Consumer spending continued to grow for a third consecutive quarter, with domestic demand up 1.1%., led by personal expenditures, government expenditures and the housing market. The price of goods and services also rose 1.1%, especially for residential structures, motor fuels and energy products. Purchasing power grew 2.1%, and labour income rose 1.4%, the largest increase since the first quarter of 2008. Corporate profits were also up 0.9%.

Exports and imports both rose, with exports outpacing imports. Demand for motor vehicles and household furniture and equipment rose 2.6%.

Internet banking is becoming a larger part of any individual's daily banking routine with the ease and convenience of this service allowing people to manage their finances all from the comfort of their own computer.

Online banking is the new face of the banking industry with bank customers now able to pay bills, check balances, manage credit cards and transfer funds online for free at their own convenience while banks utilize the online option as a cheap alternative to over-the-counter services.

Business owners are not looking for financial advisors to give them the life they want by making a killing in the stock market; these people have been able to create the life they want by themselves. In the early 1990s, at the beginning of my financial planning career, I was very fortunate to meet one of Canada's most successful businessmen. He was in his late 50s and had much more life experience than me. He shared that 99.9 per cent of the investment advisors he had met over the course of his career did not have the foggiest idea of how to make money nor did they understand what successful business people were looking for when they sought out professional advice.

A very simple meaning of arbitrage would be getting something from nothing! If you are surprised then don't be, for that's what arbitrage is. Technically, however, it can be defined as a synchronized purchase and sale of a security which will provide you with a profit derived from the price difference between the two.  

Here is a small example to show how it works. Let's imagine that the price of a stock on the NYSE is $15 per share, but the price of the same share is $10 per share in the Frankfurt exchange. Now the difference of a $5 could mean an instant profit for you requiring zero investment.  

By Warren Hayhoe,

Columnist, Canadian Money Magazine

Central Trader, Jameson Bank

USD/CAD 1.0500       
GBP/CAD 1.6177
EUR/USD 1.3516
GBP/USD 1.5399
CAD/EUR 1.4193
JPY/CAD 0.011453
Oil opened at $78.37, currently $78.75
Gold opened at $1108.40, currently $1110.60
CRB closed at 276.15, +2.31

Today:

• Commodities, Oil, and Gold fall as the US Dollar climbs after the Fed rate hike cause market to refrain demand and seek refuge  Rate hike signaling end of stimulus measures to supply liquidity to financial markets.
• Canadian retail sales strongly up 0.4% in December. Canada monthly Job Insurance Claims decline 2% in December.
• US January CPI up 2.0%, Core CPI (minus food, energy) down 0.1%, seen as somewhat a muted inflation report.

Observations:

Stock index futures are pointing to a lower open on Wall Street but were well off their lows as investors reacted to a surprise move by the Federal Reserve to hike its discount lending rate to banks. Canadian core retail sales came in line with the forecast, rising by 0.4%. In the US, core CPI declined by 0.1% suggesting that inflation is not an issue for the FED. The greenback strengthened yesterday afternoon after the discount rate hike against the major currencies including the euro and the loonie.

Yesterday:

• Canadian CPI met its target area of 2.0% YoY for the core, although this will not signal a rate hike

Six of the major components of the CPI showed increases during the twelve-month period: the exceptions were shelter, and clothing and footwear. Shelter costs declined 1.1% as a result of lower mortgage interest costs, and natural gas prices. Women's and children's clothing prices were down 6.8% and 4.8% respectively.

The higher sales were widespread; only the personal and household goods sector declined. Machinery and electronic equipment contributed most to the growth with a 1.2% increase to $8.8 billion. This sector includes machinery and equipment, computers and other electronic equipment, and office and professional equipment.

By Warren Hayhoe,

Columnist, Canadian Money Magazine

Central Trader, Jameson Bank

USD/CAD 1.0445         
GBP/CAD 1.6354
EUR/USD 1.3665
GBP/USD 1.5674
CAD/EUR 1.4266
JPY/CAD 0.011589
Oil opened at $74.02, currently $75.51
Gold opened at $1093.70, currently $1117.60
CRB closed at 267.92, -1.79

Today:

• Jim Flaherty said to Tighten Canada’s mortgage industry rules for first time home buyers amid further bubble talk.
• Canadian manufacturing sales rose slightly less than expected in  December, driven by gains in sales of cars and aerospace products.
• Foreigners bought US assets steadily in December, but the pace was slower than a month before as investors dumped bills at a record level.

