Briefly:

Previous Brieflies this week: | MON | TUE | WED | THU |

(August 5, 2008) As expected, the U.S. Federal Open Market Committee announced Tuesday it is holding the line on target for the federal funds rate at 2%.

The Fed said economic activity expanded in the second quarter, partly reflecting growth in consumer spending and exports, but labour markets have softened further and financial markets remain under considerable stress. In addition, tight credit conditions, the ongoing housing slowdown and elevated energy prices are likely to stall economic growth.

By keeping the rate low, there is always the risk that it will contribute to an environment of rising inflation. The Fed acknowledged that inflation has been “elevated,” but the committee expects inflation to moderate later this year and next year, although the inflation outlook remains highly uncertain.

• • •

HSBC Bank Canada buys smaller U.S. cousin

(August 5, 2008) In an internal acquisition, HSBC Bank Canada intends to acquire HSBC Financial Corporation Limited from HSBC Finance Corporation in the United States.

Both companies are subsidiaries of HSBC Group’s North American operations. The deal is the result of a strategic review of HSBC’s North American businesses.

HSBC Bank Canada is the much larger subsidiary of the two, with total assets of $67.4 billion CDN as of June 30, 2008, and net income of $297 million CDN for the half-year then ended. HSBC Financial Corporation had total assets of $5.2 billion CDN as of March 31, 2008, and net income of $26 million CDN for the first quarter.

“The HSBC Group has a global strategy of ‘joining up the company.’ As part of this strategy, HSBC Bank Canada will acquire HSBC Financial Corporation Limited to ‘join up’ all members of the HSBC Group in Canada under one corporate structure. HSBC Bank Canada and HSBC Financial Corporation Limited are both successful companies and will continue to operate as separate businesses while sharing best practices as we build the HSBC brand in Canada,” says Lindsay Gordon, president and CEO of HSBC Bank Canada.

• • •

U.S. economic anxiety at unprecedented levels

(August 5, 2008) Economic anxiety continues to rise in the U.S., with 61% of consumers saying they feel high or severe levels of anxiety, according to the most recent Yankelovich study, fielded in June 2008.

Yankelovich’s tracking of economic worries finds that 37% of consumers feel severe economic anxiety, a number that has nearly tripled in only six months. In January 2008, only 14% of consumers felt severe economic anxiety.

“As the price of gas and other necessities rise, consumer anxiety is following suit,” said J. Walker Smith, president of Yankelovich MONITOR. “This has huge implications for marketers because people will continue to make significant cutbacks.”

According to Smith, conflicting economic indicators don’t show the reality of the current economy.

“What matters is what people feel. And what people feel right now is verging on panic,” said Smith. “What the economy needs most right now is firm, confident leadership — a strong voice to steady the nerves and boost the resolve of consumers.”

• • •

Standard Life wins two IFCA awards

(August 5, 2008) The Standard Life Assurance Company of Canada has won two awards in the 2008 Insurance and Financial Communicators Association (IFCA) annual competition.

The awards recognize “excellence in marketing and communications work from insurance and financial organizations throughout the United States and Canada.”

Standard Life took top honours in the Community Service Materials and Campaigns category for its annual fund-raising campaign, “Step Up for the Children with Standard Life.” The company also received honourable mention in the Company Web Site (Public/External) category for its Portrait and Ideal Portfolios micro-site.

“Our in-house design, Internet and marketing teams have been supporting our company’s effort in a creative and yet efficient way to communicate with clients, advisors and our other stakeholders,” said Vincenzo Ciampi, vice-president, external communications and public affairs, of Standard Life. “We are proud that their work is being recognized again this year by the IFCA.”

(08/05/08)