Hubble telescope catches violent birth of a star
The Hubble Space Telescope has captured an image of an infant star shining clearly within a dissipating cloud of gas and dust, NASA has announced.
The young star, which scientists say was born just before the picture was taken, has been given the name URAS 14568-6304. It is located an estimated 2,280 light years away from Earth and stretches across a staggering 180 light years. The picture has attracted much attention, in part because it has a protostellar jet beneath it – a tail-like formation of gas and dust left over from the area where the star emerged from.
EURUSD
If 1.3712 could be running dowm by the market and the daily candle will close above this level in the next days, then further upside movements seems a little bit more possible but the actual range power seems too strong currently. The bearish tendency could highlight 1.3520 with the next focus to ~1.3420 (SMA 200/Weekly).
ECB Leaves Rates on Hold, Hints Monetary Loosening in June
At its May 8th meeting, the European Central Bank left its main interest rate unchanged at 0.25 percent for the sixth month in a row. However, during the press conference, ECB President Draghi said the bank may loosen monetary policy next month to combat persistently low inflation in the eurozone.
http://www.ecb.europa.eu/stats/exter.../index.en.html
Balance of payments
This section provides information on balance of payments (b.o.p.) statistics. The euro area b.o.p. is compiled by the ECB on both a monthly and a quarterly basis. Recent monthly statistics should be regarded as provisional. Data are revised when figures for the following month and/or detailed quarterly b.o.p. data are published. Earlier statistics are revised periodically or as a result of methodological changes in the compilation of source data. The monetary presentation of the b.o.p. provides a link between the external transactions of euro area non-MFIs and money supply in the euro area.
Investments with their 'Income Style' set to 'Bond Interest' will earn interest since the last interest payment was received. This is interest earned, but not yet received. This is "accrued interest".
When calculating accrued interest, Fund Manager supports several calculation methodologies. Each investment can specify the appropriate methodology under "Investment Properties... / Income / Day Count Basis". The following day count basis methods are supported:
US (NASD) 30/360:
Each month is treated as 30 days, and 360 days in a year. This method is often used for US corporate bonds.
Actual/Actual:
The actual number of days is used for both the accrual period and year. This method is used for US Treasury bonds and notes.
Actual/360:
The actual number of days is used for the accrual period. 360 days is used for a year.
Actual/365:
The actual number of days is used for the accrual period. 365 days is used for a year.
European 30/360:
Each month is treated as 30 days, and 360 days in a year.
Interest rate for the bond, representing the amount of interest earned yearly as a percentage of the bond's face value.
Date1 (Y1.M1.D1)
Starting date for the accrual. It is usually the coupon payment date preceding Date2.
Date2 (Y2.M2.D2)
Date through which interest is being accrued. This is the "to" date, with Date1 being the "from" date.
Date3 (Y3.M3.D3)
The coupon payment date following Date2
Days(StartDate,EndDate)
Function returning the number of days between StartDate and EndDate on a Julian basis (i.e., all days are counted). Example: Days(15 October 2009, 15 November 2009) returns 31.
EOM
Indicates that the investment always pays interest on the last day of the month. If the investment is not EOM, it will always pay on the same day of the month (e.g., the 10th).
Factor
Figure representing the amount of the CouponRate to apply in calculating interest. It is often expressed as "days in the accrual period / days in the year". If Date2 is a coupon payment date, Factor is zero.
Freq
The coupon payment frequency. 1 = annual, 2 = semi-annual, 4 = quarterly, 6 = every other month, 12 = monthly.
Principal
The bond's face value (shares owned times 100, see Bond Tips)
For all day count basis methods the interest is calculated as:
The difference between US (NASD) 30/360 and European 30/360 is how D1 and D2 are adjusted prior to the calculation of Factor. Each method has its own set of rules:
US (NASD) 30/360 date adjustment rules: (follows all rules, in order)
Rule 1: If the investment is EOM and (Date1 is the last day of February) and (Date2 is the last day of February), then change D2 to 30.
Rule 2: If the investment is EOM and (Date1 is the last day of February), then change D1 to 30.
Rule 3: If D2 is 31 and D1 is 30 or 31, then change D2 to 30.
