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BP shareholder losses mount Shares of BP PLC sank again today as investor concerns continued to grow. Since the Gulf of Mexico oil spill began in late April with the explosion on the Deepwater Horizon drilling rig, the energy giant's market capitalization has been cut by about $100-billion (U.S.). And, The Wall Street Journal reports, one analyst has warned the comapny needs to sell stock to assure counterparties it's still healthy. BP said today its spill-related costs have now reached $2.35-billion, and there also fears that hurricanes in the region could hamper containment efforts. Read the story
Separately today, the U.S. Internal Revenue Service put out a guidance notice to remind people affected by the spill how tax law affects them. "BP payments for lost income are taxable in the same way that the wages or business income these payments are replacing would have been," the IRS said. "The law treats compensation for lost wages or income differently for tax purposes than compensation for physical injuries or property loss, which generally are nontaxable."
BP has set up a $20-billion fund in the U.S. in the wake of the spill.
Related: Gulf spill plays havoc with real estate
Dollar rises above 96 cents The Canadian dollar rose 0.72 of a cent today to close at 96.53 cents U.S. as oil shot past $78 a barrel. The loonie has been bounced around by the market turmoil generally related to Europe's debt troubles, but is deemed sound by international investors who see the Canadian economy strong and Ottawa's fiscal position sound.
"As long as commodity prices stay fairly solid, you'll see the Canadian dollar perform well, just based on the fact that their books are in order," Fabian Eliasson, head of U.S. currency sales at Mizuho Financial Group Inc., told Bloomberg News. "Last year when you were predicting who would come out of recession fastest, a lot of people looked at Canada. They didn't have the same problems we did."
CRA extends TFSA confusion deadline The Canada Revenue Agency is extending its deadline for the thousands of people who may have unwittingly put too much into their Tax Free Savings Accounts, and could face penalties because of it. Misunderstandings over the TFSA limits led to some 70,000 people receiving notices from the CRA telling them they owed penalty taxes because they overcontributed. The government says it will be "as flexible as possible" in cases of true misunderstanding, will review the issue on a case-by-case basis and, where appropirate, waive the penalties. Initially, Ottawa set a deadline of June 30 for those who received notices to provide more information. Today, it moved the deadline to Aug. 3. Read the story
Related: Rob Carrick on the rules
Toronto braces for G20 summit Call it The Anarchists' Convention. With apologies to author John Sayles, and by no means to belittle legitimate dissent and protest, but with so many competing agendas both outside and inside the G20 summit security fence, there has to be some anarchy.
Outside the fence, there are a host of protest issues, including poverty, the environment, labour, First Nations and minorities, mothers' rights, fair trade, energy security, health care, gender equality, and homosexual and transsexual rights. There are plans for two large demonstrations today and tomorrow near the site in downtown Toronto. There might even be some anarchists.
Inside the fence, there are a host of divisive issues. The Americans don't want the Europeans to slash and burn. The Europeans don't want other countries throwing fiscal caution to the wind, but they do want a bank tax. The Chinese want everyone to shut up about the yuan. And the Saudis want to keep the price of oil high.
The tensions dividing the summit leaders - key are stimulus spending versus austerity, and financial reform that includes a new global bank levy - are still running high. President Barack Obama reiterated yesterday that governments must keep the global recovery going. Europe's argument, led by German Chancellor Angela Merkel, who has pledged to cut €80-billion over four years, is that growth will be stimulated by fiscal prudence. "There are others who are not yet so convinced of this exit strategy," she said yesterday.
CMC Markets analyst Michael Hewson raises the spectre of the U.S. becoming odd man out in the economic debate.
"President Obama and U.S. Treasury Secretary Timothy Geithner have both suggested that Germany was taking risks with growth by announcing budget cuts in response to the debt crisis in Europe and suggested that Germany as well as the U.K. should do more to stimulate growth," Mr. Hewson said. "Angela Merkel dismissed those suggestions out of hand in a TV interview saying that Germany was doing more than other countries. While in the U.K. this week's austerity budget, to head off a potential debt crisis, has split opinion, but in the main has found favour with ratings agencies and bond markets alike. All the while America could well start to find itself a little isolated as the only country in favour of further stimulus measures."
