Pacifica Perspectives/blogPacifica Partners Capital Management is an established investment boutique providing customized portfolio management solutions to both Canadian and US investors. We are industry leaders in cross-border wealth management, are independent fee-only investment managers, and believe in a low fee approach to asset management.enFri, 18 May 2012 13:14:31 PDThttp://wordpress.org/?v=3.0.1hourly1US Economy – A Beacon of Hope/blog/2012/05/18/us-economy-a-beacon-of-hope/Pacifica PartnersChinaG7GDP GrowthIMFInflationPIIGSSurrey Capital ManagementUS economyPacifica PartnersFri, 18 May 2012 11:58:15 PDT/blog/?p=1703





Navigating a Sea of Opportunity

US Economy – A Beacon of Hope

2012Q2
- Quarterly Newsletter – Investment Compass





If the embedded document above is not
visible, the text and charts have also been included below as follows:

Possibly
more so than at any other
time in history, all parts of the world are simultaneously
feeling
the impact of what a globalized world we live in. The impact of the
globalized economy to transmit shockwaves from one part of the world to
another is unparalleled. As corporations have begun releasing their
earnings for the first quarter of 2012, the markets are starting to get
a senseof just where things sit withrespect to the economy. As the
economic recovery continues to wobble along, every negative event seems to
get magnified and ripples across the world. 
 
Recent
academic studies have looked at the idea of whether or not
international investing provides the diversification that it once
did. Most of them have come to the conclusion that about twenty years
ago, diversifying by country stopped providing the benefits it once
did. A large part of this is because of the increasingly global and
interconnected nature of the world economy brought about by the increase
in trade and financial flows. What is interesting is that while every
corner of the globe is impacted by the goings on in the other parts of
the world, each continent has its own challenges.
 

US Economy Leads the Way

 
Traditionally,
North America is the first continent to bounce back after a global
economic slowdown. Said another way, it is the US that leads the world
economy back to growth mode. This time seems to be no different. When
the financial crisis ended, most market strategists seemed to be
hanging their hat on the idea that as long as the rest of the world
(primarily Asia) was able to carry the US towards economic recovery,
things would be fine. Two years later, hopes are being hinged
increasingly upon the US economy and its ability to assume its
traditional role of leading the world economy towards economic growth.

 

While
the US economy is still trying to achieve escape velocity from the
clutches of the economic slowdown, it is moving forward at steady yet
humble 2.2% annual growth rate. This is despite the fact that the
fiscal and monetary policy framework is providing all of the muscle it
can.
 
The US auto industry has accounted for about 1.6% of
American economic growth as US consumers move to replace the US
automotive fleet which sits at a record average age of 11 years. Part
of the reason that vehicles as a whole have aged is because sales fell
sharply during the last recession to about 10.4 million units. For
comparison, US auto sales achieved a record in 2005 at about 17 million
cars and trucks sold. This record was in part achieved due to the
excesses in the credit markets which allowed consumers to increase
their borrowing and in some cases buy “more car than they could
afford”. As a comparison, the average age of vehicles in Canada is a
little over 8 years.
 
US auto sales are especially
important to Canada because about 80% of the cars manufactured in
Canada are exported to the US. In their most recent earnings
announcements, North American car companies stated that domestic sales
were strong but these were being offset by slowing sales in Europe.
 
Aside
from autos, housing is another major contributor to the US economy.
Recent data continue to add credence to the idea that US housing has
seen its lows. From here, it will take time but clearly US real estate
is on the mend and should be able to continue to underpin the US
economic rebound.
 
With the US consumer accounting for
almost 70% of the US economy and about 16% of the world’s economy, the
US consumer holds significant clout over the level of global economic
growth. It is worth noting that US consumer confidence has been
rising—defying a great many observers’ expectations.

US Companies Maintain Record Profit Margins

 
As
for other US industries, most companies have finished reporting their
first quarter 2012 earnings and on average they have managed to beat
analyst expectations.  Although the expectations that had been
beaten were lowered in advance by market analysts to reflect concerns
of the global economy.

One data point that is often forgotten
about in the earnings season crush is profit margins. Simply put,
profit margins can be thought of as the portion of each dollar of sales
left over as profits. As the shows, currently, profit margins as a
percentage of the economy are running at very high levels.
 
At
some point, as we have highlighted in the past, profit margins cannot
continue to rise at their current rate and will begin to revert back to
the long term average. According to market data provider FactSet,
analysts expect that 105 of the S&P 500 companies will see
their
revenues rise but earnings reduced this quarter due to higher costs.
The moderation in oil prices and many commodities in recent weeks may
help to offset the cost increases that are expected. 
 
An
important contributor to profit margin growth has been the ability of
companies to run lean operations and opportunistically use the weak
labor market to hold wage costs in check. But recent data shows that
labor costs have started to firm and productivity (output per worker)
has started to decline. In the first quarter of 2012, US government
data shows that the total hours worked was up 3.7%, outweighing the
growth rate in the economy. Unfortunately for the average US income
earner, it should be noted that it is not that wages that are rising
but instead the output per worker is falling, which means unit labor
costs are rising. 

Forecasted 2012 and 2013 GDP Growth Rates
Click Here to view a larger version of
this chart.

Europe: Confronting Challenges

For
the bulk of the European financial crisis, speculation had revolved
around whether or not Greece would be allowed to default on its
government debt payment obligations. This was thought to be the worst
case scenario. But as we had highlighted in prior comments, the market
had already priced in the default scenario. When Greece did eventually
negotiate a cut to its debt obligations, the markets marched forward.
 
In
addition, an injection of about €650 billion ($1 trillion
USD) 
from the European Central Bank (ECB) into the financial markets helped
to bring the markets into line for a time. But it seems that a trillion
dollars does not go as far as it used to. Markets are once again
grappling with Spain’s and Italy’s debt issues primarily and sending
the yields (interest rates) on these countries’ bonds upwards. They are
the two largest members of the PIIGS (Portugal, Ireland, Italy, Greece,
and Spain) group of countries with the largest debt loads.
 
Moves
by some PIIGS nations to partake in austerity measures in order to
reform their economies have also seen bitter resistance by locals. This
culminated in recent elections in Europe that saw the governments of
Greece and France replaced by new ruling parties. Greece has seen a
rise in support for the far left and the far right; two political
fringes that have a common desire for Greece to stop the Franco-German
push for austerity. Germany has led the push for the weakest economies
of Europe to tighten spending and raise taxes.

The outcome of such a policy was rather predictable as most of
Europe is back in recession this year after a brief and feeble attempt
at economic growth. An economy that is not growing has little chance of
paying its debts – not to mention the political instability that comes
with double digit unemployment.

Europe’s Impact on China

 
We have written more commentary questioning the Chinese economy’s
foundation than almost any other topic.
 
When
too many people chase the same thing – in this case safety – the
paradox is that it is risk that they are buying.  Then it was
not
mainstream to talk about such things. Today, the issues and challenges
facing China are in fact mainstream discussion topics.

Therefore, equities continue to offer more upside than other asset
classes over the long-term. Investors will have to continue to be
patient but the rewards are there. When these long drawn-out cycles of
volatility and seemingly never ending crises end, investors who were
able to stay the course are rewarded. That being said, it is never easy
but history proves that “this too shall pass”.

After
years of relying on government directives to increase production and a
shadow banking system that was churning out loans that should not have
been issued, the Chinese leadership is trying to confront the problems
that years of strong economic growth were able to mask.

If that
were not enough, Europe’s plight is impacting China because of the
significant trade relationship that exists between the Old World and
the Middle Kingdom. According to Eurostat, the statistical office of
the EU, Europe imported about €290 billion of Chinese goods and
services in 2011. The slowdown in Europe and its return to recession
will therefore impact China. As an offset, the odds have risen of more
easing on the monetary and fiscal policy fronts by Chinese authorities
as they are becoming increasingly focused on growth once
again. 
Fixing longer term structural imbalances might have to wait .

Summary

We
believe that monetary authorities will continue to do what it takes to
continue the battle with a stubborn economic crisis but the political
leadership of the leading world economies must work together in a more
concerted, longer term effort. No nation is strong enough to confront
these challenges on its own. Equities continue to be fairly priced and
the mania for bonds has continued causing them to be bid up beyond fair
value. We continue to view government bonds to be a risky asset class
as they are quite expensive due to the fear that has induced investors
to abandon risky assets for so-called safe assets. We say “so-called”
because any asset that is overpriced becomes risky. 

Pacifica
Partners – Capital Management
Navigating
a Sea of Opportunity

Disclaimer:

This report is for information purposes only and is neither a
solicitation for the purchase of securities nor an offer of securities.
The information contained in this report has been compiled from sources
we believe to be reliable, however, we make no guarantee,
representation or warranty, expressed or implied, as to such
information’s accuracy or completeness. All opinions and estimates
contained in this report, whether or not our own, are based on
assumptions we believe to be reasonable as of the date of the report
and are subject to change without notice. Past performance is not
indicative of future performance. Please
note that, as at the date of this report, our firm may hold positions
in some of the companies mentioned.

Copyright (C) 2012 Pacifica Partners Inc. All rights reserved.

 

The Politics of Gas Prices

The
Politics of Gas Prices:

History
has shown us that US presidential election cycles too often become
fixated on a single issue or phrase that defines the election. In the
1980 election it was Reagan’s “Are you better off than you were four
years ago?” and in 1992 the Clinton campaign was able to define the
election around the phrase “It’s the economy stupid.” In the current
election, one of the hot button issues seems to be the price of
gasoline.

Click
here for full story.


Pacifica Partners sponsors the White Rock

Thank for a
successful fund raiser!

Pacifica
Partners is proud to announce our sponsorship of the White Rock
Players’ Club performance at the White Rock Playhouse (Coast Capital
Playhouse) on April 9th 2012 of “The Lion in Winter”.
Pacifica Partners has reserved all 218 seats to this exclusive
performance night and will be hosting a pre-performance social at 7pm
on Monday April 9th.

Click
here for full story.


Canadian Real Estate Bubble Chartbook

Canadian
Real Estate Chart Book

We
continue to believe that Canadian real-estate is an asset class with an
asymmetric risk profile. Simply put, the upside price potential to real
estate is limited due to already extreme valuations yet the downside
risks are significant from a number of factors including:

Click
here for full story.


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Support “The Enbridge Ride to Conquer Cancer” all<br /> proceeds benefit the BC Cancer Foundation.<br />

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The
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Pacifica Partners’ Managing Director, Paul Bains
will be participating in a two day major cycling event called style="font-weight: bold; background-color: white; color: rgb(0, 0, 153);">“The
Enbridge Ride to Conquer Cancer” style="background-color: white; color: rgb(0, 0, 153);">.

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A
message from Paul to supporters, friends, colleagues and family
follows:
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“I’ll be cycling from Vancouver to Seattle with
all of the proceeds raised going directly to the BC Cancer Foundation.
As many of you know, I am not a cyclist, but I have committed to this
event in memory of my mom. Statistics show that over 45% of men and 40%
of women will develop cancer in their lifetime and one in four
Canadians will die from it. That’s why I’m riding, to make an impact
and do something big about cancer.

I know you now understand why this is so important to me. My goal is to
raise $2500 for the BC Cancer Foundation and if  you would
help me get to my goal we may be able to meet or even beat this target.
As I mentioned, the proceeds
benefit a great organization, the BC Cancer Foundation.

If you would like to donate please href="http://www.conquercancer.ca/site/TR?px=2693346&pg=personal&fr_id=1413&s_src=BF_emailbadge2012">click
here. Thank you for your support!”

- Paul Bains


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Click Here to Provide your Support
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Suite 213 5455 152nd St
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Tel: 604.576.8908
Tol Free: 1.877.576.8908
Fax: 604.574.2096


Email: invest@pacificapartners.com

Web: PacificaPartners.com

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align="left">Legal Disclaimer

This report is for information purposes only and is neither a
solicitation for the purchase of securities nor an offer of securities.
The information contained in this report has been compiled from sources
we believe to be reliable, however, we make no guarantee,
representation or warranty, expressed or implied, as to such
information’s accuracy or completeness. All opinions and estimates
contained in this report, whether or not our own, are based on
assumptions we believe to be reasonable as of the date of the report
and are subject to change without notice. Past performance is not
indicative of future performance. Please
note that, as at the date of this report, our firm may hold positions
in some of the companies mentioned.


