http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/http://www.fxstreet.com/fundamental/http://mediaserver.fxstreet.com/images/fxstreet-provider-logo1-en.gif7http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-11-17.htmlSummary Canadian exports have been the victim of a long and deep recession in the United States. Exports have fallen more than 20% in volume terms over the course of this downturn, backsliding for eight straight quarters since Q3 2007. This is the longest negative streak since at least 1960. The United States being Canada’s most important trade partner, it comes as no surprise that the tide of Canadian exports is heavily influenced by the cyclical phases of U.S. domestic demand. There are twoTue, 17 Nov 2009 06:45:47 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-11-17.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-11-10.htmlSummary The Canadian mortgage market has undergone a radical transformation over the past 50 years. Prior to 1954, banks were not allowed extending mortgage loans. By August 2009, they held roughly 49% of all residential mortgages. Historically, the 5-year fixed-rate loan has been the workhorse of the Canadian mortgage market. This segment of the marketplace, too, has changed significantly over the years. In Canada, mortgage insurance plays a major role in the system. CMHC is the dominantTue, 10 Nov 2009 06:34:15 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-11-10.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-11-03.htmlSummary The U.S. economy is prey to a substantial and persistent trade deficit. Even in the 2002-2006 period when the dollar crumbled in value, U.S. spending growth on foreign imports outstripped foreign demand growth for U.S. exports. The trade deficit with China is by far the widest. The United States imports 4.5 times as much as it exports with China. By comparison, it imports more than twice as much as it exports with the OPEC countries. If we examine the deficit from the perspective ofTue, 03 Nov 2009 10:48:34 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-11-03.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-10-27.htmlSummary The world’s central banks have pumped massive amounts of liquidity into the economy and the global money supply is without a doubt accelerating. These exceptional efforts have had a deep impact on all financial markets, so much so that the financial crisis is now definitely drawing to a close. Still, some observers continue to be concerned about the economy because bank credit aggregates do not seem to have changed tone yet. As it turns out, credit aggregates make very poor leadingTue, 27 Oct 2009 06:38:38 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-10-27.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-10-19.htmlSummary In Canada, the housing market correction got under way much later than in the United States and lasted nowhere as long (8 vs. 33 months). In fact, it seemed like a consequence of the economic recession, rather than the cause of it as in the United States.  At the national level, existing-home price indices calculated with the repeat-sales method registered a price decline of 8.9% in Canada (Teranet – National Bank Index), against 32.6% inMon, 19 Oct 2009 19:23:20 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-10-19.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-10-14.htmlSummary A recovery in U.S. profits is key to Corporate America hiring again. Since the start of the year, the profitability of corporations has much improved. Nonfinancial corporate profits, a major driver of investment spending, were up 64.8% and 54.9% in Q1 and Q2, respectively.  The U.S. economy is experiencing very strong productivity gains, a bellwether for improved labour conditions. Typically, a recovery in non-financial profits and expanding production will result in increasedWed, 14 Oct 2009 06:24:50 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-10-14.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-10-06.htmlSummary A good number of observers today believe that business investment cannot rebound in the United States in the light of the very low production capacity rates prevailing.  Yet, present conditions are extremely propitious for investment. After the worst collapse in machinery and equipment investment since 1960, the weight of this component in GDP is at its lowest point since 1965. It must now indubitably bounce back.  U.S. firms have slashed their capital expenditures so much soTue, 06 Oct 2009 06:06:25 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-10-06.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-09-29.htmlSummary Over the past three decades, gold has not represented a good long-term investment. It took the worst financial crisis since the 1930s, a sharp depreciation in the U.S. dollar and a rekindling of inflation fears for the 30-year total return on gold to just barely beat inflation. Over this same period, even if we consider its diversification appeal owing to a lack of correlation with the stock market, gold has not constituted an attractive investment portfolio asset. Still, gold hasTue, 29 Sep 2009 06:26:09 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-09-29.