Buying Canadian has rarely made more sense

DAVID ROSENBERG | Columnist profile

From Tuesday's Globe and Mail

Published Monday, Jun. 13, 2011 7:08PM EDT

Last updated Tuesday, Jun. 14, 2011 1:38PM EDT

My colleagues and I recently made a presentation to a group of well-heeled and sophisticated investors out in warm, sunny California.

What these people came to hear about was the potential for investing in Canada, that big, far-away, snowy chunk of land at the top of the map. Few had anything but a peripheral understanding of just how large, vibrant and independent their northern cousin’s economy is, and what investment opportunities Canada has to offer.

So what were they told?

That, over the past 10 years, a period that encompassed two huge bull markets and two mammoth bear markets, the S&P 500 – the benchmark U.S. stock index – was flat on an annual rate, while the Toronto Stock Exchange grew at a 5-per-cent annual rate in local currency terms, and the Canadian dollar rose at nearly a 5-per-cent annual rate.

In other words, Canadian equities produced a combined return from both stock market gains and currency appreciation of about 10 per cent a year more than U.S. stocks. And about half the outperformance came from currency appreciation.

One would think that the Canadian dollar’s rise over par would be wreaking havoc on Canadian industries. Instead, the data reveal that exports are up 10 per cent in the past year, manufacturing shipments have risen 10 per cent, and factory payrolls have managed to eke out a 2-per-cent gain.

Being in a good currency has its advantages. And the Canadian dollar is in a long-term bull market, interim corrective phases notwithstanding.

Several forces have placed Canada’s economy in the sweet spot. Let’s examine a few:

Natural resources: Global investors are looking for reserves in the ground. This is true whether or not China endures a few quarters of subdued growth to quash its inflation buildup. Whether it be equity market capitalization, shipments or exports, Canada has triple the commodity share the United States has.

Canada is the world’s 14th-largest oil exporter while the United States is the largest importer – and with crude seemingly in a semi-permanent new and higher range, the balance-of-payments effect will continue to act as a huge underpinning for Canada’s currency.

Yield: Global investors are looking for safety and income at a reasonable price. In equities, the TSX delivers a 2.6-per-cent dividend yield, 64 basis points above the S&P 500. (A basis point is 1/100th of a percentage point.) Canadian banks pay out a 3.7-per-cent yield, versus 1 per cent stateside. Consider that the yield on the Canadian banks is higher than you can get on a 10-year U.S. Treasury bond.

Stability: The recent federal election saw the Conservatives – the party that emphasized fiscal integrity and ever-lower corporate tax rates in its campaign platform – emerge with a majority government. This appeals to global investors, who are seeking political stability in a world awash with uncertainty.

The last time Canada had a Conservative majority government was in the late 1980s, which ushered in an era of free trade with the United States, deregulation measures and tax reform, and was a great time to be long Canadian dollars.

Organic growth: Global investors are searching for economies that can grow organically, without being propped up by the crutch of fiscal and monetary stimulus.

Canada is a winner in this regard. The federal government stopped easing fiscal policy well over a year ago and the Bank of Canada has not embarked on any “quantitative easing” programs either. In contrast, since mid-2008, the U.S. Federal Reserve Board’s balance sheet has expanded 20 times more than that of the Bank of Canada’s.

Meanwhile, the Bank of Canada has raised interest rates four times. And guess what? Even with rising rates and a stronger currency, the Canadian economy expanded at a 3.2-per-cent rate compared with 2.9 per cent south of the border.

Look ma – no strings attached!

Fiscal sanity: Global investors are looking for strong fiscal balance sheets as well. On this score, with a 31-per-cent net federal debt-to-GDP ratio, Canada is near the bottom rung on the debt ladder compared with other developed nations.

I don’t mean to wrap myself in the Canadian flag but often I am asked when I will start to ease up on the positive Canada story. It will be when the good news has been fully discounted.

The potential in Canadian investments relative to our neighbour south of the border has rarely been as compelling as it is now.

David Rosenberg is chief economist and strategist for Gluskin Sheff + Associates Inc. and a guest columnist for Report on Business.

Canada among 10 most peaceful countries

By Mitch PotterWashington Bureau

WASHINGTON—Canada ranks for the first time among the world’s Top 10 most peaceful nations in a new global security assessment released Wednesday.

The Global Peace Index, which measures a complex array of 23 indicators ranging from levels of militarization to internal strife, incarceration and murder rates, placed Canada 8th internationally in 2011, jumping from 14th the previous year.

The assessment is likely to raise eyebrows in Toronto, where the violent scenes that attended last year’s G20 Summit remain a topic of heated debate.

Yet the GPI report, while assigning Canada a “slight rise in the likelihood of violent demonstrations,” downplayed events surrounding the G20 as a one-time blip more than offset by broader Canadian trends toward “societal safety and security.”

Canada’s high ranking comes in stark contrast to that of the United States, which placed 82nd among 153 countries analyzed, reflecting “much higher levels of militarization and involvement in external conflicts than its northern neighbour,” the report said.

Iceland, now recovering from the 2009 global economic meltdown and largely bereft of internal and external strife, regained 1st place in the 2011 GPI report, to be released Wednesday in Washington. Iceland is followed by New Zealand, Japan, Denmark and the Czech Republic. Small, stable democracies ranked highest, with 14 of the top 20 countries in western or central Europe.

The overall trend in 2011 suggests the world become “slightly less peaceful” over the past year, the report summarized, reflecting a higher potential for terrorism and violent demonstrations amid the political turmoil of the Arab Spring.

