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Finance Minister Wins Fight For His Choice at Bank of Canada – Bloomberg

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Photographer: David Kawai/Bloomberg

If anyone can empathize with the disappointment that Carolyn Wilkins must be feeling about being passed over for the top job at the Bank of Canada, it’s Tiff Macklem, the man who just beat her to it.

Macklem was the presumptive front-runner in 2013, when he was Mark Carney’s top deputy, only to lose out to an outsider himself — the current governor, Stephen Poloz. In fact, an insider hasn’t been given the job since 1994, when a new government promoted Gordon Thiessen amid a dispute about how much control lawmakers should have over monetary policy.

The lesson of the Bank of Canada’s modern history is that the finance minister always gets his pick — all men so far — no matter who is favored by insiders or the board in its “independent” search process.

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Finance Minister Bill Morneau had been considering Macklem for the job for two years, when the topic of transition first started coming up in discussions at the department, according to a person familiar with the minister’s thinking at the time. The two men weren’t friends, but the finance minister was impressed with a resume that included top management stints at both the Bank of Canada and government, along with his experience as a crisis manager.

It wasn’t clear whether Macklem still wanted the job, however. He felt humiliated by his rejection years earlier, and had been telling friends as recently as a few weeks ago he was happy at the University of Toronto, having recently signed an extension as dean of its business school.

Early on in the process, Morneau’s instructions to the board were to undertake an exhaustive search for a governor. By the end of February, the selection committee had invited a short list of candidates for interviews in Ottawa — including at least two current members of the governing council, according to people familiar with the process.

The Crisis Hits

The list was then whittled down to two, who were asked to make presentations to the full board.

A letter published Friday by the head of the selection committee suggests Macklem was one of the two finalists. The other was Wilkins, according to people familiar with the events. The interviews took place around March 10, said one person, just as official Ottawa was beginning to be seized by the coronavirus pandemic. On March 13, the Bank of Canada made its first emergency interest rate cut since the 2008-2009 crisis in a coordinated move with the government, which announced the first plank in its virus stimulus package.

The crisis held up deliberations for weeks, including a critical meeting between Morneau and Claire Kennedy, the board member leading the search. As recently as April 10, Prime Minister Justin Trudeau told reporters a decision had not been made.

Wilkins had backers within the prime minister’s office, who at first were unconvinced by Morneau’s championing of Macklem, according to three people familiar with the discussions. Wilkins, the most qualified woman ever to contend for the post, also had the support of Poloz, who had been grooming his top deputy for the job for years — just as Carney had groomed Macklem.

Wilkins’ critical role in the central bank’s response to the crisis — which occurred after her final interview with the board — helped her. She won praise from both the Liberal government and Bay Street. Markets saw her as the front-runner.

One government official involved in the deliberations said that while there were “comprehensive” discussions between Morneau and officials at the prime minister’s office, a consensus did emerge around Macklem. Still, three former officials described the outcome as a victory for Morneau.

Macklem said he was informed that he got the job Thursday. By Friday morning, he was at Morneau’s side at his introductory press conference in the capital.

Carney’s Backing

While Macklem and Morneau are not known to be close friends, they’ve been running in the same Toronto circles for years. After his 2013 defeat, Macklem landed as dean of the Rotman School of Management, while Morneau became part of Trudeau’s first cabinet in 2015 as finance minister, responsible for Canada’s mostly Toronto-based banks.

Their professional lives began to cross. Morneau appointed Macklem, who is on the board at the Bank of Nova Scotia, to chair a panel on sustainable finance in 2018. That same year, Macklem would score a C$25 million investment from the government for a seed startup program run by his business school.

Macklem also had prominent champions in Ottawa and corporate Canada. None was bigger than Carney, who remains influential in government circles. In an email to BNN Bloomberg television, Carney said: “It is tremendous that he will serve our country during this critical time.”

Macklem’s position at Scotiabank, where he leads its powerful risk committee, gave him close first-hand knowledge of how the industry works.

“Tiff possesses a keen understanding and deep expertise of monetary policy and the integral role the Bank of Canada plays in promoting our country’s economic well-being as well as sustaining the strength of our financial system,” Dave McKay, chief executive officer of Royal Bank of Canada, said in a LinkedIn post.

Political Minefield

While finance ministers have always downplayed their involvement in selecting a governor, it’s become a tradition in Ottawa they get the final say. Poloz got the job in 2013 despite reports at the time the central bank’s board actually preferred Macklem. The government felt he had a more compelling story about how monetary policy needed to be more supportive of growth, an appealing pitch to then-finance minister Jim Flaherty.

The politics around governor appointments is perhaps a natural outcome of having a fiercely independent central bank. Elected lawmakers get only one chance every seven years to put their stamp on an institution that makes critical decisions that affect the well-being of all Canadians.

