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DavidsTea closing all but three of its Alberta stores – CTV Edmonton

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EDMONTON —
DavidsTea is closing dozens of its stores across Canada, and all of its American stores. The decision comes as the company prepares to reopen 18 of its Canadian stores by the end of August as the COVID-19 pandemic continues.

In Alberta, the stores in West Edmonton Mall in Edmonton and Chinook Mall and Market Mall in Calgary will reopen. All others will be closed.The Canadian retailer made the announcement on Thursday.

“COVID-19 and the CCAA restructuring have led to the execution of our business plan at an exponential pace. The plan was always to significantly reduce our retail footprint and the strong performance of our e-commerce and wholesales channels in recent months has provided further validation of that strategy,” said Frank Zitella, CFO and COO of DavidsTea, in a written release.

The following Canadian stores will also reopen:

BC

  • Pacific Centre • Vancouver

Manitoba

  • Polo Park • Winnipeg

Ontario

  • Limeridge Mall • Hamilton
  • Masonville Place • London
  • Rideau Centre • Ottawa
  • Sherway Gardens • Toronto
  • Toronto Eaton Centre • Toronto

Quebec

  • Carrefour Laval • Laval
  • Dix30 • Brossard
  • Fairview Pointe-Claire • Montreal
  • Les Galeries d’Anjou • Montreal
  • Les Galeries de la Capitale • Quebec
  • Mega Centre Vaudreuil • Vaudreuil
  • Promenades St-Bruno • Saint-Bruno

New Brunswick

  • Champlain Place • Moncton

DavidsTea is known for its large variety of loose leaf tea and accessories. 

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CMHC CEO's letter a bit 'extreme and alarmist': Ex-RBC CEO Nixon – BNNBloomberg.ca

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Canada Mortgage and Housing Corporation CEO Evan Siddall’s recent letter to lenders urging them to avoid risky mortgages is a bit “extreme and alarmist,” according to former Royal Bank of Canada CEO Gord Nixon.

In a three-page letter dated Aug.10, Siddall warned excessive borrowing will worsen the economic pain triggered by the COVID-19 pandemic.

“I must say I was a little surprised. I don’t think I’ve ever seen or received a letter like that,” Nixon told BNN Bloomberg’s Amber Kanwar in a television interview Thursday.

“I think the intent and concern is certainly real,” he added, noting Siddall has been bearish on the Canadian housing market “for quite some time.”

In his letter, which came a little more than a month after CMHC tightened its underwriting standards, Siddall said there’s a “dark economic underbelly in this business that I want to expose.”

Nixon said that while Siddall’s concerns are valid, the Canadian mortgage market has always been a very responsible.

Despite continued signs of strength in the country’s hottest real estate markets, the CMHC has warned average prices could fall as much as 18 per cent from pre-pandemic levels.

“There’s obviously different views on the market,” Nixon said. “And CMHC competitors are certainly being more aggressive. And [Siddall is] raising a concern that if there is a significant downturn, it will have an impact on borrowers.”

Nixon said the unemployment rate, which is currently 10.9 per cent, is the most important factor when it comes to mortgage defaults and deferrals.

“I would say the letter was probably a little bit extreme and alarmist but having said that, who knows what the impact of COVID is going to be a year out from now,” he said.

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Canada's mortgage 'stress test' level falls for 3rd time since pandemic began – CBC.ca

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The bar at which the finances of Canadian mortgage borrowers gets tested has just been lowered, making it easier for would-be home buyers to reach.

Five-year posted mortgage rates at Canada’s big banks have inched lower in recent weeks, enough to compel the Bank of Canada to formally lower the average rate they base their calculations on to 4.74 per cent.

That’s significant because that’s the level the so-called stress test is based on. Announced in 2017, the test was designed to cool the overheated housing market of the time by making sure borrowers would be able to pay back their loans if rates were to suddenly rise.

Even if a borrower could get a mortgage at, for example, three per cent, that person’s lender was obligated to crunch the numbers as though the rate was higher — at around five per cent, for example — to make sure the loan wouldn’t be too onerous for the borrower to pay back at their income level if rates were to suddenly rise. If the borrower failed the test at the higher rate, the lender wasn’t allowed to lend to them, even if they wanted to.

That testing rate has already been lowered twice in this pandemic, first in mid-March when it dropped 15 points from 5.19 per cent to 5.04, and then again in May when it dropped another 10 points to 4.94 per cent.

This week’s 15-point cut comes on top of that and theoretically means qualified borrowers can now be approved for a slightly bigger mortgage than they could last week, even if their income is still the same.

Rate comparison portal Ratehub.ca calculates that the change could increase the purchasing power for qualified borrowers by about 1.5 per cent.

Numbers show what that means in reality. At the old level, a borrower who earns $100,000 a year and has a 10 per cent down payment would have been stress tested at 4.94 per cent and be approved for a loan on a home valued at up to $523,410.

At the new stress test level, that same borrower would be approved for a loan on a home costing up to $531,230. That’s a difference of $7,820.

“Over the last few years, rule changes have made it harder for Canadians to qualify, so the recent reductions in the benchmark qualifying rate is welcome news for first-time home buyers hoping to enter the housing market.,” said James Laird, co-founder of Ratehub.ca and president of mortgage brokerage CanWise Financial.

