Canadian economy sees biggest monthly decline in May since 2009

“We knew that it was going to be bad,” Manulife Asset Management Economist Frances Donald told BNN as Canada’s GDP report for May was breaking, “and this is bad – but not as bad as it could have been.” 

Canada’s economy shrank 0.6 per cent in May as wildfires tore through Northern Alberta – knocking out oil sands output in the process. Statistics Canada says there’s “little evidence” the fire hit other industries at a national level. Even so, it’s worth pointing out every goods-producing industry (including agriculture, mining/quarrying/oil & gas extraction, utilities, construction and manufacturing) shrank in the month.  As usual, though – real estate helped lift the economy – contributing more than $200 billion to GDP in the month. 

Donald added that the bigger issue for markets today will be the surprisingly weak GDP report from the U.S., which showed the world’s largest economy grew at less than half the rate economists expected (1.2 per ent vs 2.5 per cent). 

Oil closing in on US$40/barrel

Oil futures slipped as low as US$40.57 early this morning.  The last time crude traded below US$40 was April 7.  Seems like just yesterday we were talking about oil breaking above fifty. We’ll tie this into our analysis of the outlook for Canada’s economy.  

Vancouver residents dubious about effectiveness of new housing tax

A new poll by the Angus Reid Institute reveals Metro Vancouver residents are glad B.C. finally took action to tame the market, but they overwhelmingly think the government waited too long – and think foreign buyers will find loopholes. Some key findings:

• 90 per cent support the 15 per cent tax on foreign homebuyers
• 71 per cent say foreign buyers will find loophole
• 82 per cent say the government should have intervened sooner
• 64 per cent say they want to see home prices drop at least 10% (granted, many of those cheering for a correction are renters
• 65 per cent say foreign buyers are the main cause of high prices

Housing intervention isn’t ‘show  business’

Toronto Mayor John Tory made it clear yesterday that he won’t be rushed into fiddling with policy in an attempt to cool Toronto’s housing market -- notwithstanding fears that foreign buyers will skip over B.C., whose new tax on foreign buyers kicks in next week.This morning, BDAM speaks with Toronto’s city planner to get a better handle on the supply side of the equation.

More profit at Amazon

It wasn't so long ago that profit was rarely found in an Amazon.com earnings released. But it notched its fifth-straight quarter of profitable growth yesterday on the back of a 31 per cent surge in sales in the second quarter.  The bulleted list of highlights in the company's earnings release provides a great snapshot of the sprawling nature of Amazon's business.

Amazon's sales growth stole some of the Wow factor from Alphabet's mere 21 per cent second-quarter revenue gain. While it's barely a sliver in Alphabet's revenue pie chart, sales in the company's Other Bets division more than doubled in the quarter.  Same old question of what's cooking in that unit that could eventually go mainstream.

Latest on Husky spill

More than one week removed from the pipeline breach that spilled almost 1,600 barrels of oil in Saskatchewan, we’ll get an update today from the mayor of Prince Albert on how his town is faring. 

Japan’s central bank disappoints

The Bank of Japan’s latest stimulus effort failed to live up to expectations. The bank will nearly double its annual exchange-traded fund purchases; but investors were counting on more than just 2.7-trillion yen earmarked for ETFs.  However, BoJ Governor Haruhiko Kuroda will let the markets hold out hope for more stimulus.  “I don’t think we’ve reached the limits both in terms of the possibility of more rate cuts and increased asset purchases,” he told reporters. 

The world according to Prem

Fairfax Financial Chief Executive Officer Prem Watsa is packing on more protection for a market downturn.  Fairfax disclosed late yesterday its equity portfolio is more than fully hedged (115.3 per cent as of June 30).  We'll track Watsa's remarks during a conference call at 0830 ET. 

Releases/events: 

• Notable earnings: Imperial Oil, Enbridge, RioCan, Air Canada, Exxon Mobil, Chevron, Merck
• Notable data: University of Michigan consumer sentiment index (1000)
• 0830 ET: Fairfax Financial conference call
• 1500 ET: Navdeep Bains Twitter Q&A

Every morning Commodities host Andrew Bell writes a ‘chase note’ to BNN's editorial staff listing the stories and events that will be in the spotlight that day. Today's note was written by BNN's Managing Editor Noah Zivitz. Have it delivered to your inbox before the trading day begins by heading to www.bnn.ca/subscribe.