But there is also a personal element to it. Ottawa can be a lonely place for finance ministers, who are often forced to push back against funding demands from other ministers. They see central bank governors as objective-minded allies who often validate their positions.

Over the next few years, Morneau and Macklem will get to know each other even better.

It’s not just the crisis that will bind them. Given the growing importance of fiscal policy and the central bank’s financing of government debt, the biggest change of the Macklem era may be the deepening relationship between the bank and government. It’s a political minefield the next governor will need to navigate and will require a versatile set of skills.

Macklem will need to be politically savvy enough to engage with government officials while avoiding taking sides in policy debates outside the central bank’s purview.

Macklem was an accomplished economist well before he advanced up the management ranks at the Bank of Canada. Based on his remarks Friday, he plans to continue relying on his technical chops to adhere to the central bank’s 2% inflation target as the anchor of the Bank of Canada’s independence.

“We will use our tools as necessary in a way that respects our mandate and I am confident the government will respect our independence,” Macklem said, in French.

— With assistance by Josh Wingrove

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    Calgary breaks all-time record in housing starts but increasing demand keeps inventory low – CBC.ca

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    Soaring housing demands in Calgary led to an all-time record for new residential builds last year, but inventory levels of completed and unsold units remained low due to demand outpacing supply.

    According to the latest report from Canada Mortgage and Housing Corporation (CMHC), total housing starts increased by 13 per cent in Calgary, reaching a total of 19,579 units with growth across all dwelling types in the city.

    That compares to a decline of 0.5 per cent overall for housing starts in the six major Canadian cities surveyed by CMHC.

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    Calgary also had the highest housing starts by population.

    “Part of the reason why we think that might have happened is that developers are responding to low vacancies in the rental market,” said Adebola Omosola, a housing economics specialist with CMHC.

    “The population of Calgary is still growing, a record number of people moved here last year, and we still expect that to remain at least in the short term.”

    Earlier this year, the Calgary Real Estate Board also predicted that demand, especially for rental apartments, wouldn’t let up any time soon. 

    Industry can cope with demand, expert says

    According to numbers from the report, average construction times were higher in 2023 for all dwelling types except for apartments.

    The agency’s report suggests the increase in the number of under-construction residential projects might mean builders are operating at or near full capacity.

    However, there’s optimism the construction industry can match the increasing need.

    Brian Hahn, CEO of BILD Calgary Region, said despite concerns around about construction costs, project timelines and labour shortages, the industry has kept up with the demand for new builds.

    Demand is expected to remain robust, but the construction industry can keep up, according to BILD Calgary region CEO Brian Hahn.
    Demand is expected to remain robust, but the construction industry can keep up, according to BILD Calgary Region chief executive officer Brian Hahn. (Shaun Best/Reuters)

    “I’ve heard that kind of conversation at the end of 2022 and I heard it in 2023,” Hahn said.

    “Yet here we are early in 2024, and January and February were record numbers again.”

    Hahn added he believes the current pace of construction will continue for at least the next six months and that the industry is looking at initiatives to attract more people to the trades.

    Increase in row house and apartment construction

    Construction growth was largely driven by new apartment projects, making up almost half of the housing starts in Calgary in 2023.

    The federal housing agency says 9,034 apartment units were started that year, an increase of 17 per cent from the previous year. Of those, about 54 per cent were purpose-built rentals.

    Apartments made up around two-thirds of all units under construction, CMHC said, with the total number of units under construction reaching 23,473.

    Growth, however, was seen across all dwelling types. Row homes increased by 34 per cent from the previous year while groundbreaking on single-detached homes grew by two per cent.

    “Notwithstanding challenges, our members and the industry counterparts that support them managed to produce a record amount of starts and completions,” Hahn said.

    “I have little doubt that the industry will do their very best to keep pace at those levels.”

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    Ottawa real estate: House starts down, apartments up in 2023 – CTV News Ottawa

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    Rental housing dominated construction in Ottawa last year, according to a new report from the Canada Mortgage and Housing Corporation (CMHC).

    Residential construction declined significantly in 2023, with housing starts dropping to 9,245 units, a 19.5 per cent decline from the record high observed in 2022. But while single-detached and row housing starts fell compared to 2022, new construction for rental units and condominiums rose.

    “There’s been a shift toward rental construction over the past two years. Rental housing starts made up nearly one third of total starts in 2023, close to double the average of the previous five years,” the report stated.

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    Apartment starts reached their highest level since the 1970s.

    “The trend toward rental and condominium apartment construction follows increased demand in these market segments due to population growth, households looking for affordable options, and some seniors downsizing to smaller units,” the CMHC said.

