Phone conference with Benjamin Tal - January 16, 2012
Benjamin Tal is the Deputy Chief Economist for CIBC World Markets.
I've summarized my notes that I took throughout the conference:
Europe
- Europe is likely in recession now at -0.5%.
- Greece will go in default on its debt on March 20, 2012.- Greece will likely try to negotiate to pay back far less than 50 cents on the dollar.
- Italy in much better shape than Greece.- There will be French and Italian general elections this year.
- Euro will likely weaken further in 2012
- Interesting comment from Ben; "... the market is pricing in bad news [regarding Europe] that will not happen."
China- Soft landing in China as economy slows.
- BC lumber exports [to China] at 34 month lows.
- Market for commodities will pick up in 6-8 months as China recovers.
U.S.
- Tentative but very positive signs that U.S [economy] is improving.
- Deleveraging is close to normal levels.
- Housing recovery; fragile but better.
Canada
- Labour market slowing continuing trend of last half of 2011.
- U.S. likely to outperform Canada in 2012.
- Canada should have economic growth of around 2% in 2012.
- Housing market to soften, BC house prices already falling. Toronto may be overextended.
- Interest rates to stay low in 2012, 2013 and early 2014. [Editor's note: on Jan 25th Ben Bernanke - Chief of Federal Reserve in U.S. announced U.S. interest rates to remain low through 2014]
- Canadian dollar may drop 2 -3 cents in first half of 2012 and then recover to close to par with U.S. dollar in second half of year.
- chance of significant stock market rally in second half of this year because of improving resources, commodity stocks, improving Europe..."lots of bargains" in Europe he says.
General comments
- Euro will not disappear -"too much political capital invested."
- Government bonds unattractive - “yields are too low.”
- Dividend paying stocks are expensive.
- Commodities will recover.
- Not bullish on energy (oil) as concerns about Iran is inflating the price.
- If there is military action, all bets are off and will see $130+ oil. [Editor's note: at time of writing January 25, 2012, oil is $99.82 bl.]
