5 things you should know before you start your workday

by Cody Gault
culled from:http://business.financialpost.com

Good morning.
Here’s an executive summary of some of the most newsworthy, fascinating or amusing stories from today’s Financial Post.
1. Alberta is headed for a ‘technical’ recession: CIBC

Ted Rhodes/Postmedia News files

CIBC World Markets said yesterday that Alberta’s economy will take a beating in 2015. Among the predictions:

• GDP will shrink by 4.4 percent to -0.3 percent
• Unemployment will rise by 2.1 percent to 6.8 percent
• Housing starts will fall by 12,600 to 28,000

The report also forecasts at least two quarters of negative growth — the criteria for a “technical” recession. Cheap oil is the culprit, CIBC said, but attributed the losses less to reduced output than reduced capital spending. CIBC notes, however, that the recession follows a gangbusters 2014, in which the province led the nation in terms of growth and employment, and that Alberta’s fiscal situation is such that it is well positioned to withstand the battering and emerge with positive momentum in 2016.
Despite losing Canada’s main economic growth engine, CIBC forecasts a decent year for Canada overall:

• 1.9 percent growth, down 50 basis points from 2014
• 6.8 percent unemployment, down 10 basis points from 2014
• 190,000 housing starts, up 1,000 from 2014

Here’s why: the same factors that are hurting the oil sands — cheap oil, a weak dollar and an accelerating U.S. economy — are poised to help central Canada’s manufacturing exporters, which could benefit from lower operational costs, increased currency competitiveness and greater overall demand for Canadian wares south of the border.
2. Is the boom over? Home sales dip amid Western panic

Postmedia NewsA sharp and sustained drop in oil prices has sideswiped the economy in the resource-rich provinces of Alberta and Saskatchewan, where homeowners are trying to sell their houses before values drop further.

The Canadian Real Estate Association said yesterday that national home sales in January fell 3.1 percent from December and 2 percent from January 2014. This marks the third month of consecutive declines and the first month of year-over-year declines since April 2014. The reason? Oil-inspired western panic, according to the report. A growing number of Alberta and Saskatchewan homeowners are trying to get their houses off their hands for fear of finding themselves living in an asset worth less than they paid for it. The regional lopsidedness is underscored by data released yesterday by TD, which pegs monthly home sales down 24 percent in Calgary, 18 percent in Saskatoon 1o percent in Edmonton and 7 percent in Regina. While national home prices were still up 5.2 percent from last year, some speculate declining demand as evidence that Canada’s half-decade housing boom may be over. Other, less optimistic analysts go a step further, forecasting a debt-fuelled housing collapse akin to the U.S.’s subprime mortgage crisis in 2008.
3. Oilfield producers may not be bearing the brunt of cheap oil

Jason Franson/The Canadian Press files ancillary oilpatch players — from drill operators to truckers — have cut prices by 10 or 20 percent.

Oilfield contractors, suppliers and service providers may be bearing the brunt of cheap oil as more firms compete for fewer projects. Many of these ancillary oilpatch players — from drill operators to truckers — have cut prices by 10 or 20 percent, opting in some cases to turn little to no profit in order to keep themselves in the game. The result? Production levels remain high — the very thing that caused the collapse in the first place — while oil producers mitigate damage to their bottom lines by passing on a portion of their losses. In fact, some producers actually see a silver lining in oil’s price plunge, insofar as it is an opportunity to reset operating costs that ballooned in boom times.
4. Pentagon subpoenas Pratt & Whitney over jet engine bills

Lars Hagberg/The Canadian Press filesA Canadian Forces C-17 Globemaster cargo plane powered by Pratt & Whitney jet engines — the same model used the the U.S. military.

The Pentagon revealed yesterday that it subpoenaed Pratt & Whitney back in October over US$1.54-billion in under-documented jet engine maintenance work. The U.S. Defense Department wants to determine whether or not Pratt & Whitney’s prices are fair and reasonable, and the subpoena alleges the United Technologies subsidiary dodged requests to disclose how much it charges commercial clients to service the same model of jet engine. Also released yesterday was an audit, dated Dec. 22, claiming Pratt & Whitney had not yet complied with the subpoena. For their part, Pratt & Whitney says it has provided some of the information, but that not all of it is immediately available and that it requires clarification before providing more.
5. This Lunar New year, China dines on ‘Boston lobster’

Andy Wong/Associated PressChefs prepare 'Boston lobsters' at the Auspicious Garden restaurant in Beijing.

The United States sold more than US$90-million worth of lobsters to China in 2014, up from around US$2-million just half a decade earlier. Tomorrow’s Lunar New Year marks the seasonal high for Chinese imports — now almost as big a boon for the U.S. industry as Christmas week. Increased Chinese demand stems from the nation’s growing middle class, who view lobster shipped live by cargo plane as a status symbol (it’s relatively expensive), a curiosity (it’s relatively hard to come by) and lucky (it’s red like a dragon). Some even consider lobster to be an aphrodisiac. While China also imports live lobsters from Canada and elsewhere, Chinese prefer those caught off the coast of Maine, which restaurants popularly market as “Boston lobster” and sell for between US$50 and US$100.