    Demand from international migration and students, the high cost of home ownership, and people moving to Ottawa from other parts of Ontario were the main drivers for rental housing starts in 2023. The CMHC says rental and condominium apartment starts made up 63 per cent of total starts in 2023, compared to the average of 37 per cent for the period 2018-2022.

    There was a modest increase in rental housing starts in 2023 over the record-high seen the year prior and a jump in new condominiums. The report shows 5,846 new apartments were built in Ottawa last year, up 2.1 per cent compared to 2022.

    Housing starts in Ottawa by year. (CMHC)

    Big demand for condos

    The CMHC said condo starts reached a new high in 2023, increasing 3 per cent from 2022 numbers.

    “As of the end of 2023, there were only 13 completed and unsold condominium units, highlighting continued demand for new units,” the CMHC said.

    Condominum starts increased in areas such as Chinatown, Hintonburg, Vanier and Alta Vista, as well as some suburban areas like Kanata, Stittsville, and western Orléans. Condo apartment construction declined in denser parts of the city like downtown, Lowertown and Centretown, the report says.

    Taller buildings are also becoming more common, as the cranes dotting the skyline can attest. The CMHC notes that buildings with more than 20 storeys accounted for nearly 10 per cent of apartment structure starts in 2022 and 2023, compared to an average of 2 per cent over the 2017-2021 period. The number of units per building also rose 7 per cent compared to 2022.

    Apartment building heights in Ottawa by year. (CMHC)

    Single-detached home construction down significantly

    The number of new single-detached homes built in Ottawa last year was the lowest level seen in the city since the mid 1990s, CMHC said.

    “The Ottawa area experienced a slowdown in residential construction in 2023, driven by a significant decline in single-detached and row housing starts,” the CMHC said.

    Single-detached housing starts were down 45 per cent compared to 2022. Row house starts dropped by 38 per cent compared to 2022, marking a third year of declines in a row.

    “Demand for single-detached and row houses also declined in 2023. Higher mortgage rates and home prices have led to a shift in demand toward more affordable rental and condominium units,” the report said.

    There were 1,535 single-detached housing starts in Ottawa last year, 208 new semi-detached homes and 1,678 new row houses.

    The majority of single-detached and row housing starts were built in suburban communities such as Barrhaven, Stittsville, Kanata, Orléans and rural parts of the city.

    “Increased construction costs resulting from higher financing rates and inflation that occurred in 2022 and 2023 contributed to the decline in construction in the region,” the CMHC said. 

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    Trump’s media company ticker leads to fleeting windfall for some investors

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    Open this photo in gallery:

    A man looks at a screen that displays trading information about shares of Truth Social and Trump Media & Technology Group, outside the Nasdaq Market site in New York City, U.S., March 26.Brendan McDermid/Reuters

    Possible confusion over the new stock symbol for former President Donald Trump’s Truth Social (DJT-Q) saw some investor brokerage balances briefly jump by hundreds of thousands of dollars on Tuesday, the first day Trump’s “DJT” ticker traded.

    Several people complained on social media about briefly seeing the value of their DJT stock holdings on Charles Schwab platforms inflated to figures more in line with what they would be worth if the shares traded at the level of the Dow Jones Transportation Average.

    Some users said they faced a similar issue in pre-market hours on Morgan Stanley’s E*Trade trading platform.

    Shares of Trump Media & Technology Group opened Tuesday at $70.90, while the Dow Jones Transportation Average started the session at 15,937.73 points.

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    For one trader, the Schwab brokerage balance jumped by more than $1 million due to the error, according to a screen grab shared on social media platform X. Reuters was unable to contact the trader or independently verify the brokerage balance.

    “It sure was nice seeing millions in the account, even if it wasn’t real,” another person, going by the username @DanielBenjamin8, who faced the issue in his E*Trade account, posted on X.

    Two X users and one on Reddit surmised that the inflated balances were due to the ticker symbol for the company being nearly identical to the index.

    A spokeswoman for Charles Schwab said that certain users on some of Schwab’s trading platforms saw their brokerage balances briefly inflated due to a technical issue.

    The issue has been resolved and investors are able to trade equities and options on Schwab platforms, she said. Schwab declined to describe the exact cause of the issue.

    E*Trade did not immediately respond to a request for comment outside of regular business hours.

    Trump Media & Technology Group and S&P Dow Jones Indices, which maintains the Dow Jones Transportation Average Index, did not immediately comment on the issue.

    While social media users said the issue appeared to have been resolved, many rued not being able to cash out their supposed gains from the error.

    “I better go tell my boss that I’m actually not retiring,” the trader whose account balance had briefly jump by more than $1 million, wrote on X.

    Trump Media & Technology Group shares surged more than 36% on Tuesday in their debut on the Nasdaq that comes more than two years since its merger with a blank-check firm was announced.

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