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Global markets on rise Global markets are picking up this morning, buoyed partly by President Barack Obama's proposals in last night's State of the Union address to juice economic growth and create jobs. Also putting investors in a better mood were stronger signals from Europe.
Investors are also awaiting the outcome of the two-day meeting at the Federal Reserve, where policy makers on the rate-setting panel, the Federal Open Market Committee or FOMC, were expected to make no major changes.
"Markets are in a good mood this morning with U.S. equity futures pointing to a firm open ahead of more earnings results and this afternoon's FOMC announcement," said BMO Nesbitt Burns economist Robert Kavcic.
"President Obama delivered his State of the Union address last night and among the more concrete highlights were a proposed five-year freeze on domestic, non-security related spending that would save $400-billion over the next decade, and a call to lower corporate tax rates along with the closing of tax loopholes."
Obama proposals deemed vague Some economists believe President Barack Obama's proposals don't go far enough, and are vague at this point. Here's what some are saying today:
"I would think that any bond investor who watched President Obama's State of the Union address last evening would have been disappointed. One likely came away thinking that the speech set a low bar on deficit reduction targets, and deflected much of the attention away from deficits by going back to the future in attempting to find a common cause against which to rally national economic pride after the dent it has taken in recent years ... That debate will have to become more focused on a credible long-run deficit reduction plan with some meat to it, and less focused on pie-in-the-sky ambitions." Derek Holt, economist, Scotia Capital
"What really matters from our point of view is whether this is a credible basis for fiscal consolidation, and one that can find agreement from both sides of the U.S. political spectrum. Considering that we are essentially in an election cycle, it is much more likely that the president's opponents seize upon the proposals as too little or incorrectly targeted. It wouldn't make political sense for opponents to support a proposal and allow the President to score points moving into an election, meaning that whatever chance the US. .has at legitimate fiscal consolidation will have to wait until the next government (whatever its political leaning) is in place." Sacha Tihanyi, currency strategist, Scotia Capital
"Plans for a $400-billion deficit reduction over 10 years was seen as soft in the context of the size of the deficit. Meantime, there was some disappointment for [U.S. dollar] bulls that Obama offered nothing concrete in regards a corporate tax holiday, asking only that the Democrats and Republicans simplify the system and use the savings to lower the corporate tax rate." Sue Trinh, senior currency strategist, Royal Bank of Canada
"The bond vigilantes have not yet woken up in the U.S. in the way they have in the euro zone. Unless the U.S. addresses this fiscal problem, we're going to see a train wreck." Nouriel Roubini, co-founder and chairman of Roubini Global Economics, to Bloomberg Television
- Despite mood for cuts, Obama sees activist role for government
- Obama looks to stir Americans with vision of future
CP profit, revenue rises Canada's railways continue to pick up. A day after Canadian National Railway Co. reported a stronger outlook and boosted its dividend, Canadian Pacific Railway Ltd. today posted a boost in fourth-quarter profit and revenue.
CP earned $185.8-million or $1.10 a share compared to $146.2-million or 87 cents a year earlier. Revenue climbed 13 per cent to $1.3-billion.
"We continue to see strong demand for rail service across all lines of business," said chief executive officer Fred Green.
Boeing profit dips Boeing Co. today posted a dip in fourth-quarter profit and warned of an impact from the delays in its Dreamliner project.
Boeing earned $1.16-billion (U.S.) or $1.56 a share, down from $1.27-billion or $1.75 a year earlier. Revenue slipped to $16.6-billion.
Boeing also projected earnings-per-share profit this year of between $3.80 and $4, which Reuters said is below analysts' estimates.
"We're entering 2011 well-positioned for growth, with a large order book, increasing global demand for commercial airplanes, greater clarity around our domestic defense outlook, and significant international defense sales opportunities," said chief executive officer James McNerney.
How are we doing so far? Boeing's earnings may have been on the downer side, but fourth-quarter earnings season is shaping up well so far.
"With about one-fifth of S&P 500 companies reporting, 72 per cent have beaten earnings expectations, which is down slightly from the 76-per-cent pace seen in the prior quarter," said BMO Nesbitt Burns economist Robert Kavcic.
"The technology, industrial and commodity sectors have been especially strong, while financials have been mixed, with just 63 per cent beating estimates. Growth is now pegged at 34 per cent year-over-year for the quarter, up from 31.2 per cent year-over-year in [the third quarter of 2010]. It's still too early to discern any trends in Canada, but one thing we did see yesterday was a 20-per-cent dividend hike by CN Rail - that's a theme that should continue as the earnings season plays out."
Wal-Mart expands in Canada Wal-Mart Stores Inc. is expanding its super centres to Quebec and Manitoba.
Wal-Mart Canada said today it would open 40 more such stores in Canada this year in a $500-million expansion. The plan, it said in a statement, would mean more than 9,000 jobs in the stores and in construction.
When all is said and done, Wal-Mart will have 333 stores in Canada within a year, 164 of them super centres.
Toyota in huge recall Toyota Motor Corp. today launched another big recall, this one for almost 1.7 million cars and most of them in Japan.
While there have been no accidents, today's recall relates to issues that could cause fuel to leak.
Boyd Erman's Morning Meeting The swag bag from the World Economic Forum has everything an ambitious executive needs to hobnob in the mountains of Switzerland, Streetwise columnist Boyd Erman reports today.
In Personal Finance today
Pay down debt or save for retirement – with so much conflicting advice in the marketplace, it can be hard to figure out which strategy is right for you.
Real estate expert Don Campbell answers the top Globe and Mail reader questions.
How does it compare to other kinds of investing, or to the interest you save by paying off your mortgage more quickly?
From today's Report on Business
- From RIM's PlayBook, the picture brightens
- Shale-gas industry goes Hollywood
- British economy nosedive a bad omen
- TMX Group opens London office
Today in Globetechnology