Bank of Canada stimulus actions should reach average Canadian: Stephen Poloz

Canada’s top central banker says monetary stimulus on the scale that the country is seeing now must ultimately reach the average Canadian to help an economic recovery from the COVID-19 crisis.

In a speech Thursday afternoon, Bank of Canada governor Stephen Poloz says a recovery from the current economic crisis requires monetary policy to play a significant role once public health restrictions ease.

But for the recovery to really take off, stimulus actions need to “reach the ultimate borrower,” Poloz says.

READ MORE: TSX falls before ending one of its best months in years

In the text of his speech posted online, Poloz points to how longer-term mortgage rates were “sticky” after the Bank of Canada lowered its target overnight rate “because banks were still funding themselves at relatively steep rates in bond markets.”

Speaking to the Ivey School of Business in London, Ont., today, Poloz recalls the significance of the economic shock hitting him during a global meeting of top central bankers on March 8, where governors from China, Italy and South Korea detailed their experiences.

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Coronavirus outbreak: Bank of Canada keeps rates steady as economy sees “significant contraction”

Coronavirus outbreak: Bank of Canada keeps rates steady as economy sees “significant contraction”

“I also attended a memorial service for a friend later that day. That was my last social activity, and we were afraid to shake hands or touch the food,” Poloz says.

“I will always recall my dear friend Jim’s memorial service as the moment when the penny truly dropped.”

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Since that time, the central bank has cut its key interest from 1.75 per cent to 0.25 per cent, which is essentially as low it can go.

READ MORE: Canada’s GDP growth was already flat in February, StatCan data shows

It has also undertaken an unprecedented bond-purchasing program to pump liquidity in financial markets.

The bank has also resisted putting any specific numbers on its outlook for the economy, citing the uncertainty around how soon public health officials can contain the pandemic.

Coronavirus around the world: April 30, 2020

Coronavirus around the world: April 30, 2020

Poloz says comparisons to past downturns are “unhelpful, for they use arithmetic to compare various events that had very different effects on people.”

He says the situation today is more akin to a natural disaster than a depression with fiscal policy in place “to essentially stop the clock and later restart” the economy.

READ MORE: Rent is due May 1. Experts say CERB isn’t enough for some Canadian tenants

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Poloz says the central bank will keep a close eye to avoid rapid inflation during a recovery.

“We are alert to this risk and have the tools to respond should it materialize. But at present we see the risk of disinflation as more immediate,” he says.

Coronavirus outbreak: Singh says Liberal government should boost student benefits amid pandemic

Coronavirus outbreak: Singh says Liberal government should boost student benefits amid pandemic

© 2020 The Canadian Press


TSX falls before ending one of its best months in years

Canada’s main stock index ended lower to cap one of its best months in years and partially recover the steep declines of March.

The S&P/TSX composite index closed down 447.37 points or nearly three per cent at 14,780.74.

The loss ended a four-day winning streak that feels like a bit of a pause after Wednesday’s gains, said Greg Taylor, chief investment officer of Purpose Investments.

READ MORE: Coronavirus: What to know about getting a reduced car insurance rate

“Yesterday was really like a perfect storm of good news,” he said, pointing to positive sentiment about the economy reopening and a potential treatment for the novel coronavirus.

“And I think today’s more just sober second thoughts, people are wondering if they got too euphoric yesterday.”

In New York, the Dow Jones industrial average was down 288.14 points at 24,345.72. The S&P 500 index was down 27.08 points at 2,912.43, while the Nasdaq composite was down 25.16 points at 8,889.55.

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Global News Morning Market & Business Report – April 30, 2020

Global News Morning Market & Business Report – April 30, 2020

North American stock markets had one of their best performances in years last month.

The TSX gained 10.5 per cent after losing 17.7 per cent in March. That leaves it 17.8 per cent below its Feb. 20 record high.

While equity markets have bounced back there’s no real optimism in the bond market with 10-year U.S. treasuries not recovering much. That’s a big disconnect that has people wondering why the bond market isn’t responding, said Taylor.