Rule 4: If D1 is 31, then change D1 to 30.
European 30/360 date adjustment rules:
Rule 1: If D1 is 31, then change D1 to 30
Rule 2: If D2 is 31, then change D2 to 30.
Actual/Actual Method:
Uses the following formula for Factor:
When Fund Manager calculates the coupon dates (Date1 and Date3), it does so by going backwards from the maturity date. The amount of time between coupon dates is determined by the investment's Frequency setting. For example, a bond that matures on 1/1/2031 and has a semi-annual frequency will have coupon dates of 1/1/2031, 7/1/2030, 1/1/2030, 7/1/2029, etc... Accrued interest is calculated from the prior scheduled coupon date, not necessarily the date of your last recorded interest payment.
BRIC Bust? Michael Mandelbaum
The very structural characteristics that launched the economic successes of Brazil, Russia, India, and China are now holding them back.
Published on April 20, 2014
Canada’s economic freedom score is 80.2, making its economy the 6th freest in the 2014 Index. Its overall score is 0.8 point better than last year, reflecting improvements in investment freedom, the management of government spending, and monetary freedom. Canada continues to be the freest economy in the North America region.
Over the 20-year history of the Index, Canada has advanced its economic freedom score by 10.7 points, the third biggest improvement among developed economies. Substantial score increases in seven of the 10 economic freedoms, including investment freedom, fiscal freedom, and the management of public spending, have enabled Canada to elevate its economic freedom status from “moderately free” 20 years ago to “free” today.
A transparent and stable business climate makes Canada one of the world’s most attractive investment destinations. Openness to global trade and commerce is firmly institutionalized, and the economy has rebounded relatively quickly from the global recession. The financial system has remained stable, and prudent regulations have allowed banks to withstand the global financial turmoil with little disruption.
CANADA weathered the financial crisis well. No bank needed to be rescued: the World Economic Forum anointed Canada’s banking system the soundest in the world. Mark Carney was exported to the Bank of England in large part because of his work at the Bank of Canada. Stephen Harper, the prime minister, took to describing Jim Flaherty, who died on April 10th just weeks after leaving the cabinet, as “the best finance minister on the planet”.
In the government’s retelling of the crisis, it alone stood between Canadians and doom. Yet luck played a large, unacknowledged part, says Livio Di Matteo, an academic and contributor to Worthwhile Canadian Initiative, the world’s best-named economics blog. The government was lucky that steps had been taken to strengthen the banking system after a series of failures in the 1980s, he says; lucky that a previous Liberal government had eliminated the deficit; and lucky that resource-producing western provinces could take up the slack when the manufacturing heartland slowed dramatically. “There is a risk that if we think we’ve done really well because of our institutions and some type of Canadian exceptionalism, we might become complacent,” says Mr Di Matteo.
In this section
Mr Harper’s Conservative government has recognised some weaknesses. Despite the plaudits for its banks, Canada still has a “too big to fail” problem. Six lenders dominate a system with financial assets worth five times GDP. The federal banking regulator tightened up the banks’ capital requirements and supervision in March 2013. The body that would have to resolve a bank failure has been given more powers.
Canada is also working to reduce its reliance on the United States, which in 2013 bought three-quarters of its goods exports and supplied just over half of its imports. That is down from historical levels, but high enough for Canada to suffer when its neighbour slows (as it did in the first quarter of this year). In the past two years Canada has reached agreement in principle with the European Union on one free-trade deal, signed another with South Korea and won admission to the group of 12 countries negotiating the Trans-Pacific Partnership. To diversify energy trade—almost all its oil exports currently head south—the prime minister has also thrown his weight behind a proposed pipeline that would redirect Alberta’s crude to Asia.
But all this will take time. And Mr Harper can no longer boast that Canada, smallest of the G7 economies, is leading the pack. The IMF projects growth will be 2.3% this year, behind the United States and Britain. Canada’s employment rate is still below its pre-crisis level; it ranks fifth in the G7 for job creation since 2008, ahead only of Italy and the United States.
