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5 reasons Canadians should care what the Fed does tomorrow: Don Pittis




Expect a change in tone from the world’s most powerful central banker tomorrow when U.S. Federal Reserve chair Jerome Powell offers his latest outlook on interest rates. 

Powell has instituted a new system where he will give a news conference after every policy meeting, providing better insight into his thinking month to month.

Analysts are expecting that a gloomier economic outlook means the Fed will hold off on interest rate increases, continuing to be “patient and flexible” on new rate hikes.

But the Fed’s reaction to renewed fears of a global recession could turn out to be good for Canadians. Here are some reasons why.

1. Stronger loonie

Tourists walk at the beach in Varadero, Cuba. Other things being equal, a lower path of U.S. interest rates will make the loonie go further on winter holidays. (Fernando Medina/Reuters)

​Market indicators are telling us that the chance of the Fed chair announcing a rate hike Wednesday is now pretty much zero.

But there is some chance Powell could do more to stimulate the economy, including dropping hints that the pace of future rate hikes will be more moderate.

The growing differential between the Canadian and U.S. interest rate is one factor keeping the loonie soft.

If currency traders foresee a narrower gap between the two rates, the Canadian dollar should remain stronger than if the spread continued to widen — making imports cheaper and winter beach holiday spending go further.

2. Higher wages

Skilled workers have been in short supply for awhile, but employers are now complaining even unskilled employees are hard to find at current wages. (Mark Blinch/Reuters)

In both Canada and the U.S., there are early signs that a labour shortage is beginning to push wages higher. Industries in many places have complained that even unskilled workers are unavailable at current wages.

Most economists seem to think U.S. rates are still low enough to keep stimulating the economy. That means profitable businesses can still afford to borrow and expand, increasing demand for workers that are in short supply.

With the porous Canada-U.S. border, rising wages in the U.S. can flow through to Canada, as Canadian workers take up the slack created by U.S. shortages.

3. Increased inflation

Economic theory says a lower path of interest rates should allow not just wages, but prices to creep up — which can be both good and bad for Canadians. (Chris Helgren/Reuters)

Holding off on a U.S rate hike could well let a little more inflation creep into the economy.

Usually we think of inflation as a bad thing, because the prices of the things we buy go up. But there are a number of reasons why inflation can be good for Canadians, especially if wages keep pace with prices.

For one thing, higher inflation reduces the risk of deflation — falling prices — that many economists say discourages people from spending or from borrowing to invest.

Inflation reduces the amount heavily borrowed Canadians must pay back, because while the total debt is the same, you are paying it back in dollars that are worth less than your rising salary. On the other hand, people with cash assets lose, and inflation causes a small transfer of wealth from savers to borrowers and net spenders. 

4. Lower mortgage costs

Canadian houses are shown under construction last winter. A lower path of U.S. rates can also mean lower costs for Canadians who lock into five-year mortgages. (Mark Blinch/Reuters)

While the Bank of Canada benchmark rate — set by our own central banker Stephen Poloz — has an immediate effect on variable-rate consumer loans and mortgages, mortgages that are locked in for a longer period are more directly determined by international bond markets.

Generally, for a five-year fixed mortgage, lenders make their calculations based on what money is earning over a five-year period in New York — and those rates are, in turn, based on the Fed rate.

Lower five-year rates are reassuring to homebuyers who have been worried by previous Fed predictions that rates would be rising sharply. That means expectations of a slower path for U.S. interest rate hikes could help to stabilize the Canadian market for new and resale housing. 

5. Higher stock markets

It was another down day on markets yesterday, as companies warned of the effects of China’s economy on their balance sheets. (Brendan McDermid/Reuters)

At the end of last year, as stock prices were falling, a lot of market watchers, including U.S. President Donald Trump, blamed Powell for raising interest rates more quickly than necessary.

While keeping markets from falling is not officially part of the Fed’s mandate, a plunging market could hurt jobs and prevent the U.S. central bank from hitting its two per cent inflation target — two things that are part of its mandate.

A “dovish” tone — one that seems to expect rates to stay lower for longer — might boost share markets.

More recently, the long-term program now in effect to get rid of the bonds that the Fed bought to stimulate the economy using quantitative easing have been blamed for market sell-offs.

Ending the gradual and predictable process of unloading those bonds would, in theory, add a little more stimulus to the economy. But Powell may be reluctant to interfere with a system that as been working well ever since it was put in place by his predecessor Janet Yellen 16 months ago.

Follow Don on Twitter via @don_pittis 

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Real Estate

Couple from Toronto buys dream home in Mushaboom





MUSHABOOM – A couple who lived and raised a family in downtown Toronto developed a five-year plan in 2015 to purchase their dream home.

In September they moved into the home – located on Malagash Island in Mushaboom on Nova Scotia’s stunning Eastern Shore – that met and exceeded their best dreams for their retirement.

The Camerons, Bruce and Tanya, decided in 2019 they would explore the Maritimes to see what real estate was available to become their potential retirement home. In the spring of 2020, during a global pandemic, the real estate boom hit their city, and they were hearing the same for Nova Scotia. Our province was their first-choice for attaining their desire for an entirely different lifestyle – away from the busyness of the city.

“We had $300,000 to $350,000 as a home value in mind to buy. Our semi-detached located off Danforth in Toronto was priced at $850,000. We wanted to come out ahead, so we would be secure in retirement,” Tanya said.

Their century-old home had prime location near the subway and GO Transit Line for a great 13-minute commute downtown.

“We enjoyed our community,” explains Bruce “… we had great neighbours, young children around and street parties – lots of social activity.”

Bruce says, “Our agent suggested a starting quote of $899,000. We did not do any renovations and only some staging. Fifty couples went through and we received four significant offers. Six days later we sold – with zero conditions – and a price of over a million dollars. We just requested a closing of September 2020 to get the kids off to school – which we got.”