History<br /> has shown us that US presidential election cycles too often become<br /> fixated on a single issue or phrase that defines the election. In the<br /> 1980 election it was Reagan’s “Are you better off than you were four<br /> years ago?” and in 1992 the Clinton campaign was able to define the<br /> election around the phrase “It’s the economy stupid.” In the current<br /> election, one of the hot button issues seems to be the price of<br /> gasoline.<br />


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style="color: rgb(0, 102, 255);"> style="font-size: 24px;">The Politics of Gas Prices

style="margin: 0px 0px 0.83em; padding: 0px; font-size: 14px; line-height: 1.75em; text-align: justify;">History
has shown us that US presidential election cycles too often become
fixated on a single issue or phrase that defines the election. In the
1980 election it was Reagan’s “Are you better off than you were four
years ago?” and in 1992 the Clinton campaign was able to define the
election around the phrase “It’s the economy stupid.” In the current
election, one of the hot button issues seems to be the price of
gasoline.

href="http://www.pacificapartners.com/blog/wp-content/uploads/2012/04/Baker-Hughes-Rig-Count-Index.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt="OPEC and Crude Oil Prices"
src="http://www.pacificapartners.com/blog/wp-content/uploads/2012/04/Baker-Hughes-Rig-Count-Index.png"
style="border: 0px solid ; margin: 0px; line-height: 100%; text-decoration: none; display: inline; width: 600px; height: 347px;"
hspace="10" vspace="15">
href="http://www.pacificapartners.com/blog/wp-content/uploads/2012/04/Baker-Hughes-Rig-Count-Index.png"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;">Click
here to view a larger version of this chart

 

style="margin: 0px 0px 0.83em; padding: 0px; font-size: 14px; line-height: 1.75em; text-align: justify;">While
the price of gasoline is a serious economic issue that has the
potential to slowdown the budding recovery, the solutions and rhetoric
are not matching the importance of this issue.  On the
Republican side, the solution most often heard during the primaries was
rooted in the idea that there had to be more drilling which would
increase the supply of oil. In theory, this new found supply would lead
to lower gas prices. On the Democratic side, President Obama believes
that conservation and alternative energy sources will help to alleviate
the high price of gasoline. 

style="margin: 0px 0px 0.83em; padding: 0px; font-size: 14px; line-height: 1.75em; text-align: justify;">Ethanol
was thought to be a solution but it has proven to be a solution that
comes at a cost. Many opponents think that ethanol is bad for the
environment and it amounts to putting food into a gas tank since about
90% of US ethanol production comes from corn. Another problem with
ethanol is that it cannot be shipped over long distances. This is
another example of what passes for a solution on the campaign trail
often fails to hold much water in the “real world”.

style="margin: 0px 0px 0.83em; padding: 0px; font-size: 14px; line-height: 1.75em; text-align: justify;">More
drilling in the US will not lead to lower gas prices. The high price of
gasoline has very little to do with the oil supply. In fact, when it
comes to oil, supplies have seldom been more plentiful. The Oklahoma
oil storage and pipeline facilities are filled to capacity with oil –
much of it being Canadian tar sands oil, OPEC is doing its best to keep
production up – despite the popularly held belief that OPEC is
responsible for oil prices being at current levels – and US oil
production is rising. 

style="margin: 0px 0px 0.83em; padding: 0px; font-size: 14px; line-height: 1.75em; text-align: justify;">The
reality is that it isn’t a scarcity of oil that is leading to higher
pump prices but a bottleneck in the refining. It might be surprising to
some but oil from western Canadian oil fields sells for a hefty
discount because of this supply bottleneck. 

style="margin: 0px 0px 0.83em; padding: 0px; font-size: 14px; line-height: 1.75em; text-align: justify;">As
the data in the chart above show, drilling activity as measured by the
number
of active drilling rigs, has been running at a very strong pace in the
US and Canada.  Furthermore, US oil production has rebounded
far stronger than most any expert would have thought possible even just
a few years ago. Yet, gas prices have risen. 

style="margin: 0px 0px 0.83em; padding: 0px; font-size: 14px; line-height: 1.75em; text-align: justify;">Gasoline
prices are being impacted to a large extent by the fact that the US
refining industry has been undergoing structural change for some years.
Refineries in the eastern U.S. are being closed down as they are unable
to produce gasoline at a profit.  Surprising as this might
sound given the pain being extracted at the gas pump, not all
refineries are profitable under current market conditions.

style="margin: 0px 0px 0.83em; padding: 0px; font-size: 14px; line-height: 1.75em; text-align: justify;">The
reasons for high gasoline prices are complex and cannot be solved with
slogans in 30 second television ads or bumper stickers. Both parties
owe the voters some straight talk so that real solutions can be
evaluated and implemented.

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Pacifica
Partners inc – Capital Management
Navigating
a Sea of Opportunity

class="Apple-style-span" style="line-height: 14px;">Disclaimer:

This report is for information purposes only and is neither a
solicitation for the purchase of securities nor an offer of securities.
The information contained in this report has been compiled from sources
we believe to be reliable, however, we make no guarantee,
representation or warranty, expressed or implied, as to such
information’s accuracy or completeness. All opinions and estimates
contained in this report, whether or not our own, are based on
assumptions we believe to be reasonable as of the date of the report
and are subject to change without notice. Past performance is not
indicative of future performance. Please
note that, as at the date of this report, our firm may hold positions
in some of the companies mentioned.

Copyright (C) 2012 Pacifica Partners Inc. All rights reserved.

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We
would like to thank everyone involved in making our April 9th charity
event benefiting Umoja Operation Compassion Society a huge success!

href="http://www.pacificapartners.com/blog/2012/03/26/white_rock_charity_event/"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;">Click
here for full story.

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mchideable="hideable_repeat_2_1">
valign="top"> style="text-align: center; color: rgb(80, 80, 80); font-family: Arial; font-size: 14px; line-height: 150%;"> href="http://www.pacificapartners.com/blog/2012/03/15/canadian-housing-bubble-chart-book/"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> src="http://www.pacificapartners.com/media/Vancouver%20Real%20Estate.png"
alt="Expanded Real Estate Chart Book"
style="border: 0px solid ; margin: 0pt; padding: 0pt; line-height: 100%; text-decoration: none; display: inline; width: 149px; height: 149px;"> style="color: rgb(80, 80, 80); font-family: Arial; font-size: 14px; line-height: 150%; text-align: left;">
style="color: rgb(51, 153, 153);">Canadian
Housing Bubble Chart Book: 

In
response to feedback received from our October 24th, 2011 publication,
“Enhanced Real Estate Chart Book”, we are providing this update
consisting of 34 charts and tables, including three new summaries, that
comprise an exhaustive look at trends and valuations of Canadian real
estate. 

href="http://www.pacificapartners.com/blog/2012/03/15/canadian-housing-bubble-chart-book/"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;">
Click here href="http://www.pacificapartners.com/blog/2011/10/24/1488/"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;">
for full story.

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mchideable="hideable_repeat_3_1">
valign="top"> style="text-align: center; color: rgb(80, 80, 80); font-family: Arial; font-size: 14px; line-height: 150%;"> href="http://www.pacificapartners.com/blog/2012/02/10/the-global-economy-maybe-the-glass-is-half-full/"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> src="http://www.pacificapartners.com/media/News%20Icons/Investment%20compass/Investment%20Compass%20Winter%202012%20thumbnail.png"
alt="The Global Economy"
style="border: 0px solid ; margin: 0pt; padding: 0pt; line-height: 100%; text-decoration: none; display: inline; width: 138px; height: 149px;"> style="color: rgb(80, 80, 80); font-family: Arial; font-size: 14px; line-height: 150%; text-align: left;">
style="color: rgb(51, 153, 153);">The Global
Economy: Maybe the
Glass
is Half Full? 

To
say that Europe dominated the 2011 financial headlines would be an
understatement. One word or comment from a European politician or
central banker sent stock markets tumbling. Conversely, the smallest
hint of a resolution to the debt problems of the other “PIIGS” nations
(Portugal, Ireland, Italy, Greece, and Spain) sent the markets soaring.

href="http://www.pacificapartners.com/blog/2012/02/10/the-global-economy-maybe-the-glass-is-half-full/"
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]]>History has shown us that US presidential election cycles too often become fixated on a single issue or phrase that defines the election. In the 1980 election it was Reagan’s “Are you better off than you were four years ago?” and in 1992 the Clinton campaign was able to define the election around the phrase [...]/blog/2012/04/25/the-politics-of-gas-prices/feed/0Charity Event and Live Performance/blog/2012/03/26/white_rock_charity_event/Pacifica PartnerscharityCoast Capital Play Houseplayers' clubSFU SurreySurrey BCThe Lion in WinterUmojaWhite RockWhite Rock Play HousePacifica PartnersMon, 26 Mar 2012 15:27:10 PDT/blog/?p=1662


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Pacifica Partners is proud to announce our joint sponsorship with Simon Fraser University Surrey Campus<br /> of the White Rock Players’ Club performance at the White Rock Playhouse<br /> (Coast Capita Playhouse) on April 9th 2012 of “The Lion in Winter”.<br /> Pacifica Partners has reserved all 218 seats to this exclusive<br /> performance night and will be hosting a pre-performance social at 7pm<br /> on Monday April 9th.


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valign="top">

border="0" cellpadding="20" cellspacing="0">
valign="top"> style="color: rgb(80, 80, 80); font-size: 14px; line-height: 150%; text-align: left;">

style="color: rgb(0, 102, 255);"> style="font-size: 24px;">Charity Event and Live Performance

class="MsoNormal">Pacifica Partners is proud to announce our
sponsorship of the White Rock Players’ Club performance at the White
Rock Playhouse ( href="http://maps.google.ca/maps?q=coast+capital+playhouse+white+rock&hl=en&hq=coast+capital+playhouse+white+rock&radius=15000&t=h&z=16"
target="_blank">Coast Capital Playhouse) on April
9th 2012 of “The Lion in Winter”.

Pacifica
Partners has reserved all 218 seats to this exclusive performance night
and will be hosting a pre-performance social at 7pm on Monday April
9th. 

This
is a
great event for culture in our community and a thank-you for our
clients
and centres of influence in the Surrey White Rock area.

style="margin: 0px 0px 0.83em; padding: 0px; font-size: 14px; line-height: 1.75em; text-align: justify;">Charitable
donations may be made at the event to support the Umoja
Operation
Compassion Society (UOCS). The UOCS is a respected registered charity
and provides support
to the African refugee immigrant community in Surrey and
surrounding area, however makes its services available to all
immigrants trying to establish themselves in Canada. UOCS provides
resources and support for these vulnerable new members of our community
so that they may flourish in their new home.  In addition, the
UOCS
provides international support to orphanages and clean water projects
in Africa.  To learn more about UOCS please href="http://umojaoperationcompassion.com/" target="_blank">click
here.

class="MsoNormal">A donation
has been made by Pacifica Partners Inc. – Capital Management, to href="http://www.whiterockplayers.ca/">White Rock Players
Club – itself a
vital non-profit entity in our community, to make this opportunity
available to
all.

class="MsoNormal">Doors
will open at 7pm with a networking social.  Proceeds
from a
cash-bar will also benefit the White Rock Players’ Club.
 The
play will commence at 8pm.  To reserve your complimentary
tickets
please email: target="_blank">lion@pacificapartners.com.

href="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/SFU-Surrey-and-Pacifica-Partners.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt="Surrey White Rock Players' Club"
src="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/SFU-Surrey-and-Pacifica-Partners.png"
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width="550">
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style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;">Click
here to view a larger version of this poster

 

The
Lion in Winter

class="MsoNormal">The
play is set in 12th century England and
the joys of live theatre transcend the story told – it will be a night
to
remember!

James
Goldman’s historical play The Lion in
Winter depicts the interpersonal relationships among members of the
English
royal family on Christmas Eve and Christmas Day of the year 1183. The
play is
set in the castle of King Henry II of England, located in Chinon, in
the
English-ruled region of France. Debuted as a Broadway play in 1966,
Goldman’s
screenplay adaptation of The Lion in Winter, which was released in
1968, won
him an Academy Award.

class="MsoNormal">The
Lion in Winter concerns the
interpersonal dynamics and political wrangling of King Henry; his wife
Eleanor,
whom he has kept imprisoned in a tower for the past ten years; and
their three
sons, who are vying for the privilege of being named heir to the
English
throne. Eleanor, who has been let out of prison to celebrate Christmas
with her
family, favors Richard as heir, while Henry favors John. To complicate
matters,
the young King Philip II of France has arrived to remind Henry of a
treaty he
signed many years earlier, promising to marry his heir to Philip’s
sister
Alais. However, Alais has been Henry’s mistress for the past seven
years, and
Henry is hesitant to marry her off to any of his sons.

The
Lion in Winter explores themes of
dysfunctional family, political maneuvering, war and peace, as well as
aging,
death, inheritance, and posterity. As the principle characters plot,
scheme,
conspire, and counter-plot between each other, the deepseated emotional
ties
between them get played out in the political arena, such that sibling
rivalry
and marital jealousy translate into civil war, treason, and perhaps
even murder
among the members of a royal nuclear family.

