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(November 9, 2007) American consumer confidence took a nosedive at the beginning of this month, hitting its lowest point in two years, according to the latest reading of the RBC Consumer Attitudes and Spending by Household (CASH) Index.

Not surprisingly, the culprits in driving sentiment down are rising oil prices and falling home values.

“This month’s consumer sentiment has collapsed to a level similar to that in the wake of Hurricane Katrina in 2005,” said T.J. Marta, economic and fixed income strategist for RBC Capital Markets. “Although we do not expect a recessionary retrenchment by consumers, we do expect that economic growth will moderate substantially in coming months.”

Of particular concern to respondents is their own local economy. In the latest survey, 27% believe the local economy will be weaker in six months, up from 20% in October.

Forty-six per cent said they are less confident about job security, up from 40% in October. With nearly half worried about their jobs, doubts about investing are also on the rise, with 60% saying the next 30 days would be a bad time to invest in the stock market.

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Business risks mounting: Ernst & Young

(November 9, 2007) All businesses need to develop strategies to minimize 10 key strategic risks, according to a new report from Ernst & Young. The new report names the top 10 risks each Canadian company faces, both domestically and abroad, with regulatory and compliance risks topping the list.

John Murphy, global vice-chair for Ernst & Young’s assurance and advisory business services, explained that not all companies face the same strategic risks.

“This research flags the fact that all boards must have strategic business risks on their radar. Boards will have to decide where their greatest risks lie and how to deal with them. Ignoring them is not an option,” says Murphy.

Despite the disparity in businesses within Canada, the most pressing risk faced by each, according to the report, is regulatory and compliance issues.

“The continually escalating regulatory burden, as well as ever more complex compliance challenges, means this is still the biggest business risk to be addressed,” explains Robin Hutchinson, Canadian risk advisory services leader at Ernst & Young. “As companies become more and more global, compliance becomes an even greater challenge, forcing them to manage diverse regulations in different markets.”

Other risk concerns that topped the list include global financial shocks (e.g., recent credit crunch), workforce and consumer aging, and the inability to capitalize on the rise of emerging markets.

Aside from risks, the report also identified five serious factors that could impact business efficiency and productivity. These include war for talent, disease pandemic, the rise/fall of private equity, inability to innovate and the impact of China.

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ASC slaps Ontario firm with fines, ban

(November 9, 2007) The Alberta Securities Commission has ordered a 20-year ban against Al Grossman of Ontario, for illegally raising $2.7 million from over 500 Alberta investors.

Between September 2004 and January 2006, Grossman, president of Maitland Capital, and Ron Gardner, a salesperson, cold-called potential investors across the country, despite not being registered to serve clients outside of Ontario.

In issuing the order, the ASC hearing panel cited Grossman’s “multiple serious contraventions of or failures to comply with Alberta securities laws and his serious, at times egregious, conduct contrary to the public interest — and his troubling failure to recognize the seriousness of his misconduct.”

Grossman must also pay an administrative penalty of $250,000 and $40,000 in costs. Gardner must pay a $15,000 administrative penalty and cease trading or using securities exemptions for five years. Three other Maitland salespeople, William Rouse, Dianna Cassidy and Robert Geller, were ordered to pay $10,000 each in administrative penalties and cease trading or using exemptions for 10 years.

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Eastern provinces feel loonie crunch

(November 9, 2007) Ontario and Quebec continue to take a backseat to the western provinces’ economic growth, according to the Conference Board of Canada’s Autumn 2007 Provincial Outlook.

“Although central Canada’s economic performance is forecast to improve next year, a full turnaround is not expected until 2009,” said Marie-Christine Bernard, associate director, Provincial Outlook. “Again in 2008, western provinces will benefit from strong commodity prices that will spur development of their resource industries.”

In Ontario, sluggish vehicle sales (both in Canada and south of the border) are expected to reach a nine-year low — a result of falling consumer confidence due to the sub-prime mortgage crisis. The result is a drop in consumer spending that has slowed Ontario’s export-oriented economy. Consequently, the province is expected to trail the national growth average for the next two years, averaging a growth of 2.5%.

Despite a thriving domestic economy, Quebec’s overall growth is hindered by a struggling export-oriented manufacturing sector.

In the prairies, Saskatchewan’s sizzling economy leads the region’s accelerated growth with an expansion of 4.3% in 2007. In 2008, the province’s growth is expected to continue, but at a more reasonable rate of 2.8%.

In the east, Newfoundland and Labrador expect to expand their real gross domestic production (GDP) by 6.8% this year — the highest percentage in the country. The growth is fuelled, primarily, by a massive one-year surge in mining output. Despite this accelerated growth, the Conference Board forecasts only 1.5% growth in 2008 due to offshore oil production hitting its peak in 2007.

(11/09/07)