The rising Canadian dollar

Discussion in 'Fugu's Business of Hockey Forum' started by kmad, Oct 29, 2004.

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  1. kmad

    kmad riot survivor

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    Last I checked, the Canadian dollar was at 82 cents US. At the time of the Quebec/Winnipeg franchises moving, it was in the 60s.

    Of course, the rising dollar is the best thing to happen to the Edmonton and Calgary franchises in a long time. They might be able to afford to keep some of their star talent now. Not to mention Vancouver and Ottawa being able to stay competitive for years to come.

    Will the prosperity of the Canadian dollar have any impact on the post-CBA economic NHL landscape, beyond Canadian teams being more involved in the free agent market?
     
  2. Kravitch

    Kravitch Guest

    Wow! First a Canadian team in the Stanley Cup finals, now the dollar is rising! I feel like I'm in the 80's! I'm gonna go listen to my Flock of Seagulls CD. :D
     
  3. Jets4Life

    Jets4Life Registered User

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    I would imagine so...

    Look for the Loonie to shoot past 90 cents/US. The rising crude oil prices can only help the Canadian dollar, since the US consumes more oil than it produces. Canada is the exact opposite. Look for a big Alberta boom similiar to the 70's if this transpires.
     
  4. YellHockey*

    YellHockey* Guest

    While the dollar will make the Alberta teams more profitable, the biggest factor in those teams keeping their stars when they become UFAs is their success on the ice.

    Although a radically different CBA then the last could prevent any team from keeping all of its stars.
     
  5. Kravitch

    Kravitch Guest

    I wonder what the rising dollar mean for Winnipeg too?


    I don't get it, when the dollar was dropping like a turd a year ago, it got so much attention. But now that its rising, it's getting ignored.
     
  6. Slats432

    Slats432 Registered User

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    Ultimately I don't think it means much. Right now the suggestion is that this trend will continue for a little while. There is also a chance that it stabilizes with the US Election. That being the case, when it does stabilize, the situation goes back to being terrible and those teams will have the same problems.

    Don't look at it over a 1 or 2 year period, look at it over a 20 year period.
     
  7. ginner classic

    ginner classic Registered User

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    While the Canadian dollar and oil have had virtually identcal charts over the last two to three months, there has never been a strong correlation historically between the two. The rise of the dollar has a lot more to do with commodity indexes, and the comparison to the U.S. economy. I do not believe that the Loonie will continue on this path for much longer.

    The counter argument to mine is that poor fundamentals in the U.S. will continue to drive the Loonie Northward. That said I believe that most of the expectation around the U.S. economy already has been accounted for and only the risk of China and Japan halting purchases of U.S. government debt issues is left as a factor.
     
  8. Bring Back Bucky

    Bring Back Bucky Registered User

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    I think the point that is missing is that our dollar isn't strong, the US dollar is just uncharacteristically weak. That is something that global economics suggests will not continue. It is also very hard on our exporters, and not generally great for the economy in general. So for NHL standards, while Canadian teams have no doubt hoarded some cheap greenbacks, they probably aren't projecting a stronger loonie as a long-term component of business planning. The US & Great Britain (note, the 2 major powers who invaded Iraq) are the world's largest users of oil, and as noted above, as oil prices have skyrocketed the greenback has looked weaker. Oil supplies, however are much too high to reflect the current price. Eventually economics will prevail over fear and things will readjust. As an Oilers fan I would like to answer differently , but I think this is a pretty realistic view. :dunno:
     
  9. ehc73

    ehc73 Registered User

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    I saw on the news that some financial analysts said that the Canadian dollar (and subsequently the rest of the world) is rising against the US dollar. And the Americans are devaluing their dollar purposely because their debt is rising at something ridiculous like $16k a second. Also, because of that, the loonie could rise to as high as 85 cents before the US gets its financial situation back in order.
     
  10. DocHolliday

    DocHolliday Registered User

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    Word has it that China, who has been stockpiling US currency to stem inflation, is about to sell off much of it to try and gain more freedom and control over their economy. This could help continue the slide of the greenbacks and likely offset whatever stability may come post election.
     
