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Stories Report on Business is following today:
Canadian Tire bids for jersey
Canadian Tire Corp. says it plans to bid $200,000 tomorrow for Paul Henderson's jersey from the famous 1972 Canada-USSR series. The retailer said late today it will put its opening bid in with the auction house tomorrow.
"The jersey is currently up for auction with international bidders vying for the priceless piece of Canadian history," the company said. "If successful in securing the jersey for Canadians, Canadian Tire will take the jersey on tour in every corner of the country through its 480 store network and make it available for the public to see. Following the cross-country tour, Canadian Tire will offer the jersey on a long-term loan basis to leading sports and hockey museums including the Canadian Sports Hall of Fame and the Hockey Hall of Fame for the benefit of all Canadians."
Canada won the Summit Series four games to three, with one tie.
Bidding closes June 22, and, said Canadian Tire Retail president Mike Arnett, "that is Canada's hockey jersey - and we want to help bring it home for the enjoyment of all Canadians."
Moody's and the chocolate assembly line
Those of us of a certain age, and those who love reruns of I Love Lucy, may remember Lucy's antics at a chocolate factory, when she couldn't keep up with the assembly line. Was this what it was like for analysts at Moody's Corp. in the run-up to the financial crisis? That was the scene painted today at a hearing of the Financial Crisis Inquiry Commission, where pressure from executives bent on higher profits and greater market share was likened to the famous episode from the 1950s-era TV sitcom. Asked by chairman Phil Angelides whether he felt like Lucille Ball's character on the speeding line of chocolates, former Moody's managing director Eric Kolchinsky responded that "yes, we had a conveyor belt."
Mr. Kolchinsky, now a so-called whistleblower, told the hearing in New York that "it was very clear to me that my future at the firm and my compensation would be based on the market share" and there was little time to study some deals before they closed. Mr. Angelides referred to Moody's as a "Triple-A factory."
In prepared testimony to the commission, Moody's chief executive officer Raymond McDaniel said the agency "is certainly not satisfied with the performance" of ratings at the time and has overhauled its process. Warren Buffett, whose Berkshire Hathaway Corp. is the agency's biggest shareholder, defended the company and its CEO, saying the company was just one of many in the United States who missed the signs of a housing bubble. Read the story
EU moves on ratings agencies
The EU proposes stepping up its oversight of credit rating agencies as part of a wide-ranging plan that would govern the financial sector. The EU executive today proposed that a new regulator not only monitor the agencies, but also be equipped with powers to punish them if they don't adequately give their reasons behind downgrades. European governments have expressed concerns over cuts to sovereign ratings that have roiled financial markets and driven up borrowing costs. The EU also wants changes to how banks are government by their boards and shareholders, and a new tax on banks. Read the story
Food stamp use rises in U.S.
The number of people using food stamps in the United States has topped 40 million as unemployment continues to dog America's recovery from the recession. The average monthly benefit for individuals under the Supplemental Nutrition Assistance Program stood at $133.87 in March, and $298.96 for families, data released this week shows. While the U.S. economy has been climbing back, the jobless rate continues to hover at just shy of 10 per cent. Until the fall of 2008, the group was known as the Food Stamp Program.
Dollar to rebound, Scotia says
The Canadian dollar has been driven down by global events but will see parity with the U.S. currency again by the fourth quarter of the year and rise slightly through 2011, Scotia Capital says in a report today. The loonie will be worth $1.03 U.S. by the fourth quarter of next year, it said in a foreign exchange outlook. The dollar's shine "might have been temporarily tarnished, but parity is still on the horizon," currency strategist Camilla Sutton wrote.
Projections for global growth, hurt by Europe's debt troubles and the potential impact of government austerity measures, have affected oil prices, which in turn help drive the loonie, but the outlook is still reasonably robust, she said. And while there are "hurdles" ahead for Canada's economy, it is still well placed. As well, the Bank of Canada has begun raising interest rates, with its first move yesterday, which also should help boost the currency. The dollar rose 1.42 cents today to close at 96.30 cents U.S.
Markets bet on next rate hike
Mark Carney's quarter-point interest rate hike yesterday was ... so yesterday. Markets are now looking ahead to the next Bank of Canada meeting July 20 and their odds are 36 per cent of another increase in the benchmark overnight rate of one-quarter of a percentage point, which would bring it to 0.75 per cent. Yesterday, the central bank made its first move since the financial crisis and recession, becoming the first among the G7 to do so. But it also sent a signal that it would take into account the turbulence in the markets and further economic data before hiking again.
How will rate hike be felt?
The hike, which still holds the benchmark rate at an exceptionally low 0.5 per cent, was largely symbolic and the economy won't feel it, Scotia Capital economists Karen Cordes Woods and Derek Holt said today, citing two reasons.
"One is that longer borrowing costs have fallen in offsetting fashion, and has [the Canadian dollar]" they wrote. "Forget the spread watchers, it's the yield that matters to main street, including main street USA where the all-important 30-year fixed mortgage rate fell from a peak of 5.25 per cent in April to the 4.9-per-cent mark today driven by safe-haven seeking into government bonds."
