Saturday, June 18, 2016

Town of Pincher Creek's Committee of the Whole hears from financial advisors

Josh Davis – Todd Poland from CIBC Wood Gundy presented as a delegation during the June 8 meeting of the Town of Pincher Creek's Committee of the Whole. Wood Gundy serve as financial advisers to the Town of Pincher Creek. Poland is head of the Poland Advisory Group with Wood Gundy, and is a member of the CIBC Wood Gundy Chairman's Council. "My purpose here today is two-fold," said Poland. "Its to kind of give you an update, an in the trenches view, of where I think the economy is going, and how that effects your money." Poland gave a detailed rundown of the economy, but explained that the Town of Pincher Creek by necessity holds good quality "boring" investments, which aren't effected by about volatility.

Poland said that the "seventh inning stretch" was an appropriate metaphor for the US economy in 2016. "They still have lots of baseball to play, so to speak, but they're taking a bit of a pause." He later stated that the United States was in good shape economically.

"2015 was an ugly year," said Poland. "The only asset in Canada that didn’t lose money last year was cash." Poland stressed that bonds lost money in 2015. Poland said this was cause by and "exodus of money" leaving Canada in 2015, and said it may be slow to return. "The foreign investment money that left Canada in the last year was unquantifiable," said Poland. "It was a huge amount of money." He said that market factors including the fall in the Canadian dollar were a huge factor in this exodus of foreign investment capital. "If you were a foreign investor, you were holding a double edged sword. You were losing money not only on the market, but also on the currency."

However, Poland remained optimistic about the Albertan economy going forward. "Things aren't too bad. We've dusted ourselves off fairly well. It’s not 1982 again.” Poland said that while January was the bottom of the economy, healing is starting. "I think that we've seen the worst of this."

Poland said that he didn't believe Canada has a housing bubble, and that Canada is the only "developed country" in the world whose housing market hasn’t crashed since 2008. He called Canada's housing market "pretty safe", differentiating it from the US housing market in 2008. "Canadians actually have on of the lowest delinquency rates in the world," said Poland. "We pay our debts." Poland also said he’s okay with governments running deficits, especially while interest is low. "The problem is efficiency," said Poland.

“I think we’re going to be playing a cat and mouse game with oil for years,” said Poland on the topic of oil. "Its a manipulated market, and its being flooded." Poland explained that the US is using more of its own oil in this market. "I don't think we'll see oil back at $80. $60 is the new $80, and Suncore is making money at $60."

On the topic of inflation, Poland said "there's no inflation anywhere in the world right now."

Poland did say we could expect a “financial whammy" sometime this year. He said this was a result of volatility and rapidly changing markets. "Everything happens much faster in the modern world," said Poland. "Sensationalism is a factor within the media, with the way these things are reporter. However, another factor is electronic trading." Poland used the example of Black Rock Capital's Aladdin supercomputer, which has the power to change markets rapidly compared to traditional interactions.

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