Read
- Europe debt crisis shows rifts in G20
- Streets quiet as Toronto braces for summit weekend
- Our G8/G20 coverage
- Kevin Carmichael's G8/G20 Global View summit blog
- MarketWatch.com: G20 unity fades along with global crisis
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Yuan reaches new high As the financial reform deal in the U.S. helps set the stage for the summit, so does the fact that China's currency, a hot issue in a post-recession environment, surged today to a new high against the U.S. dollar. The People's Bank of China, making good on its promise to allow the yuan to appreciate, set the official level of the currency at 6.786, up 0.3 per cent from yesterday. Many countries, notably the United States, want Beijing to allow more flexibility in the currency, though yesterday President Barack Obama said it's too early to tell whether its promise will be enough in the longer term.
China's Canadian interest grows China's interest in Canada, and Canadian energy, is growing. On the day EnCana Corp. announced a deal with China National Petroleum Corp., President Hu Jintao said yesterday he wants to double trade with within a few years. "I have agreed with Prime Minister Harper that we should take active measures to make our countries' two-way trade volume reach a target of $60-billion by 2015," Mr. Hu said after a meeting with Mr. Harper in advance of the G20 summit.
Separately, EnCana unveiled a memorandum of understanding with CNPC that would see the two companies negotiate a joint-venture deal to develop EnCana natural gas holdings in the Horn River, Greater Sierra and Montney plays in northeast British Columbia.
"Upon completion of an agreement, [EnCana]would maintain operatorship of all developments (Montney, Horn River), with CNPC investing capital in order to gain an interest in the projects," said UBS Securities Canada analyst Matt Donohue. "By reducing the capital commitment, we expect [EnCana]will be able to generate stronger project returns while maintaining the goal of doubling corporate production over the next five years."
Read
- B.C. shale gas gets jump-start with big land auction
- Chinese president's visit a hopeful sign for strained Canadian relationship
U.S. lawmakers agree on bank reform After a marathon session, U.S. politicians this morning reached a deal on legislation paving the way for a sweeping overhaul of the banking sector, the most widespread change since the 1930s. Congressional negotiators struck a deal that will now go to the House and Senate for final votes, and then to President Barack Obama. The reforms include the so-called Volcker rule, named for former Federal Reserve chief Paul Volcker, which bars banks from using their own funds for certain trading. It would also set rules that affect how banks can trade certain derivatives, forcing them to do so through subsidiaries. "This is about as important as it gets, because it deals with every single aspect of our lives," said Senator Christopher Dodd, chairman of the Senate Banking Committee. Read the story
ICANN nears approval for .xxx The Internet Corporation for Assigned Names and Numbers is now looking at creating a .xxx for pornography sites. The decision by ICANN, which earlier rejected such a move, means that suffix could join others like .com and .ca within about six months after some 10 years of fighting, The Associated Press reports from Brussels. The decision, if made final, won't force sites to adopt the suffix, and some fear they'd prefer to keep the .com anyway. But, said Stuart Lawley, the CEO of ICM Registry LLC, the company at the heart of the issue, "people who want to find it know where it is, and people who don't see it or want to keep it away from their kids can use mechanisms to do so." The pornography industry is said to be worth about $13-billion (U.S.) a year.
Magna postpones buyout vote Magna International Inc. said today it is postponing a shareholder vote on its controversial plan to buy out founder Frank Stronach's multiple-voting shares. The announcement follows an order by the Ontario Securities Commission to provide more information to investors before a vote on the $863-million deal. "We intend to work cooperatively with the OSC staff to address the commission's concerns and comply with the OSC's additional disclosure requirements," Vincent Galifi, chief financial officer of the auto parts giant, said in a statement. Read the story
RIM shares sink Research In Motion Ltd. shares sank today on the BlackBerry manufacturer's first-quarter results yesterday. RIM posted a 20-per-cent jump in first-quarter profit but a 24-per-cent increase in sales fell shy of analysts' estimates. Profit rose to $768.9-million (U.S.) or $1.38 a share from $643-million or $1.12 a year earlier. Sales climbed to $4.24-billion, short of the $4.35-billion analysts had projected. RIM also projected revenue in the current quarter of $4.4-billion to $4.6-billion and per-share profit of $1.33 to $1.40. Read the story
Related: RIM ships record number of smart phones
U.S. GDP lower than believed The U.S. Commerce Department today revised its measures of the economy in the first quarter as consumers spent less than originally believed. The government brought down its estimate of GDP growth to 2.7 per cent from the earlier reading of 3 per cent. Read the story
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