Today's top stories from Report on Business :
Countries urge G20 to act
The leaders of Canada, the United States, France, South Korea and Britain are urging their colleagues to finish what they started at a Pittsburgh summit to boost the economy and bolster the global financial system. A letter released publicly, signed by Prime Minister Stephen Harper, President Barack Obama, France's Nicolas Sarkozy, South Korea's Lee Myung-bak and Britain's Gordon Brown warns their counterparts that their work is not done and that the nascent economic recovery is still fragile.
"Current strains illustrate the continuing risks to global economic and financial stability," the leaders wrote. "... We must ensure that our international financial institutions are strengthened to meet the needs of today's global economy. Reforms are needed to enhance their credibility, legitimacy and effectiveness, to reflect the strong growth in dynamic emerging and developing countries, and to equip them to foster sustainable growth, promote financial stability and lift the lives of the poorest."
The letter comes in the runup to the G20 meeting in Toronto in June, and in advance of another summit in South Korea. As The Wall Street Journal pointed out, several economic officials fear momentum for co-operation is ebbing as the crisis eases. Read the story
Ore producers abandon pricing system
Iron ore producers Vale SA and BHP Billiton Ltd. marked a "momentous" shift in pricing today, striking deals with buyers for shorter-term contracts and eliminating a four-decade-old system of annual benchmarking. In the past, one producer and one steel maker would set a price in negotiations that the rest of the industry would match for a year. Today, though, Vale won a 90-per-cent increase in a quarterly deal. The Financial Times noted that, as iron ore affects steel prices and thus prices for a raft of products, these negotiations had been the most important for the global economy. Leading Chinese and Japanese steel makers agreed to the new quarterly pacts, the FT said, a move that Macquarie analyst Brendan Harris described as "momentous."
In an interview with the newspaper, Steel Business Briefing analyst Rafael Halpin added: "I think Chinese mills may well prefer to agree a quarterly price below current spot levels, rather than risk talks breaking down and being forced to pay more on the spot market."
In the new pricing, Vale struck a deal for a record 90-per-cent increase, winning a price of $100 (U.S.) to $110 a tonne.
Earlier this year, Canada's potash producers also struck quarterly deals after a standoff with China. Read the story
Honda to add 400 jobs
Canada's auto industry is bouncing back, although the rebound is related to demand for specific vehicles. Honda of Canada Manufacturing announced today it will add a second shift at one of its plants in Alliston, Ont., boosting output to 600 vehicles a day from 400, and adding more than 400 jobs. The plant produces the Honda Civic, the Acura ZDX crossover, and the hot-selling Acura MDX. Honda's decision follows a move by General Motors of Canada Ltd. last week to ramp up production of two of its most popular vehicles, the Chevrolet Equinox and GMC Terrain. GM is adding a full shift and recalling more than 700 laid-off workers in Oshawa, Ont., while bringing back laid-off workers and actually hiring about 70 more at its Cami operations in Ingersoll, Ont.
Separately today, Bank of Nova Scotia auto analyst Carlos Gomes predicted Canada's auto industry would continue to rebound. Car and light truck purchases in Canada saw their best performance in February since early 2008, at 1.7 million vehicles on an annualized basis, he said, noting too the "sharp improvement" from the 1.46 million for all of last year. "While last month's outsized 25-per-cent year-over-year jump in sales may overstate the strength of the Canadian market, we expect purchases to continue to move higher alongside improving job prospects, a broadening economic recovery and enhanced incentives," Mr. Gomes wrote in a report.
Advisers urge Beijing to allow yuan to rise
Beijing now faces outside and inside pressure to allow its currency to appreciate. Several countries, most notably the United States, have been pushing China to let the yuan rise, which Beijing has rejected several times. Now, two advisers just named to the country's central bank have also called for gradual appreciation of the yuan, though the government was quick to reject that as well. One of the advisers, Xia Bin of the think tank Development Research Centre, told Reuters that Beijing should resume the managed floating exchange rate that preceded the financial meltdown "as quickly as possible." Another adviser, Li Daokui, was quoted by a local magazine as also saying China should take the initiative. But China's Commerce Minister Chen Deming said that "it has been proved both in theory and practice that the appreciation of a nation's currency provides little help for improving the balance of payments." This is all playing out in the runup to a mid-April decision by U.S. Treasury Secretary Timothy Geithner on whether to label China a currency manipulator.
