Oil volatility, Swiss secrets, and a G20 meeting

Will the volatility continue this week?

Friday finished off a bumpy week, and the question for Monday is whether we’ll be seeing more swings to come. After jumping almost a cent the day before, the loonie ended the day down 0.7 cents, while the TSX ended slightly down despite news from Statistics Canada of a boost in jobs last month. Oil had a wild week, swinging more than nine per cent thoughout three separate days, This morning, West Texas Intermediate is once again flirting with $52.

On the calendar,  January housing numbers will be released today, but the bigger headlines are international: in Istanbul, G20 finance ministers and central bankers, including Canada’s, will begin a two-day meeting by grappling with a mixed-picture from major economies. And in Europe, another banking scandal, as leaks from inside HSBC indicate the bank helped customers evade taxes by using Swiss accounts. We’ll also have OPEC’s monthly oil report today as well as India’s fourth-quarter GDP, and tomorrow, a speech from the Bank of Canada on the labour gap, and a meeting between Stephen Harper and Angela Merkel. But first, an update on job numbers from Friday.

January’s jobs were a case of quantity over quality (at least in Canada). Last month saw a somewhat surprising job jump, given all the news of cutbacks and layoffs as the oil rout really starts to hit. Statistics Canada reported 34,500 jobs were created, and the unemployment rate fell back to 6.6 per cent – and that comes after largely flat job growth the previous month, and a revised picture of 2014 which revealed the jobs picture was far weaker than we thought. But even this number may not be quite so rosy as it looks: those gains were largely in part-time work and self-employment, and one of the largest groups getting back into work was women over 55. By contrast, full-time jobs actually fell by almost 12,000 and the youth unemployment rate fell – because more young people stopped participating in the labour market. In fact, employment participation remains at a near 15-year low. You can have a closer look at the numbers behind the report in the latest Weekend Playbook. While more jobs are better than no jobs, at least for statistical purposes, the question we’re left with is whether the numbers are disguising an unhealthy job market.

It’s discouraging news, but bank economists, at least, have been drawing some solace from the relentless upward chugging of the U.S. jobs market (and its potential overspill): last month hit job growth above 250,000, but revisions of the last two months’ numbers also saw a star-spangled jobs report in November become even better. Unchanging wages had been the sole sore spot in U.S. jobs numbers lately, creating worry that wage growth wasn’t rising apace, but even that saw some improvement last month.

Swiss secrets. It sounds like a chocolate, but it reads like a crooked balance sheet. A blockbuster investigation by the Guardian, published yesterday using information on holders of Swiss bank accounts leaked by a former IT specialist, has detailed how the British bank HSBC helped its customers evade tax authorities. The account-holders included multimillionaire businessmen, dictators, famous musicians, and anyone else who might need to hide a significant amount of cash. The feature is just the latest report on tax evasion based on leaks from whistleblowers – PricewaterhouseCoopers and the Luxembourg government (including the current head of the European Commission) are currently under the microscope. In the fall, leaks indicated companies including Amazon and Fiat were permitted to pay little or no taxes, by using a complex arrangement of tax strategies and shell companies to route profits through the tiny country. The series, nicknamed “Lux Leaks” was produced by the International Consortium of Investigative Journalists, which has several Canadian members.

The G20 meets today. Finance ministers and central bankers from the G20 countries are in Istanbul today for the first day of a two-day meeting. In a blog posted on Friday, IMF head Christine Lagarde noted that “there is a lot at stake,” laying out priorities that not only include addressing the full slate of economic headliners, but the ongoing impacts of the Ebola crisis and the gender pay gap. As any watcher of economic news will know, the G20 countries face an incredibly mixed picture: as the U.S. economy appears to be building up steam, the tangled forces of falling oil prices and falling consumer prices are giving economies from Canada to Japan a limp, while some – including Ukraine and Venezuela – are experiencing out and out crisis. Meanwhile, Greece and the eurozone are locked in a duel, Russia is attempting to shore up the ruble, and Switzerland and Denmark are attempting to keep their currencies from skyrocketing. (I could go on, but then we’d be here all day.) It’s enough to keep the meeting very, very busy.

Debt, debt, more debt ($57 trillion worth). The global economy is more indebted than it was during the financial crisis. The $57-trillion number – the results of a report by consulting group McKinsey and Company – was actually released last week, but a slate of infographics are putting this number in perspective, so it’s worth a look. Japan, with 400 per cent debt to its GDP, features in the report (followed by Ireland), with a reminder that Portugal is actually more indebted than Greece. On the optimistic side, U.S. household debt is down, as are debt levels for banks.

Need to know:
TSX: 15,083.92 (-41), Friday
Loonie: 79.79 (-0.7 cents), Friday
Oil (WTI): $51.91, Monday morning (4:20 a.m.)