A long-predicted recovery in business investment and exports has yet to appear, leaving the tapped-out consumer as the main driver of growth. With interest rates still near a record low, Canadians have continued to pile on debt since the crisis: Canadian household debt rose to 93% of GDP in the third quarter of 2013 from 76% in the third quarter of 2007. Most of the borrowing has been in the form of mortgages, driving house prices higher. The IMF and others fret that Canada is vulnerable to a sudden shock (see chart).
The government has repeatedly amended mortgage rules in order to slow the housing market. The latest tweaks are that Canada Mortgage and Housing Corporation, which provides government-backed insurance, will no longer underwrite mortgages on second homes; and that the self-employed will no longer get insurance unless their income is verified.
These measures have slowed the increase in household debt and house sales; house prices have even declined in some cities. But they remain at record levels nationally and in Toronto, the most important market. The latest calculations from The Economist suggest that house prices in Canada are overvalued by 76% and 31% when measured against long-term average rents and incomes respectively.
The central bank maintains that a soft landing is the most likely outcome. But that would still hurt consumer demand at a time when the government is also cutting spending. Canada had its fiscal house in order before the financial maelstrom hit, and the federal government was able to go deep into debt with its C$63 billion ($57 billion) stimulus plan. It is now retrenching again. “Our government will not engage in reckless new spending schemes that would lead to increased taxes or higher debt or both,” said Joe Oliver, Mr Flaherty’s successor as finance minister, in April. The rush to balance the books in time for the next election in 2015 may look prudent. But it will cost the economy much-needed jobs, according to a report this week by the parliamentary budget officer.
Some parts of the country need more support than others. Resource-rich Alberta has been the engine of growth in the past few years; investment in the energy sector is healthy. It is a different story in Ontario and Quebec, which between them have just over 60% of Canada’s population. Both complain that Ottawa is scrounging on federal transfers in order to balance its books. Manufacturing, which is concentrated in these two provinces, has not yet rebounded to pre-crisis levels. Carmaking may never recover, as production continues to move south to the United States and Mexico, where costs are lower and NAFTA has reduced trade barriers. Business investment is weak. “If I was wringing my hands about anything it would be Ontario and Quebec,” says Philip Cross of the C.D. Howe Institute, a business think-tank.
Canada’s problems are still of the first-world variety. Energy exports and a sound banking system are big advantages. There is a limit to what it can do about exports to other countries. But it did not act robustly enough to deflate the housing market, and is now being too hawkish over the public finances. The post-crisis glow is fading.
OTTAWA — A decade-plus shift in the bedrock of Canada’s economy — both in product and location — may not be over yet.
The “considerable structural change” in what we make and where we make it since 2000 is very much apparent today: a declining manufacturing sector and growing reliance on resource-based industries have shaped our economy in ways we might not have expected.
For Teck Resources Ltd. Chief Executive Donald Lindsay, every cent knocked off the value of the Canadian dollar is worth $62 million.
As Chinese economic growth slows, that’s been a rare bit of good news for the world’s second-largest seaborne exporter of coal used in steelmaking, which was forced to take a $30 million writedown on its inventory in the first quarter as the commodity’s price plunged to its lowest level in six years.
“This is partially offset by the positive effect of a stronger U.S. dollar relative to the Canadian dollar,” Lindsay said in an April 22 conference call. “That has a favorable effect on our operating margins since our sales are denominated in U.S. dollars.”
Related
Teck isn’t the only Canadian company benefiting from the currency’s tumble of 7% over the past year against a basket of 10 developed-nation peers tracked by Bloomberg Correlation-Weighted Indexes, the worst performance in the group. From energy producers to auto manufacturers, the weaker currency has made exporters more competitive and pushed the nation’s benchmark stock gauge to the highest level since 2008.
“There’s wide swaths of the stock market that actually benefit from the currency’s depreciation,” David Rosenberg, Toronto-based chief economist at Gluskin Sheff & Associates Inc., said in a May 28 phone interview. “Earnings estimates are actually going up the most in the sectors of the economy that benefit from a weaker dollar.”
Above Parity
Canada’s dollar was above parity with its U.S. counterpart as recently as last year, driven by global capital flowing into the nation’s oil sands and its strong banking system after the 2008 credit crisis. That capital has been draining out since the Bank of Canada suggested interest-rate cuts to head off deflation were possible, and expressed the benefits of a lower exchange rate to companies.
