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Global liquidity is shrinking and that’s no bad thing

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After a year of record-breaking cash injections, the world’s big central banks are starting to ease off the stimulus pedal, forcing economies and financial markets to practise walking on their own again.

Not everyone is dismayed at the prospect. Since March 2020, central banks and governments have flooded markets with some $27 trillion – a third of global gross domestic product, consultancy CrossBorder Capital estimates.

Since then, world stocks have surged 85%, economic growth is rebounding from last year’s pandemic-inflicted devastation, and inflation expectations are rising. Continuing to pump out cash at last year’s pace would do more harm than good, some economists argue.

Still, cheap cash remains plentiful. At the end of March, 82% of central banks were running loose monetary policies, CrossBorder estimates, though that is down from 88% in January.

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Last month the Bank of Canada began tapering its asset purchases and signalled it could raise interest rates next year, while the Bank of England this month slowed its money-printing. Others, including the Federal Reserve, may start scaling back stimulus by the end of the year.

In other words, the growth of liquidity – the catchphrase for all that money pumped in by central banks, private lenders and governments – has peaked and is already waning.

Total liquidity from central banks and private financial institutions in the United States, China, euro zone, Japan and Britain topped 28.8% of GDP last year but is now running at 18.5%, estimates Steve Donzé, senior macro strategist at Pictet Asset Management.

The main drag is China, he says, which has halved its liquidity additions from last year’s peak.

Global money supply has dipped to 24% from last year’s peak of 26%, but is way above its pre-pandemic levels of 10%. (Graphic: 3-month growth of Global M2 ex China, https://fingfx.thomsonreuters.com/gfx/mkt/qmyvmeyyxvr/Pasted%20image%201621424406439.png)

The other big stimulus plank was government spending but as lockdowns end, so do emergency support schemes for workers and businesses.

Some central bank policy tightening may be offset by U.S. President Joe Biden’s stimulus plans, which if approved, could top 15% of GDP. But much of that is to be financed through tax rises, limiting its stimulatory effect.

JPMorgan strategist Nikolaos Panigirtzoglou said that on all commonly-used measures of gauging “excess liquidity” the extraordinarily loose conditions of 2020 appear to be tightening.

First, money supply growth has been falling relative to GDP since January, he notes, a reversal of 2020.

“That means we may already have entered a phase where excess liquidity is being contracted,” Panigirtzoglou said.

Second, the cash holdings of global investors relative to the size of their equity and bond holdings are now “exceptionally low”. It means stock markets “must rely on other things like the growth trajectory to sustain the bull market”. (Graphic: Pace of central bank purchases falls in 2021, https://fingfx.thomsonreuters.com/gfx/mkt/oakpekyjdpr/Pasted%20image%201621423590115.png)

TIME TO TAPER?

Since the 2008 crisis, markets have become hooked on ever-increasing sums of cash ploughed in by central banks. Past attempts to cut money-printing, such as in 2013 and late-2018, sowed market panic, forcing policymakers to backtrack.

But today’s backdrop, with economies recovering strongly and bond markets finally pricing in the return of inflation, looks different.

Property markets, fed by abundant liquidity, may be overheating; house prices are rising at an annualised six-month rate of more than 10%, according to data from the Bank of International Settlements analysed by CrossBorder Capital.

So piling on more stimulus risks an inflation explosion and overheating, some economists warn. Larry Summers, advisor to former President Barack Obama, accused the Fed this week of “dangerous complacency” in keeping policy so loose.

Pictet’s Donzé too believes the Fed should kick off tapering by year-end “before excesses emerge and force a drastic tightening that could derail current expansion.”

The Fed, ECB, BoE and the Bank of Japan could shrink asset purchases this year to about $3.4 trillion from almost $9 trillion last year, BofA estimates.

But that’s still huge by pre-2020 standards. Aside from the Bank of Canada, big central banks will likely end 2021 with significantly bigger balance sheets.

