Fed again was going to go deep into the ‘war-chest’

Interesting article today on the FOMC from TD Economics, the Fed again reaffirmed it’s decision to keep rates at unprecedented low levels to keep the economy in motion. President Lacker also hinted that the Fed again was going to go deep into the ‘war-chest’ and try to remove toxic mortgage stocks from the slumping US bank balance sheets.

 

 

Here is the main TD Economics Article

 

 

 U.S.: FOMC CLOSE BUT NO CIGAR FOR TREASURY BUYING

 

• The FOMC kept the fed funds rate steady and

reaffirmed its commitment to keeping rate exceptionally

low.

• President Lacker dissented, preferring the Fed

to start purchasing Treasuries immediately.

• Fed hints at its willingness to expand balance

sheet further.

• Concerns were expressed about the downside

risks to inflation and growth.

 

Not surprisingly, the FOMC kept the fed funds rates steady and reaffirmed its commitment to keeping rate exceptionally low for some time. The Committee seemed to have advanced the discussions on the purchasing of Treasuries, and although it didn’t quite commit to this today,

it appears that it is only a matter of time before it does so. To this decision, Richmond Fed President Lacker dissented, favoring instead that the Fed immediately embark on expanding the monetary base by buying Treasuries. The economic assessment of the Committee remained grim, with the Fed noting that “industrial production, housing starts, and employment have continued to decline steeply, as consumers and businesses have cut back spending”. However, the Fed stated that it anticipates “a gradual recovery in economic activity will begin later this year”, though it considered the risks to the economic outlook to be to the downside.

 

On the inflation front, the Fed noted that it expects inflation to remain subdued on account of the growing economic slack. And the statement goes on to express the Committee’s concerns about the risks that inflation could remain below the levels deemed to be appropriate to foster economic growth, which suggests that the Fed will stand on guard against any deflationary spiral.

 As expected, the Committee did give a nod to the improvements in financial market conditions since the last meeting. However, it did note that “credit conditions for households and firms remain extremely tight.”

 

In the final analysis, with the fed funds rate effectively at zero and its efficacy in stimulating the U.S. economy impaired by the dislocations in the U.S. financial sector, it is now clear that the Fed is willing to pursue more unconventional approaches to monetary policy implementation. In contrast to the prior statement in which the Fed noted its willing to sustain the size of the balance sheet at a high level, the Fed has now expressed its willingness to outright expand it. And in addition to its commitment to expand credit facilities and purchase large quantities of agency

and MBS debts, the Fed is now willing to embark on purchasing longer-dated Treasuries if certain conditions are met – which we believe will occur in due course

Change in Residential Mortgage Rates TD Canada Trust

Change in Residential Mortgage Rates

Effective December 11, 2008, mortgage rates have decreased as follows:

Term	Rate		Change
6-month convertible	5.90		-0.20
1-year open	8.55		N/C
1-year closed	5.60		N/C
2-year closed	6.25		-0.20
3-year closed	6.25		-0.20
4-year closed	6.09		-0.20
5-year closed	6.75		-0.20
6-year closed	7.00		-0.20
7-year closed	7.20		-0.20
10-year closed	7.55		-0.20
5- year Special	5.59		-0.20
Variable Interest Rate Mortgages	TD Mortgage Prime	Variance	Rate
Closed VIRM: Rate is TD Mortgage Prime + 0.60%	4.00	+0.60	4.60
Open VIRM: Rate is TD Mortgage Prime + 0.85%	4.00	+0.85	4.85
Home Equity Line of Credit	TD Prime	Variance	Rate
Float: Rate is TD Prime + 1.00%	3.50	+1.00	4.50

5 Tips to find hidden money

  5 steps to help you plan ahead. It’s hard enough these days to be thinking about how you are going to cover necessary items let alone save for the future, but as they say we don’t plan to fail- we fail to plan! This week Aaron Theilade from Investors group shares 5 simple principles to find that hidden money and start saving today for a better future.