  11. Crossroads*

    Crossroads* Guest

    Aren't you 12 or 13 years old... how would you know what it feels like to be in the '80s?
     
  12. Slats432

    Slats432 Registered User

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    Just like I would if 10 '57 Chevys drove past. I would feel like I was in the 50s... ;)
     
  13. ginner classic

    ginner classic Registered User

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    Not exactly true. The Canadian dollar has been stronger than the Euro, the Aussie Dollar, the Yen, and Gold over the last three months. I am not sure of the relative weighting of the canadian dollar in the U.S. dollar index, but the dollar has increased to a greater extent than the U.S. dollar index has declined.

    Tough to say. If you believe that market pricing of currencies is truly reflective of economic strength, you would not say it is bad for Canada. A rise in the Canadian dollar means a rise in the wealth of Canadians vis a vis the rest of the world. We have been outperforming almost all of the other industrialized nations in economic growth over the last three years.

    Last time I asked Brian Burke if they hedge long term, his answer was no. They buy a percentage of their U.S. cash requirement at the beginning of the year, but are not perfectly hedged in the short term and take no part in long term currency hedges. Not sure this is a smart move.

    The decline in value of the U.S. dollar does have more to do with oil than it does the rise in the Canadian dollar. However, there are a lot more complex factors at play here, including the one I believe the strongest in: market sentiment.
     
  14. Kravitch

    Kravitch Guest

    I'm 17 actually. OK, it feels like I'm in the early 90's. :)
     
  15. MS

    MS 1%er

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    I remember either Nonis or Burke saying in an interview a couple years ago that every cent the dollar moves is a difference of $500 000 in the team's bottom line. So the ~20 cent move in the Canadian dollar over the past year or so is a difference of about $10 million/year in profit for a team like Vancouver. Pretty big change.
     
  16. It Kills Me

    It Kills Me Registered User

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    I remember the Jays (MLB baseball) having to decide weather or not to cash in on the Canadian dollars increase last March. Im not sure what they did though.
     
  17. thinkwild

    thinkwild Veni Vidi Toga

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    Does this now then imply that the Canadian team with 13000 season tickets assistance plan is to be lifted? Is that something in the CBA?
     
  18. Kitsune

    Kitsune Registered User

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    The Canadian Dollar will likely stop the rise at about 85 cents and will drop back down to 79-80 cents, however if Bush does get re-elected, his deficit spending patterns could further help the Canadian Dollar. Amazingly, one of the reasons for the increase in the dollar is actually, as much as I hate to say this is because of 9/11, as after that the rebuilding and the wars in afghanistan and iraq, which are directly related to to 9/11 has increased the demand on core metals- nickel, copper etc, where prices has risen over 300% since 9/11, and will likely continue to rise a bit more as Canada is a huge producer of nickel and copper (the city I live in accounts for 10% of the worlds nickel- the highest concentration in the world, and were seeing a boost in the economy not seen since the first iraq war),so really, it all depends on what happens overseas with the wars that currently going on and the future wars that could/will most likely happen. Another thing to point out is that some economists say our dollar is out of a 30 year slump (read, back in 1974 our dollar was at 1.04 to the american in the floating exchange system, and then by the 1980s is was at the low 70s due to low commodity prices), not to mention a 9.1 billion surplus is helping the situation. The impact this has the canadian teams is currently next to nothing at this point as everyone is lockedout and our dollar back in June was at a mere 75-76 cents.
     
  19. ginner classic

    ginner classic Registered User

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    I am not sure that we make 85. I am looking for an entry on a short position when the market establishes then surpasses a top....maybe at .83?

    I like the way you present the argument on commodities as a primary driver, especially metals. Can't say I disagree on that or on the anlysis of the U.S. economy. On the economists' side....I will always bet against whichever side of the market the pundits are on....especially if they are making bold predictions. The Conference board of Canada came out with a report last year the day the dollar bottomed at .62 predicting a .50 dollar. It has run to .82 since then. Their last prediction was par. I think I'll bet the other way.
     
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