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-09-22.htmlSummary In the United States, the contribution that households will make to economic recovery will be limited by their need to deleverage. Is the financial situation of businesses also a factor likely to dampen recovery? After the 2001 recession, massive job losses continued for several more quarters into the recovery as businesses faced particularly depressed profit margins. As the situation is entirely different at the start of this upturn, there is no reason for immense layoffs to persist.Tue, 22 Sep 2009 05:38:12 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-09-22.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-09-15.htmlWhile the U.S. economy registered rather strong growth from mid-2003 through mid-2006, core inflation edged up slowly from 1.5% to 2.5%. Then, in the second half of 2006, economic activity took a downturn on a sharp pullback in housing activity. What at the time appeared to many Fed officials as nothing more than an adjustment in the pace of economic expansion proved to be the early signs of the worst financial crisis in 60 years. According to IMF estimates, financial sector losses in theTue, 15 Sep 2009 10:04:03 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-09-15.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-09-09.htmlSummary The euro zone caused a bit of a surprise when its real GDP figures for Q2 were released. While the zone as a whole registered a slight contraction already in contrast with the situation in the United States, Europe’s largest economy, Germany, recorded a slim increase in activity. Though the euro zone has suffered a much deeper production shock than the United States, the collapse in real GDP does not seem to have wreaked havoc in its labour market. Germany provides a flagrant case inWed, 09 Sep 2009 05:31:26 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-09-09.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-09-01.htmlCanada – In June, Canadian retail sales rose 1.0%, outdoing expectations of a 0.2% increase and constituting a fifth advance in six months. The automotive sector recorded the strongest progression (+2.1%), propelled by gasoline station sales (+4.75). General merchandise stores turned in the weakest showing, sagging 0.6%. Retail sales excluding motor vehicles and parts were up 1.0% after rising 0.6% the month before. Gains were broadly based in 6 of 8 sectors. In constant dollars, retail salesTue, 01 Sep 2009 05:32:54 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-09-01.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-08-25.htmlSummary While some forecasters see a connection between market valuation and an economy’s speed limit, the European, U.S. and Japanese experiences demonstrate instead that a downshift in potential GDP growth apparently has little impact on stock ratios.  Movements in P/E multiples seem to be driven predominantly by cyclical factors, such as the end of recession, and financial factors, such as long yields, and much less so by trend factors.  In the light of this week’s analysis, itTue, 25 Aug 2009 10:16:51 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-08-25.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-08-18.htmlCanada – Housing starts in Canada dropped to 132.1K (-4.1%) in July after rising two straight months. Single-family units dipped to 52.5K from 53.1K while multifamily units slid to 61K from 67K. The sharpest declines were observed in Ontario (-6.7K) and Alberta (-2.4K). Quebec posted the biggest gains (+6.3K). Importantly, the 3-month moving average ceased falling and is currently at a 4-month high. The Canadian trade balance registered a slim $55-million deficit in June, down from aTue, 18 Aug 2009 05:52:52 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-08-18.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-08-11.htmlSummary For all intents and purposes, the inventory correction seems to be over among retailers and for the economy on the whole. The ratio of private-sector inventories to final sales in real terms continues to slide and has now reached a level no longer congruent with recession but rather with recovery. The ratio of new orders to inventories has now attained a level historically associated with the start of recovery. In fact, such a surge in new orders as at present has always translatedTue, 11 Aug 2009 05:38:51 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-08-11.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-08-04.htmlCanada – Real GDP at basic prices fell 0.5% in May for a tenth straight monthly decline. The goods-producing sector remained a drag on growth, shrinking 1.6%, its worst performance since January 2009. Servicesproducing industries remained unchanged for a second consecutive month. With two months of data reported for the quarter, real GDP is down approximately 3.0% at an annualized rate. However, we expect both domestic and foreign demand to perk up in the second half of the year. Hence, Q2Tue, 04 Aug 2009 05:40:44 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-08-04.