Investing regularly is important. If you’re going to achieve your retirement and other financial goals, you should consistently contribute to your RRSPs and non-registered investments. “Paying yourself first” through monthly contributions is an excellent strategy to build an investment portfolio. If you’re like most Canadians, however, you are not sure where to look to find the extra money needed to invest. There is a way – in fact, there are four good ways to perhaps uncover “hidden” money you already have, which you can use to start an investment plan on a regular basis. All it takes is a bit of smart money management using the strategies set out below.

 

Review your household budget Carefully reviewing “how” your family spends its money and making changes can free up cash flow. Start by determining if expenses are essential, including your mortgage and utility payments, or if they are non-essential such as buying lunch at a restaurant every work day. Then ask yourself, what can I do differently? Small and simple changes like ensuring you turn off lights when you leave a room can make a major difference in how much money you have left to save each month. * The GVRD has created a great money-saving guide to reusing, repairing and renting goods in the lower mainland, to recive a copy, send me an email I would love to pass it along!

 

Debt consolidation can increase your ability to invest “Debt consolidation simply means paying off a number of higher interest rate loans or other high-cost debt by taking out a single loan at a lower interest rate for a consolidated overall lower monthly payment,” says Jane Olshewski, Senior Specialist – Financial Planning Programs at Investors Group. “You can choose to consolidate debts such as car loans, education loans, credit cards or lines of credit and benefit through a single, more affordable monthly payment which is lower than the sum of the many monthly payments you were making previously.” It can be an effective way to regain control of your finances, manage your monthly cash flows, free up money for other purposes and reduce stress. Additionally, any repayment plan that can allow you to move from simply servicing your debt balances to actually eliminating them is positive as well. If you own a home, you can also consider consolidating your debt using a home equity loan. Your loan is secured by your home at usually a much lower interest rate than you currently pay on most credit cards, which can often range from 19 percent to over 28 percent. By paying less interest monthly, you’ve created additional cash flow that can be used towards your retirement, other financial goals or paying down your principal. * A TD Canada Trust HELOC or Home Equity Line Of Credit is a simple interest account that can be an extremely efficient way to manage cash flow and save thousands on interest costs, send me an email at david.hudson@td.com 

 Restructure your mortgage Sometimes, changing the structure of your mortgage can help you find the money you need to make regular investment contributions. Many individuals set their mortgage repayment at the highest amount they can afford in order to minimize interest payments and pay off their mortgage as quickly as possible. Although these are two important goals, other goals like building an investment portfolio to prepare for retirement and protecting against uncertainty through insurance products also need to be taken into consideration. Does it make sense to pay off your mortgage over a different term to provide you with the cash flow you need to start an investment portfolio or to fund the monthly premiums on a life and/or disability insurance policy? If you have built up extra equity in your home, does it make sense to use the equity to cover your RRSP contribution or to start an RESP? With the help of a personalized comprehensive financial plan including a cash flow analysis prepared by a Investors Group Consultant you can decide how quickly you want to pay off your mortgage while working towards your financial goals.

 Get tax back now, not later Getting a tax refund cheque from the government each year might seem like a “windfall” profit – but it’s not. By having too much tax withheld from your pay each month, you are actually giving the government your money to use throughout the year – and they aren’t paying interest to you for your kind gesture. Instead, if you are an employee and your employer makes tax deductions on your behalf, you can reduce the amount withheld from your pay cheques each month by filing a T-1213 form with the Canada Revenue Agency (the CRA). The CRA will then issue a “letter of authority” to your employer, authorizing your employer to reduce withholding taxes. You can then invest part of your usual year-end tax refund immediately each pay period.

 

Thanks to Aaron for sharing these great tips!