Also, they said, "financial innovation" in Canada gives borrowers much more control to adjust principal repayment schedules in response to rate changes. That has developed since the mid-1990s, beginning with the popularity of revolving lines of credit that see the borrower determine the principal repayment schedules, and has since spread.
"Households have more ability than ever to offset modest rate changes with modified principal repayment schedules than ever before," they said. "Real tightening in this cycle will only begin when the overnight rate has climbed much further."
Read
Carney plots cautious rate path
Boyd Erman: Kiss the days of easy interest rate forecasts goodbye
Rob Carrick: Time to get serious on paying down debt
Video
Investor Roundtable: Sizing up the rate hike
Interactive
Behind the Bank of Canada's interest rate decision
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Bombardier profit falls
The market for business jets is beginning to stabilize after the slump, Bombardier Inc. said today as it topped analysts' estimates, though only just, with first-quarter profit. The aerospace and rail manufacturer said profit in the quarter dipped 3 per cent to $153-million (U.S.) or 8 cents a share from $158-million or 9 cents a year earlier. Revenue also slipped to $4.25-billion from $4.47-billion. "Key indicators in the business jet market are showing signs of stabilization and our level of business aircraft cancellations has substantially decreased," said chief executive officer Pierre Beaudoin. Read the story
BP shares slide, regain ground
Shares of BP PLC fell today before regaining ground amid speculation the energy giant at the heart of the Gulf of Mexico oil spill may be a takeover target. BP has lost billions in market value, and yesterday the U.S. government launched criminal and civil probes related to the spill in the Gulf, though it did not name the players that would be investigated. BP hit another snag today when a diamond-edge saw stuck in a pipe on the well. Analysts are now speculating abut the company's future amid mounting costs of the efforts to contain the spill and the potential for huge legal costs.
"Battered and bruised BP took another blow to the body today following the announcement of a criminal investigation into its operations surrounding the [Gulf of Mexico]oil spill," Yusuf Heusen, senior sales trader at IB Index, said before the stock climbed back. "As well as the already extensive financial hit that BP has taken - with more to come if further litigation goes ahead - the oil giant is now also in real danger of having irreparable harm done to its reputation."
Read
Latest effort to halt Gulf of Mexico oil leak hits a snag
Commentary: Why BP's Tony Hayward must go
U.S. probe, surging costs threaten to sink BP
House prices to dip next year, CREA says
House prices will hit a record by the end of this year, but lower prices in Ontario and B.C. will drag down the national average in 2011, the Canadian Real Estate Association said in a new forecast today. "With interest rates soon expected to rise, Canada is widely believed to be entering a typical demand-driven downturn due to recent price increases and rising interest rates, CREA's chief economist Gregory Klump said. Read the story
Greece begins asset sales
Greece's embattled government is stepping up asset sales in a bid to raise €3-billion. Finance Minister George Papaconstantinou told reporters today that the country, which sparked Europe's debt crisis, is selling stakes in its postal service and water and railway companies in a move to bring in €1-billion a year for the next three years. Read the story
Goldcorp sells gold-silver project
Goldcorp Inc. is selling a gold-silver project in Mexico for about $500-million in cash and stock, the second sale of a smaller asset in as many months. The sale to Vancouver-based Mala Noche Resources, an exploration company, will allow the miner to focus more on its bigger mines. Today's deal will see Goldcorp take a 30-per-cent stake in Mala Noche, which will be headed by former Iamgold chief executive officer Joseph Conway. Read the story
Second Cup to raise price of small cup
The Second Cup coffee chain is raising the price of a small cup of coffee by 5 cents in the fall, but other prices will probably remain the same, the chief executive of Second Cup Income Fund said today. Stacey Mowbray said after her annual meeting in Toronto that it will mark the first price hike in more than a year, The Canadian Press reported. Tim Hortons Inc . and Starbucks have already raised some prices. Ms. Mowbray said the chain did not bump prices higher during the recession despite higher costs, but the economy is now improving. "We have really held tight and our overall pricing has been less than a 1-per-cent increase across the country in the last 18 months." Read the story
Euro down, champagne up
There is an upside to the euro's downside. The chief executive officer of Taittinger said yesterday the fall in the currency should help boost exports of champagne and lead to tourists spending more in Europe, though he expressed concerns over the continent's debt troubles. "But we will always have the time to make love and drink champagne," Pierre-Emmanuel Taittinger told a Reuters summit on luxury goods. "... Today, life is very tough for all of us. There's stress. We are under pressure, we have to fight, we have to be competitive. We have to face all the difficulties of life. Nothing is better than a glass of champagne to forget things for a few minutes."
From today's Report on Business
Global imbalances threaten recovery
B.C. uses Web to fight online fraud
Profit power in GDP data bodes well for stock market
And, read our G8/G20 Global View summit blog by Kevin Carmichael