Norman Villamin, chief investment officer at Swiss wealth manager UBP, said that given policymakers’ recent experience of trying to tighten and their focus on job creation, “if policymakers are going to make a mistake, it will likely be a mistake of erring on the side of being too easy rather than becoming too tight too soon.” (Graphic: Central bank balance sheet projections, https://graphics.reuters.com/HEALTH-CORONAVIRUS/jznvnjmjzvl/chart.png)

 

(Editing by Sujata Rao and Hugh Lawson)

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1 dead, 2 critically injured after car crash in Montreal

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Montreal

Three people are in hospital with critical injuries after their vehicle crashed into a tree. Police believe they might be connected to two drive-by shootings that took place early Thursday morning.

2 drive-by shootings also took place overnight

an SPVM car near a taped-off crime scene
Montreal police are investigating a car crash possibly linked to two drive-by shootings. (Mathieu Wagner/Radio-Canada)

Urgences-santé say one person died and two others were critically injured after their vehicle hit a tree in the Rosemont neighbourhood.

Montreal police believe the crash may be linked to two drive-by shootings early Thursday morning.

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The first happened around 5 a.m. on Pie-IX Boulevard. Police say a car was shot at repeatedly and the driver, a 41-year-old man, was injured in the upper body. He was transported to hospital, but his life is not in danger, say police.

Shortly afterward, shots were reported in the Plateau Mont-Royal borough, near the intersection of Saint-Joseph Boulevard and Henri-Julien Avenue. No one was injured.

Police say they are investigating to determine if there is a connection between the collision and the shootings. Montreal police spokesperson Jean-Pierre Brabant says it’s possible those in the vehicle were involved in the shootings.

The province’s independent police watchdog is now involved.

with files from Chloë Ranaldi

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Pakistan airline crew sought asylum in Canada: spokesperson – CTV News

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Typically, Pakistan International Airlines (PIA) flight attendants who arrive in Toronto stay at a hotel overnight, meet back up with their crew the next day and then fly to their next destination.

But increasingly often, PIA attendants aren’t showing up, the airline says. According to PIA, at least eight flight attendants disappeared over the last year and a half.

They have abandoned their jobs and are believed to have sought asylum in Canada, a spokesperson for the government-owned airline says.

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Increased occurrences

Abdullah Hafeez Khan said at least eight flight attendants “have gone missing” after flying to Pearson International Airport in Toronto. He said these incidents have been happening over the last 10 years, but are now occurring more frequently.

“Since probably October of 2022, the number of the people that have opted asylum has increased tremendously,” Khan said in a video interview with CTVNews.ca from Karachi, Pakistan, where the airline is based.

“None of those crew members that disappeared in the last one-and-a-half years have come back. So they were granted asylum for one way or the other, and that probably has encouraged others to do so.”

The missing employees were fired immediately and lost their company benefits, Khan said.

Why did they flee?

Khan said he could only speculate as to why the flight attendants would flee.

The Canadian government underscored the volatile situation in Pakistan, warning in a travel advisory of a “high threat of terrorism,” along with threats of civil unrest, sectarian violence and kidnapping.

“The security situation is fragile and unpredictable,” the Canadian travel advisory reads. “Incidents are typically attributed to extremism, ethnic divisions, sectarian strife, regional political disputes and the situation in neighbouring Afghanistan.”

It added that many deaths and injuries have occurred from bombings, shootings and other terrorist attacks at a wide range of targets.

Since Khan isn’t in contact with any of the missing employees, he says, he assumes they decided to seek asylum in Canada for economic and social reasons.

“So I naturally assumed that all of them have been given asylum because I don’t think they would be living there illegally,” he said, adding they may already have family connections in Canada who can support them.

In this June 8, 2013, photo, a Pakistan International Airlines plane moments before take off from the Benazir Bhutto airport in Islamabad, Pakistan. (AP Photo/Anjum Naveed)

‘PR crisis’

Khan called the flight attendants’ disappearances a “PR crisis” for PIA that is “bad” for business amid a crew shortage.

The airline is in talks with the Canada Border Services Agency (CBSA) and Pakistani law enforcement agencies to potentially create a “legal safeguard” to curtail flight crew from seeking asylum, he said.

When asked about the PIA flight attendants’ disappearances, Erin Kerbel, spokesperson for Immigration, Refugees and Citizenship Canada, said the department couldn’t comment on specific cases due to privacy legislation.

