global outlook: double dip or single slog?

10

Click here to load reader

Upload: deltachamber

Post on 20-Jun-2015

377 views

Category:

Business


0 download

DESCRIPTION

Douglas Porter, Deputy Chief Economist & Managing Director, BMO Capital Markets presented a view of the global economy at the recent annual meeting of the Canadian Chamber of Commerce. Here is a copy of his presentation on September 26, 2010.

TRANSCRIPT

Page 1: Global Outlook: Double Dip Or Single Slog?

Your ambition achieved.™

™BMO Capital Markets

1-800-613-0205 www.bmocm.com/economics

GLOBAL OUTLOOK: DOUBLE DIP OR SINGLE SLOG?

September 26, 2010

Douglas Porter, CFA Deputy Chief Economist & Managing Director, BMO Capital Markets

Page 2: Global Outlook: Double Dip Or Single Slog?
Page 3: Global Outlook: Double Dip Or Single Slog?

© BMO Capital Markets www.bmocm.com/economics

Financial Markets See-saw

Commodities

08 09 10

30

60

90

120

150

0.75

1.50

2.25

3.00

3.75

4.50Stocks

08 09 10

600

800

1000

1200

1400

1600

6000

8000

10000

12000

14000

16000

(as of September 24, 2010)

Canadian Dollar(US¢)

08 09 10

75

80

85

90

95

100

105

Concerns: US Slowing, Europe Debt, China Tightening

Oil(US$/bbl:

lhs)

Copper(US$/lb:

rhs)TSX(rhs)

S&P 500(lhs)

© BMO Capital Markets www.bmocm.com/economics

Expansion Will Be Moderate

Recovery Gears Down

Real GDP

04 05 06 07 08 09 10 11

-8

-4

0

4

8

(q/q % chng : ar)

Canada

US

forecast

08 09 10 11CanadaUS

0.50.0

-2.5-2.6

3.02.7

2.52.2

Recession Gauges:Length Depth

-4.1%-3.3%

USCanada

18 mnths3 qtrs

Page 1-2

Page 4: Global Outlook: Double Dip Or Single Slog?

© BMO Capital Markets www.bmocm.com/economics

US Recession Much Worse

Employment

75 80 85 90 95 00 05 10

-6

-4

-2

0

2

4

6

(y/y % chng)

Job Losses in Perspective

CanadaUS

Cumulative Chng in Recession

US recession

Canada

US

0.2%2.4%

Record-4.7%

-2.4%

% Level-2.4%-6.1%

-417,000-8.4 mln

© BMO Capital Markets www.bmocm.com/economics

Jobless Rates Will Fall Gradually

SpainIrelandGreecePortugalFranceBelgiumFinlandSwedenGermanyJapanAustraliaUK

20.313.611.010.810.08.98.38.26.95.25.14.5

04 05 06 07 08 09 10 114

5

6

7

8

9

10

11

Unemployment Rate (percent)

Canada

US

forecast

33-year Low

9.6%

5.9%

4.4%

Lagging Indicator8.1%

US Job Creation Slow

Page 3-4

Page 5: Global Outlook: Double Dip Or Single Slog?

© BMO Capital Markets www.bmocm.com/economics

Canadian Housing Chills, US Freezes

Existing Home Prices(y/y % chng : 3-mnth ma)

03 05 07 09-20

-10

0

10

20

Housing Starts(2005 = 100 : 2-mnth ma)

03 05 07 0920

40

60

80

100

120

Home Sales: US = Existing + New Canada = Existing

Home Sales(mlns : ar)

03 05 07 094

5

6

7

8

9

0.2

0.3

0.4

0.5

0.6Canada

(rhs) CanadaCanada

USUS

US(lhs)

© BMO Capital Markets www.bmocm.com/economics

Tepid Consumer Recovery

Personal Savings Rate(% of disposable income : 4-qtr ma)

06 07 08 09 10 111

2

3

4

5

6

7

Real Consumer Spending

(y/y % chng)

06 07 08 09 10 11-3

0

3

6

US

Canada

08 09 10 11CanadaUS

2.9-0.3

0.4-1.2

3.41.5

3.12.2

forecast

US

Canada

Page 5-6

Page 6: Global Outlook: Double Dip Or Single Slog?

