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High stakes in euro zone France's Nicolas Sarkozy met in Frankfurt today with his German counterpart Angela Merkel and officials of the EU and the International Monetary Fund, an emergency gathering in the run-up to a high stakes summit of euro leaders in Brussels on Sunday.
The leaders said nothing after the short session, and there was no word on whether some key issues had been resolved, including major questions surrounding the euro zone bailout fund, which is known as the EFSF.
"Markets remain focused on the upcoming EFSF makeover, as Sarkozy meets with Merkel and a few other principal actors in this pantomime including the IMF's Lagarde," said David Watt, senior fixed income and currency strategist at RBC Dominion Securities in Toronto.
"It seems the devilish details of the EFSF proposals must still be ironed out. Merkel intoned that 'if the euro fails, Europe fails, but we will not allow that.'" Even so, it seems that there still looms a few days of tough bargaining."
Derek Holt and Karen Cordes Woods of Scotia Capital also cited the "continuing gridlock" between France and Germany over the bailout fund.
"France continues to argue that the EFSF should be turned into a bank which can then obtain funding via the [European Central Bank]but Germany's will never let that happen given its inflation-fighting focus, especially as German inflation still remains elevated," they said. "Indeed, the ECB's involvement remains an important aspect to the negotiations this weekend."
It was a busy day for Mr. Sarkozy, whose wife Carla Bruni also reportedly gave birth to a baby girl, their first child together, at La Muette, a Paris maternity clinic. (Which leads, of course, to the obvious comment that it took nine months for the baby, while a crisis plan for Europe is still unresolved after about two years.)
The markets are feeding off comments, rumour and speculation over the coming summit, with vague reports about what to expect. All of which could lead to a fairly big disappointment when markets open Monday after the meeting in Brussels.
Even the chief of the European Commission, Jose Manuel Barroso, seemed to manage expectations today, though he did suggest something meaningful would come out of the meeting.
"Even if we do arrive at a political decision on everything that's on the table, which I hope we will, that doesn't necessarily mean that there will not then have to be an implementing phase," he told reporters.
Notable here is that this has happened time and time again since the debt crisis in the euro zone began about two years ago. There's no question the leaders of the monetary union are working toward something, and some details are likely to emerge Sunday because they know they have to do something, probably along the lines of bank recapitalizations, a bigger haircut for Greek bondholders, and more money for the rescue fund known as the EFSF.
But with 17 governments involved and a history of letdowns, one should take everything with a grain of salt.
Mr. Holt took an in-depth look at the issues today in the run-up to the summit.
First, he noted, the EFSF is just one piece of the reform needed to keep the markets happy. And, he said in his research report, investors need to see the details behind the proposals to recapitalize the banks, whether it be forced or voluntary, and whether shoring up the institutions will come via private means or from the EFSF.
Also key is how the banks respond to beef up capital levels faster.
"Of course, if the higher capital ratio is being expedited to make way for a Greek default, then still further capital raising and/or deleveraging and asset sales would ensue in order to consistently attain newly mandated capital ratios," Mr. Holt and his colleague Karen Cordes Woods said in the report.
"Europe, it seems, is accelerating its own demise with the hope of taking a giant bath sooner without even getting into the contagion risk that could be posed by the market moving on to betting whom else within the European brotherhood may be abandoned next. While restoring Greece's debt levels toward a more sustainable path through stiff hair cuts makes sense to me, the path toward this is being viewed too simplistically in some more bullish corners."
Also troubling is the lack of "encouragement" in the talk heading into the summit, and the divisions that exist between the main players.
"The tensions within Europe are clearer behind the most played up headlines and continue to point toward disagreement on fundamental issues such as whether or not to pursue Greek hair cuts (Germany yes, France no) that would crystallize balance sheet markdowns and have Greek debt labeled in default by rating agencies," he said.
Greece shuts down The backdrop to all of this is a massive two-day general strike that began today in Greece, where unions and others are protesting the government's austerity measures, set to be voted on tomorrow after initial approval today. Athens has been wracked by violence.
Public transport, hospitals, schools and other services have been crippled, and tear gas can be seen in the streets of Athens, The Globe and Mail's Eric Reguly reports from Greece.
Prime Minister George Papandreou has appealed for Greeks to get onside with fighting the fiscal crisis, but, as today's strike shows, that's not going to happen. Unemployment in Greece is 16.5 per cent, and many say they're having trouble making ends meet.
Early estimates put the number of protesters in the tens of thousands. One police officer said he expected 50,000 to take part in the Athens demonstrations and some protesters said the number could rise in the afternoon. The shopping streets around Syntagma Square were packed with protesters. All stores were closed, their facades protected by metal shutters.
Maple Leaf in broad restructuring Maple Leaf Foods Inc. today unveiled a $560-million plan to modernize and concentrate production at its aging meat processing facilities as part of a three year plan that will see half a dozen plants shuttered across the country, The Globe and Mail's Jacquie McNish reports.
