Zoomer: The economic effects of the lockdown and the long road to recovery

Image by elnab from Pixabay

In late March, as COVID-19’s twin invasion of the world’s population and the global economy worsened, leaders from the G20, an informal group of 19 countries and the European Union, gathered – virtually, of course – to commit to a united front against the novel coronavirus.

Their pledge to do “whatever it takes” to overcome the crisis became the war cry of public health officials, finance ministers and central bankers. But trillions of dollars in emergency spending later, it’s still not clear that “whatever it takes” will be enough to pull the global economy out of its tailspin.

The viral outbreak and what some are calling the Great Lockdown meant to curb its spread have delivered an unprecedented shock to the economy and people’s savings. And it comes at a time when millions of Canadians are in their prime earning years ahead of retirement and many millions more retirees were trying to max out their investments.

FT: Can Canada’s property market repeat the success of 2008?

(Source: IDuke / Wikimedia)

For millions of Canadians, home has become a refuge in the battle to slow the spread of Covid-19. But the country is also pinning its hopes on residential property being the lifeline it was in the wake of the 2008 financial crisis, when a debt-fuelled housing boom became a driving force of the Canadian economy.

Canadian policymakers no doubt hope previous examples of the market’s resilience play out once more.

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FT: Shopify’s swift ascent stirs talk of Canadian ‘curse’

(Source: Klinkow – pixabay.com)

When shares of Shopify surged this week, the Canadian ecommerce giant briefly catapulted past Royal Bank of Canada to become the country’s most valuable company.

So it might seem odd that talk among investors immediately turned to whether the company had just had a hex put on it.

“Can Shopify beat the curse?” asked one money manager on Twitter, while another noted the company had joined the ranks of “cursed securities”.

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Maclean’s: How dormant websites could lead to a better understanding of the COVID-19 crisis

(Source: Flickr / descrier.co.uk)

From the moment the world went into pandemic lockdown officials have struggled to stay on top of the fast-moving crisis, both in terms of halting the spread of COVID-19 through social distancing and lockdown measures, as well as understanding and mitigating the severe shock to the economy and peoples’ lives. With governments, businesses and health experts flying blind, timely data has never been more vital.

As it turns out, one surprising solution may come down to our fat fingers.

FT: Bank of Canada names Tiff Macklem as its next chief

Tiff Macklem (Source: Bank of Canada)

With Canada’s economy facing its deepest recession since the second world war, the government has turned to a Bank of Canada veteran who helped steer the country through the 2008 financial crisis to navigate the pandemic as its new central bank chief.

On Friday Bill Morneau, Canada’s finance minister, announced Tiff Macklem, the former senior deputy governor, will replace Stephen Poloz, the Bank of Canada’s current boss, when his seven-year term ends on June 2.

Mr Macklem, 59, is a veteran of the bank who began his career there in 1984. As the number two to former governor Mark Carney, he played a key role in the bank’s response to the global financial crisis.

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Maclean’s: Coronavirus plunges Canada’s economy into the abyss

(Source: Michal Osmenda from Brussels, Belgium – Wikimedia)

In every economic crisis over the last century, people have ultimately turned to the world of medicine to help make sense of the fear and uncertainty around them. In the 1930s, political cartoons showed U.S. president Franklin D. Roosevelt as a doctor tending to an ailing Uncle Sam, whose bandages carried words like “banking” and “depression.” When the 1990s currency crisis in southeast Asia threatened to infect the rest of the world and trigger a global meltdown, economists and investors took to calling it the “Asian flu.” And in 2008, as America’s economy was felled by the financial crisis, then president Barack Obama urged lawmakers to “provide a blood infusion” to “make sure that the patient is stabilized.”

Never has the metaphor of an economy on life support been more appropriate than for the twin health and economic crises the entire world now faces. Canada, like nearly every other nation on the planet, has put its economy into an induced coma as it attempts to fight off the invading COVID-19 virus. Offices, factories, stores and restaurants are closed and workers have been ordered to stay home, many without paycheques, some unsure whether their jobs will still exist when the crisis abates.

Maclean’s: Canada’s stock market collapse is like nothing we’ve ever seen before

It can be difficult to comprehend the scale of the wealth destruction seen over the past month on global stock markets. Each plunge has come with a comparable statistic — “Worst one-day decline since [insert date here]” — but to understand what’s happened it helps to step back and see how the Covid-19 crash compares to past market collapses.

Simply put, we’ve never seen anything like this before.

FT: Canada closes borders in attempt to arrest spread of coronavirus

Canada joined a growing number of countries on Monday in closing its borders to most foreigners in an effort to stem the spread of the coronavirus.

While the federal government stopped short of restricting citizens of the US from entering the country, Justin Trudeau, prime minister, said that measure had not been ruled out, as preliminary provincial data indicate that a growing number of cases in Canada can be traced to the US.

“At this point we are closing our borders to all non-Canadian and non-permanent residents of Canada,” he said.

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Maclean’s: The Dow fell below where it was when President Trump first tweeted about the stock market in 2017

No president in history has hitched the fate of his presidency so closely on the stock market going up. Even amid the rout of the past two weeks, when stock prices briefly rebounded, he couldn’t resist a tweet. “BIGGEST STOCK MARKET RISE IN HISTORY YESTERDAY!,” he wrote in all caps.

That was Friday. On Monday markets erased that meagre rebound, and closed at their lowest level in years. In fact, the Dow Jones Industrial Average index ended Monday below where it stood that morning on Feb. 16, 2017, not including dividends.

FT: Bombardier bets all on private jets riding out storm

Cabin of a Bombardier Global 7500 at Paris Air Show 2019 (Matti Blume / Wikimedia)

Bombardier’s move to shrink itself from one of the world’s largest manufacturers of planes and trains to solely a maker of private business jets struck analysts as bold when it was announced a little over a month ago.

As panic over coronavirus threatens to flatten the aviation industry and tip the global economy into a deep funk, that decision to bet Bombardier’s entire future on a sector known for its intense turbulence looks increasingly precarious.

“[Bombardier] is in an unenviable position right now of being in an industry that’s very susceptible to a downturn,” said aviation analyst Brian Foley of New Jersey-based Brian Foley Associates. “Companies get nervous when they’re buying a private aircraft and if previous history is any indication, this could be a period of rough sledding for the industry.”

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