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Decline of the US Dollar

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04-05-2010, 12:54 PM
  #151
Hamilton Tigers
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Quote:
Originally Posted by Marc the Habs Fan View Post
A little reminder of what Bettman said about the CAN $:

http://www.sportsnet.ca/hockey/2009/...enors_bettman/

Quote:
"My own view is it's not going up dramatically and it's not going down dramatically," said Bettman. "My guess is within a million, a million-and-a-half or two million either way is the swing we're looking at."

One of the biggest factors in determining where it ends up is the success of the Canadian dollar. It's currently resting around 95 cents, which is helping offset some of the losses the league has experienced because of the recession.

"If it's at 95 cents and remains there the rest of year, the cap may go up a million," said Bettman. "If it goes down to 90, it may go down."
Quote:
On Thursday, the contract climbed $1.11 US to settle at $84.87 US following a gain of $1.39 US on Wednesday. Global oil trading was closed for the Good Friday holiday.

Crude has jumped from $69 US a barrel in early February on expectations a growing U.S. economy will eventually spark higher oil consumption.
Among many other factors, higher oil prices help increase the value of the Canadian dollar, since the country's economy is significantly tied to Alberta oilsands exports.

After gaining 1.8 per cent last week, the Canadian dollar continued its move toward parity on Monday, rising 0.57 of a cent to trade at 99.49 cents US.
Read more: http://www.cbc.ca/money/story/2010/0...#ixzz0kFWPb1kO

So does that mean as the U.S. economy recovers and grows, the price of oil will climb and the Canadian dollar will also remain high in relation to the U.S. dollar?

Would resulting increased revenues in Canadian NHL teams hurt struggling teams that can't afford to spend near the cap?

As I check right now, the Canadian dollar is at 99.75 cents, practically at par right now, only off by one quarter of one cent.

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04-05-2010, 02:04 PM
  #152
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99.8

It's like watching the ball drop at Times Square on New Year's eve.

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04-05-2010, 02:17 PM
  #153
tarheelhockey
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Quote:
Originally Posted by Hamilton Tigers View Post
Would resulting increased revenues in Canadian NHL teams hurt struggling teams that can't afford to spend near the cap?
If anything, it would help teams that need revenue sharing. I don't think it ever hurts a franchise for another franchise to be successful.

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04-05-2010, 02:44 PM
  #154
VelvetJones
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When oil prices go over $100 this could get ugly.

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04-05-2010, 05:16 PM
  #155
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Originally Posted by tarheelhockey View Post
If anything, it would help teams that need revenue sharing. I don't think it ever hurts a franchise for another franchise to be successful.
That's what I think, and accordingly I could never wrap my head around some anti-Hamilton arguments that would say a rising cap is bad for the struggling teams.

I was referring to the upward movement of the salary floor. But as long as no team is spending near the minimum, it shouldn't be a problem. Not sure if any team is.

99.9 http://www.cbc.ca/money/story/2010/0...l.html?ref=rss

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04-06-2010, 10:39 PM
  #156
LadyStanley
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adater: Canadian dollar passes American greenback in worth today. So much for my shopping sprees here anymore

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04-07-2010, 07:34 AM
  #157
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Quote:
“Central banks with strong fundamentals are turning increasingly hawkish, and that's true for the Bank of Canada as well,” said Scotia Capital currency strategist Camilla Sutton, noting that the move toward parity itself acted “as a bit of a magnet.”

Scotia Capital projects the dollar will hover around parity for some time, and then continue to strengthen through the end of 2011.

Ms. Sutton noted that the loonie has climbed 29 per cent in the last year. And while the last move to parity a few years ago “was a violent run that overshot dramatically,” this one has been more gradual, measured and based on fundamentals, which should allow for a “more lasting base.”