Somalia scored last, followed closely by Iraq, Sudan, Afghanistan and North Korea in the fifth annual report, compiled by the Institute for Economics and Peace in partnership with the Economist Intelligence Unit.

The measurement of peace is an evolving science and this year the GPI refined its approach, weighing 23 “qualitative and quantitative factors ranging from a nation’s level of military expenditure to its relations with neighbouring countries and the level of respect for human rights.”

Canada’s rise in the global ranks came, in part, as others fell. But the GPI credited Ottawa for achieving a thaw during 2010 in neighbourly relations, as trade tensions with the United States receded and Canada dialed down rhetoric on arctic sovereignty, easing relations with Norway, Russia and others.

“The reality is if you go down each of these 23 indicators, society is quite distinctly safer in Canada — and the difference of some 80 places above the United States is considerable,” Clyde McConaghy, president and co-founder of the GPI, told the Toronto Star.

“Even taking into account the G20 spike, Canada has startling distinctions that measure very well.”

Among other factors, the report credits Canada for “a moderately sophisticated and capable military sphere,” noting Canada’s defence budget has “broad declined” as a proportion of overall government spending since 1964, when three military branches were reorganized into the Canadian Armed Forces.

Limited access to small arms and light weapons and a comparatively low incarceration rate of 117 per 100,000 people in 2010 also elevated Canada in the global rankings.

Mideast countries struggling through the Arab Spring also saw a collapse in their global rankings, with Libya, Bahrain and Egypt falling farthest, in that order. But GPI officials acknowledge the possibility of “one step backward to go two steps forward” as the hope for many countries in the region.

“The question remains whether countries such as Libya, which experienced a huge fall, will be able to put in place more effective forms of government that will improve society for their own people,” said McConaghy.

The intent behind the GPI is to break new analytical ground on understanding “the conditions and structures that typify peaceful nations,” thereby offering a pathway for others to follow suit, he said.

“We don’t believe in failed states. We try to make no moral judgment on why and where (individual countries) are,” he said. He points to Angola — a country consistently rising from deep crisis 10 years ago — as an example of how “bottom-dwellers” are able to become “movers and shakers” toward stability and prosperity.

“As the research deepens, we now understand the structures of peace better than ever before,” said McConaghy. The findings, he said, provide “an actionable proposition” to show “these are the sorts of levers we need to pull to make more peaceful societies.”

Timmins opens new Immigration multicultural centre

Image via Wikipedia

By Len Gillis / lgillis@timminstimes.com

Updated 17 hours ago

There is a new welcome mat out in Timmins for immigrants who are seeking jobs and a new life in Canada.

The new Timmins and District Multicultural Centre was officially opened this week with an office and a resource person, Andrée Fortin, located in the Timmins Economic Development Corporation building at 12 Elm Street North.

The purpose of the office is to recognize the growing numbers of immigrants to Northern Ontario, to attract more of them to Timmins and to do whatever it takes to help new people and their families adjust to life here.

Christy Marinig, the CEO of the TEDC, welcomed guests to the office Tuesday saying the new centre comes about after roughly five years of effort on the immigration file.

"This is a very important day for the Timmins Economic Development Corporation and the city of Timmins," she said.

"It has been about five years that Cathy Ellis and Brenda Camirand really took the immigration initiative and started to develop it because we recognized there was a need for employers to bring new skill-sets into the community and that required newcomers," said Marinig.

"And there's also a lot of people interested in Northern Ontario, moving to Northern Ontario. Certainly not the numbers we're seeing in Toronto, but we are seeing people moving here and they do need the support services to be able to stay here, find employment and raise their families and enjoy everything that Northern Ontario and Timmins has to offer," said Marinig.

She added that she is pleased the new centre in Timmins has developed a partnership with the North Bay and District Multicultural Centre which has already been in operation for several years.

"Their leadership and expertise came in very handy and we saw it as a win-win situation to partner with them, because we believe it is important to work together," she added.

The North Bay office is headed up by executive director Don Currie who explained that his office will help the Timmins office through its growth period of providing immigrant settlement services.

"We opened in January 2008. So we've got about three and a half year's experience that Timmins doesn't have in this," said Currie, adding that immigration is now a pan-Northern effort.

"Actually all the five major cities in Northern Ontario are working together on attracting immigrants and Timmins has actually taken the lead on the marketing front. There is now actually a marketing campaign going on for immigrants to come to Northern Ontario," said Currie.

Currie explained that new immigrants will require help on a variety of concerns that many of us take for granted and that's why it's important to have a local office.

"It can be help finding a school for your kids. They won't know there are four different school boards in Timmins. They may need English or French language training. They may need help understanding the banking system, or how to get a Health Card, all the obvious things that we take for granted. So if you come to a new country, you don't know that," said Currie.

"Another big part of it is matching them with somebody who have lived here for awhile. So somebody with similar interests, similar age hopefully, can show them the best places to shop, where to find a provincial park and that kind of stuff," he said.

Currie said there will soon be a public effort to attract volunteers. There are already a few who have come forward in Timmins. He said North Bay has nearly 40 such volunteers.

Timmins mayor Tom Laughren said he was pleased to see the new centre opening.

"This is a very, very important endeavour for our community," said Laughren adding that many employers in Timmins face challenges of finding skilled workers, especially at a time when so many in the "baby boomer" generation are retiring.

Laughren added that Timmins has a history of acceptance of immigrants going back 100 years when the community was founded and then again in the post WW2 years.