This illustrates several problems with modern markets, including the prevalence of celebrity stock-pickers and their ability to stoke the emotions of a less-than-discriminating public. Although Ms. Whitney certainly has the chops–her call on Citigroup and several following that painted a gloomy picture for US financials were prescient–racing to buy the market on a sliver of what she had to say is irrational. Her words on Goldman were positive, put her words applied only to Goldman. This was no wholesale endorsement of the US financial system or of the view that the economy will tear off on a robust recovery any moment now.

Now’s not the time for excessive optimism. However, there are reasons–albeit less dazzling than Meredith Whitney on CNBC–to believe brighter days lie ahead.

For instance, the results of the Bank of Canada’s (BoC) Summer 2009 Business Outlook Survey and Second Quarter 2009 Senior Loan Officer Survey, coupled with Statistics Canada’s June 2009 Labour Force Survey and the results of the BoC’s term purchase and resale agreement (PRA) auction on Monday, suggest a durable foundation for stable consumer demand is being laid.

The Business Outlook Survey, conducted May 25 to June 18, indicates that decision-makers are more optimistic about conditions than they’ve been since the 20th century. After two surveys that showed an extremely negative balance of opinion on future sales,   61 percent of executives said sales growth will quicken over the next year, while only 23 percent expect it to slow, the biggest gap since the fourth quarter of 1999.

More than the view of one observer, the Business Outlook Survey represents the opinion of about 100 senior managers, selected and interviewed by the BoC based on the composition of Canada’s gross domestic product. These folks will make capital investment and hiring decisions in the months ahead.

The Senior Loan Officer Survey, meanwhile, reveals that lending conditions, while still tight, have eased; the percentage of loan officers who said credit was harder to access outnumbered those saying it was easier by 33 percentage points, down from 60 points in April’s survey. Interviews with major Canadian financial institutions were conducted June 8 through June 19.

Business managers’ positive sentiment was backed by on-the-ground practice. StatsCan’s June employment report reveals that, though Canada still isn’t creating jobs overall, the pace of losses is slowing and, in certain pockets, there is actual hiring going on.

Total net job losses were 13,000 nationally in the last three months. For the first three months of 2009 that figure was 273,000; in other words, the picture is 20 times better than it was last winter.  The unemployment rate inched up to 8.6 percent because more people were looking for work.

June’s employment gains came in information, culture and recreation, where 26,000 jobs were created, and finance, insurance, real estate and leasing, which added 21,000 to payrolls. Manufacturing again led the decliners, as 26,000 jobs were lost in the sector.

Finally, the BoC couldn’t find enough buyers to fill its PRA. In September 2008, BoC Governor Mark Carney restarted the facility that had been originally launched in December 2007. PRA transactions often last from two weeks to a year and are designed to help major bond dealers.

The BoC bought CAD2.25 billion of securities from major bond dealers after offering to purchase CAD3 billion, the first time in 43 auctions that bond dealers didn’t take full advantage of the program. This is another sign that credit in Canada is easing.

Strengthening credit is a necessary but not sufficient condition for economic recovery. The other part of the equation is confidence. People–managers and workers–won’t spend money if they’re uncertain about the future. It seems, however, that deterioration into a vicious cycle of layoffs lead to reduced consumer spending that leads to more layoffs, etc., ad nauseam, has been arrested.  

Business leaders have expressed a level of confidence not seen in more than a decade; this confidence is revealed, critically, in a positive employment report.

The International Monetary Fund (IMF), in an update to its April World Economic Outlook, now forecasts that Canada will contract 2.3 percent in 2009 and grow 1.6 percent in 2010. The IMF had predicted the Canadian economy would shrink 2.5 percent this year before rebounding to 1.2 percent growth in 2010.

The IMF noted that “the recent rally in commodity prices has been strong and broad-based, reflecting improved market sentiment, US dollar depreciation, and commodity-specific factors.”

The Conference Board of Canada, meanwhile, predicts GDP will fall by 1.9 percent in 2009, a slight revision downward from the 1.7 percent decline it forecast in April, before bouncing back to grow by 2.7 percent in 2010. Though its full year forecast is slightly more bearish this time around, the Conference Board sees the Canadian economy growing again in the second half of 2009, boosted by global stimulus efforts.

Speaking Engagements

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Click here or call 800-970-4355 and refer to priority code 014310 to register as a guest of MLM.

The Roundup

Oil and Gas

Advantage Energy Income Fund (TSX: AVN-U, NYSE: AAV) has completed its conversion to Advantage Oil & Gas and is now a corporation.

Unitholders of the fund voted 91.64 percent in favor of the plan or arrangement last week. Former unitholders of Advantage Energy Income Fund who complete a letter of transmittal provided to such unitholders will receive common shares of Advantage Oil & Gas on a one-for-one basis.

The common shares of Advantage Oil & Gas are expected to commence trading on the Toronto Stock Exchange under the symbol AAV and on the New York Stock Exchange under the symbol AAV on or about July 14. Sell Advantage Energy Income Fund.

Baytex Energy Trust (TSX: BTE-U, NYSE: BTE) is buying heavy oil and natural gas assets located in southwest Saskatchewan from True Energy Trust (TSX: TUI-U, OTC: TUIJF) for CAD93 million.

Baytex expects the new assets to add about 3,000 barrels of oil equivalent per day (boe/d), taking its total production to about 43,000 barrels for 2009, and about 6 percent to cash flow per unit. The trust will spend about CAD10 million on these assets in 2009.

Baytex Energy Trust is a buy up to USD17; sell True Energy Trust.