“On almost every relative measure Canada is strong,” she said. “Fundamentals are better than both economists and the central bank anticipated; inflation is firmer, job gains are larger and growth is running well above expectations. Canadian sovereign risk is low, which in the current environment is a key metric for global investors. Sentiment is bullish for both [the Canadian dollar] and Canadian-based assets, which is driving [Canadian dollar] positive currency flows. Finally, the groundwork has been laid for the Bank of Canada to turn hawkish.”
http://www.theglobeandmail.com/repor...rticle1525034/

The NHL has an advantage here, over the other pro leagues. By having such a foothold in Canada, it has the ability to capitalize on a situation like this in which the the blow caused by the U.S. recession can be softened by the stronger than expected Canadian economy.

I wonder if there's enough incentive here to move Canadian expansion/relo from the back burner to the front burner.

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04-07-2010, 11:18 AM
  #158
ps241
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Michael Levy (formerly) of "custom currency house" in Winnipeg use to speak to our Entrepreneurs group in Winnipeg and he was probably the most reliable person i have met on being able to forecast canadian currency fluctuations compared to the US.....he was always quite accurate

i remember when he spoke to our group in 2002 and the canadian dollar was in the mid to low .60's (cent) and he talked to us about preparing for our dollar to get back over .90 cents within five years and everyone thought he was nuts even though his argument was compelling

before he left custom currency house in November of 2007 this was one of the last articles he wrote:

Bullish Canada
With oil prices back up this morning after a dreadful explosion and fire that ripped into the Enbridge pipelines that take nearly 20% of U.S. imports of energy product from Canada to the U.S., we though that this last column should restate our bullish outlook on Canada, the driving message of our public presentations over the last several years.
We start with energy because the vast reserves of oil and natural gas in the ground will some day make Canada the world's largest supplier of fossil fuels to the world.
When the method of efficiently extracting the oil reserves from the Canadian oil sands is perfected, and that could be a few years down the road, Canada will even match or surpass the likes of Saudi Arabia and become one of the richest nations on earth because of our ability to safely produce and refine energy products whose world demand continues to grow at record levels year over year.
The world will continue to need our commodities whether the aforementioned energy products, base metals, lumber, precious metals, water, power from the likes of Quebec (and B.C. once again as more hydro is produced in the decades to come), grains from the prairies, and the list goes on.
The emersion of Asia and India onto the economic scene in the past decade has put an insatiable demand on the commodity markets that will in fact never be quelled.
Their new economies, which are infant compared to North America and those of Europe, are now showing that as they mature, both for export and now especially for internal demand, will not stop growing and will eventually take the price of all they require in these markets to price levels never before imagined.
Who in the late nineties would have thought that oil at $9 a barrel would be pushing $100 today? Or copper at 60 cent a pound in 1998 that has been over $4 this year and today trades over three.
The list is endless and includes most all the base metals used in the manufacturing of just about everything from cellular phones to electronic devices to automobiles. Base metals that come from Canada.
Gold which was just $250 per ounce back at the turn of the decade and flirted with its 1980 high of $850 is a major product of the Canadian mining industry and the demand in China and especially India has a shortfall in production trying to feed a new middle class Asian market whose demand is skyrocketing year over year.
Add to that buyers world wide that are using the yellow metal as a store of value against fiat currencies, especially the failing American dollar and in the years to come, the $800 price may look like the $35 price for an ounce of gold back in 1971.
Canada is the only country in the G-8 that does not have a budget deficit; in fact in the past 10 years where the U.S. national debt has almost doubled to over $9 trillion, Canada has actually paid off over $92 billion on our sovereign debt.
Canada is going to become the lowest taxed regime corporately in the industrialized world, with federal income tax on businesses coming down to 15% in the next five years; an invitation for industries and corporations of world to set up shop in our country.
To put it succinctly, Canada is and will more so become the darling of the investment world. We have seen it burgeon since 2002 when the Canadian dollar started to turn from the record lows all the way up to this past month when we reach modern day record highs. That is the world knocking on our door to buy "us" and having to buy Canadian dollars to do so.
Canada is safe geo-politically, has a stable government, and invites the world to our doorstep.
The next several months, or even a year or two, might be rocky with the subprime and credit mess to which the U.S. has dragged us all in, but once that plays through the system, and it will, the future belongs to Canada.
Our dollar will once again go back past the recent highs of November and could in years to come go to $1.20 or $1.30 U.S., or even higher as our economy explodes as the world demands what we produce.
We were bullish back in 2004 when we started our public pronouncements; we were bullish in April 2005 when we stood in Winnipeg and forecast a Canadian dollar at par. Every presentation since then it has been our major theme and for good reason.
The 21st century belongs to Canada.




