• People Advantage: Canada is a nation of intelligent, educated workers, ranking #1 in the OECD in higher education achievement.
• Business Environment Advantage: The Economic Intelligence Unit has rated Canada the #1 place to do business in the G7 for the next five years.
• Economic Advantage: Canada is better placed than many countries to weather the global financial turbulence and worldwide recession.
• Tax Advantage: Canada offers businesses low tax rates, boasting the lowest payroll taxes among the G7 countries.
• NAFTA Advantage: Canada ’s NAFTA advantage gives investors access to more than 443 million consumers and a combined GDP of more than US$15.4 trillion.
• The Asia-Pacific Gateway and Corridor Initiative (APGCI): Take advantage of Canada’s strategic location as the crossroads between the North American marketplace and the booming economies of Asia

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Canada’s economic recovery is likely to be far stronger than markets anticipate, a Bay Street economist forecast Wednesday, indicating that a “burst” of 10% growth is possible in the coming quarters.

The prediction from Sheryl King, chief economist and strategist at Merrill Lynch Canada, comes amid fierce debate over what shape the recovery will take following the deepest recession since the Second World War.

“Markets think we are going to get this gradual rise in growth, and then everything is going to be fine,” Ms. King said in an interview. “But business cycles never end like that. You usually get some pop in growth.”

Those who argue that a strong rebound, rather than a slow, weak recovery, is in the offing were handed a key piece of evidence Wednesday when major U.S. credit-card providers, led by American Express Co., reported defaults and delinquencies were less than expected in June. This may signal that U.S. consumers’ credit positions — up until now, the missing piece in the U.S. recovery puzzle — are not deteriorating as rapidly as feared, despite rising unemployment and the continuing housing slump.

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The Bank of Canada will stick to its conditional pledge to keep its benchmark interest rate at its current near-zero level through the second quarter of next year, most Canadian primary securities dealers said on Friday.

Eight of Canada’s 12 primary dealers polled by Reuters predicted the slow pace of economic recovery will prevent the Bank of Canada from lifting its key interest rate above the current 0.25% level, an historic low, until after the first half of 2010.

“Given the state of the economy and the fact that we expect the recovery to be very mediocre and modest, there is really no need to tighten any earlier than that,” said Carlos Leitao, chief economist at Laurentian Bank Securities in Montreal.

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Teck said last week it sold a 17.2 percent equity stake to state-owned China Investment Corp in a deal that allows the Canadian miner to pay down its massive debt while expanding China’s portfolio of commodity investments.

The deal underscores how deep China’s pockets are at a time when many sources of credit and financing have dried up in the global recession, even for the biggest miners.

‘Most people thought China would take advantage of this dip in commodity prices and, because they’re the only ones with money, take advantage of this financial situation we are in. They have come through big time, be it oil and gas, or any commodity you can think of,’ David Davidson, an analyst with Paradigm Capital in Toronto, said in an interview after the Teck deal was announced.

Teck is a major producer of copper, metallurgical coal, zinc and gold, all commodities sought by China.

‘I think what they are looking for is distressed opportunities … Companies who have a strong resource base that are suffering because of the lack of liquidity in the market,’ said Jack Azimi, managing director of Foundation Markets, a small investment firm in Toronto.

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Companies issuing speculative-grade debt are the riskiest borrowers in the corporate credit universe because they are most likely to default on their debt. They have all sorts of bad habits such as high levels of indebtedness and highly volatile earnings. At the end of 2008 when the U. S. financial sector was collapsing, investors bailed out of this sector fearing heavy defaults and losses.

Those fears were realized as speculative-grade borrowers have been squeezed in a vise — on one side by falling earnings and on the other by contracting credit. The old story that credit is easy to get — until you really need it, best describes the plight of these companies.

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“By investing in the Clean Energy Fund, our Government is encouraging new technologies now to help protect and preserve our environment for future generations,” said the Honourable Lisa Raitt, Minister of Natural Resources. “Not only will this funding protect our long-term energy security, but this additional stimulus creates high-quality jobs for Canadians at a time when they’re most needed.”

The Fund invests $850 million in technology development and demonstration. This includes $650 million for large-scale carbon capture and storage (CCS) demonstration projects and $200 million for smaller-scale demonstration projects of renewable and alternative energy technologies.

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The Canadian dollar is cheap (in PPP terms) versus the U.S. dollar. Canada’s banks are strong and more conservative than ours and its government is conservative and sensible. And unlike the United States, Canada is an energy exporter. In fact, Hydro-Quebec is the world’s largest producer of hydroelectric power.

