Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Canada Cleaning Up Money Laundering Hits GDP The Same As Tariffs
Canada and the US have arguably one of the strongest relationships in the world. In addition to sharing the world’s largest undefended border, a whopping $3.5 billion in goods and services flow through the borders per day. However, Americans are threatening a shock to Canada’s economy by imposing a 25% tariff, a move that would deliver a 6% hit to the economy. Canada supposedly can avoid that by cracking down on its illicit activity flowing across the border. Unfortunately that would deliver a similar impact to GDP, since money laundering estimates show this is a similar contributor to Canada’s economy. We’re stuck between a brick (of drugs?) and a hard place.
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Canada’s Anti-Money Laundering Agency Isn’t Serious About Real Estate
FINTRAC, Canada’s anti-money laundering agency, has been ordered to crack down on real estate. The agency doesn’t really have its heart in the process though, hitting three firms distributed in Toronto and Vancouver with minor administrative fines. To compound the issue, those fines took up to 3 years. Meanwhile, their attempt to hit HSBC with serious anti-money laundering allegations was stopped in its tracks. It’s almost like there’s an incentive to not find any real issues.
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Bank of Canada Cuts & Ends QT, Loonie Plunges Further
The Bank of Canada cut its key policy rate at its latest scheduled meeting, as widely expected. It also ended quantitative tightening (QT) much sooner than anticipated, and that may be a problem for the currency. QT is the opposite of quantitative ease (QE), an unconventional monetary policy that’s become quite conventional in response to a slowing economy. The premature end of QT means the central bank will have less firepower for the next recession, potentially prolonging a recovery.
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Canada’s Big Unemployment Revisions Leave Puzzling Job Picture: BMO
The Canadian economy is doing better than expected after recent revisions, especially with jobs. The upward revisions of the labor force data has shrunk unemployment, and shows the economy added more jobs than previously thought. However, BMO economists warn revisions introduce more uncertainty than they help relieve fears. When contrasted with the other key job indicator, payrolls, it reveals a widening gap—one of the widest on record. This may suggest that more of the economy is considered to be “informal” employment. Not exactly the pillar for employment that we hope to lean on.
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Canadian Real Estate Slips, Ontario Sees Sharpest Correction By Far
Canadian real estate slipped at the national level, but one province has seen a much bigger correction than the rest. At the national level prices have fallen 17.2% from peak, but only Ontario has seen a greater decline (-20.7%). The second largest price decline from peak is BC (10%), and that’s quite the gap. Though price declines are once again materializing in other provinces, indicating this correction may be far from over.
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