as i stated we chuckled at Michael the first time he talked to us but he proved to be correct.

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04-07-2010, 11:57 AM
  #159
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There are lots of reasons to be bullish on the Loonie - particularly as in the case of the NHL, in comparison to the greenback.
  1. As mentioned in the above article, the fundamentals of the Canadian economy are strong. Canada has the lowest net debt to GDP ratio in the G8 and has very manageable (and recent) trade and fiscal deficits.
  2. Global demand for oil and minerals is not going to significantly decline in the foreseeable future. Gold will certainly come off its highs somewhat if confidence in the US dollar increase and the world economy improve, but the outlook for oil, gas, copper, zinc, potash, etc., is bullish into the future.
  3. The US dollar is going to have a lot of external pressure on it for the foreseeable future. China, Japan, Hong Kong and Taiwan have a combined $1.9 Trillion in US Treasuries in their foreign reserves. OPEC nations have another $220B and Russia another $125B. China and Japan have been holding the value of the Yaun, and Yen low for decades to stimulate exports. At some point they will be forced to allow the Yuan and Yen to float to their natural values. This will put downward pressure on the dollar. Some of this has already started. Since 2003, both Russia and China have progressively increased the euro in their foreign reserves. In November 2007, the Chinese parliament, announced that China will shift the country’s reserves out of dollar-denominated investments and into the euro and other strong currencies.
  4. Currently most global oil transactions are done in US dollars. Globally, the 3 important oil 'markers' or prices indices are denominated in $US. This creates global demand for the US currency as anyone buying or selling oil on the global market must have US dollars in their foreign reserves. However since 2003, Iran has been accepting payment in Euros and Yen as did Iraq prior to the US invasion. In 2007 they opened the Iranian Oil bourse and if they take the next step in creating a euro based oil 'marker' it could very well signal a major move from dollar to euro pricing. After Iran, Venezuela and Nigeria would probably follow. This again would put negative pressure on the US dollar.
  5. The Canadian tax system has a built in buffer against future deficits - it's called the RRSP. Canadians have billions held in RRSP savings, and the vast majority of these funds are held by people with higher incomes who will pay higher tax rates on their future RRSP withdrawls. A 2005 study showed that 35% of families with incomes of less than $36,500 hold RRSPs, 90% of families with incomes over $85,000 hold RRSPs. These are the same people who will have substantial balance sheet equity and income generating assets to supplement their CPP and RRSP income. As the baby boomer population bubble moves into retirement, government tax receipts from RRSP withdrawals are going to swamp tax deferred RRSP contributions. That's how a tax shelter becomes a net benefit for the government. While the US has IRAs, Roth IRAs and 401k's, the contribution limits, savings rates and employer matching proportions are much, much lower in the US.
  6. Canadian banks are among the most stable and solvent in the world. While the sub-prime mortgage fiasco in the US and ABCP fall out in Canada have had an impact, Canadian banks are all on very solid ground.

While I wouldn't expect to see a massive run up in the Loonie as a high exchange rate is somewhat self limiting. However a Loonie trading between $0.95US and $1.10US is probably the future.

(point 5 above was laid out much better by my economics prof Tony Boardman during my MBA program)


Last edited by LeftCoast: 04-07-2010 at 12:03 PM.
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