RE: Canadian Banking Ranking

This has been quite the topic of conversation as of late, and quite frankly I would have to agree with Reuven Brenner “If you look at…all these rankings, they’re meaningless,” So what if our banking system is at the top of glossy chart that is a product of the Geneva-based World Economic Forum, how does that help the everyday Canadian who earn a decent wage and pay their bills on time, but is struggle ling to secure that loan to keep there small business afloat?
It’s interesting to note that if JD Power slaps a ‘highest ranking in initial quality’ on a ‘B’ vehicle brand, its not going to sway the masses that have their eyes set on Canada’s top selling vehicle the Honda Civic.

Many of us are huge fans of Consumer Reports, what a great way to make sure that you are buying the best product for your money, I love reading the reviews and looking at the nifty little red and black circles that put the elusive stamp on our consumer goods. But Consumer Reports shares the same problem with the Geneva Economic article- Macro Focus-
In the US and Canada there are well over 100 automobile magazine publications that test, review and employ experts in the industry to grade automobiles and only automobiles. I am simply floored when a friend tells me that they are considering purchasing a new fancy Lexus but are concerned that the consumer reports said it has poor visibility…..People are you really going to make a $80,000 purchase on the results of a magazine that compares rakes, hoses and toaster’s??

Due to the economic fundamentals of our global economy (gosh that sounds McCain like) banks lend over border lines just as easily as streets, and the global pipeline has been shut – to even the ‘top rated’ Canadian banks. While we are all enamored at the usefulness of a financial institutions home page and color schemes, we should really be caring about is access to the funds that are being choked out of the system. After all what good is first place if it gets you nothing!

Here are the “Top Rated Banks”

Great article by Kelly McParland posted today in the National Post

David Akin: Are Canada’s banks really world’s safest?
Posted: November 13, 2008, 4:15 PM by Kelly McParland
Full Comment, david akin, Canadian politics

Just about any time these days that Finance Minister Jim Flaherty or Prime Minister Stephen Harper talk about the global fiscal and economic crisis, you will almost certainly hear them assert that Canada’s banks are “the soundest in the world.” Indeed, that was the first thing Flaherty said Wednesday morning just as he was announcing a suite of measures to help the banks do their job better.
It’s a claim Canada’s politicians have been making ever since the Geneva-based World Economic Forum published a report Oct. 8 that ranked Canada’s banking system the “soundest” among 134 countries surveyed.
But is Canada’s banking system really that sound? Should Canadians and politicians be putting much stock in the World Economic Forum’s report?
“If you look at . . . all these rankings, they’re meaningless,” said Reuven Brenner, a professor in the Desautels faculty of management at McGill University.
Banking policy experts worry such a ranking may lull Canadians and politicians into a false sense of security or reduce the impetus to make changes and regulatory reforms they say are needed to make our financial services sector stronger.
“Our banks aren’t perfect,” said Louis Gagnon, an associate professor at Queen’s University business school.
“They do venture sometimes, at a cost, into markets where they don’t belong. There’s no question that a review in processes would be useful. There’s a measure of transparency that hasn’t existed. We’d like to know more about our banks.”
Officials, on orders from Prime Minister Stephen Har-per, are reviewing the regulatory system, although Ottawa has not provided details about the scope or purpose of the review.
The WEF report contained a ranking of 134 countries on a broad array of issues that affect a country’s ability to attract and retain new business investment.
So, for example, Canada ranked 19th in the world on intellectual property protection, 34th when it comes to co-operation in labour-employer relations, and 10th on the quality of overall infrastructure. Canada ranked first on “soundness of banks.”
But no one from the World Economic Forum objectively researched all these variables. All the WEF did was to circulate surveys to small groups of business executives in each country.
In Canada, just 75 business executives were asked their opinion about each of these factors.
As it turns out, those 75 Canadians essentially thought Canada’s banks were more sound than any group of another country’s executives thought about their country’s banking system.
“It’s important that people who are using these statistics recognize that one question by itself doesn’t give you the full answer,” said James Milway, executive director of the Institute for Competitiveness and Prosperity at the University of Toronto.
Milway’s institute was the World Economic Forum’s Canadian partner. It found the Canadian executives and administered the survey.
The survey “is really speaking to the perceptions of business executives in Canada to similar business executives around the world talking about their own country. The ranking is not the result of a thorough and deep analysis done by analysts who are looking at various ratios and measures of banking systems,” Milway said.
National Post
Gemini Award-winning reporter David Akin is the National Affairs Correspondent for Canwest News Service and is based at the CNS Parliamentary Bureau in Ottawa, Ontario, Canada.  Read more at his blog, On the Hill
Photo: Bank of Canada Governor Mark Carney pauses during a news conference upon the release of the Monetary Policy Report in Ottawa October 23, 2008. (REUTERS/Chris Wattie)

