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In another sign that third party asset backed commercial paper is slowly being worked out of the financial system, DundeeWealth announced today that it had sold off all of its MAV II Class A-1 and Class A-2 Floating Rate Notes for net proceeds of $139,511,186.

DundeeWealth still holds MAV II Class B and Class C notes, MAV II IA Tracking notes and MAV III IA and TA Tracking notes.

The “Master Asset Vehicle” notes were created by the restructuring of the third-party ABCP market in December 2007. Under that plan, the ABCP was bundled into various long-term notes, which were theoretically more liquid than the frozen ABCP market.

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Expect slow, steady growth in 2010: BMO

Economists and market strategists from BMO Financial Group are predicting slow and steady growth in the coming year, as the recovery stabilizes and central banks eventually raise interest rates.

Douglas Porter, deputy chief economist, BMO Capital Markets says both Canada and the U.S. should post GDP growth rates of about 2.5%.

Interest rates will finally rise from current near-zero levels in the second half of the year, but he points out that borrowing costs will still be quite low from a historical perspective. Meanwhile the dollar will likely average close to parity with it’s U.S. counterpart.

Unemployment will remain high on both sides of the border, at 8.5% in Canada and 10% in the U.S.

“The good news is that despite widespread concerns on this front, inflation is expected to remain quite subdued, averaging 1.5% in Canada and about 2% in the U.S. in 2010,” Porter says.

On the investment front, slow-but-steady economic growth should provide modest returns on the capital markets, according to Paul Taylor, chief investment officer, BMO Harris Private Banking.

Global economic growth should average 3%, with China and India both outperforming with growth of between 8% and 10%.

Stock market returns will stabilize after 2009’s rollercoaster ride, and should outperform both cash and bond holdings.

Taylor’s colleague south of the border, Jack Ablin, CIO, Harris Private Bank, says emerging market equities are currently overpriced compared to U.S. stocks, and expects the emerging market will underperform. The U.S. market could see returns of 15% in the coming year, he says.

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Chamber of Commerce sees strengthening recovery

The Canadian Chamber of Commerce says the economy will continue to strengthen in 2010. However, it warns that premature withdrawal of stimulus measures could stall recovery, endanger confidence and put jobs at risk, according to a Canadian Press report.

In its annual outlook for 2010, the chamber says the global economy has “turned the corner to recovery,” but there are still uncertainties.

The Canadian economy is projected to grow at an average annual rate of 2.6% in 2010, a fairly modest pace compared with previous economic cycles.

The unemployment rate is expected to peak in the early part of the new year, at roughly 8.8%.

The combination of the high dollar, excess supply, high unemployment and competitive pressure will continue to subdue inflationary pressures. Inflation is projected to average 1.6% in 2010 and 2% in 2011.

(12/29/09)