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Pacifica
Partners – Capital Management
Navigating
a Sea of Opportunity

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Copyright (C) 2012 Pacifica Partners Inc. All rights reserved.

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valign="top"> style="text-align: center; color: rgb(80, 80, 80); font-family: Arial; font-size: 14px; line-height: 150%;"> href="http://www.pacificapartners.com/blog/2012/03/15/canadian-housing-bubble-chart-book/"> style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> src="http://www.pacificapartners.com/media/Vancouver%20Real%20Estate.png"
alt="Canadian Real Estate Bubble"
style="border: 0px solid ; margin: 0pt; padding: 0pt; max-width: 160px; line-height: 100%; text-decoration: none; display: inline; width: 239px; height: 150px;"> style="color: rgb(80, 80, 80); font-family: Arial; font-size: 14px; line-height: 150%; text-align: left;"> style="color: rgb(51, 153, 153);">Canadian
Housing-Bubble Chart Book: 

In
response to feedback from our October 24th, 2011 publication “Enhanced
Real Estate Chart Book”, we are providing this update consisting of 34
charts and tables, including three new summaries, that comprise an
exhaustive look at trends and valuations of Canadian real estate.

href="http://www.pacificapartners.com/blog/2012/03/15/canadian-housing-bubble-chart-book/"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;">Click
here for full story.

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cellspacing="0" width="100%">
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mchideable="hideable_repeat_2_1">
valign="top"> style="text-align: center; color: rgb(80, 80, 80); font-family: Arial; font-size: 14px; line-height: 150%;"> href="http://www.pacificapartners.com/blog/2012/01/31/putting-a-floor-under-oil-prices/"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> src="http://www.pacificapartners.com/media/News%20Icons/Investing%20in%20Energy%20Stocks.png"
alt="Putting a Floor Under Oil Prices"
style="border: 0px solid ; margin: 0pt; padding: 0pt; line-height: 100%; text-decoration: none; display: inline; width: 149px; height: 140px;"> style="color: rgb(80, 80, 80); font-family: Arial; font-size: 14px; line-height: 150%; text-align: left;"> style="color: rgb(51, 153, 153);">Putting a
Floor Under Oil Prices: 

Only three years ago, it was thought that Saudi Arabia – the largest
oil exporter in the world – could generate large budget surpluses with
oil at $70/barrel.  
href="http://www.pacificapartners.com/blog/2011/10/24/1488/"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;">
href="http://www.pacificapartners.com/blog/2012/01/31/putting-a-floor-under-oil-prices/">Click
here href="http://www.pacificapartners.com/blog/2011/10/24/1488/"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;">
for full story.

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cellspacing="0" width="100%">
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valign="top"> style="text-align: center; color: rgb(80, 80, 80); font-family: Arial; font-size: 14px; line-height: 150%;"> href="http://www.pacificapartners.com/blog/2012/02/10/the-global-economy-maybe-the-glass-is-half-full/"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> src="http://www.pacificapartners.com/media/News%20Icons/Investment%20compass/Investment%20Compass%20Winter%202012%20thumbnail.png"
alt="Global Economy"
style="border: 0px solid ; margin: 0pt; padding: 0pt; line-height: 100%; text-decoration: none; display: inline; width: 161px; height: 160px;"> style="color: rgb(80, 80, 80); font-family: Arial; font-size: 14px; line-height: 150%; text-align: left;"> style="color: rgb(51, 153, 153);">The Global
Economy: Maybe the Glass is Half Full? 

style="margin: 0pt 0pt 10px; color: rgb(32, 32, 32); display: block; font-family: Arial; font-size: 22px; font-weight: bold; line-height: 22px; text-align: left; font-style: normal; font-variant: normal; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; background-color: rgb(255, 255, 255);"> class="Apple-style-span"
style="color: rgb(80, 80, 80); font-size: 14px; font-weight: normal; line-height: 21px;">To
say that Europe dominated the 2011 financial headlines would be an
understatement. One word or comment from a European politician or
central banker sent stock markets tumbling. Conversely, the smallest
hint of a resolution to the debt problems of the other “PIIGS” nations
(Portugal, Ireland, Italy, Greece, and Spain) sent the markets soaring. class="Apple-converted-space"> 

href="http://www.pacificapartners.com/blog/2012/02/10/the-global-economy-maybe-the-glass-is-half-full/"
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]]>Pacifica Partners is proud to announce our joint sponsorship with Simon Fraser University Surrey Campus of the White Rock Players&#8217; Club performance at the White Rock Playhouse (Coast Capita Playhouse) on April 9th 2012 of &#8220;The Lion in Winter&#8221;. Pacifica Partners has reserved all 218 seats to this exclusive performance night and will be hosting [...]/blog/2012/03/26/white_rock_charity_event/feed/0Canadian Housing-Bubble Chart Book/blog/2012/03/15/canadian-housing-bubble-chart-book/Pacifica PartnersBuying real estate in the USCalgary Real estateCanadian housing bubbledebtGooglehousing bubblehousing crashincomeMontreal Real EstateMoving to CanadaMoving to the USprice momentumreal estate bubbleS&P 500SentimentStatistics CanadaSurrey Wealth ManagementTeranetToronto Real EstateUBCvaluationsVancouver Capital Managementvancouver real estateWinnipeg Real estatePacifica PartnersThu, 15 Mar 2012 16:21:15 PDT/blog/?p=1642


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style="color: rgb(0, 102, 255);"> style="font-size: 24px;">Canadian Housing-Bubble Chart
Book


 

In
response to feedback received from our October 24th, 2011
publication, “ href="http://www.pacificapartners.com/blog/2011/10/24/1488/"
target="_blank">Enhanced Real Estate
Chart href="http://www.pacificapartners.com/blog/2011/10/24/1488/"
target="_blank"> Book“, we are providing this
update consisting of 34 charts and tables, including style="color: red;">three new summaries, that
comprise an exhaustive look at
trends and valuations of Canadian real estate. This summary
has been
generated solely for educational purposes and we would like to thank
the
UBC Sauder School of Business – Center for Urban Economics and Real
Estate, Teranet and National Bank, Statistics Canada, Standard
&
Poors, and Google
for making numerous data elements and housing price indices available
for generating the following summaries. For definitions of the data
used in this summary please visit the following sites:

target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">UBC Center for Urban
Economics and Real Estate style="color: rgb(0, 0, 128);">.

target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Teranet – National Bank Home
Price Index TM style="color: rgb(0, 0, 128);">.

target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Statistics Canada for access
to their Cansim database style="color: rgb(0, 0, 128);">.

href="http://www.standardandpoors.com/indices/sp-case-shiller-home-price-indices/en/us/?indexId=spusa-cashpidff--p-us----"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">S&P Case-Shiller Home
Price Indices style="color: rgb(0, 0, 128);">.

target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Google Trends style="color: rgb(0, 0, 128);">.


 
We welcome feedback,  email href="mailto:realestate@pacificapartners.com" target="_blank">realestate@pacificapartners.com
or tweet: target="_blank">@pacifica_prtnrs

style="color: rgb(0, 0, 0);"> style="font-size: 20px;"> style="color: rgb(3, 185, 155);">Summary

We
continue to believe that Canadian real-estate is an asset class
with an asymmetric risk profile. Simply put, the upside price
potential to real estate is limited due to already extreme valuations
yet the downside
risks
are significant from a number of factors including:

  • Policy changes involving
    the tightening of credit availability to Canadian consumers.
  • Rising interest rates as the Bank
    of Canada ends its period of emergency rates implemented since the
    financial crisis.
  • Over-supplied housing inventories.
  • Reversion to the mean of long term
    fundamental economic relationships eg: price to rent ratios, price to
    income, present value of cash flows from rental properties, home price
    appreciation to income growth, home price appreciation to GDP growth,
    etc. 
  • Broad economic consumer woes
    resulting from stubbornly high
    unemployment, weak income growth, and higher-than-targeted inflation.

As stated earlier: Although
housing prices are impacted by a number of economic and
demographic factors, we believe that the prevailing themes stimulating
Canada’s housing market over the last decade have been twofold:
Firstly, the organic growth
of the Canadian economy in response to global demand for commodities
has resulted in wealth accumulation and economic growth which can
justify a component of house price appreciation. Secondly,
over
the
last decade, there has been a rapid increase in Canadian mortgage and
household debt which served to inflate housing prices through financial
leverage. Both of these two factors, one sustainable but subject to
contraction risks (GDP growth) and the other unsustainable for
the long term (enhanced leverage), have merged into the almost
unprecedented housing bull market.

Our
outlook on Canadian real-estate remains negative and we believe
Canadian
housing will begin an extended contraction phase resulting in a move of
home prices back towards long term sustainable valuations.

style="font-size: 14px;">Chart
summaries are provided below and are divided into the following
six categories:

Section A
(table 1 and charts 1 & 2): style="font-weight: bold;">- NEW

Canadian
Real Estate Senitment,  Wage Growth, and Housing
Supply and Demand

Section
B (charts 3 through 10):
Canadian Real Estate Market Trends, Valuations, and Drivers of Home
Prices

Section
C (charts 11 through 18):
Canadian Real Estate Unemployment, Vacancy Rates, and Home Price Growth
in Major Canadian Cities

Section
D (charts 19 through 22):
Canadian and US Real Estate versus Stock Markets (TSX and S&P
500)

Section
E (charts 23 through 26):
US Housing Price Performance vs. Major Canadian Cities

Section
F (charts 27 through 33):
US Housing Price Performance vs. Major Canadian Cities
 


 

size="+1"> style="font-size: 15px;"> style="color: rgb(3, 185, 155);">Section A size="+1">(Table 1 and Charts 1
& 2):
Canadian Real Estate Sentiment, Wage Growth, and Housing Supply


 

style="color: rgb(0, 102, 255);"> style="font-size: 15px;">Table 1) Housing Bubble Sentiment
Indicator - NEW

Canadian
Real Estate bulls have continued to cite the fact that real estate
valuations have appeared “expensive” for years, yet, the momentum
has continued to take prices higher. Real estate bears, on the other
hand, claim that home prices have been so stretched from fundamental
valuations that past price momentum is irrelevant.  As with
all asset classes, a change to investor sentiment regardless
of the
catalyst that triggers the change (eg. rising interest rates,
government policy, extreme valuations, etc.) will dictate future real
estate returns.

To attempt to monitor real estate sentiment analytically, we examine
the number of
Google searches for the term “housing
bubble“, summarized by the originating city of the
searches.  The table below displays the top ten cities
globally in which the term “housing bubble” was searched in each year
from 2004 to 2012. The
highest number of city-sourced searches for
“housing bubble” arise from Canadian cities, namely Vancouver, Toronto,
Calgary and Edmonton.  The progression of the
trend is ominous
as California cities dominated much of the top searches until 2009,
after which Canadian and Australian cities began to emerge.
 Currently, four of the five cities that
dominate global searches of “housing bubble” are Canadian,
specifically: Vancouver, Toronto, Calgary, and Edmonton.

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target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt="Canadian Real Estate"
src="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Canadian-Housing-Bubble.png"
style="border: 0pt none ; margin: 5px; height: auto; line-height: 100%; text-decoration: none; display: inline;"
border="0" height="400" hspace="5" vspace="5"
width="650">
href="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Canadian-Housing-Bubble.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Click Here style="color: rgb(0, 0, 128);"> to view a larger version of
this table.

 


 

style="color: rgb(0, 102, 255);"> style="font-size: 15px;">Chart 1) Provincial wage growth
versus home price appreciation style="color: black; font-weight: normal;">:   style="font-weight: bold;">Vancouver, Victoria, Calgary,
Edmonton, Regina, Winnipeg, Ottawa, Toronto, Montreal, and Halifax style="color: red;">- NEW

Canadian
wage growth versus home price appreciation from 2001 to 2011 is
reported below.  Average weekly wage growth per home province
of each city is reported.  Also, only wages of full time
workers between the ages of 25 and 54 were examined in an attempt to
capture changes to the buying power potential of
first-time-homebuyers.

In all ten markets examined, home price appreciation far surpassed
average weekly wage growth.  The markets with the largest
difference between wage growth and home price appreciation in
descending
order are:  Regina, Winnipeg, and Vancouver.

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target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt="Canadian Real Estate"
src="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Surrey-Financial-Planning.jpg"
style="border: 0pt none ; margin: 5px; height: auto; line-height: 100%; text-decoration: none; display: inline;"
border="0" height="395" hspace="5" vspace="5"
width="649">
href="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Surrey-Financial-Planning.jpg"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Click Here style="color: rgb(0, 0, 128);"> to view a larger version of
this chart.

