Winnipeg Free Press

Winnipeg Free Press (Newspaper) - June 3, 1981, Winnipeg, Manitoba Analyst welcomes rate dip the drop this week in the . Prime rate is a Good sign because it Breaks the trend in interest rate increases analyst Hugh Benham said yesterday. There is a reasonable Chance the interest rate spiral will turn around now but the rates won t drop like a Stone As they did last year said Ben Ham partner in charge of research at Richardson securities. Most major . Banks dropped their prime rate to 20 per cent from 20% per cent. Two Banks made the move late last week and it became general Mon Day and yesterday despite a Short lived setback when the Federal Reserve Board unexpectedly drained Money from the county s banking system late yesterday. The Bank of Canada rate normally a signal to chartered Banks dropped by .38 per cent 38 basis Points last week. The chartered Banks did not follow in this Case because they had not followed the most recent increase. Benham said there is still a school of thought that thinks the rate could jump up again but if this is the Start of a downward Treid it will be a gradual decline. Our forecast is for the Canadian prime rate to drop 400 basis Points four per cent in not less than six he said. University of Manitoba economics professor Norman Cameron said he did t expect the Bank of Canada to react to this Type of change on the . Prime rate. Free press wednesday june s9 retailers urge interest Cut Benham gradual decline. Earnings up despite govt. Tax blow Omega hydrocarbons a Calgary based company with Oil interests in the Waskada area of Manitoba reported first Quarter revenues of million a 125-per-cent increase Over the same period last year. In a report to shareholders president Jack Hall said Omega s successful earnings record has been adversely affected by the new Federal Petroleum tax and High interest rates a trend that will continue through 1981. Net earnings for the period ending March 31 were a 63 per cent increase Over the same Quarter last year the report states. Cash flow of was 88 per cent higher than last year. By Wally Dennison the Bank of Canada should steadily lower its trend setting interest rate to loosen the costs squeeze on retail ers and Spur consumer buying says the retail merchants association of Canada. George Crompton the association s National manager said that was the major suggestion of delegates to the organization s two Day meeting in Vic Toria which concluded monday. In a Long distance interview from Victoria yesterday Crompton said retailers Are equally vulnerable to High interest rates although the Impact of the rates varies according to the Mer chant s size and debt Load. His association represents about retailers primarily independents. Crompton was commenting on a re port that Winnipeg based Hudson s Bay co. Was closely watching interest rate movement in the Hope that Relief is due shortly. Because of a massive debt Load. The Bay s fortunes Are possibly tied More closely to interest rate Levels than any other retailer. A vigorous expansion program and several major acquisitions in recent years Are responsible for most of the debt. The Chain s debt consists of billion Long term million Short term and million at floating rates and Indus try analysts say a one percentage Point change in the interest rate can result in a million swing in the company s pre tax earnings. Wrong policy the Bay s interest debt Load pro file reflects Why it s so important for the Bank of Canada to encourage lower interest rates from lenders by steadily lowering its own trend setting rate said Crompton. A High interest rate policy As a vehicle for reversing the inflationary spiral and propping up the value of the Canadian Dollar is wrong he emphasized because High rates Only add to inflation. While gradually reducing the Bank rate would devalue the Dollar and raise the Cost of imports Crompton said these results would be More than offset by increased Export opportunities and greater buying of Canadian goods. The High rates Are hurting More people than they Are helping and they re particularly injurious to those who can least afford to be Crompton said the Central Bank s rate should be lowered so the end of 1981 would have rates from lending institutions at least equalling the current inflation rate of 11 to 12 per cent. Then people would at least be Able to in addition to slowing sales in certain merchandise categories he said climb ing interest rates have squeezed retail ers in three ways suppliers have been pushing hard for payment within 30 Days rather than the Normal 60 Days from the receipt of shipment it costs More to borrow the same amount of Money and inventory carrying costs keep escalating As retailers search for More Money to pay for the inflationary damage of High rates on their inventories. Crompton agreed however with a prediction by Winnipeg merchandising analyst Cynthia Rose that the re tailing sector should fare slightly better this year than in 1980. Rose of Richardson securities of Canada looks for Over All sales volume to be no lower than last year and perhaps to turn up by one to per cent in real Dollar terms discounting last year saw sales decline in real Dollar values. But the recovery is not going to be she emphasized. It will be 1982 or 1983 before we see any real strength coming into the retail Sec Rose said retailing hit a Low last summer and fall and the worst is now behind should be getting better from Here Richardson securities economists she pointed out foresee interest rates dropping by year end to a 14-to-l5 per cent Range from their current per cent Levels. If rates decline As predicted she said that would Spur buying in the last Quarter the period when most retail ers do More than half their business and the one in which inventories Are at their Peak. Rose noted that the Bay which reported a million first Quarter loss and whose interest costs shot up to million from million a year earlier does 75 per cent of its business in the last Quarter. A hopeful sign that rate Relief looms Rose said was last week s prime lend ing rate Cut to 20 per cent from per cent by Chase Manhattan Bank of new York the third largest United states Bank and other smaller . Banks. Historically she said