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-07-28.htmlSummary The Bank of Canada reiterated last week that it expects to keep its policy rate at 0.25% until next June, “conditional on the outlook for inflation.” Because of the difficulty of gauging excess capacity in the economy, the Bank’s inflation safety margin could be slimmer than it thinks. The current output gap is about the same as in the 1990 recession and inflation is only 1.4 points lower. The real policy rate, however, is almost 8 points lower than it was then. The historicalTue, 28 Jul 2009 05:55:46 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-07-28.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-07-21.htmlCanada – Early in the week, the Business Outlook Survey released by the Bank of Canada brought good news. Canadian businesses are a lot more optimistic this summer than in the past two surveys. A majority of respondents (61%) now anticipate some growth in their sales volume over the next 12 months, while 23% continue to expect a further decline. The balance of opinion has turned around sharply to +39% after sinking to a low of -34% in 2008Q4. Back then, 57% of businesses expected their salesTue, 21 Jul 2009 08:00:46 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-07-21.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-07-14.htmlSummary There has been a decoupling between headline and core inflation. At 0.1%, the former is currently accelerating at its lowest rate in 15 years. Core CPI inflation, instead, has remained firm at 2% since the beginning of the year despite an economy in recession. Excess capacity in the economy as whole is not a sufficient condition for service price inflation to decelerate. In times of economic weakness or contraction, the goods sector is the one usually hardest hit. Thirteen of nineteenTue, 14 Jul 2009 06:33:02 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-07-14.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-06-23.htmlSummary With a record quarterly depreciation of 14%, the USD/CAD exchange rate came to the rescue of Canadian manufacturers in 2008Q4. The situation has since turned around with an appreciation of about 10% over Q1. This is bad news for our manufacturers already operating under recession circumstances. By our simulations, nine industries accounting for 27% of Canadian manufacturing shipments are quite vulnerable to an exchange rate holding on average at US$0.88. The 13 other industries shouldTue, 23 Jun 2009 07:19:39 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-06-23.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-06-16.htmlSummary Presently, the ratio of residential investment to GDP is already scraping bottom and the ratio of business investment in machinery and equipment to GDP is at a 45-year low. Consequently, forecasters advancing the scenario of a double-dip recession must necessarily expect a further decline in consumption ahead. Even though the economy is currently deep in excess capacity territory, if long rates rise too much, the surge could paralyze activity, as these would have an impact on mortgageTue, 16 Jun 2009 06:15:49 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-06-16.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-06-08.htmlThe U.S. Consumer Price Index (CPI) was virtually unchanged in April month over month. Larger-thanexpected declines in food and energy prices were partially offset by a second consecutive sizeable jump in the tobacco index. Increases in medical care costs and newvehicle prices, as well as an upturn in lodging away from home, contributed to push the CPI ex food and energy up on the month. Year over year, instead, while the all-items CPI was down 0.7%, core CPI was up 1.9%. Even excluding theMon, 08 Jun 2009 07:42:02 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-06-08.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-06-02.htmlSummary Unable, alas, to dodge the financial crisis and the U.S. recession, Canada has just recorded its worst real GDP contraction since the 1990-91 recession. Indubitably, the Canadian economy remains hitched to the United States for the sheer volume of trade between the two countries. Nevertheless, the Canadian downturn, though very severe at first glance, stands in sharp contrast with the 1981-82 and 1990-91 recessions. For one thing, the current episode is coloured by sharp regional andTue, 02 Jun 2009 04:59:18 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-06-02.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-05-25.htmlSummary The Consumer Confidence Index published by the Conference Board of Canada is not comparable to the one issued by its counterpart in the United States. The main difference between the two lies in how the underlying diffusion indexes are constructed. This problem can be overcome by applying a standard method of construction for both countries. If the underlying surveys differ, whether because the questions asked are not the same, the surveys are not conducted at the same time of theMon, 25 May 2009 11:25:43 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-05-25.