cently described the process that NYU uses to generate their results: The first step that Engle and colleagues propose is to calculate what they call the Marginal Expected Shortfall (MES) associated with a given financial institution. This is an estimate, based on recent dynamic variances and correlations of observed stock prices, of how much the stock valuation of a given institution would be expected to fall today if the overall market were to decline by more than 2%. This is essentially a time-varying tail-event beta, details of whose estimation can be found here.
“Despite the rapid growth in emerging economies, the United States remains a large and wealthy market that is right next door to Canada, whereas emerging markets are a significant distance away,”
the U.S. is also Canada’s leading source of foreign direct investment, or FDI. In 2010, the stock of U.S. investment here was $306-billion.
"Interest rates have recently being going somewhere unexpected: down.
With the United States government bumping up against its debt ceiling, inflation ticking upward, and a growing debt crisis in Europe, most expected interest rates to be increasing.If so, it will mean pain for savers, but good news for borrowers
.A drop in interest rates is equivalent to a sale on the price of money, and corporations are already rushing to take advantage of the easy lending conditions, even if they're in no immediate need of funds.
Mortgage rates have fallen, too - good news for homeowners looking to refinance.
But lower rates have not turned out so well for some of the market's savviest players, including Bill Gross, the founder of Pimco, the world's biggest bond fund. Earlier this year, he sold his U.S. Treasuries, because he thought interest rates were poised to rocket higher, which would drive down prices of bonds.
Oil has been trading consistently around the $100-a-barrel level, thereby lifting inflation, another bond-market negative.
Investors are getting nervous and growing more willing to buy super-safe government bonds."
The average Canadian family has joined the $100,000 club, but it’s one they most
likely don’t want to belong to.
Average Canadian household debt has hit $100,879. That’s close to twice as much
as we owed 20 years ago, according to a study by the Vanier Institute for the
Family
At the same time, the rate at which Canadians save has dropped
In 2010, that savings rate has dropped to 4.2 percent — about $2,500 per
household.
the recession has shaken out the labour market. “We’re experiencing a gain in
jobs, but people are now in jobs that paid less than what they did.
Mortgages account for about two-thirds of the $100,879 owed by the average
household, or about $63,126 per household, with 55 per cent holding mortgages
and 45 per cent mortgage-free. The other third is consumer debt, which includes
credit cards and personal loans.
“The debt-to-income ratio is concerning … but recently, (mortgage) credit
demand has slowed and consumer credit demand has slowed considerably as well.
It’s now at less than 5 per cent, which is half of what we saw in the previous
five years on average.”
Personal debt consolidation and restructuring expert Jim Ferguson said the most
common reason people are getting into overbearing debt is the ease of
availability of credit
Canadian debt levels, relative to income, are still meaningfully below peak U.S.
levels, but that a further sizable increase would be worrisome.
“Household financial assets are also growing fast due to the strong stock
market, which dampen concerns about the debt, but assets can vanish more quickly
than debts.”
Between 1990 and 2010, the Canadian prime rate declined by more than 10 percentage points, while inflation fell significantly. The result was a near-perfect environment for financial assets, pushing values for stocks and bonds ever higher.
Empowered by the regulator, the Canadian banks have leveraged their massive size and distribution powers to dominate virtually all the financial services sector.
The combined outcome was an explosion in trading and market-sensitive revenues, which grew by more than 15 per cent a year for two decades, and today are approximately 20 per cent of gross revenues. Although the process is not quite complete, the banks are also well on their way to dominating the domestic mutual fund business.