Crescent Point Energy Trust (TSX: CPG-U, OTC: CPGCF) has completed transactions that result in its conversion into a dividend-paying corporation, Crescent Point Energy Corp (TSX: CPG, OTC: CSCTF); note the new Toronto Stock Exchange and US over-the-counter symbols.

Following completion of the assumption of the corporate shell of Wild River Resources, the acquisition of Gibraltar Energy and the sale of 25 percent of Wild River Resource assets and 25 percent of Gibraltar Energy assets to privately held Shelter Bay Energy, Crescent Point expects daily production to average 42,000 boe/d in 2009 and end the year above 44,500 boe/d. It forecasts 2009 capital expenditures at CAD225 million. Crescent Point Energy Corp is a buy up to USD32.

Information Technology

Bell Aliant Regional Communications Income Fund (TSX: BA-U, OTC: BLIAF) announced last week that, in collaboration with the government of New Brunswick, it will by 2010 provide the fastest broadband connections in Canada to residents of the province via fiber to the home (FTTH) technology. Bell Aliant calls the service “FibreOp.”

Bell Aliant will be the first service provider in Canada to supply an entire city with fiber-optic cable. The total cost to install fiber-optic cable straight to 70,000 homes is estimated at CAD60 million, or CAD857 per home. The government of New Brunswick will kick in CAD1 million to support the project. Bell Aliant Regional Communications Income Fund is a buy up to USD25.

Food and Hospitality

Colabor Income Fund (TSX: CLB-U, OTC: COLAF) will convert to a corporation via a plan of arrangement with ConjuChem Biotechnologies (TSX: CJB, OTC: CJBFF).

The new Colabor will maintain its payout at a level equal to what current Colabor unitholders receive; it will pay a quarterly dividend of 26.91 cents Canadian per share, the quarterly equivalent of Colabor’s current monthly distribution of 8.97 cents per unit. The arrangement with ConjuChem affords Colabor access to more than CAD100 million in tax losses in coming years.

Colabor unitholders will receive one common share for every trust unit of Colabor held on the effective date of the conversion, and ConjuChem will change its name to Colabor Group Inc. The new Colabor won’t retain any of the businesses currently carried on by ConjuChem or its related assets. Pursuant to the plan of arrangement, ConjuChem will transfer its assets and liabilities to a new subsidiary.

The conversion is tax deferred, so no income tax will be payable by unitholders. Colabor, which because of its aggressive expansion following the October 2006 announcement is already paying entity-level taxes, is a buy up to USD10.

Here are tentative second quarter earnings announcement dates for Canadian Edge Portfolio companies.

Conservative Holdings

• AltaGas Income Trust (TSX: ALA-U, OTC: ATGFF)–August 5
• Artis REIT (TSX: AX-U, OTC: ARESF)–August 12
• Atlantic Power Corp (TSX: ATP-U, OTC: ATPWF)–August 11
• Bell Aliant Regional Communications Income Fund (TSX: BA-U, OTC: BLIAF)–July 30
• Bird Construction Income Fund (TSX: BDT-U, OTC: BIRDF)–August 7*
• Canadian Apartment Properties REIT (TSX: CAR-U, OTC: CDPYF)–August 11
• CML Healthcare Income Fund (TSX: CLC-U, OTC: CMHIF)–August 7*
• Colabor Income Fund (TSX: CLB-U, OTC: COLAF)–July 24*
• Consumers’ Waterheater Income Fund (TSX: CWI-U, OTC: CSUWF)–July 24*
• Great Lakes Hydro Income Fund (TSX: GLH-U, OTC: GLHIF)–July 27
• Innergex Power Income Fund (TSX: IEF-U, OTC: INRGF)–August 6*
• Just Energy Income Fund (TSX: JE-U, OTC: JUSTF)–August 7*
• Keyera Facilities Income Fund (TSX: KEY-U, OTC: KEYUF)–August 5
• Macquarie Power & Infrastructure Income Fund (TSX: MPT-U, OTC: MCQPF)–August 5
• Northern Property REIT (TSX: NPR-U, OTC: NPRUF)–August 6
• Pembina Pipeline Income Fund (TSX: PIF-U, OTC: PMBIF)–July 29
• RioCan REIT (TSX: REI-U, OTC: RIOCF)–July 27
• TransForce (TSX: TFI, OTC: TFIFF)–July 29*
• Yellow Pages Income Fund (TSX: YLO-U, OTC: YLWPF)–August 6

Aggressive Holdings

• Ag Growth International (TSX: AFN, OTC: AGGZF)–August 12
• ARC Energy Trust (TSX: AET-U, OTC: AETUF)–August 7
• Chemtrade Logistics Income Fund (TSX: CHE-U, OTC: CGIFF)–July 29
• Daylight Resources Trust (TSX: DAY-U, OTC: DAYYF)–August 6*
• Enerplus Resources (TSX: ERF-U, NYSE: ERF)–August 7*
• Newalta Income Fund (TSX: NAL, OTC: NWLTF)–August 6*
• Paramount Energy Trust (TSX: PMT-U, OTC: PMGYF)–August 7*
• Penn West Energy Trust (TSX: PWT-U, NYSE: PWE)–August 12
• Peyto Energy Trust (TSX: PEY-U, OTC: PEYUF)–August 6*
• Provident Energy Trust (TSX: PVE-U, NYSE: PVX)–August 13
• Trinidad Drilling (TSX: TDG, OTC: TDGCF)–August 11
• Vermilion Energy Trust (TSX: VET-U, OTC: VETMF)–August 10*

*Bloomberg estimate