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(October 9, 2008) The current sell-off on the TSX will likely see the index falling to 9,500 before the end of the year, but the fundamentals of the global economy suggest that this is a gross overreaction, according to a report from CIBC World Markets.

The global economy should turn in a growth rate of 3.5% for 2008, which in turn will spur a recovery in Canadian equities in 2009.

“While there is now little doubt that most OECD economies are in recession, there is little to suggest that growth has come anywhere close to grinding to a halt in any of the BRIC countries, which have been the mainstay of recent global economic growth,” says Jeff Rubin, CIBC World Markets chief economist and chief strategist.

In his latest Canadian Portfolio Strategy Outlook report, Rubin points out that even with the largest economies in recession, the price of oil remains around $90 per barrel. When the developed economies snap out of their current funk, the price will skyrocket.

He’s calling for an average price of $150 per barrel over the second half of 2009, with energy companies leading the TSX back toward 12,000 by the end of next year.

“Investors should not lose sight of the fact that many of yesterday’s fundamentals have not changed,” he says. “It almost seems that the more the Federal Reserve Board and other central banks around the world pull new tricks out of their hats, the more investors run for cover.”

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New Brunswick insurers team up

(October 9, 2008) Assumption Life and Acadia Life, an affiliate of Caisses populaires acadiennes, have partnered to create a new sales company focused on the New Brunswick market.

The new company will be a subsidiary of both insurers, although both companies will provide competing products to the new sales company. Acadia and Assumption will combine their respective sales forces, consisting of about 20 employees, with any new hiring being done through the new firm.

“This is a great announcement, not only for the Acadian community, but also for all the people of New Brunswick,” says Camille Thériault, CEO of the new subsidiary. “We know that consumers want better life insurance coverage. We know this is an important opportunity and we want to be there to meet the needs of today’s market. With this agreement, we now have a powerful tool to achieve our goals.”

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U.S. consumer mood sours

(October 9, 2008) You could have seen this coming a mile away. American consumer confidence has crashed hard, according to the October reading of the RBC CASH (Consumer Attitudes and Spending by Household) Index.

The survey reflects the brutality of the month of September, when markets were pummeled and household names in the financial services industry just vanished.

“The dramatic upswing in consumer sentiment last month stemming from declining energy prices has reversed just as suddenly,” said T.J. Marta, Economic and Fixed Income strategist for RBC Capital Markets. “We may be entering a period of manic-depression for consumers, with mood swings dictated by the latest good or bad news.”

Confidence dropped 32 points, to a reading of 37, after two months of modest increases. It marks the largest single-month decline since the index was started in January 2002. The monthly national survey quizzes consumers on the current and future state of local economies, personal finance situations, savings and confidence to make large investments.

Sixty-two percent of Americans report they are less confident in their ability to save and invest this month, compared to a reading of 51% announced at the beginning of September.

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RBC pre-registering TFSAs

(October 9, 2008) RBC is the latest financial services provider to accept pre-registration for tax-free savings accounts, which will not be officially available until January 1, 2009.

“The TFSA is unlike anything Canadian investors have seen before and will be an important investment vehicle for Canadians looking to save money and minimize their taxes,” said David Birkbeck, head, registered products strategy, RBC.

Clients opting for the RBC TFSA will have access to RBC Funds, RBC GICs and RBC savings deposits. The bank will not charge an annual administration fee, and will offer a pre-authorized contribution system, dubbed TFSA-Matic

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Transamerica Life Canada appoints new head

(October 9, 2008) Transamerica Life Canada has appointed of Douglas Brooks as its new president and chief executive officer.

He has extensive experience in the life insurance industry, most recently as senior vice-president and chief financial officer at Equitable Life of Canada.

Previously, Brooks was vice-president and chief risk officer at Sun Life Financial.

A graduate of the University of Waterloo in mathematics and actuarial science, he has been active in the insurance industry and served in numerous leadership positions, particularly with the Society of Actuaries and the Canadian Institute of Actuaries, where he is a past member of the board of directors.

(10/09/08)