 


 

style="color: rgb(0, 102, 255);"> style="font-size: 15px;">Chart 2) Real Estate Supply and
Demand Growth: Vancouver,
Calgary, Edmonton, Winnipeg, Ottawa, Toronto,
Montreal, Halifax - NEW

In
all major Canadian housing markets, save Ottawa, housing capacity
growth has exceeded population increases between 2001 and 2011.
 Calgary, Edmonton, Montreal and Halifax are what we would
consider to be “severely over-built” with a population growth to
capacity growth of 70% or lower.  Housing capacity is defined
as the number of individuals that can be reasonably housed in new
housing units, whether or not a new housing unit sits unoccupied,
under-occupied, or over-occupied.  Assumptions made may be
more appropriate for some markets than others.

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target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt="Canadian Real Estate"
src="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Surrey-Investment-Counsel.png"
style="border: 0pt none ; margin: 5px; height: auto; line-height: 100%; text-decoration: none; display: inline;"
border="0" height="395" hspace="5" vspace="5"
width="649">
href="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Surrey-Investment-Counsel.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Click Here style="color: rgb(0, 0, 128);"> to view a larger version of
this chart.

 


 

style="color: rgb(0, 0, 0);"> style="font-size: 15px;"> style="color: rgb(3, 185, 155);" size="+2">Section B
(charts 3 through 10):
Canadian Real Estate
Market Trends, Valuations, and Drivers of Home Prices


 

style="color: rgb(0, 102, 255);"> style="font-size: 15px;">Chart 3) Canadian home prices over
discounted rent valuation: Vancouver,
Calgary, Edmonton, Toronto, and
Montreal

In
theory, residential real estate prices should equal the discounted
sum of future rental income. As a result, we have attempted to estimate
fair values for residential real estate in major cities by comparing
actual prices to theoretical discounted prices. In theory, this ratio
should equal one and deviations from this value should regress back to
the value one over time.
Note, discounted cash flow calculations are highly volatile
and dependent on underlying model assumptions. However based
off of this
methodology, Canadian real estate appears extremely expensive in most
major markets, with the exception of Toronto.

Canadian real
estate only appears somewhat reasonably priced if the assumption that
current
emergency low interest rates continue indefinitely into the
future. Any increase
in interest rates to even pre recession levels (which were also
historically low) causes Canadian real estate as a whole to appear
grossly overvalued.

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target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt="Canadian Real Estate"
src="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Burnaby-Wealth-Management.png"
style="border: 0pt none ; margin: 5px; height: auto; line-height: 100%; text-decoration: none; display: inline;"
border="0" height="395" hspace="5" vspace="5"
width="649">
href="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Burnaby-Wealth-Management.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Click Here style="color: rgb(0, 0, 128);"> to view a larger version of
this chart.

 


 

style="color: rgb(0, 102, 255);"> style="font-size: 15px;">Chart 4) Canadian misery index -
National,
Vancouver, Toronto, and Montreal

The
Canadian misery index (inflation + unemployment rate) has been
climbing since hitting a low at the end of the first quarter
2008. Toronto misery is at levels not seen since 1995. All three major
Canadian cities are at or above misery levels similar to those of the
early 2000s. Canadian interim misery index (not quarter end data)
indicates that national
misery is currently just below 10%, last seen at the end of the first
quarter
of 2003.

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target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt="Canadian Real Estate"
src="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Surrey-Wealth-Management.png"
style="border: 0pt none ; margin: 5px; height: auto; line-height: 100%; text-decoration: none; display: inline;"
border="0" height="395" hspace="5" vspace="5"
width="649">
href="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Surrey-Wealth-Management.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Click Here style="color: rgb(0, 0, 128);"> to view a larger version of
this chart.

 


 

style="color: rgb(0, 102, 255);"> style="font-size: 15px;">Chart 5) Canadian household credit
as a percentage of nominal GDP

Canadian
household credit, both consumer credit and residential
mortgage credit, has increased sharply over the last decade. Total
credit as a percentage of nominal GDP increased from under 60% during
the third quarter of 2001, to the current levels of 90%. The
surge in Canadian
household debt is predominantly comprised of residential mortgage
credit as can be observed from the chart below. Canadian consumer debt
accumulation appears to have been exhausted and is currently in a stall
state of approximately 90% of GDP.  Lack of debt accumulation
is a headwind for further real estate price appreciation.

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target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt="Canadian Real Estate"
src="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Real-Estate-Bubble-Vancouver.jpg"
style="border: 0pt none ; margin: 5px; height: auto; line-height: 100%; text-decoration: none; display: inline;"
border="0" height="395" hspace="5" vspace="5"
width="649">
href="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Real-Estate-Bubble-Vancouver.jpg"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Click Here style="color: rgb(0, 0, 128);"> to view a larger version of
this chart.

 


 

style="color: rgb(0, 102, 255);"> style="font-size: 15px;">Chart 6) Growth of Canadian home
prices in comparison to nominal GDP growth and mortgage credit


Appreciation in Canadian home prices (from January 2000 onward) has
more
closely reflected growth in mortgage credit rather than growth in
Canadian nominal GDP.

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target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt="Canadian Real Estate"
src="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Real-Estate-Bubble-Canada.jpg"
style="border: 0pt none ; margin: 5px; height: auto; line-height: 100%; text-decoration: none; display: inline;"
border="0" height="395" hspace="5" vspace="5"
width="649">
href="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Real-Estate-Bubble-Canada.jpg"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Click Here style="color: rgb(0, 0, 128);"> to view a larger version of
this chart.

 


 

style="color: rgb(0, 102, 255);"> style="font-size: 15px;">Chart 7) Canadian real (inflation
adjusted) rent index: Calgary,
Vancouver, Edmonton, Winnipeg, Montreal,
Halifax, Ottawa, Toronto

style="color: rgb(80, 80, 80); font-family: Arial; font-size: 14px; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: 21px; orphans: 2; text-align: justify; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; background-color: rgb(255, 255, 255); display: inline ! important; float: none;">Canadian
residential rent increases have not historically kept pace with
inflation. While Canadian housing prices have surged higher, renting
has become relatively cheaper. This is evident from the chart below
indicating long term trend of real-rents (inflation adjusted) has been
downward in most Canadian cities.

This has implications for retirees expecting to utilize
rental income to finance long term retirement expenditures. As with non
inflation indexed bonds, cash flows from Canadian real estate may prove
to be ineffective to satisfy future increases in the cost of living.
 This is in addition to the fact that residential real estate
in Canada already possess low rental yields, or the net annual rental
income generated from a property dividend by the current market value
of the property.

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target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt="Canadian Real Estate"
src="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Financial-Planning-Langley.png"
style="border: 0pt none ; margin: 5px; height: auto; line-height: 100%; text-decoration: none; display: inline;"
border="0" height="395" hspace="5" vspace="5"
width="649">
href="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Financial-Planning-Langley.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Click Here style="color: rgb(0, 0, 128);"> to view a larger version of
this chart.

 


 

style="color: rgb(0, 102, 255);"> style="font-size: 15px;">Chart 8) Total employment as a
percentage of population in major Canadian cities: style="color: black;">Vancouver, Calgary,
Edmonton, Winnipeg, Ottawa, Toronto, Montreal, Halifax

Total
employment as a percentage of population in Toronto, Calgary, and
Vancouver is similar to their respective mid 1990s levels. All major
Canadian cities have employment levels off from their highs with the
exception of Edmonton which has followed volatile multi-quarter cycles
since mid 2004. This
observation corresponds with the increase
in the overall Canadian unemployment. Note, individual cities will have
varying “natural” levels of employment based off of age demographics
and other factors that impact labour force participation.

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target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt="Canadian Real Estate"
src="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Housing-Crisis-Vancouver.png"
style="border: 0pt none ; margin: 5px; height: auto; line-height: 100%; text-decoration: none; display: inline;"
border="0" height="395" hspace="5" vspace="5"
width="649">
href="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Housing-Crisis-Vancouver.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Click Here style="color: rgb(0, 0, 128);"> to view a larger version of
this chart.

 


 

style="color: rgb(0, 102, 255);"> style="font-size: 15px;">Chart 9) Canadian real (inflation
adjusted) home price index: Vancouver,
Edmonton, Toronto, Calgary,
Regina, Montreal, Victoria, Winnipeg

Long
term real (inflation adjusted) annual home price returns have
exceeded 3% in Vancouver and Victoria BC, while exceeding 1.5% in
most other large Canadian cities. Edmonton is the only exception with a
compounded annual house price appreciation of 0.64% over the examined
period.
To put this into perspective, numerous examinations of long term real
US home price appreciation
indicate that they have only slightly exceeded inflation at an
approximate annual
compounded rate of 0.5% per year.

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target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt="Canadian Real Estate"
src="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Investment-Management-Surrey.png"
style="border: 0pt none ; margin: 5px; height: auto; line-height: 100%; text-decoration: none; display: inline;"
border="0" height="395" hspace="5" vspace="5"
width="649">
href="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Investment-Management-Surrey.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Click Here style="color: rgb(0, 0, 128);"> to view a larger version of
this chart.

 


 

style="color: rgb(0, 102, 255);"> style="font-size: 15px;">Chart 10) Canadian home prices to
rents: Vancouver, Calgary,
Edmonton, Toronto, Montreal

Canadian
home prices are currently not inline with historic multiples
of residental rental prices. Most extended from historical norms are
Vancouver, Montreal, and Toronto. While Edmonton and Calgary, are
elevated from historic averages but below previous witnessed
highs.

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target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt="Canadian Real Estate"
src="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Housing-Bubble-Vancouver.jpg"
style="border: 0pt none ; margin: 5px; height: auto; line-height: 100%; text-decoration: none; display: inline;"
border="0" height="395" hspace="5" vspace="5"
width="649">
href="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Housing-Bubble-Vancouver.jpg"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Click Here style="color: rgb(0, 0, 128);"> to view a larger version of
this chart.

 


  

style="color: rgb(0, 0, 0);"> style="font-size: 15px;"> style="color: rgb(3, 185, 155);" size="+2">Section C (charts
11 through 18):
Canadian Real Estate
Unemployment, Vacancy Rates,
and Home Price Growth in Major Canadian
Cities


 

The following charts display a time
series of unemployment, vacancy rates, and quarterly home price changes
for: Vancouver, Calgary, Edmonton, Winnipeg, Ottawa, Toronto, Montreal,
and Halifax.

 

style="color: rgb(0, 102, 255);"> style="font-size: 15px;">Chart 11) Vancouver unemployment,
vacancy rates, and home price growth

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target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt="Canadian Real Estate"
src="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Medical-Wealth-Management.jpg"
style="border: 0pt none ; margin: 5px; height: auto; line-height: 100%; text-decoration: none; display: inline;"
border="0" height="395" hspace="5" vspace="5"
width="649">
href="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Medical-Wealth-Management.jpg"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Click Here style="color: rgb(0, 0, 128);"> to view a larger version of
this chart.

 

 

style="color: rgb(0, 102, 255);"> style="font-size: 15px;">Chart 12) Edmonton unemployment,
vacancy rates, and home price growth

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target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt="Canadian Real Estate"
src="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Physician-Wealth-Management.png"
style="border: 0pt none ; margin: 5px; height: auto; line-height: 100%; text-decoration: none; display: inline;"
border="0" height="395" hspace="5" vspace="5"
width="649">
href="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Physician-Wealth-Management.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Click Here style="color: rgb(0, 0, 128);"> to view a larger version of
this chart.

 

 

style="color: rgb(0, 102, 255);"> style="font-size: 15px;">Chart 13) Calgary unemployment,
vacancy rates, and home price growth

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target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt="Canadian Real Estate"
src="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Wealth-Managment-for-Dentists.png"
style="border: 0pt none ; margin: 5px; height: auto; line-height: 100%; text-decoration: none; display: inline;"
border="0" height="395" hspace="5" vspace="5"
width="649">
href="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Wealth-Managment-for-Dentists.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Click Here style="color: rgb(0, 0, 128);"> to view a larger version of
this chart.

 

 

style="color: rgb(0, 102, 255);"> style="font-size: 15px;">Chart 14) Winnipeg unemployment,
vacancy rates, and home price growth

class="Apple-style-span" style="line-height: 14px;"> href="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Surrey-Asset-Management.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt="Canadian Real Estate"
src="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Surrey-Asset-Management.png"
style="border: 0pt none ; margin: 5px; height: auto; line-height: 100%; text-decoration: none; display: inline;"
border="0" height="395" hspace="5" vspace="5"
width="649">
href="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Surrey-Asset-Management.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Click Here style="color: rgb(0, 0, 128);"> to view a larger version of
this chart.