In response to questions about PIA’s claim that discussions are underway about the issue, a spokesperson for the CBSA said it could not confirm any information.

“The Canada Border Services Agency does not provide comment or details on specific individuals, including any discussions that would take place with airline companies, as an individual’s border and immigration information is considered private and protected by the Privacy Act,” Maria Ladouceur said in an email to CTVNews.ca.

Since the crew members’ disappearances, Khan said, the airline has “done numerous things to curtail that.”

For instance, the airline is only staffing Toronto-bound flights with crew members who have “established linkages” in Pakistan, such as children, spouses or parents, as well as those who have worked in the organization for more than 15 years.

The airline avoids sending to Toronto those who are single or don’t have established family ties in Pakistan, he said.

Khan said he and the airline are no longer in contact with the flight attendants because, they discovered, they usually change their phone numbers soon after disappearing in Toronto.

Who disappeared?

The PIA flight attendants who vanished in Canada are seasoned pros in their late 30s or 40s, some of whom have worked for the airline for as long as two decades, Khan said.

“There was never any sign from them that they would seek something like that,” he said. “So that is something that is bothering us in the matter because working with people who have been working with you for a long time and then something happens like this is pretty unexpected.”

In one of the latest cases in February, the crew members were waiting to take the bus back to the airport from the hotel in Toronto and one of the flight attendants didn’t show up, Khan said.

The airline was unable to reach the flight attendant on her cellphone or hotel landline so, Khan says, they asked hotel management to check if she was OK.

“When the crew went there, she left her uniform there with a note saying, ‘Thank you PIA,'” Khan said, which he interpreted as a genuine sentiment of gratitude for her more than 15 years of service with PIA rather than a taunt.

Khan said the crew members who disappeared were “family values people” who had good careers in Pakistan.

Asylum policies

Individuals can make a refugee claim in Canada at a port of entry upon arrival or online if they are already in Canada, according to the Canadian government’s website.

Canadian immigration or border officials will determine if the person is eligible for a hearing before the Immigration and Refugee Board. All claimants must undergo health and security screenings, the government says.

If eligible to make a claim in Canada, refugee claimants can access social assistance, education, health services, emergency housing and legal aid pending a decision on their claim. Most can apply for a work permit after a medical examination.

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Alberta's population surges by record-setting 202,000 people: Here's where they all came from – CBC.ca

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Alberta smashed population-growth records in the past year, mainly due to people moving to the province from across Canada and around the world.

The province’s population surged to just over 4.8 million as of Jan. 1, according to new estimates released Wednesday by Statistics Canada.

That’s an increase of 202,324 residents compared with a year earlier, which marks — by far — the largest annual increase on record.

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Alberta also broke a national record in 2023 for interprovincial migration, with a net gain of 55,107 people.

“This was the largest gain in interprovincial migration nationally since comparable data became available in 1972,” Statistics Canada said in a release.


Most of the interprovincial migrants came from Ontario and British Columbia.

Statistics Canada estimates that 38,236 Ontarians moved to Alberta last year, versus 14,860 Albertans who moved to Ontario, for a net gain of 23,376 people.

Similarly, an estimated 37,650 British Columbians moved to Alberta, compared to 22,400 Albertans who moved to B.C., for a net gain of 15,250.


All told, interprovincial migration accounted for 27 per cent of Alberta’s population growth over the past year.

That put it just ahead of permanent immigration, which accounted for 26 per cent, and well ahead of natural population increase (more births than deaths), which accounted for eight per cent.

The largest component, however, was temporary international migration.

Non-permanent residents from other countries accounted for 39 per cent of the province’s population growth in the past year, reflecting a national trend.


Canada’s population reached 40,769,890 on Jan. 1, according to Statistics Canada estimates, which is up 3.2 per cent from a year ago.

“Most of Canada’s 3.2-per-cent population growth rate stemmed from temporary immigration in 2023,” Statistics Canada noted.

“Without temporary immigration, that is, relying solely on permanent immigration and natural increase (births minus deaths), Canada’s population growth would have been almost three times less (1.2 per cent).”

Alberta’s population, meanwhile, grew by 4.4 per cent year-over-year.

Alberta now represents 11.8 per cent of the country’s population, its largest proportion on record. 

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