© BMO Capital Markets www.bmocm.com/economics

05 06 07 08 09 10

9

12

15

18

21

0.9

1.2

1.5

1.8

2.1

Canada: Aug = estimate

US(lhs)

Canada(rhs)

Vehicle Sales (mlns : ar)

Changing Gears

(3-mnth ma)05 06 07 08 09 10

5

10

15

20

China

US

Crossover

© BMO Capital Markets www.bmocm.com/economics

Global GDP: The Great Divide

Real GDP

ChinaIndia

BrazilKorea

CanadaUS

JapanEurozone

UK

0 2 4 6 8 10 12

10.38.88.8

7.23.4

3.02.4

1.91.7

08 09 10 11WorldEurozone

3.00.3

-0.6-4.0

4.21.6

3.71.5

(y/y % chng)2010:Q2

Page 7-8

Page 7: Global Outlook: Double Dip Or Single Slog?

© BMO Capital Markets www.bmocm.com/economics

Must Broaden Markets

Europe & Emerging Markets

75 80 85 90 95 00 05 10

4

6

8

10

12

14

16

Canadian Exports (% of total)

Canadian Exports: Where Now?

United States

75 80 85 90 95 00 05 10

60

65

70

75

80

85

Europe

Emerging Markets

© BMO Capital Markets www.bmocm.com/economics

Loonie & Commodities: The Ties that Bind

95 97 99 01 03 05 07 09200

400

600

800

1000

60

70

80

90

100

110

120

Canada (as of September 24, 2010)

BoC Commodity Price Index

(lhs)

C$(US¢ : rhs)

Page 9-10

Page 8: Global Outlook: Double Dip Or Single Slog?

© BMO Capital Markets www.bmocm.com/economics

Dots represent countries in the OECD, except Norway, which has huge assets

OECD Fiscal Landscape

Deficit vs Debt

-60 -30 0 30 60 90 120-3

0

3

6

9

12

15

Net Debt

2010 (% of nominal GDP)

Deficit

Surplus

Australia

New Zealand

Japan

US

Canada

Greece

UKIreland

Italy

SpainPortugal

TROUBLE

Germany

France

© BMO Capital Markets www.bmocm.com/economics

Canadian Dollar Outlook: Still Looking Up?

Canadian Dollar

03 04 05 06 07 08 09 10 11

60

70

80

90

100

110

Downside Risk: Sovereign Debt Spillover

(US¢ : as of September 24, 2010)

Parity

forecast

Positives:

Rate Hikes

Global Diversification

Sounder Finances[Current]97.58¢

Page 11-12

Page 9: Global Outlook: Double Dip Or Single Slog?

© BMO Capital Markets www.bmocm.com/economics

HST Made Little Impact

Inflation Below 2%

United States

07 08 09 10 11

-3

0

3

6

Consumer Price Index (y/y % chng)

Core

Total

Canada

07 08 09 10 11

-3

0

3

6

Core

forecast

1.1%1.7%

[Total]1.6%[Core]

0.9% ...and Falling

Total

© BMO Capital Markets www.bmocm.com/economics

CurrentSpread26 bps

10-year Bonds

07 08 09 10 11

0

1

2

3

4

5

6

Bond Yields Will Rise... EventuallyBoC Tightens

Monetary Policy Tightens in Canada First

Fixed Mortgage Rate

07 08 09 10 11

4.0

4.5

5.0

5.5

6.0

6.5

7.0Overnight Rate

05 07 09 11

0

1

2

3

4

5

6

(% : as of September 24, 2010)

US forecast

Canada

0% - 0.25%USCanada 1.00%

3.50%

2.55%

’10)(Year-end

US

Canada 2.80%

US(30-yr)

Canada(5-yr)

Canada 2.87%US 2.61%

[Current]

3.50%

’11)(Year-end

Page 13-14

Page 10: Global Outlook: Double Dip Or Single Slog?

© BMO Capital Markets www.bmocm.com/economics

S&P 500: Correction Japan: Bear

Equity Markets

GermanyDJIATSXUK

S&P 500Brazil

AustraliaSpainJapanChina

Greece

-35 -30 -25 -20 -15 -10 -5 0 5 10

5.74.1

3.93.4

3.0-0.6

-4.7-10.2-10.2

-20.1-31.1

Global Equities: New Challenges(y-t-d % chng : as of September 24, 2010)

© BMO Capital Markets www.bmocm.com/economics

Equals Single Slog

Constraints on Growth

Fiscal Restraint

Tight Credit

Jobless US

Cooling Emerging Market Growth

Strong C$

Page 15-16