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-05-18.htmlSummary Monthly indicators are available to help economists monitor developments in many components of aggregate demand (consumption, business fixed investments, residential construction and net exports). With non-farm inventories, matters are more complicated. The reason is that monthly statistics provide information on book value whereas economic analysts want to know about inventory investment. The difference between the two measures is referred to as the inventory valuation adjustment. InMon, 18 May 2009 07:57:57 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-05-18.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-05-12.htmlSummary Should sidelined investors wait for the market to pull back in order to gain a better entry point? With profits on a downward slope, how can we determine whether the markets are fairly valued? The problem is that valuation measures become very cloudy during economic turnarounds because price movements and earnings attain extreme levels. Looking back at the past five recessions can, however, give us an idea of things to come. Given that, historically, P/E ratios have varied from 14.5xTue, 12 May 2009 07:43:43 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-05-12.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-05-05.htmlEconomists have spent a lot of time and energy studying how monetary policy should be designed and implemented. Though policymaking remains in a large measure a subjective endeavour, if not an art as some would have it, economists generally agree on the basic principles that should guide central bankers. Back in 1993, John Taylor proposed a rule that incorporated these. It stipulates that the "real" short-term interest rate should be determined by three elements, namely, (1) where currentTue, 05 May 2009 06:40:58 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-05-05.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-04-28.htmlSummary Despite the recession, inflation is remarkably buoyant in Canada. In March, the Bank of Canada core CPI stood at 2%, dead on the monetary authority’s target midpoint. While core inflation in the goods sector has remained stable since 2005 in the United States, this measure of inflation in Canada has registered a sharp turnaround since last summer. The loonie’s unprecedented depreciation during a U.S. recession administered a virtual electroshock to import prices. While the UnitedTue, 28 Apr 2009 05:52:39 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-04-28.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-04-20.htmlSummary The U.S. recession continues to batter the labour market, although the monthly decline in employment has been hovering at about 0.5%. These statistics, however, hide an important facet of the labour market. Even in times of recession, the gross job creation rate remains high. What’s more, history teaches us that the gross job destruction rate can fall and the gross creation rate can rise even in the thick of an economic downturn. Many forecasters swear by initial U.I. claims to predictMon, 20 Apr 2009 07:57:57 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-04-20.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-04-13.htmlCanada – Net job losses totalled 61300 in March, after 79500 full-time jobs were trimmed and 18200 part-time jobs gained. At the industry level, the headcount was down 34200 in manufacturing and 18200 in construction. The serviceproducing sector created 1300 jobs for a first increase in three months. British Columbia led the provinces in losses (-22600) by a long stretch, followed by Alberta (-14900) and Ontario (-10800). Quebec shed 4600 jobs. At the national level, the unemployment rate roseMon, 13 Apr 2009 06:31:04 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-04-13.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-04-08.htmlSummary In 2008Q4, the profit margin of Canadian manufacturers held steady while that of their U.S. counterparts crumbled. The trend observed since 2003, namely, a slimmer margin in Canada than in the United States, has reversed. The loonie’s 14% depreciation relative to the greenback, a record quarterly movement, probably accounts for the gist of the turnaround. Two major arguments support this view. First, manufacturing prices have declined less sharply in Canada; this would not have beenWed, 08 Apr 2009 06:45:04 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-04-08.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-03-24.htmlSummary On average, since the 1980 recession, consumer confidence has bounced back two months ahead of recoveries and the stock market has registered gains of about 20% just over three months before the official upturn. The interval by which the leading economic index--composed of ten different indicators—precedes recoveries has varied across recessions. Investors have begun to hunt down opportunities on the stock market. However, at 11%, the gains registered by the S&P 500 are still notTue, 24 Mar 2009 06:01:08 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-03-24.