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An NDP win in Alberta, and a record-breaking trade deficit

May 6: The common theme is oil, as WTI sits above $61 this morning. Plus, the pistachio market, and an $8000 gender wage gap


 

MORNING-PLAYBOOK-STORYToday, the big shocker is the political upheaval in Alberta.

There’s no better time to review Andrew Leach’s analysis of the NDP’s energy policy from a couple days ago and, in the meantime, let’s have a look at what a slowdown in energy exports actually means.

Canada posted a record trade deficit yesterday, while the U.S. announced its own trade deficit had hit a six-and-half year high. The TSX/S&P Composite Index responded with a nearly 200-point decline, spread across all 10 sectors, and the loonie inched downward, as well. Meanwhile, oil is actually continuing to rise: This morning, West Texas Intermediate (the North American benchmark) was at $61.78 at 7:30 a.m. Toronto time, and had been rising through the morning. Brent, the global benchmark, is sitting at very nearly $69.

Economic data to watch today include productivity and labour costs for the first quarter in the U.S., and the Ivey purchasing manager’s index for Canada, and the latest earning from some major oil companies, including Husky and Enbridge. Tesla will also be reporting today, fresh after its announcement of a home battery, as well as Wendy’s, 21st Century Fox, and Loblaws. Tomorrow is the U.K. general election, so we’ll have a look at the big economic issues from London then.

Bad news for Canadian and American exports. Yesterday brought figures on the trade deficits for both Canada and the U.S., and the numbers weren’t good, indicating that exports are failing to make up for the impact of the oil rout. From February to March, Canada’s trade deficit was at a record-breaking $3.02 billion, with a sharp decline in energy exports outweighing an increase in exports for other things that Canada makes, such as car parts. In the U.S., the trade deficit was at its highest since the autumn of 2008, rising 43.1 per cent in a single month to $51.4 billion.

The trade deficit measures how much the value of imports exceeded exports, so it can be used as an important measure of the health of the economy. A lot of Western countries have longstanding trade deficits, which means they habitually import more than they export, while China (and Germany), both have trade surpluses. This means they export more to the world than they import. The Bank of Canada has repeatedly said that exports (spurred by a low loonie), will make up for the hole cut out of the Canadian economy by the falling price of oil by the second half of the year. But these figures suggest that has yet to happen. For the U.S., the number means that exports were even lower than the government had predicted, a jarring suggestion of a slowdown, even as this year began on a surge of optimism for the American economy. The dollar has surged this year, making American exports far more expensive, something a lot of big multinationals, from Apple to McDonald’s, have complained about in earnings reports this quarter, and it’s not clear if the domestic economy is really picking up the slack. The dollar was falling this morning on the news.

Could the end of Iranian sanctions upend the pistachio market? Pistachios are Iran’s second-largest export, behind oil, and the end of U.S. sanctions could mean the country’s nuts could be competing on the global market once again, and make pistachios cheaper. That’s how it would work in theory, anyway—although, for now, American pistachio farmers, who are concentrated in California, aren’t worried. Nonetheless, the market for the cocktail nuts (and excellent ice-cream flavour) is equal to about $1.3 billion in each country, and a new supply could both ease prices—which have risen by 40 per cent in just five years—and cut back American output, which has tripled in just over 10.

Canadian women are getting ripped off—big time. The gender wage gap between Canadian women and men (with similar qualifications, jobs, etc) is twice the global average of $4,000, according to a study by a Toronto-based consulting firm. Yes, the Canadian average is $8,000, and the company told the Globe and Mail that this is even when factors such as women taking time away from work for children is taken into account. So let’s tally up the facts again: Canadian women make up nearly half the labour force, and more women graduate from university in Canada than men. In business and management master’s programs, women made up nearly half the students by 2010. While there are lots of typical explanations for women being paid less, including taking time for child care, voluntarily taking lower-paying jobs, not aggressively negotiating for their starting salaries (some of which this study says it accounts for), and just general discrimination, it’s still not clear why Canada’s would be so much bigger than the global average.

North Korea has an online shopping site. There’s just one problem: Barely anyone in North Korea can access the Internet. Even when they can, it’s a “domestic” Internet, which only has a few, restricted websites . . . such as the government’s home page. An Associated Press television crew had the apparently very odd experience of being given a “tour” of the site, with few specifics, such as how and when products will be delivered. But the website might be viewable by the country’s growing number of smartphones: apparently, about two million (though I’m guessing those numbers come from the North Korean government itself), just in the years since the government took down its ban on mobile phones, in 2008. Any foreigners in North Korea who miss the benefits of home delivery are out of luck: Foreigners are banned from using the service.

Need to know:
TSX: 15,173.94 (-193.53), Tuesday
Loonie: 82.84 (-0.14), Tuesday
Oil (WTI): $61.78, Wednesday (7:30 a.m.)

 


 

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