Benjamin Tal - May 3rd 2007

I know many of you have been holding your breath for my report so here it is...in point form!

• admits that today the economic climate is more or less....confusing!
• his advice is to stop reading newspapers!
• U.S. housing market is down 20% this year
• U.S. economy is slowing although the U.S. housing market is only 5% of the whole U.S. economy.
• $850 Billion in housing spending has contributed to only 5% growth in U.S. spending.
• there will be a definite inpact on interest rates as the market slows.
• U.S. FED has been vague in their economic 'language'.
• housing spending is now only $100 Billion so there has been a drop of $750 Billion!
• Housing Wealth Effect: feeling good about growth in value of my real estate (paper wealth) so I start to spend money!!!!
• sounds like a recesion BUT wages are increasing for first time in 2 generations
• result - soft landing not a market crash.
• in the past the saying was, as the U.S. market goes so does the world.
• today only 15% of the world is American. China is 30% of the world economy.
• India and China are driving business.
• wealthy Chinesse middle class.
• India and China are 'Keeping up with the Joneses!"
• Chinesse consumer (not American) is driving the market for Chinesse goods.
• Huge demand for consumer commodities
• Canada is a resource Superpower!
• TSX weighted 40% in commodities.
• claims the 1999 crash in Real Estate was caused by bad monetary policy error.
• inflation has always followed an oil shock. But NOT today. WHY? globalisation and the WalMart Effect are keeping prices low, interest rates then stay low, and finally mortgage rates stay low!
• WalMart is China's 6th largest trading partner.
• WalMart forces suppliers to cut prices which is anti-inflationnary.
• Lower bargaining power for labour.
• Canadian $ a Petro $.
• A high Canadian $ is anti-inflationnary.
• strong Canadian job growth.
• 250,000 new jobs inpast 6 months in Canada.
• high employment....as GDP falls?!
• quality and type of jobs is a factor.
• huge growth in self-employment segment.
• by 2012 - 20% of Canadians will be self-employed.
• low exposure in Canada to Real Estate because of no tax incentive.
• low exposure to interest only loans.
• low sub-prime exposure as well.
• demographics don't tell a story for housing bust
• sees a doubling of real estate prices in next 20 years.

That's all folks!

Karim Kanji

1.866.440.3721