BoC too dovish, says Tal

The BoC’s latest rate cut has done little to accelerate household borrowing, says Benjamin Tal, deputy chief economist, CIBC.

“It’s not as exciting anymore,” notes Tal, because rates have been low for so long and consumers are used to this low interest-rate environment.

Meanwhile, the loonie dropping has helped drive Canada’s manufacturing sector. “This is the time for manufacturing to shine … it’s a good investment,” he adds at a CIBC Renaissance event held yesterday in Toronto.

For more on Tal’s economic updates, see our live tweets below. And, follow @advisorca for more news and events coverage.

Live tweets from CIBC Renaissance Roadshow

We’re 6 years into recovery, interest rates still 0%, this is not a recovery, says Tal @cibc

The bad is that we’re facing deflationary fears because China slowing, and because of a currency war @cibc. The good is that U.S. consumers and U.S. housing are strong, says Tal

“What we’ve seen in the energy space is nothing short of a black swan,” he adds. Oil price decline was the black swan, but why? To create alternative energy investment

In fact, says Tal, alternative energy investment makes oil more relevant: when oil is $100, you’re more motivated to invest in alternative energy @cibc

If oil prices are still set to rise, I will not invest, I will wait; shale oil could be the new producer

On China: don’t believe headline numbers re: GDP growth. It’s weaker than they say. Tal says Chinese #stocks are more likely to see large swings in P/E ratios @cibc

On the U.S.: Tal says manufacturing is slowing because the dollar is rising. And, unemployment for young people is falling, while housing [prices] are rising

Overall, you have a situation in U.S. where we’re not in any emergency. So there’s no need to keep interest rates at 0%, says Tal says. Rates should be higher.

Canada’s debt-to-income ratio is 165%. But that number is a lot of noise, says Tal @cibc

Golombek on taxes

Up next, @JamieGolombek, who’ll be discussing tax and estate planning strategies @cibc

Update on Canadian tax after #Liberals win: decrease #tfsa, cancel family tax cut, replace Canada Child Tax Benefit with child benefit @cibc (For more, read: The Liberals have won. Should you worry about the TFSA?)

Legally, Liberals could change federal personal tax rates this year.

Starting in 2016, rules changing for life interest trusts @JamieGolombek e.g., tax liability on death of spouse B

U.S. tax: most clients won’t have to worry about U.S. estate tax, only those with more than CA$7 million @JamieGolombek