The dilemma now for the central bank, which meets June 4, will be if the currency appreciates as the economy grows and inflation accelerates.
Forecasters expect the loonie to continue to slide, weakening to $1.11 by Sept. 30, from $1.0846 on May 30 in New York, and ending the year at $1.12, according to the median estimate in a Bloomberg survey of more than 40 economists and strategists.
Growth Signs
Other resource companies have seen the benefits of the weaker loonie, with Vancouver-based New Gold Inc., Montreal-based Osisko Mining Corp. and Calgary-based oil producer Canadian Natural Resources Ltd. all citing the exchange rate for reducing costs or boosting profit in the first quarter.
Evidence of growth is showing up in economic data, with Canadian factory sales rising to the highest in more than five years in March. Inflation reached the central bank’s 2% target for the first time in two years in April, as the weaker currency helped make imported goods more expensive. http://ww2.nationalpost.com/images/l...ement-72x8.png
While Canada’s gross domestic product slumped in the first quarter amid harsh winter weather, the 1.2% annualized rate outpaced the U.S.’s 1% contraction in the period.
Canada’s dollar opened at $1.0286 on Oct. 23 when Central bank Governor Stephen Poloz surprised investors by dropping language about the need for future interest-rate increases, citing slack in the economy, leading to speculation about possible rate cuts. The currency slid 0.9% that day and bottomed on March 20 at $1.1279, the lowest point since 2009.
Rate Cuts
Poloz said April 16 that he wouldn’t rule out rate cuts to stimulate the economy after leaving the benchmark at 1%. Policy makers said the recovery hinges on a shift in demand from indebted consumers to exports and business investment, predicating an export rebound on rising U.S. orders and a weaker Canadian dollar.
Last year saw the smallest foreign inflow since 2008, and year-to-date investment of $6.14 billion trails the $9.55 billion total for the same period last year.
“Poloz has been wanting to talk the currency weaker to kick-start the economy,” Darcy Browne, managing director of currencies at Canadian Imperial Bank of Commerce’s capital markets unit, said by phone from Toronto May 30. “He can’t really talk hawkish if the currency is below $1.08.”
Company Earnings
Equity analysts have pushed consensus forecasts for company earnings on the Standard & Poor’s/TSX Composite Index, the benchmark Canadian equity gauge to a two-year high after three straight months of upward revisions, according to data from Gluskin Sheff.
The earnings forecasts for energy-company have surged 40% this year, while those for the S&P/TSX Industrials Index are at the highest point in Gluskin Sheff data going back four years.
The brighter prospects for Canadian firms have caught foreign investors’ attention, with $2.99 billion of inflows into the country’s stock market in March, contributing to the S&P/TSX’s 7.2% climb this year. It touched 14,765.15 on May 2, the highest level since June 2008.
The recent inflows combined with faster inflation have pushed the Canadian dollar up this month, with its 1.1% rally against the U.S. dollar the best performance among Group of 10 currencies.
Changing ‘Tune’
For Krishen Rangasamy, a senior economist at National Bank of Canada, the signs of economic growth will make it increasingly difficult for the central bank to maintain the kind of stance that’s facilitated the currency’s decline.
“No matter what the Bank of Canada says, markets are starting to see the data and saying, you know what, the Bank of Canada will probably have to change its tune sooner or later,” he said in a May 29 phone interview from Montreal. “The economy is slowly improving in Canada.”
National Bank forecasts the loonie to close the year little changed at $1.09.
Speculative bets against the loonie outnumbered those for the currency by 21,810 contracts on May 27, from 26,534 the previous week, according to data from the Washington-based Commodity Futures Trading Commission. Traders have been bearish on Canada’s currency since March 2013.
To Michael Craig, a fixed-income portfolio manager at Sprott Asset Management LP, the weaker loonie is too important to Canada’s recovery for the central bank to let the recent rally continue.
“The only way — and the bank has been kind of clear about this — is if we get the export sector going,” he said in a May 28 phone interview from Toronto. “And if you see a stronger Canadian dollar, it’s not going to help.” Bloomberg.com
