The Bank of Canada threw us all a knuckleball this week when they announced a quarter point drop of their key overnight rate (on Wednesday). The rate is now at 3/4% dropping a 1/4, and it seems the Bank assumes the economy needs even more stimulus.
The telling statement from their announcement is the final paragraph of their statement:
The oil price shock increases both downside risks to the inflation profile and financial stability risks. The Bank’s policy action is intended to provide insurance against these risks, support the sectoral adjustment needed to strengthen investment and growth, and bring the Canadian economy back to full capacity and inflation to target within the projection horizon.
This suggests that the very commodity reliant, Canadian economy is going to take a hoof in the “lower abdomen” thanks to plummeting oil prices. Lower inflation, but higher unemployment seems to be on the event horizon.
The Canadian dollar continues to plummet, thanks to very low oil prices, which may slow down the cross border shopping insanity that has been going on for the past little while. Maybe we shall see more of our American family dropping by in Canada this summer? Is this lower interest rate simply going to accelerate the drop of the Dollar’s value? Some experts feel this is going to cause a Canadian dollar back around the 70 cent level (compared to the US dollar), we shall see whether that comes to pass.
My Writings for Week Ending January 23rd
The cold of Ottawa in January constantly begs the question, why do we live here? :
- I had another run at some of the Best Financial Tweets of the week. I thought I wasn’t going to be able to find many, but the real problem is, there are too many, and my Twitter feed is too large (I miss far too much).
- I did finally get my money out of the TD RESP account for my daughter, but it took longer than I wanted and I highlight the issues I created by trying to use lower MER Mutual funds with TD E-series RESP Bear Trap.
- How do you eat an elephant ? Here is an idea, don’t order the frigging elephant!!
- RESPs are too hard for Mommies? My regular readers could spot the Swerve title, but I am just not too sure why I have seen so much mainstream media (TV) pushing this Giraffe & Friends RESP thing, and yes, Mrs. C8j was really quite insulted by the pitch.
This Week’s Finest
And boom goes the Interest Rates. I believe the Canadian Economy has become a little over-dependent on stimulation, how will Canada kick the stimulation habit?
- Michael James wonders who you think The Average Investor is? Depends on what you call average, I suppose, and maybe what you call an investor as well.
- Anybody got $600M to spare (US) ? That is the price tag for the cheapest NBA Team (the Milwaukee Bucks) according to Forbes, I seem to have a major requirement, I am old, male and Caucasian.
- Mark over at 2nd Career Search is continuing the story of his interesting career (so far) with My Career (Part 2).
- Barry from Money We Have wants to show us How to Find the Best Canadian Rewards Credit Card , which can be useful.
- Gail Vaz-Oxlade writes about Credit Card Minimum Mess, but she says she has friends who only make minimum monthly payments on their cards? Really? You have Gail as a friend and you haven’t figured out how dangerous that is? Gail must be different with her friends.
- Mark from the Blunt Bean Counter has returned from his bungle in the jungle, with a review of the consultation paper on the new Ontario Retirement Pension Plan (so not the final idea, but the one they are “socializing), evidently Self-Employed Folks will be excluded from the plan? Strikes me as a bad idea, but read on and see what Mark thinks.
- Mr. Money Mustache is a man you should be reading, and a man of money morals and (I think) quite honest, and his honesty oozes forth in You’ll Never Believe How Much the MMM Family Spent this year…
- I visited Disneyland as a child and have many magical memories (the Tiki Room, the Original Pirates of the Caribbean ) , however, luckily I didn’t get this malady, Disneyland Measles Outbreak, hits 59 and counting, wonder if you need to get your shots before visiting?!?
- The Canadian Couch Potato shows us a great example of the importance of a Limit Order this time with a big time order, in Taking ETF Trades to the Next Level.
- For those lovers of the Internet of Things, a cautionary tale of the Internet of Abused Things, as we become more reliant on “Smart” technology, how long before others use it to their advantage (my answer is, it is already happening).
- Mark from My Own Advisor borrows from the Canadian Money Forum an odd discussion about the Economics of the Dishwasher, it’s simple for me, I hate washing dishes, if I could put clothes in there too, I would be even happier, bring it on!
- Our amigos over at Million Dollar Journey want to help you drippy dividend investors, so they give us The Largest Oil and Gas Dividend Stocks , let them drip!
This week’s big health news was that sitting is killing us. Here is a video that outlines ways to stop doing that (sitting is worse than smoking? What if you sit and smoke?).
Some useful phrases never to use, at a job interview, mine would be, “Will you validate my parking?”:
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70 cents to a dollar would be a nightmare, but I guess that’s where we’re heading, with lower inflation, lower oil price, lower interest rate cuts. Seems logical.
We will be more of an exporter, but things are gonna get expensive…
There are a few financially obsessed folks in CMF, sometimes very good entertainment 🙂
Thanks for the mention!
Thanks for the mention. Yes the credit card tool is very useful especially for those who like to churn cards.
I started watching the “sitting” video but stopped at the advice to just “stand up”. That seems like such an effective strategy that I didn’t need to hear more. Thanks for the mention.
I hope you are still standing… don’t sit down or you will die! 👻