 

 

style="color: rgb(0, 102, 255);"> style="font-size: 15px;">Chart 15) Ottawa unemployment,
vacancy rates, and home price growth

class="Apple-style-span" style="line-height: 14px;"> href="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Portfolio-Manager-Surrey-BC.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt="Canadian Real Estate"
src="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Portfolio-Manager-Surrey-BC.png"
style="border: 0pt none ; margin: 5px; height: auto; line-height: 100%; text-decoration: none; display: inline;"
border="0" height="395" hspace="5" vspace="5"
width="649">
href="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Portfolio-Manager-Surrey-BC.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Click Here style="color: rgb(0, 0, 128);"> to view a larger version of
this chart.

 

 

style="color: rgb(0, 102, 255);"> style="font-size: 15px;">Chart 16) Toronto unemployment,
vacancy rates, and home price growth

class="Apple-style-span" style="line-height: 14px;"> href="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Wealth-Management-Surrey-Fraser-Valley.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;">
Canadian Real Estate src="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Wealth-Management-Surrey-Fraser-Valley.png"
style="border: 0pt none ; margin: 5px; height: auto; line-height: 100%; text-decoration: none; display: inline;"
border="0" height="395" hspace="5" vspace="5"
width="649">
href="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Wealth-Management-Surrey-Fraser-Valley.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Click Here style="color: rgb(0, 0, 128);"> to view a larger version of
this chart.

 

 

style="color: rgb(0, 102, 255);"> style="font-size: 15px;">Chart 17) Montreal unemployment,
vacancy rates, and home price growth

class="Apple-style-span" style="line-height: 14px;"> href="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Burnaby-Capital-Management.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt="Canadian Real Estate"
src="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Burnaby-Capital-Management.png"
style="border: 0pt none ; margin: 5px; height: auto; line-height: 100%; text-decoration: none; display: inline;"
border="0" height="395" hspace="5" vspace="5"
width="649">
href="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Burnaby-Capital-Management.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Click Here style="color: rgb(0, 0, 128);"> to view a larger version of
this chart.

 

 

style="color: rgb(0, 102, 255);"> style="font-size: 15px;">Chart 18) Halifax unemployment,
vacancy rates, and home price growth

class="Apple-style-span" style="line-height: 14px;"> href="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Wealth-Management-for-Doctors.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt="Canadian Real Estate"
src="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Wealth-Management-for-Doctors.png"
style="border: 0pt none ; margin: 5px; height: auto; line-height: 100%; text-decoration: none; display: inline;"
border="0" height="395" hspace="5" vspace="5"
width="649">
href="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Wealth-Management-for-Doctors.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Click Here style="color: rgb(0, 0, 128);"> to view a larger version of
this chart.

 

 

style="color: rgb(0, 0, 0);"> style="font-size: 15px;"> style="color: rgb(3, 185, 155);" size="+2">Section D
(charts 19 through 22):
Canadian and US Real Estate versus Stock Markets (TSX and S&P
500)


 

style="color: rgb(0, 102, 255);"> style="font-size: 15px;">Chart 19) From 1977 – Canadian real
estate
versus the TSX index

Displayed
in the chart below are Canadian home prices as a ratio of the
TSX index (Canadian stock market) from 1977. Seven cities are included:
Vancouver,
Victoria, Calgary, Edmonton, Regina, Toronto, and Montreal. Over the
long term, home prices in Canada have
lagged price appreciation of stocks. Note, the stock index below is a
“price index” and therefore, excludes payment of dividends.

class="Apple-style-span" style="line-height: 14px;"> href="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Wealth-Management-Burnaby.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt="Canadian Real Estate"
src="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Wealth-Management-Burnaby.png"
style="border: 0pt none ; margin: 5px; height: auto; line-height: 100%; text-decoration: none; display: inline;"
border="0" height="395" hspace="5" vspace="5"
width="649">
href="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Wealth-Management-Burnaby.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Click Here style="color: rgb(0, 0, 128);"> to view a larger version of
this chart.

 

 

style="color: rgb(0, 102, 255);"> style="font-size: 15px;">Chart 20) From 1998 – Canadian real
estate
versus the TSX index

Displayed
in the chart below are Canadian home prices as a ratio of the
TSX index (Canadian stock market) from 1998. Nine cities are included:
Vancouver,
Victoria, Calgary, Edmonton, Regina, Ottawa, Toronto, Montreal, and
Halifax. Over the medium term, home prices in Canada have
outperformed price appreciation of stocks. Note, the spike on the
charts observed at March 2009 represent the stock market bottom during
the financial crisis.

class="Apple-style-span" style="line-height: 14px;"> href="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Asset-Management-Burnaby.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt="Canadian Real Estate"
src="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Asset-Management-Burnaby.png"
style="border: 0pt none ; margin: 5px; height: auto; line-height: 100%; text-decoration: none; display: inline;"
border="0" height="395" hspace="5" vspace="5"
width="649">
href="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Asset-Management-Burnaby.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Click Here style="color: rgb(0, 0, 128);"> to view a larger version of
this chart.

 

 

style="color: rgb(0, 102, 255);"> style="font-size: 15px;">Chart 21) From 1987 – US real
estate versus the S&P 500 index

For
comparison purposes the following two charts (Chart 20 and Chart
21) have also been
included which display US home prices as a multiple of the
S&P 500 (US stock market).
The chart immediately below displays US home prices as a ratio of the
S&P
500 index (US stock market) from 1987 onward. Fourteen US cities are
included in the chart below as well as a composite index of ten major
US Cities. Over the medium term, home prices in Canada have
outperformed price appreciation of stocks. Note, the spike on the
charts observed at March 2009 represent the stock market bottom during
the financial crisis.

class="Apple-style-span" style="line-height: 14px;"> href="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Crossborder-Financial-Planning.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt="Canadian Real Estate"
src="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Crossborder-Financial-Planning.png"
style="border: 0pt none ; margin: 5px; height: auto; line-height: 100%; text-decoration: none; display: inline;"
border="0" height="395" hspace="5" vspace="5"
width="649">
href="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Crossborder-Financial-Planning.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Click Here style="color: rgb(0, 0, 128);"> to view a larger version of
this chart.

 

 

style="color: rgb(0, 102, 255);"> style="font-size: 15px;">Chart 22) From 1998 – US Real
Estate versus the S&P 500 Index


For comparison purposes the following chart and the chart above have
been included which display US home prices as a multiple of the
S&P 500 (US stock market).
The chart below displays US home prices as a ratio of the S&P
500 index (US stock market) from 1987 onward. Fourteen US cities are
included in the chart below as well as a composite index of ten major
US Cities. Over the medium term, home prices in Canada have
outperformed price appreciation of stocks. Note, the spike on the
charts observed at March 2009 represent the stock market bottom during
the financial crisis.

class="Apple-style-span" style="line-height: 14px;"> href="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Canadian-and-US-Financial-Planning.jpg"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt="Canadian Real Estate"
src="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Canadian-and-US-Financial-Planning.jpg"
style="border: 0pt none ; margin: 5px; height: auto; line-height: 100%; text-decoration: none; display: inline;"
border="0" height="395" hspace="5" vspace="5"
width="649">
href="http://pacificapartners.com/blog/wp-content/uploads/2012/03/Canadian-and-US-Financial-Planning.jpg"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Click Here style="color: rgb(0, 0, 128);"> to view a larger version of
this chart.

 

 

style="color: rgb(0, 0, 0);"> style="font-size: 15px;"> style="color: rgb(3, 185, 155);" size="+2">Section D (charts
23 through 26):
US Housing Price Performance vs. Major Canadian Cities


 

The following charts indicate relative
performance of US home prices
to Canadian home prices in four Canadian markets: Vancouver, Calgary,
Toronto, and Montreal. US home prices reflect Canadian dollars by
applying a timely CAD/USD exchange rate to the US home price index.

 

style="color: rgb(0, 102, 255);"> style="font-size: 15px;">Chart 23) US Home Prices versus
Vancouver Home Prices

class="Apple-style-span" style="line-height: 14px;"> href="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Investing-in-US-Real-Estate-Vancouver-BC.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt="Canadian Real Estate"
src="http://www.pacificapartners.com//blog/wp-content/uploads/2012/03/Investing-in-US-Real-Estate-Vancouver-BC.png"
style="border: 0pt none ; margin: 5px; height: auto; line-height: 100%; text-decoration: none; display: inline;"
border="0" height="395" hspace="5" vspace="5"
width="649">
href="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Investing-in-US-Real-Estate-Vancouver-BC.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Click Here style="color: rgb(0, 0, 128);"> to view a larger version of
this chart.

 

 

style="color: rgb(0, 102, 255);"> style="font-size: 15px;">Chart 24) US Home Prices versus
Calgary Home Prices

class="Apple-style-span" style="line-height: 14px;"> href="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Investing-in-US-real-estate-Calgary.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt="Canadian Real Estate"
src="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Investing-in-US-real-estate-Calgary.png"
style="border: 0pt none ; margin: 5px; height: auto; line-height: 100%; text-decoration: none; display: inline;"
border="0" height="395" hspace="5" vspace="5"
width="649">
href="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Investing-in-US-real-estate-Calgary.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Click Here style="color: rgb(0, 0, 128);"> to view a larger version of
this chart.

 

 

style="color: rgb(0, 102, 255);"> style="font-size: 15px;">Chart 25) US Home Prices versus
Toronto Home Prices

class="Apple-style-span" style="line-height: 14px;"> href="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Investing-in-US-real-Estate-Toronto.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt="Canadian Real Estate"
src="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Investing-in-US-real-Estate-Toronto.png"
style="border: 0pt none ; margin: 5px; height: auto; line-height: 100%; text-decoration: none; display: inline;"
border="0" height="395" hspace="5" vspace="5"
width="649">
href="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Investing-in-US-real-Estate-Toronto.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Click Here style="color: rgb(0, 0, 128);"> to view a larger version of
this chart.

 

 

style="color: rgb(0, 102, 255);"> style="font-size: 15px;">Chart 26) US Home Prices versus
Montreal Home Prices

class="Apple-style-span" style="line-height: 14px;"> href="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Investing-in-US-real-Estate-Montreal.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt="Canadian Real Estate"
src="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Investing-in-US-real-Estate-Montreal.png"
style="border: 0pt none ; margin: 5px; height: auto; line-height: 100%; text-decoration: none; display: inline;"
border="0" height="395" hspace="5" vspace="5"
width="649">
href="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Investing-in-US-real-Estate-Montreal.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Click Here style="color: rgb(0, 0, 128);"> to view a larger version of
this chart.

 

 

style="color: rgb(0, 0, 0);"> style="font-size: 15px;"> style="color: rgb(3, 185, 155);" size="+2">Section E
(charts 27 through 33):
US Housing Price Performance vs. Major Canadian Cities


 

The following charts indicate annual
changes in monthly home prices and “sales pair” volume. Data has been
generously made available by Teranet – National Bank for: Canada,
Vancouver, Calgary, Ottawa, Toronto, Montreal, and Halifax.
 Please visit http://www.housepriceindex.ca/
for the definitions and methodologies used
calculating their indices.

 

style="color: rgb(0, 102, 255);"> style="font-size: 15px;">Chart 27) Canadian Home Price and
Sales Volume Change

class="Apple-style-span" style="line-height: 14px;"> href="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Moving-between-Canada-and-the-US.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt="Canadian Real Estate"
src="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Moving-between-Canada-and-the-US.png"
style="border: 0pt none ; margin: 5px; height: auto; line-height: 100%; text-decoration: none; display: inline;"
border="0" height="395" hspace="5" vspace="5"
width="649">
href="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Moving-between-Canada-and-the-US.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Click Here style="color: rgb(0, 0, 128);"> to view a larger version of
this chart.

 

 

style="color: rgb(0, 102, 255);"> style="font-size: 15px;">Chart 28) Vancouver Home Price and
Sales Volume Change

class="Apple-style-span" style="line-height: 14px;"> href="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Moving-between-Vancouver-and-the-US.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt="Canadian Real Estate"
src="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Moving-between-Vancouver-and-the-US.png"
style="border: 0pt none ; margin: 5px; height: auto; line-height: 100%; text-decoration: none; display: inline;"
border="0" height="395" hspace="5" vspace="5"
width="649">
href="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Moving-between-Vancouver-and-the-US.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Click Here style="color: rgb(0, 0, 128);"> to view a larger version of
this chart.

 

 

style="color: rgb(0, 102, 255);"> style="font-size: 15px;">Chart 29) Calgary Home Price and
Sales Volume Change

class="Apple-style-span" style="line-height: 14px;"> href="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Moving-between-Calgary-and-the-US.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt="Canadian Real Estate"
src="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Moving-between-Calgary-and-the-US.png"
style="border: 0pt none ; margin: 5px; height: auto; line-height: 100%; text-decoration: none; display: inline;"
border="0" height="395" hspace="5" vspace="5"
width="649">
href="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Moving-between-Calgary-and-the-US.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Click Here style="color: rgb(0, 0, 128);"> to view a larger version of
this chart.