The couple got more than they had anticipated.

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Real Estate

Rabobank Announces Leadership Changes in U.S., Canadian Offices





NEW YORK, Dec. 16, 2020 /PRNewswire/ — Rabobank, the leading global food and agribusiness bank, has appointed two of its top executives, Tamira Treffers-Herrera and Robert Sinescu, to become Co-Heads of North American Client Coverage, positioning the Bank for future growth in the region.

Treffers-Herrera has also assumed the role of Vice Chairperson and Head of the Atlanta office, where she additionally oversees Rabobank Mexico, which is led by Eduardo Palacios. Sinescu is the Head of the Chicago office, and also oversees Rabobank Canada, led by Marc Drouin, who was recently appointed as Canada’s General Manager.

Treffers-Herrera and Sinescu report to David Bassett, Head of Wholesale Banking North America, the Bank’s corporate and investment banking business for the region based in New York.

“Both Tamira and Robert have a demonstrated history of strong leadership, operational excellence and passion for our clients,” Bassett said. “Their broad experience and deep sector expertise will be invaluable in delivering dynamic results for clients while accelerating our growth trajectory in North America.”

Each office will have an even greater focus on key Food & Agribusiness sectors and clients: The Chicago office will drive growth in sectors including Dairy, Farm Inputs and Grains & Oilseeds, which are also key areas of focus for the Canada office. The Atlanta office will focus heavily on sectors such as Animal Protein, Beverages, Sugar, and Supply Chains, which are important sectors in Mexico as well.

“Rabobank is fully committed to our clients throughout North America, and we believe our new sector-focused coverage will improve our ability to provide knowledge-based, value-added solutions that benefit our clients,” Bassett said.

Treffers-Herrera was most recently based in London as CEO of Rabobank’s European Region from 2016-2020, where she took the organization through Brexit. Prior to that, she worked in the Atlanta office from 2002-2016. During her tenure in Atlanta, Treffers-Herrera served as Global Sector Head – Consumer Food & Beverages, and prior to that she was a senior banker for a portfolio of large beverage and consumer foods clients. She holds a Bachelor of Arts degree from the University of Kentucky, a Master of Arts from the Patterson School of Diplomacy and International Commerce and has studied at The University of Chicago Booth School of Business and Harvard Business School.

Sinescu has been with Rabobank for over 21 years and was previously General Manager of Rabobank Canada, where he oversaw all operations, business development, commercial strategy and relationships with regulators. In addition, he continues to serve as CEO of Rabo Securities Canada Inc. Prior to Canada, he was a senior banker, Head of Corporate Banking, European Sector Head for Sugar, and a member of the Management Team for Rabobank France. He holds a Bachelor of Science in Business from the Bucharest School of Business, a Master of Business Administration & Management and a Master of Science in Banking and Corporate Finance from Sorbonne University in Paris, and has studied at Brown University.

Drouin has worked with Rabobank’s Canadian team for more than nine years and most recently served as a senior banker, Head of Rabobank Canada’s AgVendor Program and a member of Rabobank Canada’s Management Team. He brings extensive wholesale banking experience within the Dairy, G&O, CPG and Supply Chain sectors. Drouin holds a Bachelor of Arts degree from McGill University and a Master of Business Administration in International Finance, Marketing and Management from the Schulich School of Business at York University.

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Real Estate

Greybrook Realty Partners & Marlin Spring Brand Jointly Owned Asset Manager – Greyspring Apartments





TORONTO, Dec. 14, 2020 (GLOBE NEWSWIRE) — Greybrook Realty Partners and Marlin Spring are pleased to announce the new branding of their jointly owned investment and asset management firm, Greyspring Apartments. With a portfolio of more than 2,000 units and CAD$375 million in assets under management, Greyspring Apartments is focused on the acquisition and repositioning of multi-family assets throughout Canada.

The new name and branding is an important step in Greyspring’s evolution as an independent operating business. Formed in 2018 by long standing-partners Marlin Spring and Greybrook Realty Partners, Greyspring Apartments was established with the goal of building a leading asset management firm with a robust portfolio of residential rental real estate assets in primary and secondary markets across Canada.

Greyspring’s talented team of real estate, asset management and finance professionals is overseen and guided by the Management Board, whose members include Benjamin Bakst, CEO, Marlin Spring; Elliot Kazarnovksy, CFO, Marlin Spring; Sasha Cucuz, CEO, Greybrook Securities Inc.; Peter Politis, CEO, Greybrook Realty Partners; Chris Salapoutis, President & COO, Greybrook Realty Partners; Ashi Mathur, President, Marlin Spring; and Karl Brady. In addition to his role on the Management Board, Karl Brady leads Greyspring Apartments as its President. 

“We are pleased to announce the official name and branding of a business we formed with our partners at Marlin Spring a few years ago,” said Peter Politis, CEO, Greybrook Realty Partners. “Greyspring has been diligently focused on the execution of strategic value-add programs across its portfolio that are improving the quality of housing for tenants and overall asset values. For Greybrook investors, expanding from our core business in real estate development to the value-add space through Greyspring, has allowed us to provide our clients with investment opportunities that diversify their real estate investment portfolios.”

“Marlin Spring and Greybrook have partnered on many residential real estate projects in recent years,” said Benjamin Bakst, CEO and Cofounder, Marlin Spring. “To a great extent, Greyspring illustrates our approach to partnerships. We believe in, and strive for, responsible growth through deepening our relationships with our trusted partners. With Greyspring, we’ve formalized our focus on providing better and more affordable living experiences for Canadians. This vision aligns with our mission to deliver exceptional real estate value to all our stakeholders with an uncompromising adherence to our core values.”

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