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He said stock markets mainly overlooked weak U.S. jobless numbers, lower consumer spending and an unwillingness of the European Central Bank to do more quantitative easing.

READ MORE: Rent is due May 1. Experts say CERB isn’t enough for some Canadian tenants

“No one’s expecting the data to improve right now because this is kind of the eye of the storm. But it better start to improve in the next month or two to justify the bounce back in the equity markets.”

There was also some speculation Thursday that the White House would start putting on tariffs or ratcheting tensions with China as they tried to seek retribution for the virus.

“That would be a fairly big negative for the market if trade tensions started to heighten up and we just don’t need that as we’re still dealing with the other stages of recovery.”

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COVID-19: Local Housing Market Check-In

COVID-19: Local Housing Market Check-In

All 11 major sectors of the TSX were lower with materials, financials and health care leading the way.

Materials lost 3.7 per cent as metals dropped partly on weak economic data out of China. Wesdome Gold Mines Ltd. and Silvercorp Metals Inc. were each down about eight per cent.

The June gold contract was down US$19.20 at US$1,694.20 an ounce and the July copper contract was down 2.65 cents at US$2.34 a pound.

READ MORE: Canada’s GDP growth was already flat in February, StatCan data shows

The heavyweight financials sector fell 3.5 per cent as Bank of Montreal and National Bank of Canada dipped 5.4 and 4.9 per cent respectively.

Cannabis producers Canopy Growth Corp. led health care lower while energy was down 2.2 per cent despite higher crude oil prices as Suncor Energy Inc. lost 6.2 per cent.

The June crude contract was up US$3.78 or 25 per cent at US$18.84 per barrel and the June natural gas contract was up eight cents at US$1.95 per mmBTU.

Foodora stopping Canadian operations mid-May

Foodora stopping Canadian operations mid-May

Crude is up nearly 63 per cent from last week’s lows but is still down nearly 70 per cent since January as economies have shut down to slow the spread of COVID-19 and Russia and Saudi Arabia engaged in a price war.

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Despite the recent gains, Canadian oil producers are cutting output as no one’s making money at current prices.

The Canadian dollar traded for 71.89 cents US compared with an average of 71.83 cents US on Wednesday.

READ MORE: CEWS vs. CERB: How the two benefits fit together and who may have to return payments

Taylor said the real risk for markets will be in the fall once the economy starts to normalize and optimism will be heightened for a healthy second-half recovery.

“If things start to open up and the economy doesn’t rebound as fast as everyone thinks, the earnings are really sluggish… I think that could be the big risk that causes a retest of those lows.”

Coronavirus around the world: April 30, 2020

Coronavirus around the world: April 30, 2020

© 2020 The Canadian Press


Investors gain Rs 7.68L cr in 4 days of mkt rally

NEW DELHI: Investors’ wealth jumped Rs 7.68 lakh crore in four days of market rally, with the sensex ralling 997 points on Thursday.
Rising for the fourth straight session, the 30-share BSE sensex settled 997.46 points, or 3.05 per cent, higher at 33,717.62.
During the holiday-shortened week, the sensex rallied 2,390.40 points or 7.63 per cent.
Led by the improved sentiment, the market capitalisation of the BSE-listed companies gained Rs 7,68,168.35 crore to Rs 1,29,41,620.82 crore in four trading days.
“Markets this week rallied from the lows seen in March 2020. After almost a month of lockdown the world over, early signs of easing of the same along with some signs of the flattening of the COVID-19 curve spurred hope of economic activity resuming albeit at a slow pace. Some promise of a possible cure with positive preliminary results of a few drugs also added to hope and optimism,” Shibani Sircar Kurian, executive vice-president, fund manager and head (equity research) of Kotak Mahindra Asset Management Company, said.
ONGC was the top gainer in the sensex pack, rallying 13.40 per cent, followed by HCL Tech, Hero MotoCorp, TCS, Maruti and Infosys.
In the broader market, the BSE Midcap and Smallcap indices rose up to 1.46 per cent.
BSE metal index zoomed 8.27 per cent, followed by auto, IT, teck and oil and gas.
“The Indian markets had a strong run on the last trading day of the week, buoyed by encouraging drug trials result in the US to treat COVID-19,” Religare Broking Ltd vice-president (research) Ajit Mishra said.
On the BSE, 1,342 companies advanced and 1,093 declined, while 171 remained unchanged.

