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(September 28, 2007) Two Canadian banks are making it easier for self-directed investors to make trades.

BMO and RBC are lowering their commission rates for BMO InvestorLine and RBC Direct Investing, respectively. Investors can now trade at a $9.95 flat rate.

For the BMO plan, only clients with more than $100,000 of assets under their control will be eligible for the rate, and there are no trade restrictions. The new pricing applies to RBC investors who have more than $100,000 in their account, or who trade between 30 and 149 times a quarter. For people who trade more than 150 times a quarter, the flat fee will be reduced even further, to $6.95 per trade.

“We have a strong commitment to providing exceptional value to our clients,” says Connie Stefankiewicz, president and CEO of BMO InvestorLine. “We are making this new rate accessible to more of our clients by making the asset level needed to qualify for the rate much easier to reach than other offers currently out there.”

“If there ever was a time to be a self-directed investor, it’s now,” adds Doug Coulter, president and CEO of RBC Direct Investing. “This latest move continues our aggressive strategy to provide investors with greater value and rewards for their business. We’re committed to delivering ongoing enhancements and exceptional value for investors who choose to manage their own portfolios.”

Since not everyone has the cash in one account to qualify for the new rate, BMO says its clients can now combine assets from any of their InvestorLine accounts to hit the $100,000 mark.

“As the number of online investors steadily rises and as the population ages, we’re finding we have an increasing number of clients who invest online on behalf of other family members, such as their parents,” says Stefankiewicz. “We think this reality should be recognized and the additional business should be rewarded.”

The new rate will come into effect on November 1 for BMO and December 22 for RBC investors.

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Commodity Price Index falls again

(September 28, 2007) For the third consecutive month, Scotiabank’s Commodity Price Index took another tumble.

All four of the indexes and sub-indexes — metals and minerals, oil and gas, forest products, and agriculture — lost ground. Even with the decline, though, the index is up 3.6% over last year.

Patricia Mohr, vice-president, economics, at Scotiabank says the drop is due to the sub-prime fallout. “This triggered dislocation in the asset-backed commercial paper market used to fund sub-prime mortgages and widening credit spreads across debt markets,” she says. “Investment and hedge funds in the United States and Europe, involved in securitizing U.S. sub-prime mortgages and facing heavy losses, were forced to sell profitable metal and oil positions to raise cash to cover stepped-up bank collateral requirements, margin calls and potential investor redemptions.”

The base metal and oil prices did bounce back after the Federal Reserve Board announced its 50 basis point rate cut on August 17 and its other cut a month later.

Nickel prices also moved lower, from $24.59 in May to $11.36 in August. September is looking a bit better for nickel — prices have rebounded to $14.75.

Oil prices had a spectacular September trading, getting as high as $84.10. That’s up from $72.36 in August and $74.15 in July.

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Slower growth and a strong dollar will drive future trends: Scotiabank

(September 28, 2007) Scotiabank predicts that slower growth, lower interest rates and the strengthening Canadian dollar will be 2008’s key economic and fiscal trends.

The bank’s global outlook report says the Federal Reserve’s decision to reduce interest rates is “out of sync” with what more cautious regions such as Canada, Europe and Japan are doing.

“This policy divergence will widen into 2008 as the Fed cuts rates at least another three-quarters of a percentage point, more if current prospects for slow growth morph into a risk of no growth over the winter,” says Warren Jestin, Scotiabank’s chief economist. “Upcoming inflation trends may help to validate the policy U-turn, as U.S. wage gains lose momentum, housing prices erode, energy prices plateau and nervous retailers resort to deeper discounting to lure reluctant shoppers to the checkout counter.”

The report also notes that the Bank of Canada may be forced to cut rates by half a percentage point by the end of the year. “The cumulative rate reduction will be significantly less on this side of the border because output growth, job gains, the housing market and consumer spending are all stronger here and likely to remain that way,” says Jestin. “Fiscal settings also provide more stimulus here, and the Bank of Canada has less tolerance for 2%-plus inflation than its counterpart south of the border.”

(09/28/07)