Here then are three top Canadian stocks you should buy now to maximize your returns in 2009.

Top Canadian Stock #1

In a recent interview posted at Kudlow’s Money Politics, Canadian Prime Minister Stephen Harper told readers, “We have, I think, the only banks in the western world where we’re not looking at bailouts… We haven’t got any TARP money… We don’t have a Fannie Mae or Freddie Mac equivalent mucking around in the system.”

See any difference here from the Barney Frank, Chris Dodd, Hank Paulson, Captain Geitner approach?

Bank of Nova Scotia (BNS) is my number-one Canadian bank stock. Founded in 1832, the Bank of Nova Scotia got off to a rough start. None of the board members really knew anything about banking, and the man chosen to manage the bank swindled it to the tune of C$315,000. Not a small sum in 1844. But Bank of Nova Scotia bounced back.

Today, Bank of Nova Scotia is one of Canada’s “Big 5″ banks. For 2008, Scotia Capital, Bank of Nova Scotia’s investment banking arm, was named Best Investment Bank in Canada and Best Investment Bank globally in the infrastructure sector by Global Finance magazine.

Buy Bank of Nova Scotia below trend.

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Unlimited overtime pay was just one of the many perks John Halbauer enjoyed as a welder during Alberta’s super-sized energy boom.

That’s disappeared, along with 11 of the 25-year-old’s 13 co-workers who got laid-off in January. “I was worried. I didn’t know if I was going to have to move back home or what,” the Kimberley, B.C., native said.

His employer, Harley’s Welding Inc., is located in Nisku, an industrial park south of Edmonton that caters to the province’s notoriously unpredictable oil and gas industry. Most companies were hit hard when the global economic crisis and plummeting energy prices side-swiped Alberta late last year.

But in recent weeks, Mr. Halbauer and many others in the province have noticed that the economy is slowly improving, especially in the northern half of Alberta.

“We are almost really busy. Work is rolling in,” Mr. Halbauer said.

Indeed, a run-up in oil prices and recent news that two oil sands projects, including Imperial Oil Ltd.’s $8-billion Kearl mine outside Fort McMurray, are going ahead has buoyed many.

But the optimism is guarded, and no one is predicting another unprecedented boom for Alberta, once the country’s hottest economy.

Earlier this year, Statistics Canada estimated that oil-sands spending will drop to $13.2-billion in 2009, down more than 30 per cent from last year. Billions worth of capital projects have either been scrapped or put on hold.

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Mark Carney, the Bank of Canada governor, suggested Thursday the markets might be premature in their enthusiasm about improving economic conditions, and are underestimating how long it will take for the global economy to heal.

His remarks, made in Montreal at the International Economic Forum of the Americas, came after a speech in which he went against the prevailing wisdom on economic prospects, judging by how markets have moved positively as of late.

“We shouldn’t overplay at this stage the green shoots. And we shouldn’t underestimate the scale of the challenge,” he told reporters at a news conference. “Private-sector demand has retreated and it is not imminent that it will come back with strength.”

The warning about feeble economic growth came even though Mr. Carney, in a speech to hundreds of key global policymakers, said the U.S. economy – which was the centre of the economic storm – “will likely” post positive economic growth in the third quarter, thereby ending that country’s worst recession in the post-Second World War period. Previously, the central bank had said the U.S. economy would start stabilizing in the second half of 2009,

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Day is pushing his cabinet colleagues for a larger chunk of the $50 million the government sets aside annually in the budget under the Global Commerce Strategy.

Internal and external critics, including some of the provinces, have bemoaned Canada’s weak or outdated image abroad.

“We are getting the cue from people outside the country who are saying that Canada should market itself more and get the message out about what a good place this country is in which to work and invest and to live,” Day said in an interview.

Some of the components of a larger visibility push are already in place.

The Department of Foreign Affairs and International Trade has been bringing groups of foreign journalists to Canada, paying for their flights, accommodations and giving them a daily allowance.

While they’re here, the reporters get special access to high-profile figures such as Day, Finance Minister Jim Flaherty, Bank of Canada governor Mark Carney and the heads of the major banks.

The media coverage pays off in spades, says Day.

One recent junket produced positive coverage in France’s Le Figaro and Belgium’s De Tijd, with headlines like, “Canadian Lessons for Belgium,” or “The Canadian banking sector brags it’s one of the most solid in the world.”

“You’re not buying the ads, you’re subject to an array of questions from a reporter, which is fair game,” said Day. “But we think we’ve got a fair message that stands up to those investigative questions.”

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