 

 

style="color: rgb(0, 102, 255);"> style="font-size: 15px;">Chart 30) Ottawa Home Price and
Sales Volume Change

class="Apple-style-span" style="line-height: 14px;"> href="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Moving-between-Ottawa-and-the-US.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt="Canadian Real Estate"
src="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Moving-between-Ottawa-and-the-US.png"
style="border: 0pt none ; margin: 5px; height: auto; line-height: 100%; text-decoration: none; display: inline;"
border="0" height="395" hspace="5" vspace="5"
width="649">
href="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Moving-between-Ottawa-and-the-US.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Click Here style="color: rgb(0, 0, 128);"> to view a larger version of
this chart.

 

 

style="color: rgb(0, 102, 255);"> style="font-size: 15px;">Chart 31) Toronto Home Price and
Sales Volume Change

class="Apple-style-span" style="line-height: 14px;"> href="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Moving-between-Toronto-and-the-US.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt="Canadian Real Estate"
src="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Moving-between-Toronto-and-the-US.png"
style="border: 0pt none ; margin: 5px; height: auto; line-height: 100%; text-decoration: none; display: inline;"
border="0" height="395" hspace="5" vspace="5"
width="649">
href="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Moving-between-Toronto-and-the-US.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Click Here style="color: rgb(0, 0, 128);"> to view a larger version of
this chart.

 

 

style="color: rgb(0, 102, 255);"> style="font-size: 15px;">Chart 32) Montreal Home Price and
Sales Volume Change

class="Apple-style-span" style="line-height: 14px;"> href="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Moving-between-Montreal-and-the-US.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt="Canadian Real Estate"
src="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Moving-between-Montreal-and-the-US.png"
style="border: 0pt none ; margin: 5px; height: auto; line-height: 100%; text-decoration: none; display: inline;"
border="0" height="395" hspace="5" vspace="5"
width="649">
href="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Moving-between-Montreal-and-the-US.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Click Here style="color: rgb(0, 0, 128);"> to view a larger version of
this chart.

 

 

style="color: rgb(0, 102, 255);"> style="font-size: 15px;">Chart 33) Halifax Home Price and
Sales Volume Change

class="Apple-style-span" style="line-height: 14px;"> href="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Moving-between-Halifax-and-the-US.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt="Canadian Real Estate"
src="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Moving-between-Halifax-and-the-US.png"
style="border: 0pt none ; margin: 5px; height: auto; line-height: 100%; text-decoration: none; display: inline;"
border="0" height="395" hspace="5" vspace="5"
width="649">
href="http://www.pacificapartners.com/blog/wp-content/uploads/2012/03/Moving-between-Halifax-and-the-US.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Click Here style="color: rgb(0, 0, 128);"> to view a larger version of
this chart.

 

target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt=""
src="http://www.pacificapartners.com/blog/wp-content/uploads/2011/09/Surrey-Wealth-Management.png"
style="border: 0pt none ; height: auto; line-height: 100%; text-decoration: none; display: inline;"
align="left" border="0" height="73" width="70">

Pacifica
Partners – Capital Management
Navigating
a Sea of Opportunity

class="Apple-style-span" style="line-height: 14px;">Disclaimer:

This report is for information purposes only and is neither a
solicitation for the purchase of securities nor an offer of securities.
The information contained in this report has been compiled from sources
we believe to be reliable, however, we make no guarantee,
representation or warranty, expressed or implied, as to such
information’s accuracy or completeness. All opinions and estimates
contained in this report, whether or not our own, are based on
assumptions we believe to be reasonable as of the date of the report
and are subject to change without notice. Past performance is not
indicative of future performance. Please
note that, as at the date of this report, our firm may hold positions
in some of the companies mentioned.

Copyright (C) 2012 Pacifica Partners Inc. All rights reserved.

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style="font-size: 14px; font-weight: normal; line-height: 21px;">Putting
a Floor Under Oil Prices

style="color: rgb(80, 80, 80); font-size: 14px; font-weight: normal; line-height: 21px;">Only
three years ago, it was thought that Saudi Arabia – the largest oil
exporter and second largest
producer in the world – could generate large budget surpluses with oil
at $70/barrel.

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style="font-size: 14px; font-weight: normal; line-height: 21px;"> style="background-color: rgb(255, 255, 255);">Debt
distraction masks opportunities in equities:

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of the most glaring benefits of weak global equity markets over the
last year has been the fact that dividends yields are at their most
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Global Economy: Maybe the Glass is Half Full?

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say that Europe dominated the 2011 financial headlines would be an
understatement. One word or comment from a European politician or
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hint of a resolution to the debt problems of the other “PIIGS” nations
(Portugal, Ireland, Italy, Greece, and Spain) sent the markets soaring.

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To say that Europe dominated the 2011 financial<br /> headlines would be an understatement. One word or comment from a<br /> European politician or central banker sent stock markets tumbling.<br /> Conversely, the smallest hint of a resolution to the debt problems of<br /> the other “PIIGS” nations (Portugal, Ireland, Italy, Greece, and Spain)<br /> sent the markets soaring.
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style="color: rgb(0, 102, 255);"> style="font-size: 24px;">The Global Economy:
Maybe the Glass
is Half Full

2012Q1 – Quarterly Newsletter – Investment Compass

If the embedded document above is not
visible, the text and charts have also been included below as follows:

To
say that Europe dominated the 2011 financial headlines would be an
understatement. One word or comment from a European politician or
central banker sent stock markets tumbling. Conversely, the smallest
hint of a resolution to the debt problems of the other “PIIGS” nations
(Portugal, Ireland, Italy, Greece, and Spain) sent the markets soaring.

 
In the history of the S&P 500, there have been only eleven days
where more than 98% of the stocks that comprise the index moved in the
same direction. Six of these eleven days occurred in 2011. In addition,
from August 5th to the 30th, the S&P 500 experienced an
extraordinary average daily move (up or down) of about 2.5%. This
average, to put it into perspective, is 3.5 times the daily volatility
for the previous nineteen years.

 
As a result, 2011 will be recalled as a year in which most everyone
“was waiting for the other shoe to drop”. Some of these “shoes”
included a potential” PIIGS nation debt default; which countries might
have to replace the Euro as their currency; whether or not the Chinese
economy could be slowed down without causing a ‘hard landing’;
inflation and its squeeze on the emerging markets; and a credit rating
downgrade of the US—potentially leading to a double dip recession.

 
The only one of these “shoes” that has dropped so far is the US debt
downgrade in August of last year. Not surprisingly, after the US debt
downgrade US bonds enjoyed a stunning rise of over 3% for the month.
The reason was that investors believed that US Treasury bonds and the
US dollar were still by far the best house in a bad neighborhood. It
was a reminder that once again – in tumultuous times, the safety of US
dollar assets becomes apparent to the global financial markets.

size="+1"> style="">The Big Picture

 
One dominant theme of the last five years has been the macro-economic
backdrop. Macro refers to “the big picture” with respect to the economy
and the risks that are weighing on the global economy’s ability to
expand. The curious aspect of the macro picture is how it has morphed
at different stages, taking investors on a rollercoaster ride. What
began with the collapse of U.S. real estate changed into the Lehman
Brothers default which ushered in the liquidity crisis and the
subsequent recession.  

class="Apple-style-span" style="line-height: 14px;"> href="http://www.pacificapartners.com/blog/wp-content/uploads/2012/02/Newsletter-Annual-Bank-Credit-Growth-Chart.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt="Steepness of the Yield Curve"
src="http://www.pacificapartners.com/blog/wp-content/uploads/2012/02/Newsletter-Annual-Bank-Credit-Growth-Chart.png"
style="border: 0pt none ; margin: 5px; height: auto; line-height: 100%; text-decoration: none; display: inline;"
border="0" height="395" hspace="5" vspace="5"
width="649">
href="http://www.pacificapartners.com/blog/wp-content/uploads/2012/02/Newsletter-Annual-Bank-Credit-Growth-Chart.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Click Here style="color: rgb(0, 0, 128);"> to view a larger version of
this chart.

 
After a seemingly all too brief lull, it has now morphed into a
sovereign debt crisis engulfing Europe. Some observers are now casting
a wary eye on Japan which after over twenty years of economic malaise
is now possibly near the end of its Houdini-like ability to forego a
debt crisis of its own. Japan has defied just about everyone who has
ever tried to profit from such an event occurring over the last twenty
years.

size="+1"> style="">US Economy Looking Good

 
The economic data for the US has been better than expected for over two
quarters with the economy having generated over 2 million jobs since
summer 2011. Further, for twenty–three consecutive months, the economy
has been able to create new jobs while the real estate sector is
showing early signals that the bottoming process has begun. Key US real
estate markets such as Miami and Phoenix are showing encouraging data.
The surprise thus far is the resilience of the US economy despite
headwinds at home and abroad. Domestically, the biggest source of
headwinds likely comes from the lack of political resolve on both sides
of the aisle “to get something done”. Politics seems to trump economics
with the US Federal Reserve caught in the middle.

 
With the Fed having done all it
prudently can and Treasury fiscal measures to cut the budget deficit
ruled out until after the November 2012 Presidential elections, it has
fallen to the American economic machine to revert to form and pull the
global economy back on track.

 
The US economic recovery is being led by exports, while car sales and
consumer spending are starting to regain a more solid footing. One
caveat on consumer data recently is that the savings rate has started
to decline once again. Whether this is because of increased confidence
returning to US households or simply because wages have been stagnant
is open to question. Consumers are having to loosen their purse strings
after several quarters of belt tightening in which the focus was more
on debt repayment.

 
Another key barometer of the US economy is provided by credit and
banking data. As the chart on the prior page shows, in the last six
months bank credit (i.e. lending) has begun increasing. This is a
positive indicator for cyclical sectors such as retail, automotive
sales and construction. The rise of credit creation from the banking
sector has been a missing ingredient for the economy’s ability to gain
traction. Despite all of the positive North American data, the economic
momentum is still early in its acceleration and not yet felt widely on
Main Street. It seems that the US mood is less “happy days are here
again” and more “will it hold?”

class="Apple-style-span" style="line-height: 14px;"> href="http://www.pacificapartners.com/blog/wp-content/uploads/2012/02/Newsletter-Total-State-and-Local-Tax-Revenue.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt="Steepness of the Yield Curve"
src="http://www.pacificapartners.com/blog/wp-content/uploads/2012/02/Newsletter-Total-State-and-Local-Tax-Revenue.png"
style="border: 0pt none ; margin: 5px; height: auto; line-height: 100%; text-decoration: none; display: inline;"
border="0" height="395" hspace="5" vspace="5"
width="649">
href="http://www.pacificapartners.com/blog/wp-content/uploads/2012/02/Newsletter-Total-State-and-Local-Tax-Revenue.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> style="color: rgb(0, 0, 128);">Click Here style="color: rgb(0, 0, 128);"> to view a larger version of
this chart.

size="+1"> style="">European Headwinds

 
While exports have been a source of strength for the US economy,
Europe’s problems will provide headwinds to US exporters for the
remainder of the year. As many are expecting Europe to either enter a
recession or to already be in one, European demand for foreign goods
should suffer. Europe remains a key global market for both US and Asian
goods.
 
Perhaps one key piece of data from Europe is interest rates on European
government bonds. In response to the measures taken by the European
Central Bank (ECB) in December of last year, bond yields have eased
lower. This is a sign of investor confidence and provides stability on
interest costs while European leaders get their house in order.
 
The measures taken by the ECB included a $640 billion USD cash
injection into the banking system. In doing so, the ECB parted with its
traditional measured response to economic challenges because it feared
that a liquidity crisis similar to that of 2008 was starting to
entrench itself. In the 2008 financial crisis, banks around the world
became afraid to lend to one another. Thus the global economy ground to
a halt in relatively short order.

size="+1"> style="">Where is the money going?

 
So far, the ECB’s measures seem to be helping as about half of this
money has found its way into government debt markets. In other words,
the liquidity that has been provided has been used to purchase
government bonds. This has helped to rein in interest rates and made it
easier for governments in Europe to borrow and roll over debt
maturities.
 
The remainder of the ECB’s cash infusion was largely re-deposited back
at the ECB – even though the ECB is only paying 0.25% on these deposits
while charging the banks a borrowing rate of 1%. This is being done by
financial institutions because they are not fully confident that they
can avert a liquidity crunch and require access to funds for possible
future use despite the borrowing costs.

 
The one drawback is that very little of this money has
made its way into the banking system to allow consumers and businesses
to borrow with easier credit terms. It could be said that governments
are crowding out the private sector.

