Gold

Every week, my father insists on sending me his weekly updates on the market.  These updates are intended for his colleagues at Grosvenor, who are specialist developers, investors and fund managers in several sectors – residential, retail, office and industrial property.  Until recently I would just ignore the updates – attempting to understand the meaning of the colourful lines and pie charts only confused me more.  Considering that my fathers title is “senior director, research and investment strategy” of the North America department, the update specifically deals with the Canadian and American market in all aspects.

Fortunately I have been able to take things out of the classroom and do my best to understand this gibberish.  I know – my parents must be so proud…

Here is my first attempt at fully attacking and understanding the weekly pdf file that has haunted my inbox for the last year or two.

Included in this update:

The Federal Reserve raised its discount rate – the rate it charges banks for temporary loans.  This occurred on Thursday by 25 basis points to .75%, which was noted as the first increase since June 2006.  On top of this the Fed commented that they intend to keep the rate low for an “extended period” of time in order to push the banks to rely more on money markets for credit rather than the Fed itself.

Secondly the report compares consumer prices in both countries.  In America, prices only rose by 0.2% in January from December.  This number is less than the forecast and an indicator that the “pace of recovery is not fuelling inflation”.  The CPI is now 2.7% higher than where it stood one year ago.  The Canadian consumer price also rose.  The .4% jump in January from December, and 1.9% annual rise is thought to be due to gasoline prices.

Canadian retail sales rose .4% in December, after their decline of .5% in November.  This adds up to a 6.7% increase from one year ago.

US “housing starts” rose in January by 2.8% with an annual increase of 21.1%.  This increase follows the .7% decline in December.

Finally, the Canadian government announced “tighter standards” for mortgages to take effect beginning April 19th, 2010.  This is a response to a housing market that has shown strong improvement since last Spring.  Consequently there exists a fear of a “housing bubble”.

Being able to interpret the numbers and lingo is the next thing on my to-do list.   Maybe that will come to me next week – for now thats my updated update.

TED – The Paradox of Choice

Barry Schwartz raises a somewhat comical version of a sad truth.  By raising awareness to the increasing choices that consumers face, Schwartz comments on why consumers actually suffer from the plethora of choices.  He says that it has two major negative effects.  The first being “paralysis rather than liberation, with so many options to chose from people find it very difficult to chose at all.”  As ironic as this seems, its true.  For me it has never been more evident in my life than something so simple as choosing a topic for an English 112 paper.  Two weeks ago I was given the assignment of writing an argumentative research paper.  My professor did not assign a topic or give a list of any, instead he left it up to us.  I still have yet to come up with a topic that I am happy with writing extensively about which leads into Schwartz second point.  “Even if we manage to over come paralysis, we end up less satisfied with the result of the choice if we had less to choose from…. Its easy to imagine a different choice that would have been better.”  Every topic that I have come up with is not good enough or not enjoyable enough with the sense of there always being a better choice.  Hopefully soon I will solve my topic dilemma, however during the stress from this uncertainty – its nice to get a good laugh.

“We do not find support for the argument of host city backers that the Olympics delivers positive economic benefits,” said Tsur Somerville of the Sauder School of Business.

Despite the optimistic projections from the BC Government over the past couple of years, the reality of the Olympics now is unavoidable.  A report on November 20, 2002 projected $10.7 billion worth of economic growth and 244,000 new jobs.  Unfortunately, when compared to reality and recent results from the Sauder School, these optimistic numbers far exceed the only one-tenth of one percent gain in economic growth.

Despite the lack of boost or bust Somerville comments in his report of the feel good factor.  “While the findings suggest no economic gain, the Games still present a very real opportunity to celebrate excellence, athleticism and human achievement. The societal impact of valuing the Olympic ideals goes far beyond economic and politics. Hosting the Games ultimately reflects pride in our athletes, city and country.”

This feel good factor however in the long run could be very positive for Canada.  The sense of nationalism and pride in ones country can go a long way.  Although economically controversial in regards to the allocation of assets, the Olympics provide a sense of togetherness that is second to none.