TD Lower Mortgage Rates

November 7th 2008 TD Canada Trust is please to advise of a new limited time offer effective Novemer 8th, 2008 Limited Time Offer of 5.34% on the 4-Year Fixed Mortgage * applies to new applications up to November 30th * Must be funded by March 31st 2009 *Offer may be changed to withdrawn at any time Great news for those who are looking for the stability of a fixed rate, or are looking for the maximum qualification. Until today’s announcement the 3 year fixed rate at 5.7% was the lowest qualifying rate. This will allow borrows to qualify for more mortgage while keeping there TDSR and GDSR in line. I am always happy to answer your mortgage questions, please drop me a line at david.hudson@td.com Cheers, David

CSBFL Commercial Property Incentive

Great news from TD Bank Financial Group, Attention Small Business Owners!

SBB is currently offering Small Business customers the opportunity to finance the purchase or expansion of commercial properties at a higher loan to value (LTV) through a combination of the Canada Small Business Financing Loan (CSBFL), and the Business Mortgage product. By leveraging the CSBFL product, customers can receive financing up to 85% LTV based on the property value.
To ensure as many customers take advantage of this great offer before it ends as possible, the Small Business Credit Centres will be proactively working with you to help identify commercial property purchase and expansion opportunities to utilize this product.
Remember, time is running out! This offer cannot be extended to applications submitted after Mar 3rd, 2009, or funded after Mar 31st 2009.
CSBFL Commercial Property Incentives
•    the highest LTV currently available at a Schedule A Bank
•    a special low rate of TD Prime + 1% for the life of the CSBFL
•    Limited Personal Guarantee up to 25%
•    No Set up Fees, and 2% Cash Rebate on the authorized CSBFL amount

Home Buyers’ Plan (HBP) RRSP Withdraw for First Time Home Buyers

Lately I have come across a higher number of clients who are interested in the RRSP early withdraw plan for first time home buyers. This week I will focus on Home Buyers Plan, and some tips that clients have found useful.

The Home Buying Plan is a great way to help you acquire the necessary down payment to afford a home, the benefit is that you are really borrowing from yourself  interest free!  The loan from your RRSP’s must be repaid within 15 years and can be set at varying lengths of amortization depending on the institution who is providing the loan. Do not attempt to pay the loan off in 1-2 years,  we have all been taught to be adverse with debt but opting to pay off the loan in 1-2 years can lead to serious cash flow problems, and financial upset.

Because the loans are on the total principle withdraw from the RRSP they can easily add up. Understand that you are not paying any interest on this loan but if you take a $15,000 RRSP loan out and take a two year repayment the monthly payment will be $625 high enough to seriously disrupt your cash flow, but if you take a 5 year repayment it becomes a more manageable $250 per month

Today’s topic is the conditions for the HBP, one of the most important things to ensure is that you must be a first-time home buyer. Several files that have crossed my desk recently I have had a number of folks who whish to use the program but have obviously purchased quite a number of homes before, this will not fly with CRA.

Below are the conditions that the CRA presents for participation

Conditions for participating in the HBP

Only the individual who is entitled to receive payments from the RRSP (the annuitant) can withdraw funds from an RRSP. You can make withdrawals from more than one RRSP as long as you are the annuitant (plan owner) of each RRSP. Your RRSP issuer will not withhold tax on these amounts.

Generally, you will not be allowed to withdraw funds from a locked-in RRSP.