RBI most popular among central banks on Twitter

MUMBAI: The Reserve Bank of India (RBI) is not the most powerful in terms of monetary fire power like its peers in the US and Europe but when it comes to popularity, the monetary authority is the most followed on Twitter.
With the microblogging site emerging as a key platform for information dissemination, many central banks are active on Twitter, especially in these times of economic uncertainties amid the coronavirus pandemic.
The 85-year-old RBI and its governor Shaktikanta Das have separate Twitter accounts.
An analysis of official Twitter accounts of major central banks shows that RBI has the maximum number of followers.
As of Thursday morning, RBI’s Twitter handle has 7.45 lakh followers. On April 20 alone, the handle saw 1.31 lakh new followers, according to an official with the central bank, who attributes the massive spike to an ongoing campaign.
Since March 2019, the count of followers has more than doubled from just about 3,42,000 to over 7,50,000 to data, the official said.
The RBI created its Twitter account in January 2012.
Closely behind RBI is the Bank Indonesia, the central bank of the East Asian nation, with 7.15 lakh followers. At the third spot is Banco de Mexico — the apex bank of Mexico — with 7.11 lakh followers on the microblogging site.
RBI also created a Twitter account ‘RBI Says’ and also started a Facebook page with the same name in early April. At that time, it also launched a safety campaign advising people to remain healthy and safe by not going to bank branches as the nation was put under a lockdown to help contain the spread of coronavirus infections.
During the ongoing seven-week lockdown that began from March 25, the number of followers has increased by more than 1.5 lakh, the official said.
In March 2019, RBI was at the sixth position among major central banks and at the fourth place before the lockdown in terms of followers, the official added.
The RBI campaign featuring cine star Amitabh Bachchan to drive public awareness about going digital and keeping safe distance in times of the coronavirus pandemic, has also helped increase the number of followers, as per the official.
In comparison, the world’s most powerful central bank — the US Federal Reserve — has only about 6.17 lakh followers for its Twitter account created in March 2009.
The Frankfurt-headquartered European Central Bank, the second most powerful monetary authority in the world, has 5.55 lakh followers. This account was created in October 2009.
The Bank of Japan, which created its Twitter account in October 2011, has 27,100 followers, while Bank of England has around 3.03 lakh followers on its account created in January 2009, as per the data.
Personally, Das has 1.11 lakh followers. He joined Twitter in January 2015, when he was in the government.
After the coronavirus pandemic battered the markets and economy, Das on March 27 unleashed a monetary policy bazooka with trillions of rupees in fresh liquidity support along with a 75 basis points repo rate cut and nudged all to promote digital transaction.
“The pandemic is upon us but this too shall pass. We need to remain careful and take all precautions. I leave you with this comforting thought. Stay clean. Stay safe. Go digital,” Das had said.
His ‘go digital’ call was significant as social distancing is being reiterated as one of the good practices to avoid spreading of coronavirus infections.
Ever since Das was air-dashed to fill the vacuum created by the sudden resignation of his media-shy predecessor Urjit Patel in December 2018, RBI has been emphasising on simplify banking and its workings to the youth, by aggressively tapping social media platforms like Twitter and Facebook.
There is a need to take to these popular social media platforms to reach the youth as a part of its mass media awareness programmes, RBI said in its annual report released in August 2019.

U.S. sees another 3.8 million jobless claims, bringing total to 30 million

Millions more Americans filed claims for unemployment benefits last week, suggesting that layoffs were spreading to industries that were not initially directly impacted by business closures and disruptions related to the coronavirus.