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-03-17.htmlSummary Despite having the most highly capitalized banking system in the world, Canada has not been impervious to the financial crisis and has just registered its sharpest decline in real GDP since the 1990 recession. Nevertheless, the Canadian economy seems a lot less off balance than its U.S. counterpart. In the previous economic cycle, the consumption-to-GDP ratio attained stratospheric levels in the United States. By contrast, the ratio in Canada is presently at its long-term average. TheTue, 17 Mar 2009 05:55:39 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-03-17.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-03-10.htmlSummary U.S. household wealth is under attack on two fronts. On the one side, the stock markets are in chaos. On the other, housing wealth has suffered a rare but brutal decline. From now on, U.S. households will need to save in order to achieve their financial objectives, aside from paying back part of their debt. Consequently, we are witnessing a turnaround in the U.S. negative savings trend that began back in the early 1990s and the phenomenon is playing out very rapidly. Households willTue, 10 Mar 2009 08:47:37 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-03-10.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-03-03.htmlSummary Since last fall, Canadian real return bonds have underperformed to the point of erasing all the excess returns generated since December 1999. With the global growth outlook having deteriorated in Q4, the risks for deflation are probably higher today than they were back during the deflation scare of 2002-03. Still, the Fed expects PCE inflation to remain positive within a range of 1% to 1.5% in 2010. The output gap in Canada is no where as big a threat as it is in the United States andTue, 03 Mar 2009 06:03:12 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-03-03.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-02-17.htmlSummary The tide is turning. Relative to the median household income, the median price of existing homes has now fallen back to its long-term equilibrium level. What’s more, home and condo inventories have decreased by about one million units since peaking. By and large, about another million need to be sold before returning to a balanced market. As it happens, job losses in the economy do not translate automatically into new home listings and, historically, lower mortgage rates have been theTue, 17 Feb 2009 06:05:01 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-02-17.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-02-11.htmlSummary When the financial sector finally stabilizes – soon, it is hoped – we expect the vast amounts of liquidity (investment in money market funds as a share of total mutual fund assets is now at a 17-year high) to pour back into equities. Where will it go? In this research piece, we identify the sectors and industries that perform best in end-of-recession rallies this side of the border. For the purpose, we evaluated the performance of Canadian sectors and industries during the past fiveWed, 11 Feb 2009 08:35:17 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-02-11.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-01-21.htmlSummary History clearly shows that asset prices, those of stocks and/or real estate, are always the first to be hit by deflation. A generalized drop in price levels in the real economy constitutes a very different scenario from one in which total inflation temporarily decouples from core inflation. The bursting of a speculative bubble or any other shock can cause the economy to slow down to such a point that wages will contract if the unemployment rate surpasses a certain level. Core inflationWed, 21 Jan 2009 09:24:54 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2009-01-21.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2008-12-23.htmlSummary The time has come for big, bold monetary manoeuvres. After completely exhausting the interest rate option, the Federal Reserve is now turning on the taps full force by injecting massive amounts of liquidity directly into the economy. The impact of this injection is already being reflected in the money supply, as the aggregates have ballooned by a breathtaking 20% or so at an annual rate. In times of recession, and especially during a financial crisis, the monetary authority mustTue, 23 Dec 2008 07:23:09 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2008-12-23.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2008-12-16.htmlHighlights Quebec and Ontario account for three-quarters of Canadian manufacturing, a sector that has been hard hit by the U.S. recession. Buoyant domestic demand along with well-filled order books in the aeronautics sector is likely to help the Quebec economy sidestep a severe recession. However, a technical recession is still a possibility. The economy should grow by 0.7% in 2008 and 0.2% in 2009. Because of the marked weakness of the external sector, the strength of domestic demand, whichTue, 16 Dec 2008 06:39:15 GMThttp://www.fxstreet.com/fundamental/analysis-reports/info@nbc.ca (National Bank of Canada)http://www.fxstreet.com/fundamental/analysis-reports/weekly-and-economic-letter/2008-12-16.html