To participate in the HBP, ONE of the following conditions must apply:

* You are withdrawing funds to buy or build a home for yourself as a first-time home buyer.

or

•    You are withdrawing funds to buy or build a home for a related person with a disability .
•
In addition, ALL of the following conditions must apply:

* You must enter into a written agreement (Offer of purchase) to buy or build a qualifying home. The agreement may be with a builder or contractor, or with a realtor or private seller. Obtaining a pre-approved mortgage does not satisfy this condition.
* You intend to occupy the qualifying home as your principal place of residence.
* Your repayable HBP balance on January 1 of the year of the withdrawal is zero.
* Neither you nor your spouse or common-law partner owns the qualifying home more than 30 days before the withdrawal.
* You are a resident of Canada.
* You buy or build the qualifying home before October 1 of the year after the year of withdrawal.

You are responsible for making sure that all HBP conditions that apply to your situation are met.

If a condition is not met while you are participating in the plan, your RRSP withdrawal will not be considered eligible. You will have to include the RRSP withdrawal as income on your income tax return for the year you received the funds.

If you do not meet the conditions to participate in the HBP in the current year, you may be able to participate at a later date.

TD Canada Trust Change in Prime Lending Rate 4.00%

Effective October 22, 2008 TD Bank’s prime lending rate will be 4.00%.

 

In a highly anticipated rate cut, TD Canada Trust passed along the full savings to its customers. This rate applies to all Float Portions of previous HELOC accounts.

Vancouver Home and Interior Design Show

This weekend was the Vancouver Home and Interior Design Show, on the recommendation of an excellent Realtor ( Morgan Browne www.morganbrowne.caI decided to take the plunge and visit the show!

The show really was an amazing event, there was lots for all to see, touch and eat! Benjamin Moore http://www.benjaminmoore.com/ Design Stage presented Designing with the Stars, where some of HGTV’s http://www.hgtv.ca/ hottest upcoming talent like Kelly Deck and Wendy Russel, made sure that your pad will be looking tight for the Winter!

Another really cool theme was the Small Space Living presented by WesThurn Designs http://www.westhurndesign.com/ and Canadian Homestead Magazine http://www.canadianhomestead.ca/Formany that live in the Concrete Jungle of Downtown know the pain of having to properly stuff your 500 Sq ft show homes, it was really neat to see the concepts and how you can make things appear larger than they are (note to self)

Moving to the large floor level it was interesting to see the breadth and variety of vendors that the show attracted. Western Living Magazine http://www.westernlivingmagazine.com/ presented the West Xpressd along with BC Hydro http://www.bchydro.com/ a showcase of sustainable design from some of the West Costs local design talent http://www.fatcrowdesign.com/  , from art to architecture. It was definitely one of the highlights of the show and I really learned a great deal from it. some of the Designers featured where:

Alex Suvajec,Brent Comber,Contexture,Fat Crow Design,Greg Ball, Skookum Brand, Pulse Furniture, Keep it Cartesian, Joel Tobman,

Food Stage! Probably my favorite, well I was pretty hungry and the not-to-be-missed cooking demonstrations did not help my grumbling tummy! Forget the food the Kitchen was very sweet, ultra modern and hip to creative concoctions.

Right next door to the food stage was the Lounge, now this is something that I just was not feeling, it was just bizarre to try and make a trade show floor a hip urbaine wine bar, there was no way that it could lose the stigma of that cheesy blue carpet to bad because it looked like Peller Estates http://www.peller.com/okanagan/homepage.php and the Vancouver Sun http://www.canada.com/vancouversun/index.html put a lot of effort into the event

Future Shop http://www.futureshop.ca/marketing/_midnight_publish/splashpage.asp?test%5Fcookie=1 was there promoting Connect Pro, it was need to look at all the automated accessories that are available, kind of like a real life Cribs episode! A ultra-modern exhibit put together by Erik Lauzon of Konstruk Design http://www.konstrukdesign.com/Konstruk_Design_Vancouver_BC.html it showcased the most extreme gadgets that we would all love to have it was pretty cool!