Ottawa had planned to change the way the stress test was calculated to begin with, announcing in February a plan to tinker with the formula starting in April. But those plans, like many others, were put on hold when the pandemic hit.

Good news for buyers

Sherry Cooper, chief economist at Dominion Lending Centres, said in an interview that move is good for buyers in that it will make it “a touch less difficult to qualify for a loan. People will be able to borrow a bit more money.”

She said she has observed that qualifying rate was quick to move on the way up, but has been much slower to come down even as interest rates have tumbled because of the pandemic, so it’s good to see the qualifying rate come down to something closer to what’s actually happening in reality.

“With record low interest rates, it’s hard to argue that housing hasn’t become more affordable,” she said.

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A financial iron curtain? China seen bracing for more US action – Aljazeera.com

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A sharp escalation in tensions with the United States has stoked fears in China of a deepening financial war that could result in it being shut out of the global dollar system – a devastating prospect once considered far-fetched but now not impossible.

Chinese officials and economists have in recent months been unusually public in discussing worst-case scenarios under which China is blocked from dollar settlements, or Washington freezes or confiscates a portion of China’s huge US debt holdings.

Those concerns have galvanised some in Beijing to revive calls to bolster the yuan’s global clout as it looks to decrease reliance on the greenback.

Some economists even float the idea of settling exports of China-made COVID-19 vaccines in yuan, and are looking to bypass dollar settlement with a digital version of the currency.

“Yuan internationalisation was a good-to-have. It’s now becoming a must-have,” said Shuang Ding, head of Greater China economic research at London-based lender Standard Chartered and a former economist at the People’s Bank of China (PBOC), the country’s central bank.

The threat of China-US financial “decoupling” is becoming “clear and present”, Ding said.

Although a complete separation of the world’s two largest economies is unlikely, the administration of US President Donald Trump has been pushing for a partial decoupling in key areas related to trade, technology and financial activity.

Washington has unleashed a barrage of actions penalising China, including proposals to bar US listings of Chinese companies that fail to meet US accounting standards and bans on the Chinese-owned TikTok and WeChat apps. Further tension is expected in the run-up to US elections on November 3.

“A broad financial war has already started … the most lethal tactics have yet to be used,” Yu Yongding, an economist at the state-backed Chinese Academy of Social Sciences (CASS) who previously advised the PBOC, told Reuters.

Yu said the ultimate sanction would involve US seizures of China’s US assets – Beijing holds more than $1 trillion in US government debt – which would be difficult to implement and a self-inflicted wound for Washington.

But calling US leaders “extremists”, Yu said a decoupling is not impossible, so China should make preparations.

High stakes

The stakes are high. Any move by Washington to cut China off from the dollar system or retaliation by Beijing to sell a big chunk of US debt could roil financial markets and hurt the global economy, analysts said.

Fang Xinghai, a senior securities regulator, said China is vulnerable to US sanctions and should make “early” and “real” preparations. “Such things have already happened to many Russian businesses and financial institutions,” Fang told a forum in June organised by Chinese media outlet Caixin.

Guan Tao, former director of the international payments department of China’s State Administration of Foreign Exchange and now chief global economist at BOC International (China), also said Beijing should ready itself for decoupling.

“We have to mentally prepare that the United States could expel China from the dollar settlement system,” he told the Reuters news agency.

In a report he co-authored last month, Guan called for increased use of China’s yuan settlement system – the Cross-Border Interbank Payment System – in global trade. Most of China’s cross-border transactions are settled in dollars via the SWIFT system, which some say leaves it vulnerable.

Renewed push

After a five-year lull, Beijing is reviving its push to globalise the yuan.

The PBOC’s Shanghai head office last month urged financial institutions to expand yuan trade and prioritise local currency use in direct investment.

Central bank chief Yi Gang said in remarks published on Sunday that yuan internationalisation is proceeding well, with cross-border settlements growing 36.7 percent in the first half of 2020 from a year earlier.

Still, internationalisation is hampered by China’s own stringent capital controls. It could also face resistance from countries that have criticised China on matters ranging from the coronavirus to its clampdown on Hong Kong.

The yuan’s share of global foreign exchange reserves surpassed 2 percent in the first quarter, Yi said. It also beat the Swiss franc in June to be the fifth most-used currency for international payments, with a share of 1.76 percent, according to SWIFT.

One way to accelerate cross-border settlement would be to price some exports in renminbi, such as a possible coronavirus vaccine, suggested Tommy Xie, head of Greater China research at OCBC Bank in Singapore.

Another is to use a proposed digital yuan in cross-border transactions on the back of currency swaps between central banks, bypassing systems such as SWIFT, said Ding Jianping, finance professor at Shanghai University of Finance and Economics.

China has fast-tracked plans to develop a sovereign digital currency, while the PBOC has been busy signing currency swap deals with foreign counterparts.

Shuang Ding of Standard Chartered said Beijing has no choice but to prepare for Washington’s “nuclear option” of kicking China out of the dollar system.

“Beijing cannot afford to be thrown into disarray when sanctions indeed befall China,” he said.

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