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Originally posted by pratickm

Another option is a preferreds ETF like the CPD.

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Stimulus won't avert recession: Board

Not even massive infusions of government spending and tax cuts will keep Canada and the United States out of recession this year, says the Conference Board of Canada.

The Ottawa-based think-tank says Canada's economy tumbled into recession at the end of 2008 and will continue to shrink through the first half of this year – for three negative quarters of growth.

A recession is defined as two straight quarters of economic shrinkage.

The slide will end in the final two quarters of 2009 as the U.S. economy rebounds, but not enough to avoid an annual contraction of 0.5 per cent in the Canadian economy, the first since 1991.

True recovery won't occur until next year, the board said.

Meanwhile, 175,000 Canadians will likely lose their jobs this year as layoffs mount and hiring freezes, the meltdown in commodity prices and plunging home values eat away at Canadians' incomes. In addition, business profits and investment will crash, and both federal and provincial budgets will fall into sizable deficits, the economic research group said.

"The deepening U.S. recession continues to hurt Canada's trade sector," explained Conference Board economist Pedro Antunes said.

"The new and perhaps more significant factor dragging Canada into recession is the impact that much lower commodity prices are having on real income."

http://www.thestar.com/business/article/570736

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Sell shares in Canadian banks, Dundee says

Shares in all the major Canadian banks have been rated "sell" by Dundee Securities.

The Dundee analyst team headed by John Aiken changed its recommendation Friday on Royal Bank of Canada (TSX: RY.TO) and Toronto-Dominion Bank (TSX: TD.TO), which join the other big banks on its "sell" list.

Dundee also reduced its target share prices for all the Big Five except Bank of Montreal (TSX: BMO.TO).

Its only "buy" in the sector is National Bank of Canada (TSX: NA.TO), the country's sixth-largest bank, because of its relatively low market valuation.

Canadian bank stocks lost an average of one-third of their value in the final quarter of 2008 and have further to fall, Aiken wrote.

"With the brunt of the recession gaining intensity in the U.S. and in Canada, we believe that near-term weakness will continue, particularly in the real estate and consumer lending markets," the Dundee report said.

"Further, credit deterioration is gaining momentum and (loan loss) provisions continue to rise. The cost of borrowing remains high as competition for consumer deposits remains stiff."

Until those trends reverse, "we do not see any near-term catalyst that would provide a meaningful, sustainable lift to valuations."


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Quote:

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Originally posted by Krazzyfour
Dundee also reduced its target share prices for all the Big Five except Bank of Montreal (TSX: BMO.TO).

Its only "buy" in the sector is National Bank of Canada (TSX: NA.TO), the country's sixth-largest bank, because of its relatively low market valuation.

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"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."

-- Rhett Butler in "Gone with the Wind"

Not Even Bailout Funds Can Burnish Banks' Image

Not even a fresh influx of government money could reverse investor sentiment regarding the banking industry.

While news that Bank of America [BAC 7.18 -1.14 (-13.7%) ] was getting $20 billion in bailout funding to prop up its balance sheet initially cheered investors, the mood quickly turned as it became apparent that it might not be enough.

And BofA's troubles were merely reflecting the rest of the sector's woes. European bank Barclays [BCS 7.25 -1.15 (-13.69%) ] lost about a third of its stock value, HSBC [HBC 39.95 -0.38 (-0.94%) ] continued to come under pressure, and Citigroup [C 3.50 -0.33 (-8.62%) ] continued its slide even as the company desperately sought to assure the market that it was adjusting its model to meet future needs.

"People are afraid to trust anything," says Kathy Boyle, president of Chapin Hill Advisors in New York. "You've got a lot of issues here that aren't going away quickly and they're going to have to absorbed quickly. That's going to translate into losses for these institutions."

From an investors standpoint, there will be little incentive to jump back into the stocks of the nation's big banks.

"I don't know where the end is going to be," Boyle says. "I don't know where it's going to turn around, but it's going to take a long time before these banks turn profitable again. You're going to see more mergers and more creative efforts to try to stir business up."

While some analysts were taking a wait-and-see approach on BofA's problems, investors are dumping the stock in droves.

Unless the pendulum swings quickly, earnings could well be a precursor to a blistering round of bank closings.

"There's certainly going to be more bank failures in 2009 as the economic backdrop continues to deteriorate and the smaller banks start to feel the pain," said Christopher Mustascio, managing director at Stifel Nicolaus. "Now you've got a full-fledged recession...Some of these banks are not going to be able to deal with that, and you're going to see failures."

The $700 billion Troubled Asset Relief Program, which banks can access to bolster their capital positions, will help ease some of the damage as will Federal Reserve moves to ease monetary policy. The liquidity moves of 2008 have lagging effects that should take root in the coming months.

But banks will fail, and at numbers large enough to cause alarm.

"I do think some of the actions taken by both the Fed and Treasury will limit the failure, especially at the larger banks, that we have seen in the late '80s or early '90s," Mustascio said. "But to think we're not going to see more failures in 2009 is probably naive."

http://www.cnbc.com/id/28694605

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Banking industry outlook darkens

Shares in the Big Five Canadian banks rated `sell' amid losses, fears of escalating writedowns

Investors ratcheted up their scrutiny of financial stocks yesterday as an avalanche of bad news ignited fresh fears of escalating writedowns and massive credit losses at some of the world's largest banks.

Big quarterly losses from Citigroup Inc. and Bank of America, along with the nationalization of Anglo Irish Bank PLC, all combined to darken the industry's outlook. In Britain, banking shares plummeted as those events sparked worries of a cash crunch at domestic lenders amid speculation of another government bailout.

The TSX financial sub-index lost 1.45 per cent. Helping sap investor sentiment was word that one analyst now has "sell" ratings on the stocks of all the Big Five Canadian banks – a rare turn of events for an industry widely lauded for being the envy of its global peers.

John Aiken of Dundee Capital Markets downgraded the ratings of both Royal Bank of Canada and Toronto-Dominion Bank yesterday, adding those heavyweights to his catalogue of "sell" recommendations. He also lowered price targets for all banks except Bank of Montreal.

"With the brunt of the recession gaining intensity in the U.S. and in Canada, we believe that near term weakness will continue, particularly in the real estate and consumer lending markets," Aiken said in a note to clients. "Further, credit deterioration is gaining momentum and provisions continue to rise. The cost of borrowing remains high as competition for consumer deposits remains stiff.

http://www.thestar.com/Business/article/572655

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US Bank Stocks Fall on Fears More Losses Ahead

Markets Have Record Slide For Obama Inauguration

An index of bank stocks lost 19.7 percent on fears of more losses. The Dow Jones industrial average fell 332.13 points, or 4.01 percent, to end unofficially at 7,949.09. The S&P 500 Index slid 44.90 points, or 5.28 percent, to finish unofficially at 805.22. The Nasdaq Composite Index tumbled 88.47 points, or 5.78 percent, to close unofficially at 1,440.86.

"Nothing can cure what took us four years getting into this mess other than time, over the next several quarters ... Nobody wants to venture and pick a bottom. There is just too much investor fatigue out there," Morgan Keegan's Patten said.


Bank of America [BAC 5.10 -2.08 (-28.97%) ] fell to its lowest level since January 1991, as analysts said the U.S. largest bank will remain under pressure until it rebuilds its capital, four days after posting its first quarterly loss in 17 years. Citigroup shares [C 2.80 -0.70 (-20%) ] fell 18 percent, while Bank of America stock sank 240 percent.

http://www.cnbc.com/id/28750125

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