Canada August Inflation Slows To 1.1% On Mortgages, Drugs

Is Air Canada’s Rally Set to Continue?

Sure, I could match the redheaded Anne of Green Gables with PEI and Acadia National Park with Bar Harbor, but the bike trip to Montmorency Falls? Hmm. The puffin nests on Bird Islands? Huh. Lunenburg, which wears the UNESCO World Heritage site badge? I was stumped. (The answers: Quebec City, Sydney and Halifax, respectively.) Other notable differences: On Caribbean cruises, the pools resemble shallow aquariums full of squirming bodies. Chaises are hot commodities. In fact, many passengers remain onboard during port stops to enjoy the extra inch of outdoor deck real estate. By contrast, on the Maasdam, the lounge chairs surrounding the swimming squares were often empty. When they were occupied, the individuals using them were frequently swaddled in thick blue towels worn as leg warmers and a capelet.

Canada’s Flaherty Announces Capital Markets Watchdog Plan

Doug Horner, Albertas finance minister, said in a statement that he is committed to protecting the provinces interests, without specifying whether he supports the plan. I am only learning of this agreement now and will need time to review it, Horner said. I am surprised that all the provinces were not consulted on this proposal before it was announced. Legal Challenge Quebec officials said they oppose todays move and may mount a legal challenge. The current system that supports the presence of a large financial sector in Montreal and Quebec is jeopardized, Finance Minister Nicolas Marceau said in comments broadcast by CBC Television. He said a common regulator may shift power from Montreal, the French-speaking provinces biggest city and home to the countrys derivatives market. You can imagine those firms would be attracted by a common regulator in Toronto. Flaherty said hes hopeful other provinces will see the wisdom of participating. The federal finance ministers original plan for a national regulator, released in 2010, suffered a setback when the Supreme Court of Canada ruled a year later the proposal was unconstitutional because it encroached on provincial jurisdiction. The case turned on whether the federal government has the authority to create a national regulator under a section of the constitution that gives Parliament the power to regulate trade and commerce. Great News Todays announcement is great news, Bradley Meiers, head of debt syndication at Toronto-Dominion Banks TD Securities, said in an e-mailed response to questions. It needed to be done. I think it might be tough to get every province to sign on. The piecemeal effort may be more successful than Flahertys previous attempt, said Ian Russell, chief executive officer of the Investment Industry Association of Canada. This is a completely different approach, Russell said in a telephone interview. In the past, Flaherty was trying to get the whole group inside the tent before they started, and we never started, we never got anywhere. The regulator will administer both provincial and federal legislation, according to the statement. A council of ministers will oversee the system. Sousa said the new body will eventually replace the Ontario Securities Commission.

Up for an adventure? Cruise Canada and New England

Bank of Canada Governor Stephen Poloz, who sets policy to keep price gains in the middle of a 1 percent to 3 percent range, has said inflation will remain below 2 percent until mid-2015. The central banks key lending rate has been 1 percent for three years, the longest pause since the 1950s, and economists surveyed by Bloomberg predict Poloz wont raise borrowing costs until the second half of 2014. I dont see the case to be really worried about inflation and that backs a dovish Bank of Canada for a long time, Derek Holt , vice president and economist at Scotiabank in Toronto, said in a telephone interview. The Canadian dollar fell 0.2 percent to C$1.0290 per U.S. dollar at 9:36 a.m. in Toronto. One dollar buys 97.18 U.S. cents. Government bond yields declined with two-year yields falling 2 basis points to 1.23 percent and five year notes by 1 basis point to 2.01 percent. The slower year-over-year total and core inflation rates matched the median estimates in Bloomberg economist surveys. Mortgage interest costs fell 3.6 percent in August from a year earlier while prescribed medicines declined 4.2 percent, according to the report. Major price increases included a 9.5 percent jump in natural gas and a 1.7 percent rise in rental costs. Cheaper Phones On a monthly basis, consumer prices were unchanged in August as clothing costs rose 1.9 percent and telephone services declined 1.7 percent. The core rate climbed 0.2 percent in August from July.

Not only is the industry’s situation getting better, but investors are also beginning to see a new perspective on airlines: stable profits fed by higher fares and load factors and reduced competition. I don’t see this perspective fully priced into airlines yet, however. Using Businessweek’s earnings estimates and closing prices from Sept. 17, Delta Air Lines trades at only 7.8 times its 2014 fiscal year earnings, and United Continental trades for even less, at 7.3 times its 2014 earnings. Although United Continental has missed estimates or lowered guidance in the past couple of years, earnings anywhere near these estimates would still leave the airline trading well below the broader market average. On Delta’s side, the situation continues to improve. With its merger with Northwest Airlines now behind it, Delta is focusing on slashing debt, running its oil refinery, and even returning capital to shareholders through a dividend and buyback program. When major players in an industry rally, their surging stock tends to place buying pressure on industry peers. In Air Canada’s case, it has robust earnings to accompany its rising shares. The company’s latest quarterly report solidly beat estimates, causing a pop of around 25% the day of the announcement, and setting the latest stage of its rally in motion. Earnings forecasts point to an even brighter future ahead for Air Canada’s earnings,with 2014 fiscal year consensus estimates of $0.96 per share. That makes the stock look extremely undervalued at less thanfive times its 2014 earnings. Another index inclusion The big news out of the U.S. airline industry last week was the inclusion of Delta Air Lines in the S&P 500, where it joined Southwest Airlines and became the only legacy carrier in the index. This helped Delta shares move higher in the days following, as the positive news was eaten up by investors who now view Delta as a safer investment.