking for growth motors in the third quarter, as one of the biggest support tools – net exports – came in the round, as the improvement was due to lower imports," says BMO's Porter.

"Otherwise, look for mild profits from consumer spending and corporate investments, as well as flat housing," he added.

Before that, however, Bank of Nova Scotia will begin operations in the fourth quarter of the reporting period on Tuesday after which the Royal Bank of Canada, the Canadian Imperial Bank of Commerce and the Toronto-Dominion Bank will later reside.

Fourth is neither hot nor cold, Barclays analyst John Aiken predicted in their bank reports.

"But stable, calm near [fiscal year 2018] can only be right: Looking at the fourth quarter, we believe that the Canadian banks will deliver close to a year and it should turn to a single increase in the mid-term result for FY18, "Mr. Aiken said.

"Overall, we believe that the following trends resonate during the quarter: positive margins, steady lending growth, normalization but still benign creditworthiness, lower investment bank charges and stabilizing trading revenue; [efficiency ratio] controlled by "kitchen wash" Q4, but the key leverage effect remained positive; more modest [foreign exchange] tail rolls on the bottom row; and dividends rise from BMO, NA, and LB, "he added, referring to the National Bank and Laurentian Bank.

According to Barclays analysts, the value of shares could benefit.

"Even though banks 'valuations are sticking to a wider market, we believe that domestic business environment may be challenging investors' concerns, which are highlighted during the slower growth of the loan and in the financial period," Aiken said.

"We think the banks' relatively defensive position, including medium-sized one-tiered earnings development, fairly diversified companies slow down, historic" flight safety "to trade and a solid dividend yield of 4.3 per cent, convincing contrasts to reject the bears."

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What else to watch this week:


It's Cyber ​​Monday. And it's probably good that the financial and result calendar is pretty light, so you do not have to go online for too long.


Scotiabank and Alimentation Couche-Tard Inc. report quarterly results.

And in the United States, economists expect the latest reading of the S & P Case-Shiller home price index to grow 0.3 percent in September from August and 5.3 percent from the previous year.


Not just banks, but also a pot. RBC sends quarterly results, as well as CannaRoyalty Corp.

Markets are also watching the speeches by President of the United States of America, Jerome Powell, when he talks to the New York Finance Club at noon.

Federal Reserve Representative Jerome Powell

Alexander Drago / Reuters

Brex returns to the stage with the Bank of England analysis and the results of stress tests with British banks.

"U.K's banks have been in the spotlight because their share prices have fallen sharply recently," said CMC Markets chief analyst Michael Hewson.

The United Kingdom and the EU agree on a divorce during the weekend, but Prime Minister Theresa can now get it in his own parliament.

"The fear of uncontrolled people has damaged the industry in recent weeks, and these tests are a valuable indicator and investor insurances to convince them that the UK banking sector will be able to ride any Brexit scenario."

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Statistics Finland is expected to report that the country's current account deficit narrowed considerably in the third quarter, but observe what you have read.

Economists note that the deficit will be around $ 11.5 billion to $ 12 billion, far from the second quarter of $ 15.9 billion.

"From a nominal point of view, export growth was good, though it was due to price rises rather than the fact that the volumes were actually a little smaller in the season," said CESC Mendes.

"Nominal imports were roughly flat during the quarter only because of rising prices as real imports fell. When real imports are reduced, the current account deficit should not be left out of the market for optimistic domestic demand."

See also the quarterly results of TD and CIBC and the minutes of the last Fed meeting.


In addition to Canada's Gross Domestic Product Report, there is a great deal to rally at the G20 summit in Buenos Aires, in particular the expected President Donald Trump and Xi Jinping,

Presidents Donald Trump and Xi Jinping meet at the G20 summit in Hamburg, Germany on July 8, 2017

POOL / Reuters

"The short-term possible solution is expected to be slowly expected, and price competition may well rise from the current 10% to 25% at the beginning of next year," said CMC's CEO. Hewson.

"Although the trade preferences are set at a low level, the agreement that the proposed raised rate will not be implemented at the beginning of next year could be described as progress."

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