FINWIRES · TerminalLIVE
FINWIRES

BMO's Robert Kavcic On Biggest Factor Keeping the Recession Label Off of Canada

By

The lack of widespread contraction across Canadian industries, regions and components of economic

growth is the biggest factor keeping the recession label off, BMO's Robert Kavcic said in an overnight note.

Final domestic demand in the Canadian economy was still growing 1.3% y/y as of Q1, and the -0.4%

q/q print followed a "chunky" 2.7% advance in the prior quarter, Kavcic noted. Government aside, the private components are very mixed -- residential investment and M&E are down from a year ago, but

household spending and intellectual property investment are still growing, he said. The trade war and

housing recession are clearly having an impact, but it's not being felt everywhere, he added.

Stepping back, one common thread of every period officially labeled a recession since 1980 (there were four of them), was synchronized declines across these components of private domestic demand, he said.

Related Articles

Treasury

Noble Prices Upsized Offering of Senior Notes due 2034

Noble (NE) said late Monday it has priced an offering of $800 million of 6.25% senior notes due 2034 at par of the principal amount, with closing expected June 11.The offering was upsized from $500 million previously, it said.Net proceeds will be used to help redeem all of its 8.5% senior secured second lien notes due 2030 and $300 million of 8.0% senior notes due 2030, the company said.

$NE
Treasury

Update: Market Chatter: Bank of Canada Warns Against Overreacting to Techical Recession Indicator

Bank of Canada Senior Deputy Governor Carolyn Rogers cautioned against concluding the country is in a recession after recent data showed the economy contracted for a second consecutive quarter, Bloomberg is reporting Monday."Two quarters of annualized contraction in GDP does meet one definition of a recession. But simply the fact that you have to put the term 'technical' in front of it sort of tells you that you need to really look past that one indicator," Rogers told a parliamentary committee on Monday.Bloomberg noted real gross domestic product fell by 0.1% on an annualized basis during the first three months of the year, Statistics Canada reported Friday. That follows a 1% contraction in the fourth quarter, a downward revision from a 0.6% decrease previously reported by the federal agency.Rogers said employment data and leading indicators should also be taken into consideration, such as a flash estimate for industry-based GDP that suggested the economy grew by 0.4% in April. "I think we need to be careful not to put too much weight in any one indicator," Rogers told parliamentarians.(Market Chatter news is derived from conversations with market professionals globally, and/or from other media sources. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

$CXY
Treasury

Market Chatter: Bank of Canada Warns Against Overreacting to Techical Recession Indicator

Bank of Canada Senior Deputy Governor Carolyn Rogers cautioned against concluding the country is in a recession after recent data showed the economy contracted for a second consecutive quarter, Bloomberg is reporting Monday."Two quarters of annualized contraction in GDP does meet one definition of a recession. But simply the fact that you have to put the term 'technical' in front of it sort of tells you that you need to really look past that one indicator," Rogers told a parliamentary committee on Monday.Bloomberg noted real gross domestic product fell by 0.1% on an annualized basis during the first three months of the year, Statistics Canada reported Friday. That follows a 1% contraction in the fourth quarter, a downward revision from a 0.6% decrease previously reported by the federal agency.Rogers said employment data and leading indicators should also be taken into consideration, such as a flash estimate for industry-based GDP that suggested the economy grew by 0.4% in April. "I think we need to be careful not to put too much weight in any one indicator," Rogers told parliamentarians.(Market Chatter news is derived from conversations with market professionals globally, and/or from other media sources. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)