 
This experience is not all that different than that of the US over the
last two or three years. If events follow a similar script to that of
the thawing of the US liquidity freeze, credit should begin to ease for
European borrowers very gradually.
 
Markets will be watching whether or not European governments make
continued progress in getting firm commitments from the European Union
member nations with respect to fiscal tightening measures. In short,
spending must be reduced sharply and a new treaty that will require
European nations’ ratification in April of this year will impose steep
austerity measures. These spending cuts will curtail European GDP.
 
This is where the European plan differs from the US. In the US, fiscal
policy remained largely accommodative – partly because the political
process would not allow tax increases. In Europe, there is really no
political constituency that argues for tax cuts as consistently as that
in the US. Right or wrong, this has perhaps helped the US economy
sidestep an even more gradual economic rebound – regardless of what the
long term implications of more debt might be.

target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt=""
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style="border: 0pt none ; height: auto; line-height: 100%; text-decoration: none; display: inline;"
align="left" border="0" height="73" width="70">

Pacifica
Partners – Capital Management
Navigating
a Sea of Opportunity

class="Apple-style-span" style="line-height: 14px;">Disclaimer:

This report is for information purposes only and is neither a
solicitation for the purchase of securities nor an offer of securities.
The information contained in this report has been compiled from sources
we believe to be reliable, however, we make no guarantee,
representation or warranty, expressed or implied, as to such
information’s accuracy or completeness. All opinions and estimates
contained in this report, whether or not our own, are based on
assumptions we believe to be reasonable as of the date of the report
and are subject to change without notice. Past performance is not
indicative of future performance. Please
note that, as at the date of this report, our firm may hold positions
in some of the companies mentioned.

Copyright (C) 2012 Pacifica Partners Inc. All rights reserved.

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Spending Putting a Floor Under Oil Prices:

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three years ago, it was thought that Saudi Arabia – the largest oil
exporter and second largest producer in the world – could generate
large budget surpluses with oil at $70/barrel. In recent weeks, new
estimates state that the country would need oil at $75/barrel just to
balance the budget – never mind trying to post a budget surplus.
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Dividend Growth Opportunities

style="color: rgb(80, 80, 80); font-size: 14px; font-weight: normal; line-height: 21px;">One
of the most glaring benefits of weak global equity markets over the
last year has been the fact that dividends yields are at their most
attractive levels in nearly 30 years. This is especially so when we
compare dividend yields to government bond yields.
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alt="Canadian Real Estate Chartbook"
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Real Estate Chart Book

style="color: rgb(80, 80, 80); font-size: 14px; font-weight: normal; line-height: 21px;">The
following chart book consists of 32 charts that summarize trends, key
factors, and relative valuations of Canadian real estate in major
Canadian centers. This summary has been generated solely for
educational purposes and we would like to thank the UBC Sauder School
of Business – Center for Urban Economics and Real Estate, as well as
Teranet and National Bank, and Standard & Poors for making
numerous
data elements and housing price indices available for generating the
following summaries.
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]]>To say that Europe dominated the 2011 financial headlines would be an understatement. One word or comment from a European politician or central banker sent stock markets tumbling. Conversely, the smallest hint of a resolution to the debt problems of the other “PIIGS” nations (Portugal, Ireland, Italy, Greece, and Spain) sent the markets soaring. #outlook [...]/blog/2012/02/10/the-global-economy-maybe-the-glass-is-half-full/feed/0Putting a Floor Under Oil Prices/blog/2012/01/31/putting-a-floor-under-oil-prices/Financial PostBudgetsCanadaCrudeIranNorth DakotaoilOPECproductionRussiaSaudi ArabiaVenezuelaWTICPacifica PartnersTue, 31 Jan 2012 17:20:59 PST/blog/?p=1568


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Only three years ago, it was thought that Saudi Arabia –<br /> the largest oil exporter and second largest producer in the world –<br /> could generate large budget surpluses with oil at $70/barrel. In recent<br /> weeks, new estimates state that the country would need oil at<br /> $75/barrel just to balance the budget – never mind trying to post a<br /> budget surplus.


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style="color: rgb(0, 102, 255);"> style="font-size: 24px;">OPEC Spending Putting a Floor Under
Oil Prices

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Only three years
ago, it was thought that Saudi Arabia – the largest oil exporter and
second largest producer in the world – could generate large budget
surpluses with oil at $70/barrel.  In recent weeks, new
estimates state that the country would need oil at $75/barrel just to
balance the budget – never mind trying to post a
budget surplus. The country’s oil minister has stated that the
nation would work to stabilize prices at the $100/barrel level – which
is a first. Saudi Arabia has traditionally held the role of OPEC
moderate while Iran and Venezuela have been hawks who favor higher oil
prices.  Saudi Arabia has always balanced its need for oil
revenues with the knowledge that if left unchecked, high oil prices
have tended to precede recessions.

href="http://www.pacificapartners.com/blog/wp-content/uploads/2012/01/Oil-Prices-Blog-Chart.png"
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here to view a larger version of this chart

 

style="margin: 0px 0px 0.83em; padding: 0px; font-size: 14px; line-height: 1.75em;">
The reason
for this change in policy would most likely be due to the country’s
response to the uprisings across the Middle East last year. Fearing
unrest, the government of Saudi Arabia has unveiled a huge increase to
public spending that totals almost $130 billion. The Saudi commitment
to stabilizing oil in the $100/barrel range should serve as a wakeup
call for consumers and investors alike.

style="margin: 0px 0px 0.83em; padding: 0px; font-size: 14px; line-height: 1.75em;">
The reason
that Saudi Arabia’s budget should matter is that as the nation spends
money at a breathtaking clip, it will require higher oil prices to keep
its budget from spilling large amounts of red ink. It is thought that
like last year, the nation will end up spending more money than the
official budget calls for. Therefore, the world should not look to
Saudi Arabia to use its powers of persuasion and size amongst its OPEC
peers to reign in oil prices. In fact, the Institute of International
Finance estimates that the break–even oil price for Saudi Arabia will
move to $110 over the next three years.

style="margin: 0px 0px 0.83em; padding: 0px; font-size: 14px; line-height: 1.75em;">
Furthermore,
as the chart shows it is not just Saudi Arabia that needs high oil
prices to meet its spending commitments. Russia needs prices of over
$100/barrel to balance its budget. Together, Saudi Arabia and Russia
account for a little over 20% of the world’s oil production. Therefore,
it would be hard to argue that these two major oil producers would be
willing to bring down prices.

style="margin: 0px 0px 0.83em; padding: 0px; font-size: 14px; line-height: 1.75em;">
One
unintended outcome of these budget constraints amongst the oil
producing nations is that the longer oil prices stay elevated, the more
the energy industry will spend to find new sources of oil. Improvements
in drilling technology have allowed oil to be found at ever greater
depths in the oceans and allowed parts of North America to become new
and significant oil producers. For example, North Dakota now produces
over 500,000 barrels daily and its production now surpasses that of
OPEC member Ecuador.

style="margin: 0px 0px 0.83em; padding: 0px; font-size: 14px; line-height: 1.75em;">
For
consumers this means that hope at the gas pumps will prove ill advised.
For investors, this should mean that continued investment in the oil
shale plays in Texas, North Dakota and other parts of North America
should continue.


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Pacifica
Partners – Capital Management
Navigating
a Sea of Opportunity

class="Apple-style-span" style="line-height: 14px;">Disclaimer:

This report is for information purposes only and is neither a
solicitation for the purchase of securities nor an offer of securities.
The information contained in this report has been compiled from sources
we believe to be reliable, however, we make no guarantee,
representation or warranty, expressed or implied, as to such
information’s accuracy or completeness. All opinions and estimates
contained in this report, whether or not our own, are based on
assumptions we believe to be reasonable as of the date of the report
and are subject to change without notice. Past performance is not
indicative of future performance. Please
note that, as at the date of this report, our firm may hold positions
in some of the companies mentioned.

Copyright (C) 2012 Pacifica Partners Inc. All rights reserved.

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alt="Uncovering Dividend Growth Opportunities"
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Dividend Growth Opportunities: 

One of the most glaring benefits of weak global equity markets over the
last year has been the fact that dividends yields are at their most
attractive levels in nearly 30 years.

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style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> src="http://www.pacificapartners.com/media/Moving%20to%20Canada%20from%20the%20US.png"
alt="Expanded Real Estate Chart Book"
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border="0" height="160" width="149"> style="color: rgb(80, 80, 80); font-family: Arial; font-size: 14px; line-height: 150%; text-align: left;"> style="color: rgb(51, 153, 153);">Canadian
Real Estate Chart Book: 

Our Canadian real estate chart book is a comprehensive look at economic
trends and valuation metrics that influence residential real estate
prices.  Our outlook on Canadian real-estate is negative and
we believe Canadian housing will begin an extended contraction phase
resulting in a move of home prices back towards long term sustainable
valuations:  
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Fears: What’s an investor to do? 

The past three months have been the toughest for investors since the
last quarter of 2008 when the financial crisis deepened after the
collapse of Lehman Brothers. When the crisis and corresponding
recession ended in 2009 it was believed by many that with governments
and central banks around the world united in maintaining an
accommodative economic policy the financial storm had passed. 
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]]>Only three years ago, it was thought that Saudi Arabia – the largest oil exporter and second largest producer in the world – could generate large budget surpluses with oil at $70/barrel. In recent weeks, new estimates state that the country would need oil at $75/barrel just to balance the budget – never mind trying [...]/blog/2012/01/31/putting-a-floor-under-oil-prices/feed/0Dividend Growth Opportunities/blog/2012/01/12/dividend-growth-opportunities/Financial Postdividend growersDividend YieldDividendsincome strategiespayout ratioS&P 100S&P 500Pacifica PartnersThu, 12 Jan 2012 11:26:29 PST/blog/?p=1557


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One of the most glaring benefits of weak global equity markets over the last year has been the fact that dividend yields are at their most attractive levels in nearly 30 years. This is especially so when we compare dividend yields to government bond yields. This has been a rare event over the last six decades.<br />


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style="color: rgb(0, 102, 255);"> style="font-size: 24px;">Uncovering Dividend Growth
Opportunities


style="font-family: arial,helvetica,sans-serif;"> style="font-size: 16px; line-height: 20px;">One of the most
glaring benefits of weak global equity markets over the last year has
been the fact that dividend yields are at their most attractive levels
in nearly 30 years. This is especially so when we compare dividend
yields to government bond yields. This has been a rare event over the
last six decades. Despite the historic opportunities too many investors
are ignoring them and are still fleeing into the bond market. Recent
fund flow data shows that capital is rolling into the bond markets –
despite the cratering of interest rates.
 

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here to view a larger version of this table

style="font-family: arial,helvetica,sans-serif; font-size: 16px; line-height: 1.25em;">Looking
at the dividend data for the S&P 500 companies shows that 109
companies do not pay a dividend currently. If we take the remaining 391
companies, we can glean a few insights that would prove helpful to
anyone looking at enhancing their portfolio’s dividend income.
 

style="color: rgb(80, 80, 80); font-family: Arial; font-size: 14px; line-height: 150%; text-align: left;"> style="margin: 0px 0px 0.83em; padding: 0px; font-size: 16px; line-height: 1.25em; font-family: georgia;"> style="font-family: arial,helvetica,sans-serif;"> style="line-height: 1.25em;">One of the mistakes investors
commonly make when looking to add a dividend paying company to their
portfolio is to simply look at the stocks with the highest current
yield. This is calculated by taking the current dividend and dividing
by the current market price. This should just be a starting point – but
too often it is the start and finish of dividend analysis for many
investors.
 

style="margin: 0px 0px 0.83em; padding: 0px; font-size: 16px; line-height: 1.25em; font-family: georgia;">
style="font-family: arial,helvetica,sans-serif;">What
matters at least as much – and sometimes more – is the dividend growth
rate. That is, what will the dividend yield be five years or even ten
years from today for an investor who wants to buy and put away an
investment in a dividend paying equity.
 

style="margin: 0px 0px 0.83em; padding: 0px; font-size: 16px; line-height: 1.25em; font-family: georgia;">
style="font-family: arial,helvetica,sans-serif;">From the
data in the table, we can see that of the ten companies in the
S&P 500 and S&P 100 indexes with the fastest rate of
dividend increase over the last five years there is not a single
utility or telephone company that ranks as a top dividend growth
company. However, all too often investors start and stop with telecom
and utility stocks when looking for dividend stocks. To take a look at
what these dividend growth rates mean from a practical basis, we can
look at the example of Comcast Corp. The company used to be penalized
by the market in terms of its valuation because investors would often
fear that the company would spend its cash flow on possibly risky
acquisitions as it maintained a relatively small dividend. For a time
this was true. As the company began to pay down its debt and cutback on
acquisitions, the company has begun to ramp up its dividend. As it has
grown its dividend by 21% annually, the dividend yield should be
approaching 4% over the next four years at its current 5 year dividend
growth rate.
 

style="margin: 0px 0px 0.83em; padding: 0px; font-size: 16px; line-height: 1.25em; font-family: georgia;">
style="font-family: arial,helvetica,sans-serif;">One other
metric that investors can use to gauge dividend paying equities is the
payout ratio – or the percentage of profits paid out to shareholders in
the form of dividends. Generally, a low payout ratio means that the
company is able to enhance or increase its dividend growth rate. To see
this, we can see that for some of the companies in the table the rate
of dividend increase has appreciated significantly over the last five
years when compared to the ten year rate of increase. In the case of
Comcast, the payout ratio is only about 31% which provides good
potential to increase the dividend over time.
 

style="margin: 0px 0px 0.83em; padding: 0px; font-size: 16px; line-height: 1.25em; font-family: georgia;">
style="font-family: arial,helvetica,sans-serif;">One aspect
of dividend investing that does not get a lot of attention is the fact
that the greatest benefits of dividends comes from the compounding
effect. For an investor to reap the rewards of compounding dividend
growth rates requires patience and the ability to hold onto a company
for years. From a portfolio perspective, a good dividend growth company
with a good track record of growing earnings and dividends should
comprise part of the “buy and hold” portion of the portfolio. Patience
will be rewarded but it takes time.
 

style="margin: 0px 0px 0.83em; padding: 0px; font-size: 16px; line-height: 1.25em; font-family: georgia;">
style="font-family: arial,helvetica,sans-serif;">In part,
this is an example of how companies with strong profit growth rates who
have current low dividend payout rates can be tomorrow’s high yielding
stock through the compounding of dividends. For dividend paying
investment opportunities, investors should look beyond just the current
dividend yield.