Canadian Banks follow the . Rate trend by one to two weeks. Airlines facing million crisis Geneva world s major commercial airlines will be million in the red by the end of this year if present trends continue the International air transport association said tuesday. The 110 member companies will to Gether lose 1.7 billion dollars in operating their International scheduled flights while paying out an estimated million in repayment charges financial experts added. The billion already set aside for a pour Empress cuss now stretches out i across Canada. Investing in new fuel efficient aircraft will be completely wiped out leaving companies million in the red the finance team told a meeting of 120 senior executives from about 60 firms. Iata director general Knut Hammarskjold called the two Day meeting at Short notice to discuss immediate solutions to the worsening financial crisis. Aviation fuel which has increased in importance and now makes up More than 30 per cent of an average airline s operating costs has also become More expensive for european airlines be cause of the stronger Dollar. Governments Are Likely to be asked to reduce Airport charges and the amount of air traffic control fees which they pass on to National carriers Iata spokesman David Kyd said. European governments pay nearly one billion dollars a year for safety control Over european air space. They have been passing on an increasing share of this to airlines. Money Gold metals Winnipeg Gold 11 . Today foreign Exchange not tuesday supplied by the Bank of Montreal Sis a. These rates Are called nominal 20-ounce contracts open High Tun tuesdays trading volume 20 contracts _ 530.00 Zustra iia Dollar Winnipeg Silver 1 1 . Today my Krince contracts High 10 85 10-8s i-98 "-25 10.98 i 11.75 11.72 Low close 11.16 11.72 s trading volumes Contra 2-85 2 85 2 85 12jb Mon. 10.82 11.16 11.87 n o2 Halifax Empress class service from Winnipeg now to Toronto . Nonstop monday saturday. Now to Vancouver . Nonstop daily. ., . One stops How to Montreal . Daily. Monday to saturday. One stops. Now to Edmonton . Nonstop Dajer now to Calgary . Nonstop now to Ottawa . One Stop daily and financial newspapers. And a full selection of refreshments from Coffee to cocktails Fine wines and liqueurs when time All at no extra Cost. On morning flights you la be served a Champagne breakfast. And a delectable assortment of hot or cold hours d oeuvres on All Between meal flights. Lunch and dinner flights feature a four course meal followed by chocolate covered cherries or pralines. And of course our famous China and Silver and refreshing hot Towel service. On Long distance wide Cabin flights chair Empress class also includes complimentary headphones for stereo music or a movie. Only music on dc-8 and 727 flights and a Choice of prime Steak or an alternate hot entree on lunch and dinner flights. Call your travel agent or chair at 957-1060. And enjoy the comforts of Empress class throughout Canada or to Europe the Orient and the South Pacific. A pair chair Empress cuss. A better Economy. At no extra Cost and on no other airline. I up and b and Emprem class pfc trademarks of Canadian Pacific limited. F London Gold London a closing Gold prices wednesday in . Dollars a Troy ounce. London-474.00 Paris-537.46 Frankturt-d75.03 Zurich-474.50 Hong Kong-476.95 London metals London a London closing metals tuesday in pounds Sterling a tonne Silver in Pence a Troy ounce. Copper spot 845.5-846.5 future 870- .50 tin spot future Lead spot 342-.50 future 350-.50 Zinc spot 413.5-414.5 future 423.5-424 Silver spot 514-515 future 527.5-530 aluminium spot 620-621 future 604.50 Nickel spot future 085 City Cash Gold noon Cash Gold Silver and Coin prices wednesday in . Dollars an ounce bid Good 473 Silver 10.40 coins Maple Leat 482 Krugerrand 437 source Bank of Nova Scotia. Gold options Winnipeg up Gold options. . Funds Winnipeg commodity Exchange open High Low close Tum. Sept. 1mi series 500 39.00n series 520----------------28.50n 31.00n series 23.00n 25.00n series so 20.00n series 580----------------i5.00a 16.00a december 1981 series 480----------------69.00n series 500----------------60.00a series 5m----------------ss.ooa 52.00b series series 5m----------------38.00n 39.00n tuesday s volume 0 options. Noon Dollar Montreal up . Dollar in terms of Canadian funds at noon today was up 9-100 at 51.2072. Pound Sterling was Down 2 24-25 at 52.4343. In new York the Canadian Dollar was Down 3-50 at so.8284 and Pound Sterling was Down 2 3-5 at 52.0165. Ask 476 10.60 Bowater paper London Bowater paper corp. Traded at 257 Belgium inv franc a Bulgaria lev China Renmin i a Columbia peso a czechoslovak Crown Denmark Krone e Caribbean Dollar Fiji Dollar Finland Mark France franc Granv Mark Greece drachma Guyana Dollar Hong Kong Dollar Hungary Forlett India Rupee Indonesia rupiah Iraq Ireland Pound Israel shekel Italy lira Jamaica Dollar Japan yen Kuwait Dinar Lebanon Pound Malaysia ringgit to Mexico peso nether i and Guilder . Dollar Norway Krone Pakistan Rupee a Poland zloty Portugal escudo a Romanta Teu saudi Arabia rival Singapore Dollar South african Rand Spain peseta Sweden Krona Switzerland franc Tanzania Schilling trin Tob do far . Dirham . Pound . Dollar x-.s.r. Ruble Venezuela Bolivar 1.3750 .0725 1.2010 3.1858 .6050 .031690 1.2010 .01428 1.2244 .7125 .0222 .1670 .1640 .4485 1.4200 .2750 .2170 .5125 .0210 .4780 .2210 .0330 .1480 .001930 3.9450" .1218 .001040 .6788 4.3140 .2748 .5145 .0500 .4625 1.0550 .2090 .1245 .0343 .0195 .2388 .3550 .5605 1.4200 .01315 .2440 .5815 .1505 .5035 .3252 2.4598 1.2074 1.6447 .2700 quotations in Canadian funds. Falconbridge Nickel mines new Pence on London Stock Ltd 50 cents. June 30, rec Exchange on wednesday. Ord june 17. 1 St in features performance now full Economy fare business passengers can enjoy the deluxe Standard of service and attention of chair Empress class on All our flights All across Canada. Except Northern . And Yukon services and on june 15, Well be introducing connecting service from Vancouver to Victoria. Empress class offers you a time saving Check in with seat selection All in one Stop. And inflight you la relax in the Comfort of your own exclusive business Section. 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