The Labor Department’s weekly jobless claims report on Thursday followed news on Wednesday that the economy in the first quarter suffered its sharpest contraction since the Great Recession. This ended the longest expansion in the United States’ history as the economy reels from nationwide lockdowns to slow the spread of COVID-19, the respiratory illness caused by the virus.

READ MORE: U.S. sees steepest quarterly GDP drop since Great Recession

Initial claims for state unemployment benefits totaled a seasonally adjusted 3.839 million for the week ended April 25, the government said. That was down from 4.442 million in the prior week but the numbers are still high at levels unimaginable just months ago. Economists polled by Reuters had expected 3.50 million claims in the latest week. Applications for jobless benefits hit a record 6.867 million in the week ended March 28.

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Coronavirus outbreak: Trump ‘can’t imagine’ why disinfectant comments led to spike in inquiries about ingesting products

“Job separations will likely remain high for a while, as softer demand spills over into industries not initially directly affected by shutdowns,” said Andrew Hollenhorst, an economist at Citigroup in New York.

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Last week’s filings lifted the number of people who sought unemployment benefits to around 30 million since March 21, roughly 18.4 per cent of the working-age population.

READ MORE: Light, heat, bleach — Doctors reject Trump’s ‘idiotic’ coronavirus cures

At face value, the ballooning joblessness rolls imply a jump in the unemployment rate to above 15 per cent in April.

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Coronavirus outbreak: Trump says he ‘never even thought’ about changing date of U.S. election

Economists, however, say this unlikely due to the nature of job losses during the lockdowns. The government has allowed people temporarily unemployed for reasons related to COVID-19 to file for jobless benefits.

This includes those quarantined with the expectation of returning to work, as well as people leaving employment due to a risk of exposure or infection or to care for a family member.

However, according to the Labor Department’s Bureau of Labor Statistics, which compiles the closely watched monthly employment report, a person is defined as unemployed if they do not have a job and have actively looked for work in the past four weeks, and currently are available for work.

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© 2020 Reuters


Canada’s GDP growth was already flat in February, StatCan data shows

Statistics Canada says economic growth stalled in February ahead of the downturn in March due to the COVID-19 pandemic.

The agency says real gross domestic product was essentially unchanged for the month as declines in educational services and disruptions in the transportation and warehousing sector offset growth in other areas.

READ MORE: Canada’s GDP shrank by 9% in March amid COVID-19

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The educational services sector fell 1.8 per cent in February due to rotating strikes by Ontario teachers, while the transportation and warehousing sector pulled back 1.1 per cent due to rail blockades across many parts of the country and a train derailment near Saskatoon.

Excluding these two sectors, Statistics Canada says the economy would have grown 0.2 per cent in February. In a preliminary estimate for March released earlier this month, the agency said the economy posted a nine per cent decline for the month as business came to a standstill due to measures taken to slow the spread of the pandemic.

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The official estimates of GDP for March and the first quarter of 2020 will be released on May 29.

