Wednesday-Night.com
Salon Magazine vol 18
July 21, 1999
# 908
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Wednesday Night #908
July 28, 1998Wednesday evening July 28, 1999 was the evening of the Money Managers.
- Jacques and Chil,
- Treasury bill,
- Dollars to euros, pesos and yen.
- Asia's turning
- While we're learning
- To profit from these gentlemen.
Led by Jacques Clément and Chilian Heward, the guests gathered closely around the table to explain, interpret, predict what had happen and what will happen in the money markets of the world. They explained what they believed and had learned from what they had overlooked.
By midnight everyone in the room emerged a little wiser.
But first, Marie-Hélène Sarrazin shared the news of her new association with SIPAR's open-end fund of small cap companies. It is an exciting challenge and Wednesday Night friends offered their congratulations and best wishes.
THE ECONOMY
In the past five months, the United States dollar has reached a new low and investors are shifting into the Euro and the Yen, turning from the United States to the European Community, Japan and Southeast Asia as currency havens. A lesser amount is shifting to Canada; this in spite of the fact that the U.S. economy is booming.
Lyda LetacqIn the U.S. unemployment is so low that despite a minimum wage of $5.50, rising to $6.75, few jobs pay less than $11.00 per hour. Because of the labour shortage, green cards are readily available.
There is some fear of inflation. However, the fact that productivity in the U.S. is up may keep inflation down. Nonetheless, it is widely expected that the Fed will return to a negative outlook on August 24, followed by a quarter percent increase in interest rates. Wages are expected to rise, and interest rates to increase by a maximum of half a percent between now and year's end. It may be necessary for Canada to follow with a quarter percent increase.
The most significant development in the economy is that the world is healing, mostly evident is southeast Asia, as well as China, South America, Mexico and the United Kingdom. The European economy has been showing surprising growth. Germany is recovering strongly. Six months ago, Chil pointed out, conventional wisdom worried about deflation. As the world heals, his concern is now about inflation. He reminded us of his dictum Money goes where it is best treated. Interest rates have bottomed out and are coming back to normal - but what is normal?
Chil HewardThe outflow of capital from the United States has the potential for affecting the United States dollar, and the Canadian as well by osmosis. The United States has a huge current account deficit, leading to a rapidly declining dollar.
With reference to the US current account deficit, Chil stated that he would not be surprised to see quotas introduced by the U.S. for countries with which it has major trade deficits. (Editor's note: it seems appropriate to note the death this week of Kelvin J. Lancaster, father of the "second-best theory" which reshaped economic thought about free trade, industrial structure and regulation. See: National Post of July 30th, Obituaries)
Me Marie CormierThere are signs that the market is beginning to shift gears.
- There is a shift in purchasing prices e.g. in the last three months, oil prices have increased 35%.
- Commodity prices are up.
- Labour unrest and settlements are widespread leading to a cyclical increase in labour costs.
CANADA
Dame Margaret Lefebvre-Walker
The projection of growth in the United States GDP is 4% this year, at least 3% next year. We can beat that in Canada.
Our annual trade surplus stands at between two and two and a half billion dollars. There is a large travel surplus. These factors largely offset the interest payments on national debt, leading to a probable current account surplus in the foreseeable future.
The current balance of payments deficit stands at approximately two and a half to five billion dollars. Our foreign reserves are at a record high. We are in a very strong position. With a weak Canadian dollar and with growth taking off, many people are underestimating yield growth.
At 66.5 cents, the Canadian dollar is undervalued. Raymond Royer ,![[français paper]](http://www.geocities.com/davidnicholson_99/fr.gif){kind=small}
the Chairman of DOMTAR, has recently predicted a rise in value of the Canadian dollar to 85 cents. Jacques Clément disagrees. On a trade-weighted basis and measured against the ten most industrialized countries of the world, it should stand at about seventy-five cents.
Why does the Canadian dollar value drop in July traditionally? While there was no answer for the historical trend, Chil pointed out that this year Quebecor had to finance a US$ 4B purchase.
 Margaret Lefebvre-Walker |
All in all, signs indicate the best performance in thirteen years. Consumer confidence has decreased, but sales of housing, automobiles and appliances are expected to remain strong. Alan Greenspan, in his six-hour appearance at the Humphrey-Hawkins Committee ( is he competing with Fidel?), seems more concerned about the stock market and consumer demand than about inflation.
Chil Heward is concerned however that climate change is not factored in; the West is suffering from floods, the East from droughts. Also not factored in, energy costs and their impact on production, transportation, disposable income of consumers. He also points out that Jacques did not include the costs of overtime in hourly labour costs.
Barrett, the high profile, controversial C.E.O. of the Bank of Montreal before being dumped, was credited with the significant improvement in the profile and profit picture of that institution. However, there was some question as to whether these positive developments were the result of his managerial skills or of those managers who worked with him. Furthermore, some questioned the acceptance of MBANX as the virtual bank of the future.
Will he be able to succeed in his current position with Barclay's Bank? Barclay's has been rudderless for years and Mr. Barrett has been hired to right it. Although not unanimous, the consensus expressed was that if he does not possess the required skills himself, he knows where to obtain them and will succeed. Possibly he will be able to achieve at Barclay's what he failed to do in Canada, spearhead the acquisition of a major interest in Bank of Montreal and make it into the world-class institution expected from the proposed merger with the Royal. All will stay tuned.
Wednesday 24 February 1999 Matt Barrett(55) resigns with $1.5 million a year in retirement for life plus stock options worth about $26 million.
But chairman of Bank of Montreal says blocked
merger didn't influence decision. See ours on Banks
MONTREAL
 Susan Eyton-Jones |
This week's news that the last of the great silos at the Old Port is to be turned into an acoustic wonder elicited mixed - and quite passionate - reactions. Depending on the debater, it is either an enormous waste of money, or a monument, a part of history dating back to 1903, being preserved with the cost of maintenance to be picked up by the visiting public.
 Herbert Bercovitz |
 Me Rita de Santis |
Wed #906 Brazil July 14, 1999 João Carlos & Lala Spiller Simon's family, a song Robert Stewart, Guy Stanley & Gerald Ratzer "Brazil is a serious buy"
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Margaret ... Mr. Nicholson is going to get mad with you, and reprimand you for this one.
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Wed #906 Brazil July 14, 1999 João Carlos & Lala Spiller Simon's family, a song Robert Stewart, Guy Stanley & Gerald Ratzer "Brazil is a serious buy"
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Wednesday, June 09, 1999 Economy class seats may be< killing you Increasingly cramped seating means airline passengers are now far more likely to die of blood clots than in crashes ( saved )
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