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Pacifica
Partners – Capital Management
Navigating
a Sea of Opportunity

class="Apple-style-span" style="line-height: 14px;">Disclaimer:

This report is for information purposes only and is neither a
solicitation for the purchase of securities nor an offer of securities.
The information contained in this report has been compiled from sources
we believe to be reliable, however, we make no guarantee,
representation or warranty, expressed or implied, as to such
information’s accuracy or completeness. All opinions and estimates
contained in this report, whether or not our own, are based on
assumptions we believe to be reasonable as of the date of the report
and are subject to change without notice. Past performance is not
indicative of future performance. Please
note that, as at the date of this report, our firm may hold positions
in some of the companies mentioned.

Copyright (C) 2012 Pacifica Partners Inc. All rights reserved.

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style="font-size: 14px; font-weight: normal; line-height: 21px;">Canadians’
Misery Index Rising: style="font-size: 22px; font-weight: bold; line-height: 100%; color: rgb(105, 105, 105);"> 

color="#505050"> style="font-weight: normal; line-height: 21px;">In the
1960s, an economic adviser to President Lyndon Johnson came up wiht the
idea of an index to measure the general economic hardships felt by the
masses. This index, appropriately labeled “the Misery Index”, is
calculated by adding the unemployment rate to the inflation rate.
style="color: rgb(80, 80, 80); font-weight: normal; line-height: 21px;"> href="http://www.pacificapartners.com/blog/2011/11/04/canadians-misery-index-rising/"
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color="#336699">Click here for full
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alt="Expanded Real Estate Chart Book"
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style="margin: 0px 0px 10px; display: block; font-family: Arial; font-weight: bold; text-align: left; color: rgb(32, 32, 32); font-size: 22px; line-height: 100%;"> style="font-size: 22px; line-height: 100%; color: rgb(0, 128, 128);"> class="Apple-style-span"
style="font-size: 14px; font-weight: normal; line-height: 21px;"> style="background-color: rgb(255, 255, 255);">Canadian Real
Estate Chart Book: class="Apple-style-span"
style="color: rgb(80, 80, 80); font-size: 14px; font-weight: normal; line-height: 21px;"> style="background-color: rgb(255, 255, 255);"> 

class="Apple-style-span"
style="color: rgb(80, 80, 80); font-weight: normal; line-height: 21px;">Our
Canadian real estate chart book is a comprehensive look at economic
trends and valuation metrics that influence residential real estate
prices.  Our outlook on Canadian real-estate is negative and
we believe Canadian housing will begin an extended contraction phase
resulting in a move of home prices back towards long term sustainable
valuations style="color: rgb(80, 80, 80); line-height: 21px;">:  class="Apple-style-span"
style="color: rgb(80, 80, 80); font-weight: normal; line-height: 21px;"> 
href="http://www.pacificapartners.com/blog/2011/10/24/1488/"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;">
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"
color="#336699">Click here href="http://www.pacificapartners.com/blog/2011/10/24/1488/"
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alt="Recession Fears"
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border="0" height="169" width="161"> style="color: rgb(80, 80, 80); font-family: Arial; font-size: 14px; line-height: 150%; text-align: left;">

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style="font-size: 14px; font-weight: normal; line-height: 21px;">Recession
Fears: What’s an investor to do? class="Apple-style-span"
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The
past three months have been the toughest for investors since the last
quarter of 2008 when the financial crisis deepened after the collapse
of Lehman Brothers. When the crisis and corresponding recession ended
in 2009 it was believed by many that with governments and central banks
around the world united in maintaining an accommodative economic policy
the financial storm had passed. 
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]]>One of the most glaring benefits of weak global equity markets over the last year has been the fact that dividend yields are at their most attractive levels in nearly 30 years. This is especially so when we compare dividend yields to government bond yields. This has been a rare event over the last six [...]/blog/2012/01/12/dividend-growth-opportunities/feed/0Happy Holidays/blog/2011/12/19/happy-holidays/Pacifica PartnersPacifica PartnersMon, 19 Dec 2011 16:26:04 PST/blog/?p=1545Happy Holidays from everyone at Pacifica Partners! In lieu of greeting cards this year we have made a donation to the local food bank.

]]>Happy Holidays from everyone at Pacifica Partners! In lieu of greeting cards this year we have made a donation to the local food bank./blog/2011/12/19/happy-holidays/feed/0Canadians’ Misery Index Rising/blog/2011/11/04/canadians-misery-index-rising/Financial PostCanadaInflationMisery indexMontrealTorontounemploymentVancouverPacifica PartnersFri, 04 Nov 2011 16:22:42 PDT/blog/?p=1519


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In the 1960s, an economic adviser to President Lyndon<br /> Johnson came up<br /> with the idea of an index to measure the general economic hardships<br /> felt by the masses. This index, appropriately labeled “the Misery<br /> Index”, is calculated by adding the unemployment rate to the inflation<br /> rate. As inflation and unemployment eased during the 1980s the term<br /> seemed to fade from economic discourse.<br />


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style="color: rgb(0, 102, 255);"> style="font-size: 24px;">Canadians’ Misery Index
Rising

In the 1960s, an economic adviser to President Lyndon Johnson came up
with the idea of an index to measure the general economic hardships
felt by the masses. This index, appropriately labeled “the Misery
Index”, is calculated by adding the unemployment rate to the inflation
rate. As inflation and unemployment eased during the 1980s the term
seemed to fade from economic discourse.

href="http://www.pacificapartners.com/blog/wp-content/uploads/2011/10/Canadian-Misery-Index.png"
target="_blank"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;"> alt="Canadian Misery Index Rising"
src="http://www.pacificapartners.com/blog/wp-content/uploads/2011/10/Canadian-Misery-Index.png"
style="border: 0pt none ; margin: 10px; width: 600px; height: 344px; line-height: 100%; text-decoration: none; display: inline;"
height="344" width="600">
C href="http://www.pacificapartners.com/blog/wp-content/uploads/2011/10/Canadian-Misery-Index.png"
style="color: rgb(51, 102, 153); font-weight: normal; text-decoration: underline;">lick
here to view a larger version of this chart

 

style="color: rgb(80, 80, 80); font-family: Arial; font-size: 14px; line-height: 150%; text-align: justify;">
However, with rising inflationary pressures and stubbornly high
unemployment levels in both Canada and the US, this index may be more
relevant than ever. With the 2012 presidential election around the
corner it would not be surprising to hear the term “Misery Index”
dusted off for use in the political arena.
 
style="color: rgb(80, 80, 80); font-family: Arial; font-size: 14px; line-height: 150%; text-align: justify;">While
Canada has earned accolades from politicians and individuals for its
fiscal prudence and strong banking system, many Canadians are not
receiving the benefits of the gleeful conditions that they are being
told they are experiencing. One example of this discontent is the
“Occupy” movement that started in Wall Street and made its way to
 Canada.  Looking at the news headlines, it seems
Canadians are none too happy with corporations and the lack of economic
progress on Main Street.  As the chart shows, the Canadian
misery index has stealthily marched higher after hitting a low in the
first quarter of 2008. The data indicate that the cost of living in
Canadian cities is rising and high unemployment is mounting.
 
style="color: rgb(80, 80, 80); font-family: Arial; font-size: 14px; line-height: 150%; text-align: justify;">What
is also apparent is that Toronto’s misery is at 16 year highs while
Vancouver’s and Montreal’s misery has also climbed sharply higher and
is now above the psychological threshold of 10%. Many might find this
surprising since this is counterintuitive to the broadly bullish
opinions that have become the consensus. This finding is particularly
noteworthy  because the OECD (Organization for Economic
Co-operation and Development) has singled out Canada as a country
facing significant challenges from a steady climb  in consumer
debt. Looking at the data in the chart above, Canadians may wish to
consider the underlying trends in inflation and unemployment before
making major  financial decisions. Recent unemployment data in
Canada shows unemployment at 7.3% and inflation rising to an
uncomfortable 3.2%.
 
style="color: rgb(80, 80, 80); font-family: Arial; font-size: 14px; line-height: 150%; text-align: justify;">Critics
will note that by excluding volatile items such as food and energy,
inflation is up 1.9% and that the misery index has traditionally used
total inflation, or “headline  inflation”.  At the
same time, many investors and non-investors alike are particularly
irked by the “excluding food and energy” part of inflation data. With a
hint of sarcasm, they will say “Sure inflation is no problem – if you
do not have to drive or eat.”  It is true that globally, much
of the increase in headline inflation has been driven by food and
energy prices due to weather and the effects of easy monetary policy in
the US.  Should headline inflation persist through high energy
and food prices, it could trickle down into the core-inflation numbers.

style="color: rgb(80, 80, 80); font-family: Arial; font-size: 14px; line-height: 150%; text-align: justify;">With
the Canadian and US economies so closely linked to one another, what
happens in the US impacts Canada.  Much of what happens to
Canada’s economy depends on the policy path of the Federal Reserve.
Simply put, Fed policies impact the global economy.  Yet, it
is often forgotten that the e Federal Reserve has a dual mandate.
 Apart from keeping prices (inflation) under control, the Fed
is supposed to be mindful of the US unemployment rate. To that end,
with 14 million Americans out of work, the Fed sees unemployment as the
 bigger issue.

style="color: rgb(80, 80, 80); font-family: Arial; font-size: 14px; line-height: 150%; text-align: justify;">The
danger of the Fed’s focus on lowering unemployment is that it could
inadvertently stoke inflation. As central bankers have learned from
past experience, once the inflation genie is  let out – it is
difficult to rein it in.   Time will tell if this will be the
case but if inflation becomes persistent, then the misery index will
become a much more popular economic data point than it has been in a
very long time.


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Pacifica
Partners – Capital Management
Navigating
a Sea of Opportunity

class="Apple-style-span" style="line-height: 14px;">Disclaimer:

This report is for information purposes only and is neither a
solicitation for the purchase of securities nor an offer of securities.
The information contained in this report has been compiled from sources
we believe to be reliable, however, we make no guarantee,
representation or warranty, expressed or implied, as to such
information’s accuracy or completeness. All opinions and estimates
contained in this report, whether or not our own, are based on
assumptions we believe to be reasonable as of the date of the report
and are subject to change without notice. Past performance is not
indicative of future performance. Please
note that, as at the date of this report, our firm may hold positions
in some of the companies mentioned.

Copyright (C) 2011 Pacifica Partners Inc. All rights reserved.

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Given the volatility in global stock, bond, and commodity markets, many
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Estate Chart Book:

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Canadian real estate chart book is a comprehensive look at economic
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we believe Canadian housing will begin an extended contraction phase
resulting in a move of home prices back towards long term sustainable
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]]>In the 1960s, an economic adviser to President Lyndon Johnson came up with the idea of an index to measure the general economic hardships felt by the masses. This index, appropriately labeled “the Misery Index”, is calculated by adding the unemployment rate to the inflation rate. As inflation and unemployment eased during the 1980s the [...]/blog/2011/11/04/canadians-misery-index-rising/feed/0