The centerpiece of the strategy calls for the construction of a new $395-million prepared meats factory in Hamilton, Ont., that is set to employ 670 workers by its scheduled completion in 2014. Another $155-million will be invested in new equipment in three plants in Toronto, Winnipeg and Saskatoon.
Other Canadian communities will lose factories that can be traced back to the late 1800s. Hardest hit will be Kitchener, Ont., which will see a sprawling meat processing plant closed and 1,200 jobs lost.
Ottawa awards shipbuilding package Shipyards in Halifax and Vancouver have won the right to build $33-billion of government vessels over the next three decades, the largest procurement package ever awarded in Canadian history, The Globe and Mail's Steven Chase reports.
The decision by Ottawa leaves one region in the cold as rivals now prepare to embark on the greatest round of public shipbuilding since the Second World War.
The Levis shipyard in Quebec was the loser in a bidding contest that pitted three regions of Canada against each other. The Halifax yard is owned by Irving Shipbuilding, the Vancouver Shipyard is owned by Seaspan and the Quebec City yard by Davie Yards.
Agnico suspends mine's operation Shares of Agnico-Eagle Mines Ltd. plunged today as the miner suspended operations and production at its Goldex project in Val d'Or, Que., because of water intake and instability.
"While the company continues to assess the situation, it appears that a weak volcanic rock unit in the hangingwall of the Goldex deposit has failed," Agnico said in a statement.
"This rock failure is thought to extend between the top of the deposit and surface. As a result, this structure has allowed ground water to flow into the mine. This water flow has likely contributed to further weakening and movement of the rock mass."
Agnico said it will study the possibility of resuming operations next year on the western side of the deposit, and for now, it is writing off its investment in Goldex to the tune of about $260-million (U.S.) in the third quarter.
Rio Tinto in deal for Hathor Mining giant Rio Tinto Ltd. has struck a white-knight deal for Canada's Hathor Exploration Ltd. , and outbidding hostile suitorCameco Corp. for the junior uranium miner.
Rio valued the deal at $578-million, a cash offer of $4.15 a share, The Globe and Mail's Brenda Bouw reports. Cameco's bid stands at $3.75 a share.
Hathor explores for uranium in northern Saskatchewan's Athabasca Basin, largely in the region's "eastern corridor" that is home to Canada's producing mines. It describes its Roughrider deposit as a "significant high-grade" project.
"The strategic context of the Rio Tinto offer underscores the 'best of breed' global stature of the Roughrider uranium deposit relative to its peers of undeveloped uranium deposits around the world," Hathor CEO Michael Gunning said in a statement.
The companies said directors and senior executives of Hathor, who own about 4.6 per cent of the company, have agreed to the Rio Tinto deal.
Wi-LAN stalks Mosaid Wi-Lan Inc. really wants to get its hands on Mosaid Technologies Inc. , boosting its bid for the company to $42 cash from $38.
"The Revised Offer is higher than Mosaid shares have traded in more than 10 years prior to the announcement of Wi-LAN's intention to make the offer," the Ottawa-based company said.
Wi-Lan added that has "no intention" to further revise its bid. I really don't know why companies say this.
Morgan Stanley beats Morgan Stanley beat analysts' estimates today with a hefty accounting gain and more money from trading leading to a rebound in third-quarter profit.
Morgan Stanley earned $2.2-billion (U.S.) or $1.15 a share, compared to a loss of $91-million or 7 cents a year earlier.
"Morgan Stanley effectively navigated turbulent markets while consolidating our market share gains with Institutional clients," said chief executive officer James Gorman.
- Morgan Stanley posts $2.15-billion profit
- U.S. consumer banks on the mend
- BNY Mellon profit rises 5 per cent
- Citigroup posts third-quarter profit gains
U.S. consumer prices climb Energy and food prices continue to push up inflation in the United States but core prices remain tame.
Prices rose in September by 0.3 per cent from a month earlier, the U.S. Labor Department said today, though so-called core inflation, which excludes volatile items, inched up just 0.1 per cent.
The overall annual rate now sits at 3.9 per cent, the highest in about three years. The annual core rate is at 2 per cent.
"Overall, headline inflation should now have peaked and will drop below the core rate in the second half of next year," said Paul Ashworth, chief U.S. economist at Capital Economics in Toronto.
Youth unemployment troubling The International Labour Organization paints a troubling picture of the world's youth today, warning of a "scarred generation" amid high unemployment.
"In the current context of economic instability, young men and women face increasing uncertainty in their hopes of finding a decent job," the group said in a new report. "There is no doubt that the global economic crisis has further exposed the fragility of youth in the labour market. At the end of 2010, there were an estimated 75.1 million young people in the world struggling to find work – 4.6 million more than in 2007."