© 2020 The Canadian Press


Gold demand falls 36% due to volatile prices: WGC

MUMBAI: Gold demand in India fell 36 per cent in the January-March quarter of this year to 101.9 tonne due to volatile prices, economic uncertainties and coronavirus-induced nationwide lockdown towards the end of the quarter, according to a report.
Jewellery demand and gold investment demand also declined in the first quarter and going ahead it could be a “challenging year” unless the industry is able to get the artisans and reorganise the supply chain in quick time.
According to the World Gold Council‘s (WGC) Q1 Gold Demand Trends report, in terms of value India’s the first quarter gold demand fell 20 per cent to Rs 37,580 crore, compared to Rs 47,000 crore in the same period of 2019.
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Gold prices jumped 25 per cent to an average of Rs 36,875 per 10 grams, without customs duty and taxes, during the first quarter of this year, compared to an average of Rs 29,555 in the same period of 2019, WGC India managing director Somasundaram PR told PTI.
“Indian gold demand in the first quarter of 2020 dropped due to a combination of factors such as high and volatile prices, economic uncertainties and towards the end of the quarter, severe logistical freeze following lockdown,” he added.
Meanwhile, total jewellery demand during the quarter also declined by 41 per cent at 73.9 tonne compared to 125.4 tonne in January-March of 2019. In value terms, jewellery demand saw a drop of 27 per cent at Rs 27,230 crore as against Rs 37,070 crore in the same quarter of 2019.
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“Wedding demand during the first few weeks of the quarter did appear to bring in some seasonal cheer. However, later developments, more particularly since the beginning of March, disrupted the market and consumer confidence, resulting in a sharp drop in jewellery demand by 41 per cent,” Somasundaram said.
The total investment demand in the first quarter of 2020 was down by 17 per cent at 28.1 tonne. In value terms, however, gold Investment demand was up by 4 per cent on a year-on-year basis at Rs 10,350 crore.
“Investment demand, though lower by 17 per cent at 28.1 tonnes, was relatively better as sentiments towards equities turned negative and investors turned to gold’s liquidity and safe haven status,” he said.
Commenting on COVID-19 and its impact on the industry, he said a digital transformation of the industry could be a positive outcome of the current crisis, as social distancing, contactless payments and other behavioural necessities challenge earlier forms of consumer engagement.
“Going forward, we are unable to quantify the impact on full year demand as we do not have sight of several critical factors at play under current circumstances. It is going to be a challenging year unless the industry is able to get the artisans and reorganise the supply chain in quick time,” Somasundaram added.
Meanwhile, the total gold recycling in the country grew by 16 per cent in Q1 2020 at 18.5 tonne.
Somasundaram said recycling and collateralised loans against gold may be expected to grow exponentially due to high gold prices in the next few quarters as the immediate economic impact of the lockdown becomes evident and hopefully, fundamental reforms follow, easing business sentiment.
“In that scenario, it is possible that gold becomes a tool for revival of many SME businesses and household fortunes. This perhaps presents an opportunity that could revive GMS (Gold Monetisation Scheme) in a consumer-friendly manner.
“Consumer sentiment could receive a boost with the arrival of a normal monsoon as predicted by IMD. Issues of integrity of gold and right price will receive greater consumer attention as gold prices test affordability,” he added.

‘US, India in talks to restructure supply chains’

WASHINGTON: The US is in talks with its “friends”, including India, for restructuring the global supply chains, Secretary of State Mike Pompeo has said, as he praised New Delhi for lifting the export ban on critical medical supplies to combat the global coronavirus pandemic.
The novel coronavirus has infected over 3,193,960 people and claimed more than 227,640 lives across the globe. The US is the worst-hit with 1,039,909 cases and 60,967 deaths — the highest in the world.
Addressing a media conference on Wednesday, Pompeo said, “We’re working with our friends in Australia, India and Japan, New Zealand, the Republic of Korea, and Vietnam to share information and best practices as we begin to move the global economy forward.”
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“Our conversation certainly involved global supply chains, keeping them running smoothly, getting our economies back to full strength and thinking about how we restructure the supply change chains to prevent something like this from ever happening again,” he said.
“One example of our work together is with India. It has lifted export bans on critical medical supplies, including pharmaceuticals, used to treat some COVID-19 patients,” Pompeo said.
Over the last few weeks, Pompeo has spoken over phone — at least four times — with external affairs minister S Jaishankar.
Readout of the calls indicated that ensuring global supply chain figured prominently in their conversations.
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Pompeo said the US government has provided over $32 million in funding to support the COVID-19 response in Pacific island countries.
“We’re working with the Burmese government, the United Nations, NGOs, and others to prevent the spread of COVID-19 in Burma, including among vulnerable populations,” he said.
Referring to a recent report, Pompeo said Americans have devoted nearly $6.5 billion in government and non-government contributions to help countries fight COVID-19.
“This is by far the largest country total in the world and more than 12 times that of China’s combined contributions,” he said.