Bombardier strikes China deal
Bombardier Inc. has signed a deal with China Development Bank Corp. for up to $3.85-billion (U.S.) in customer financing. Under a memorandum of understanding, CDB's leasing unit will help fund deals for Bombardier Aerospace's C Series, Q400 and CRJ planes. The financing is available not only to customers in China but elsewhere as well. Bombardier said in a statement that the financial resources of the CDB leasing arm "put Bombardier in a stronger competitive position to recommend financing and leasing solutions for potential customers in China and elsewhere."
"In our view, this is a positive development as it paves the way for C Series orders from China," said Desjardins. "Recall that recent media reports indicate that Bombardier would like to have a launch customer in every major world region. More specifically, the company is apparently in negotiations with several Chinese carriers. However, we do not expect an order from China in the short term as the Civil Aviation Administration of China appears to be mostly interested in purchasing jumbo jets and regional aircraft in 2010. An order from China is almost a given over the long term however." Read the story
Yellow Media to acquire Canpages
Fresh from its rebranding, Yellow Media Inc. today made an even deeper push into the digital world, striking a deal to acquire Canadian Phone Directories Holdings Inc., known as Canpages, for about $225-million. It's buying Canpages in a cash-and-notes deal from a private equity group. Canpages has a strong online search business, Yellow Media said, and publishes 84 directories with a circulation of about eight million copies. Its annual revenue is $110-million. "The acquisition of Canpages will accelerate our business transformation to the digital world," Yellow Media said. Read the story
U.S. home prices rise again
House prices in the United States rose again month-over-month in January, surprising observers who had projected a fall in the S&P/Case-Shiller home price index. Today's reading marked the eighth increase in a row for that index. "Over all, this report suggests the there was some positive momentum in home prices in January," said TD Securities portfolio strategist Ian Pollick. "And, despite our soft outlook for home prices for the remainder of the year, the characteristics of the data are strongly suggesting that next month's print might actually be positive on a year-over-year basis."
Labatt to shut Lakeport brewery
Labatt Breweries is shutting down the Lakeport Brewery operations in Hamilton, Ont., but says the move, which affects 143 workers, won't affect Lakeport's products in beer stores. "Canada's beer market is intensely competitive and we need to continually seek the lowest possible overall, and brewery-specific, production costs," a spokesman said. Read the story
NASA to help U.S. safety regulators
Auto safety regulators in the United States are going to get some help from rocket scientists in studying the electronic throttle systems in Toyota Motor Corp. vehicles. U.S. Transportation Secretary Ray LaHood said today that NASA will help analyze the systems as authorities continue their probe into the auto maker's massive recalls. Toyota says the electronic throttle systems were not the cause of unintended acceleration in vehicles, and it has recalled millions of cars to resolve the issue of sticky gas pedals. But Mr. LaHood told Reuters today that "we are determined to get to the bottom of unintended acceleration." Separately today, Toyota launched its promised task force on quality. Read the story
Investing in wine good for portfolio, economists say
Investing in wine can do wonders for investors, two economists say in a new study. And while prestigious wines are best, less expensive brands can be good as well, Swiss economists Philippe Masset and Jean-Philippe Weisskopf say in the study published in the American Association of Wine Economists, Reuters reports. Wine has logged better returns and less risk than the Russell 3000 index, particularly in times of economic slumps, they say. "In a nutshell, our findings show that the inclusion of wine in a portfolio and, especially more prestigious wines, increases the portfolio's returns while reducing its risk, particularly during the financial crisis," they say. Read the story
From today's Report on Business