What really excited me was the launching of a new upscale magazine for Fine British Columbia Properties, its called BEST-HOME Canada’s West www.besthomemagazine.com and is in a class of its own, think Robb Report meets DuPont Registry, the magazine is to be published three times a year and is based in Calgary.

I did see a booth from ING Direct but nothing from TD Canada Trust, which I found a little odd as TD Canada Trust is the lead sponsor on a major campaign on the HGTV network, The TD Canada Trust First Timer Mondays $25,000 Giveaway!

I hope that next year I can take a more active role in the show and represent TD Canada Trust!

Lynchism Gem: Ignore the headlines

Famed Money Manager Peter Lynch is perhaps best known for his timeless wisdom that you can beat the pros by focusing on stocks of companies where you either work or shop or have some other edge. But a more relevant Lynchism today is this gem: Ignore the headlines.

It’s not that easy thing to do, every water cooler and dinner table has endless chatter on recession, housing, subprime woes, the credit crunch, Overpaid CEO’s and soaring energy costs.

Makes you want to sit on your thumbs and wait it all out before making any big moves. But what exactly are you waiting for???

Rarely has there been a moment in time that you couldn’t scare yourself into doing nothing. And yet, as Lynch observed nearly 20 years ago, “in spite of all the great and minor calamities that have occurred…all the thousands of reasons that the world might be coming to and end-owning stocks has continued to be twice as rewarding as owing bonds” The top reason not to buy stocks, in Lynch’s view, is if you don’t already own a home-in which case, that should be your first investment. An owner occupied home is nearly always profitable.

Warren Buffet the Oracle of Omaha has recently been quoted to be actively perusing US Stock and companies with his personal account. “Be Fearful when others are Greedy, and be greedy when others are fearful.”

The Fundamentals of the economy especially in British Columbia are very strong. If you are needing to retire and have lived your whole like in Winnipeg and have enough to live well in BC would you not leave the winter behind, if you want to use your RRSP’s and the Canadian Medicare then your California of Canada is right here in the Lower Mainland!

 

Here is a great article in the Vancouver Sun echoing these ideals

#####

B.C. in better position than most to weather financial storm

Derrick Penner

Vancouver Sun

Monday, October 20, 2008

 

VANCOUVER — On the bright side, British Columbia is heading into a period of economic uncertainty with a provincial budget that is in good shape and an economy that is performing well, according to the  Institute of Chartered Accountants in B.C. (ICABC).

However, the B.C. economy is not doing so well when it comes to the competitiveness and productivity of its workforce, the ICABC said in its annual Check Up B.C. report, an assessment of provincial economic performance. B.C.’s labour-force productivity increased by 1.3 per cent between 2002 and 2007, the report said, which lagged the national average of 4.5 per cent.

“At this time of uncertainty, it is imperative that government continues to be conservative in their economic forecasts and considers all policy tools at its disposal to stimulate investment, boost productivity and maintain sound fiscal management,” Richard Rees, CEO of the ICABC.

Rees added that the no one knows what the impact of the current financial crisis will be, and while “many British Columbians stand to lose a great deal,” the province’s economy is “in a better position than many of our competitors to weather some of the challenges.”

The Check Up report measures factors in three general areas: quality of life, work and investment, mostly how these factors performed over 2007.

On the work side, the ICABC noted that B.C. reported a record low unemployment rate of 4.2 per cent in 2007, a year that saw 70,800 new jobs created.

However, in 2008 the job market has softened, the ICABC added, with only 500 net new jobs created in August and an unemployment rate that has risen to 4.6 per cent.

“Already many resource-dependent communities are feeling the effects of reduced consumer demand and lagging commodities markets, and our forest industry continues to stagnate,” Rees said.

“But we are fortunate in B.C. that the provincial government has done a good job creating a sound economic environment.”

© Vancouver Sun 2008