The report said an actual drop in the number of unemployed youth was because of young people dropping out of the search for a job.
"For many youth who did manage to find work, the job found is less than ideal," the report added. "... By the end of 2010, as much as half of working youth were in part-time employment in Canada, Denmark, the Netherlands and Norway, while in Australia, Iceland, Ireland, Slovenia, Sweden and the United Kingdom, the share was 1 in 3."
Panel okays song The Canadian Broadcast Standards Council says Buckcherry's Crazy Bitch is okay for the airwaves. It's not an issue of free speech or anything like that that led the panel to determine that the lyrics aren't abusive or discriminatory toward women. It's that there was only one "crazy bitch."
"The panel reviewed some of the CBSC's previous decisions involving the word 'bitch' and concluded that the use of the word in the song 'Crazy Bitch' did not reach the level of abusive or unduly discriminatory comment as the song only referred to one particular woman rather than generalizing all women as 'crazy bitches,'" the CBSC said in a statement today.
The case stems from a complaint by a listener, who said it was offensive to women, after it was broadcast on CKQB-FM in Ottawa, so the panel looked at the issue under the human rights sections of the Canadian Association of Broadcaster code of ethics.
The panel said it's troubled by the "lowering of the bar for coarse language," but in this case it's not a breach.
"The panel recognizes, however, that the complainant was also concerned about the context in which the term was employed in this particular song. She asserted that the message of the song was an objectification of women, in her words, that 'a crazy bitch remains useful as long as she is good in bed.' The panel does not agree with that interpretation; it does not consider that the expression 'crazy bitch,' as used in the song, is aimed at womanhood in general."
Dumb, smart and funny 1. Out of the frying pan: For some strange reason, Iceland's leaders still want into the European Union, and have just completed another round of talks. Having just emerged from one crisis, you've got to ask why they want to get into another.
2. Britain's Lord Wolfson has come up with a novel competition, offering £250,000 to anyone who can devise a way to end the euro zone. "While there has been a lot of speculation about countries leaving the euro, there has been too little detailed research on the many complex questions this would raise," he told The Financial Times.
3. Best line of the day, from Howard Lindzon at StockTwits: "I was talking dirty to the iPhone and it was dishing it right back. That's hot."
4. One smart cookie? Not exactly. One wonders what a waste commission would make of the German finance ministry's €4,000-decision to distribute 16,000 fortune cookies in late August with euro-positive sayings in them. Really smart stuff like "Progress due to a stable euro," Agence France Press reports today. Many Germans suddenly aren't so keen on the euro.
5. "You cannot hope that this will be the end of all our troubles, but I very much hope that important, long-term decisions which are important for the future of the European Union and the euro will come about," EC chief Jose Manuel Barroso said today in talking about a key EU summit on Sunday. See why their troubles never end?
6. Norway has its very own "Occupy" protest. It's just one guy, but he looks committed to the cause.
7. Official public offerings have been killed or cut back for several reasons, but here's a novel one. YG Entertainment, a South Korean talent agency, has scaled back its IPO because of a marijuana scandal involving one of its stars, Reuters reports today. The star in question said that he did in fact smoke a wee bit of pot, but he thought it was a cigarette.
8. "This week we are giving the battle of battles up to Sunday evening. Without the measures, the 2011 budget won't be met, nor in 2012." Better than saying "mother" when Greek Finance Minister Evangelos Venizelos spoke to Parliament today?
9. The Guide to Sleeping in Airports names the Vancouver and Toronto airports among the top 10 in the world.
10. "I don't want to be an activist ostrich with my head in the sand, like a broken record just saying the same stuff over and over again." U2's Bono's was making an important point in an interview with Agence France Presse, urging industrialized countries to still support Africa despite the euro crisis. I agree with him, and not making fun of the issue but, regarding his comment, I'm compelled to point out the lyrics of I Will Follow: Walk away, walk away/I walk away, walk away/I will follow/If you walk away, walk away/I walk away, walk away/I will follow/I will follow.
In Economy Lab Federal Reserve Chairman Ben Bernanke has been keeping an eye on how Bank of Canada Governor Mark Carney has been fighting the financial crisis, The Globe and Mail's Kevin Carmichael writes from Washington.
Ben Bernanke starting read Bank of Canada's playbook
In International Business It is conceivable - if unlikely - that the euro zone will find ways to manage its emergency. It is inconceivable that it will cure the illness, partly because members are in denial about its nature and partly because it is a chronic condition. Martin Wolf of The Financial Times examines the issue.
There is no sunlit future for the euro
In Globe Careers After months in which part-time jobs and self employment represented the bulk of job creation, a new survey points to a welcome trend toward increased professional hiring in Canada, The Globe and Mail's Wallace Immen reports.
Employers laying out welcome mat
In Personal Finance Merchants use a variety of tricks to make us buy stuff we don't need. Here's how to recognize a few of them.
From today's Report on Business