Observations:

Investors return from the three-day holiday and stock index futures are pointing to a strong start for the broader markets. Futures were positive though off their highs for the morning after Kraft Foods reported

Most of the gains were in the transportation equipment industry, including aerospace products and parts, which rose 28.1%, motor vehicles, up 4.4% to $3.6 billion, and the petroleum and coal products industries, up 2.4%, reflecting greater sales volumes by refineries.

In Forex, cash is traded for cash. Euros are traded for dollars, dollars for yen, yen for euros and so on. There are dozens of trading pairs, just as there are dozens of currencies around the world that participate in the currency exchange markets. Forex trading is always about buying one currency and selling another one simultaneously.

Some currency pairs are more popular than other currencies and you may see those referred to as the 'majors.' This is information that you will need to know when you want to be a part of Forex currency trading.

Total financial collapse, once a problem only for developing countries, has now come to Europe. The International Monetary Fund is imposing its "austerity measures" on the outer circle of the European Union, with Greece, Iceland and Latvia the hardest hit. But these are not your ordinary third world debtor supplicants. Historically, the Vikings of Iceland successfully invaded Britain; Latvian tribes repulsed the Vikings; and the Greeks conquered the whole Persian empire. If anyone can stand up to the IMF, these stalwart European warriors can.

Dozens of countries have defaulted on their debts in recent decades, the most recent being Dubai, which declared a debt moratorium on November 26, 2009. If the once lavishly-rich Arab emirate can default, more desperate countries can; and when the alternative is to destroy the local economy, it is hard to argue that they shouldn't. That is particularly true when the creditors are largely responsible for the debtor's troubles, and there are good grounds for arguing the debts are not owed. Greece's troubles originated when low interest rates that were inappropriate for Greece were maintained to rescue Germany from an economic slump. And Iceland and Latvia have been saddled with responsibility for private obligations to which they were not parties.

Veteran and amateur traders alike must understand foreign exchange risk management methods if they hope to have any chance of financial success in the long run.

Unfortunately, many traders do not think about foreign exchange risk management at all. Or if they do, they only think about market risk. Serious traders understand there are at least 5 types of risk associated with trading forex, and market risk is only one small one.

In this article we'll explore the 5 different types of risk you're exposed to when trading the forex markets, and ways you can lessen, or even eliminate, your exposure.

 The value of exports grew to $32.2 billion in December, from $31.7 billion in November, the fourth consecutive monthly gain, with a 2.8% increase in volume accounting for the difference, as prices actually dropped slightly. Two-thirds of the growth was in automotive products, with machinery, equipment and energy products contributing the rest. Exports of industrial goods and materials declined.

By Warren Hayhoe,

Columnist, Canadian Money Magazine

Central Trader, Jameson Bank

USD/CAD 1.0689               
GBP/CAD 1.6683
EUR/USD 1.3731
GBP/USD 1.5614
CAD/EUR 1.4673
JPY/CAD 0.011937
Oil opened at $71.68, currently $72.53
Gold opened at $1062.40, currently $1074.50
CRB closed at 261.52, +2.97

Today:

• While focus is on the Eurozone, some concerns over Fannie/Freddie loom, as the state’s ailing housing giants already consumed $51bln of gov’t money, and it’s likely to need even more; partnered with no blueprints for its future or clear exit strategy for the gov’t added to issues.
• In early morning trade Oil, the Euro, and metals gain on Greece Aid speculation.
• Reports that lawsuits against Toyota will push the cost of recalls linked to faulty manufacturing in its accelerator and brakes passed the estimate of $2bln for warranty costs and lost sales.

Yesterday:

• Canada’s housing starts rose 5.8 percent in January to a seasonally adjusted rate of 186,000 units from 176k in December. Few analysts raise worries over facing a potential short term bubble.