by Jeff Sanford

The Canadian Association of Financial Planners’ 16th annual convention kicked off in Toronto today. Over 1,500 delegates crowded into the Metro Toronto Convention Centre to hear Dr. Sherry Cooper deliver the keynote address, an intense, fast-paced report on Canada’s place in the new economy.

“The volatility we’ve experienced in the last few months is here to stay,” said the BMO Nesbitt Burns chief economist in her trademarked, rapid fire delivery.

The reason for this, she said, is that Canada is on the upswing of a wave in the long cycle (deep cycles in the economy that work over hundreds of years), triggered by breakthroughs in communication technology and biotechnology.

“The real productivity growth of computers has only been recently realized because of the net,” said Cooper. “And in a few weeks we will have encoded the human genome. This is an immense period of opportunity.”

This new paradigm has already reshaped parts of the Canadian economy said Cooper. The Toronto Stock Exchange 300 is now a technology index as the market capitalization of Nortel exceeds the market cap of the six banks combined by a factor of two and half.

In terms of macroeconomics effects, the traditional link between commodities and inflation – long a commandment of the Canadian economy – has been broken.

Cooper left the audience with several predictions. She said we will see a rise in the price of loonie to US70¢, on the strength of our current account surplus, and predicted that central banks will notch up interest rates a few more times before the banks retire to the sidelines for the rest of the year.

She also said the yield on long bonds would decrease to about 4.5%, a result of a shortage of AAA debt as federal and provincial governments aggressively retire their debt at the same time the appetite for fixed income products rises.

Cooper also revisited her oft-heard message on tax cuts, a message that brought a spontaneous round of applause from the audience. Citing off-the-record conversations with Finance Minster Paul Martin, Cooper said she expects personal income tax cuts, capital gains tax cuts and cuts to corporate taxes over the next five years. This course of action she says would put Canada at the forefront of wealth producing nations.

Following this morning’s StatsCan report that Canada is the 11th country in the world to report GDP above $1 trillion dollars, Cooper’s address kicked off the CAFP conference on an economic high note.