Covid-19: US economy shrinks by 4.8% in first quarter

WASHINGTON: In its worst performance in a decade, the US economy contracted by 4.8 per cent in the first quarter due to the coronavirus pandemic that has forced a near shut down of the country, according to the latest governmental advance estimates released on Wednesday.
The decline in the first quarter GDP (gross doemstic product) was, in part, due to the response to the spread of the COVID-19, as governments issued “stay-at-home” orders in March, said the Bureau of Economic Analyses (BEA) of the US Department of Commerce.
“This led to rapid changes in demand, as businesses and schools switched to remote work or cancelled operations, and consumers cancelled, restricted, or redirected their spending,” it said.
The sharpest contraction of the American economy in a decade is expected to get worse in the second quarter. In the fourth quarter of 2019, real GDP increased 2.1 per cent, it said.

According to the BEA, the full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate for the first quarter of 2020 because the impacts are generally embedded in source data and cannot be separately identified.
Over the weekend, White House senior economic adviser Kevin Hassett said that they expected second-quarter negative GDP growth between minus 15 and minus 20 per cent.
US President Donald Trump believes the US economy is likely to bounce back by the fourth quarter and next year.
“What we are doing is I think you’re going to see a big rise in the third, but you’re going to see an incredible fourth quarter and you’re going to have an incredible next year. I think you’re going to have a recovery,” Trump told reporters on Monday.
Explaining the reasons for contraction of the American economy, the BEA said that the decrease in the first quarter real GDP reflected decreases in consumer spending, nonresidential fixed investment, exports, and private inventory investment that were partly offset by increases in residential fixed investment and government spending.
Imports, which are a subtraction in the calculation of the GDP, decreased, it said.
For durable goods, the largest contributor to the decrease was new motor vehicles, based primarily on three months of unit sales data from Ward’s Automotive Reports, the report said.
For nondurable goods, increases in food and “other” nondurable goods, notably prescription drugs, were partly offset by a decrease in clothing and footwear, it said.

Glenmark to conduct trials of potential Covid drug

NEW DELHI: Glenmark Pharmaceuticals on Thursday said it has become the first company in India to receive approval from Drug Controller General of India (DCGI) to conduct clinical trials of Favipiravir antiviral tablets for the treatment of COVID-19 patients.
Having internally developed the active pharmaceutical ingredients (API) and the formulations for the product, the company filed the product for clinical trials with the DCGI and has received approval for conducting the trial on mild to moderate patients, Glenmark Pharmaceuticals said in a statement.
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The Mumbai-based company is the first pharmaceutical company in India to be given an approval by the regulator to start the trial on COVID-19 patients in the country, it added.
Favipiravir has demonstrated activity against influenza viruses and has been approved in Japan for the treatment of novel influenza virus infections, it added.
As per the clinical trial protocol approved, 150 subjects with mild to moderate COVID-19 will be randomised in the study in a 1:1 ratio to Favipiravir with standard supportive care or standalone standard supportive care, the company said.
Treatment duration is a maximum of 14 days and the total study duration will be a maximum for 28 days from randomisation, it added.
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In the past few months, following the outbreak of COVID-19, multiple clinical trials have been initiated on such patients in China, Japan and in the US.
The drug firm said its product is a generic version of Japan-based Fujifilm Toyama Chemical Co Ltd’s Avigan tablets.
Glenmark Pharmaceuticals executive vice president – Global R&D – Sushrut Kulkarni said the company is all geared to immediately begin clinical trials on Favipiravir on COVID-19 patients in India.
“The clinical trial will let us know the efficacy of this molecule on COVID-19 patients. If the clinical trials are successful, Favipiravir could become a potential treatment for COVID-19 patients,” he added.
Shares of the company were trading at Rs 346.80, up 5.19 per cent from their previous close on BSE.