AM 1150 Kelowna - Radio Rallies & Reversals

With the TSX working on its 7th straight day of gains, one economic report seems to have come and gone without much notice. This past Tuesday, Statistics Canada reported that Canada's economy grew at an annual rate of 2% in the second quarter. That's down from a 5.8% pace in the first quarter, and well below even the most pessimistic estimates. Like our neighbors to the south, the economic numbers are rolling over as households rebuild savings, and governments retrench after showering their economies with billions in stimulus money.

Looking ahead, we can expect less import demand from the US and less government stimulus. Investment in housing, a key factor behind Canada's initial rebound as record low interest rates and government incentives encouraged a wave of home buying and renovation projects, increased 0.3% - the slowest in five quarters. On the bright side, companies are picking up some of the slack by spending on durable goods and technology, and there's still quite-a-bit of cash on corporate balance sheets.

Next week, the Bank of Canada will announce it's next rate decision; Bottom line - don't lock-in long-term yet, and expect more M&A activitiy on the horizon as companies look to buy growth in a slower growth envir0nment.