iPhoneLaura Leyshon
Stories Report on Business is following today :
Greece rescue talks begin
Greek officials are meeting today with the EU, the European Central Bank and the International Monetary Fund to discuss details of a support package that will affect not only the debt-burdened country but the currency union as a whole. The talks, expected to run for days, were delayed from Monday as Europe closed much of its airspace because of the volcanic ash from Iceland dusting the continent. That delay alone caused more anxiety in the markets and pushed up Greek borrowing costs to prohibitive levels. So far, countries in the euro currency zone have promised €30-billion, with up to €15-billion more from the IMF. Greece's troubles alone have pummelled the euro and led to questions about the future of the monetary union. The talks come one day after the IMF warned in a new report that rising government debts pose a threat to the economy.
Read
Greece starts talks on potential aid
Greek yields hit new highs amid bailout fund fears
IMF warns governments on surging debts
Neil Reynolds: Telltale signs of a coming sovereign debt crisis
Flaherty says he will oppose bank tax
Finance Minister Jim Flaherty is gearing up to fight a growing campaign for a global bank tax. Mr. Flaherty has oft stated his opposition in the face of strong support in other countries such as the United States. The finance minister says he doesn't want to see Canada's banks, which emerged from the crisis relatively unscathed and are now poster children for financial systems, punished. "Canada will not go down the path of excessive, arbitrary or punitive regulation of the finance sector," Mr. Flaherty said today at a conference in Toronto. Read the story
EnCana posts solid quarter
EnCana Corp. , the country's biggest natural gas producer, posted solid first-quarter results this morning, with hedging gains helping to boost profits to $1.48-billion (U.S.) or $1.97 a share, well above what analysts had forecast. That compares to $477-million or 63 cents a year earlier calculated on a pro-forma basis given the breakup of the company into two businesses. Hedging gains of $912-million were a big part of that. The company said the quarter was solid, though chief executive officer Randy Eresman noted that the "current natural gas price environment is unsustainably low given what it costs to balance a normal market."
Added Mr. Eresman: "Therefore, we plan to invest based on what we believe to be a more sustainable long-term price. Over the long term, we are confident that we can profitably grow production as we work to capture market share from higher-cost producers."
EnCana broke into two companies late last year, creating Cenovus Energy Inc. to hold oil sands and refining assets. Cenovus reports first-quarter earnings next week. Read the story
Auto makers on comeback trail
Several of the world's leading auto makers are reporting more optimistic signs today.
General Motors Co. said it has now repaid more than $8-billion (U.S.) in loans from Canada and the United States, which chief executive officer Ed Whitacre said is a sign of recovery. The Canadian and Ontario governments provided $9.5-billion in aid to GM, $1.4-billion of it in loans, while the United States gave $52-billion, $6.7-billion of it in loans. The loan repayments are far ahead of schedule and, Mr. Whitacre wrote in The Wall Street Journal, "nobody was happy that GM needed government loans - not the governments, not the taxpayers and, quite frankly, not the company. We believe we can best thank the citizens of the U.S. and Canada by making sure that their investments are hard at work every day, building high-quality, fuel-efficient vehicles."
Chrysler Group LLC, meanwhile, said this morning it has posted losses of almost $4-billion since emerging from bankruptcy protection last June, but notable was a first-quarter operating profit that chief executive officer Sergio Marchionne, who is also CEO of Fiat, pointing to as a sign the auto maker is coming back to life. Chrysler posted an operating profit of $143-million in the first quarter and, The Globe and Mail's Eric Reguly reports from Fiat's investor day in Torino, it's on track for full year revenues of $40-billion to $45-billion.
Volkswagen AG also posted a solid first quarter today as its operating profit more than doubled from a year earlier to €848-million. Global sales surged 24 per cent in the quarter from a year earlier. Europe's biggest automaker said net profit jumped to €473-million from €243-million a year earlier.
Morgan Stanley profit surges
The major U.S. banks continue to bounce back strongly from the financial crisis. Morgan Stanley said today its first-quarter profit came in at $1.8-billion (U.S.) or 99 cents a share, a turnaround from the loss of $177-million or 57 cents a year earlier. Revenue gains from fixed income trading helped drive revenues to $4.1-billion from just $1.4-billion. Several U.S. financial institutions, including Goldman Sachs Group Inc. and JPMorgan Chase & Co. , have reported big gains from trading in the quarter. Read the story
Apple stock on the rise
Apple Inc. stock is rising this morning after reporting a blowout quarter when markets closed yesterday. The technology giant is winning rave reviews today from analysts, who note the strong demand for its iPhone as shipments in the quarter doubled to 8.75 million. "Apple continues to increase its market share in the global smart phone and computer markets and is maintaining its sizeable lead in the MP3 market," said Canaccord Adams analyst Peter Mysek, who raised his 12-month price target on the stock to $325 (U.S.). "We expect the iPad and the upcoming refresh of the iPhone to only add to the company's growth."
Like the iPod before it, the iPhone is a huge success. It's apparently sexy too. A survey of 1,500 women by a British mobile phone company showed 54 per cent of women would be likelier to date a man with an iPhone. One can only imagine why the company conducted such a survey but it also noted, according to Bloomberg News, that downloads of dating applications for smart phones topped 250,000 last year.
Read: Apple blows past Street targets
Why the dollar will stay strong
A funny thing happened on the way to the recovery: Canada pulled so far ahead that Canadian interest rates are now expected to run higher than those in the United States for at least several months. That, in turn, should serve to draw even more money into Canadian debt markets and keep the Canadian dollar around parity with its U.S. counterpart, or even higher. The Bank of Canada gave the dollar another boost yesterday as it signalled that its benchmark overnight rate, now at 0.25 per cent, could rise as early as the beginning of June. Economists expect the key rate will continue to rise, reaching about 1.5 per cent by the end of the year.
Whether it moves in June or waits until July, the Bank of Canada will boost rates far earlier than the Federal Reserve, whose target is now near zero, keeping a spread running for quite some time.
"While growth has been stronger than expected in both countries, that's where the similarities end," said BMO Nesbitt Burns senior economist Sal Guatieri. "The housing market remains shaky in the U.S. but red hot in Canada. Bank credit continues to shrink in the U.S., while growing strongly in Canada. The massive slack in the U.S. economy may take years to absorb, compared with just one year in Canada (according to the bank's projection). Core inflation is falling in the U.S. but not in Canada. All in, we still expect the Fed to stand pat until November."
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Rate expectations send dollar soaring
At the Bank of Canada, learning to like parity
From today's Report on Business
David Rosenberg: Investors should beware the coming U.S. tax bill