Stories Report on Business is following today :
Scotiabank tops estimates
Bank of Nova Scotia this morning wrapped up what can only be seen as a stellar quarter for the country's major banks. Scotiabank topped analysts' estimates with a first-quarter profit of $988-million, up 17 per cent from a year earlier. Its Canadian banking operations saw record profits rise 28 per cent to $560-million. But for Royal Bank of Canada , the major banks have handily surpassed the expectations of analysts, and RBC's earnings were nothing to sneeze at. "The Canadian banks reported tremendous earnings," money manager Barry Schwartz told Bloomberg. "This tells me that the Canadian economy is really recovering."
Barclays Capital analyst John Aiken added in a research note: "We were a little surprised that Scotiabank's earnings did not exceed consensus by a higher margin, given the fact that [loan loss]provisions came in $100-million below the Street's expectations. However, Scotia did finish earnings season off in style and we believe the outperformance on earnings against consensus should benefit its valuation as it had lagged the group through this earnings season." Read the story
Papandreou to press Obama on speculators
The controversy over derivatives and public finances is mounting, and Greece's Prime Minister George Panadreou plans to drive home his point today when he meets in Washington with President Barack Obama. European leaders responding to Greece's debt crisis have pointed the finger at speculators they say have used credit default swaps to bet against Greek bonds. Mr. Papandreou, who meets with Mr. Obama and Treasury Secretary Timothy Geithner, said yesterday that European and U.S. leaders must put a stop to the speculation. "If the European crisis metastasizes, it could create a new global financial crisis with implications as grave as the U.S.-originated crisis two years ago," he said in a speech.
Separately today, German Chancellor Angela Merkel and Luxembourg's leader Jean-Claude Juncker, also pressed for greater oversight of credit default swaps, according to Bloomberg news.
Yet Germany's regulator said this week that, after a review of the data, there was nothing to show that Greek debt was the victim of credit default swaps. And, according to Bloomberg, UniCredit SpA is warning that a "government debt bubble" could be the result of any curbs to trading on CDS. "CDS exist to improve the efficiency of credit markets," said UniCredit strategist Tim Brunne in Munich. "Simply abandoning sovereign CDS helps to create a government debt bubble."
Buy 'Northern Tiger,' Scotia Capital advises
Markets have been exceptionally bullish on Canada lately, citing a rebounding economy, a strong currency, a healthy banking sector and a fiscal position far superior to those of other countries. Some commentators have even mentioned the success of the winter Olympics. Scotia Capital economists Derek Holt and Karen Cordes today cited 20 reasons to invest in 'The Northern Tiger,' writing that "the country has much of what one would want in both a global portfolio and a physical presence." They cite:
1. The Bank of Canada will be the next major central bank to raise its benchmark rate, in the third quarter of the year.
2. The Canadian dollar is poised to hit parity with the U.S. currency and "the economy will not only survive in this climate as it has before, it will generally thrive."
3. The loonie has an edge over the Australian dollar as Australia's central bank is close to finishing its pullback from the crisis, while the Bank of Canada hasn't started yet.
4. Canada will be "the poster child for fiscal health" over the next five years compared to other major economies. "Provincial finances are a bigger challenge, but general government net-debt-to-GDP still stands Canada in very good stead.
5. Corporate revenues should be on a strong growth path, mirroring the beginning of "a strong recovery."
6. The world wants the commodities Canada has to offer.
7. Canada will boast a "virtually unbeatable" global corporate tax system within two years. "Who'd have thought that after years of painful dialogue that led to reforms?"
8. While growth in productivity suffers now, it could catch up.
9. Real estate is "richly valued" and more of a "containable risk" than it was in the United States and Europe.
10. The balance sheets of non-financial companies are in "excellent" shape.
11. A financial sector deemed "best in class."
12. Canada will have fewer "messy" exits from emergency measures.
13. Canada has a "relatively favourable" regulatory environment.
14. Ottawa is offering tax incentives to invest in equipment.
15. Canada has little political risk.
16. There is no risk of defaulting on sovereign debt.
17. Canada offers "untapped opportunities" in seed capital and financing for ideas.
18. Last week's federal budget cut back on the paperwork needed for venture capital.
19. Canada boasts "strengths in diversity" with a high proportion of foreign-born workers and "strong market ties."
20. Canada offers a highly educated work force.
Mr. Holt and Ms. Cordes did not mention Olympic Hockey, but everyone knows Canada rules.
Chevron to slash jobs
Chevron Corp. said today it's slashing 2,000 jobs this year and plans to continue cutting positions next year. Speaking to analysts in New York, the energy giant also said projected refining will continue to be tough over the next few years.
Alimentation Couche-Tard profit falls
Canada's biggest convenience store group, Alimentation Couche-Tard Inc. , said today its third-quarter profit fell to $54.8-million (U.S.) or 29 cents a share from $71.1-million or 36 cents a year earlier. But the company said it bettered its performance and increased its quarterly dividencd to 4 cents a share from 3.5 cent.
EU warns U.S. on Air Force contract
Tensions between the European Union and the United States are rising over bidding for a massive U.S. Air Force contract. Yesterday, a European consortium pulled out of the race, alleging the bidding was tilted in favour of Boeing Co. Boeing is now the sole contender for the tanker project given the decision by the European group led by EADS, the parent of Airbus, and Northrop Grumman. Today, the European Commission warned the U.S. it was concerned about protectionist measures, saying in a statement it would be highly concerned if the facts show the bidding was "such as to inhibit open competition" for the project. "It is highly regrettable that a major potential supplier would feel unable to bid for a contract of this type," added EU Trade Commissioner Karel De Gucht, according to The Associated Press. "Open procurement markets guarantee better competition and better value for money for the taxpayer."
Toyota driver in harrowing runaway
Despite its herculean efforts, Toyota Motor Corp. can't seem to put its troubles behind it. Reports from California this morning tell the tale of a 61-year-old Prius driver whose car sped up to 94 miles per hour (150 kilometres) on a highway in San Diego County as its accelerator stuck. A California Highway Patrol officer had to help stop the speeding vehicle, and Toyota says it is now investigating the incident that occurred yesterday. James Sikes, the driver, said he was passing another car when his Prius accelerated. He pressed the brakes, he said, but it continued to speed. A CHP cruiser pulled up alongside and, through a loudspeaker, helped Mr. Sikes slow down.
Of doughnuts, coffee and stock prices
UBS Securities Canada this morning raised its price target on Tim Hortons Inc. by a dollar, citing what it called a successful presentation to analysts last week. Its target is now $38, and its earnings per share estimates "moderately" higher. Analysts Vishal Shreedhar and David Palmer said in a research note that UBS believes Tim Hortons is "a strong company characterized by low relative risk, high returns, and continued growth, underpinned by accelerating progress in the U.S."
From today's Report on Business