Boeing DreamlinerStephen Brashear
Today's top stories from Report on Business :
North America's prospects brighten
North America's economic prospects continue to brighten, although the march to a sustained recovery is painfully slow. The Canadian and U.S. central banks today both cited an improving economy, with no hints of raising interest rates until well into next year.
The Federal Reserve this afternoon held its benchmark Federal funds rate at its historic low, pledging again to keep it there for an extended period. Notable in the central bank's statement was that, since its committee last met in November, signs suggest that "economic activity has continued to pick up and that the deterioration in the labour market is abating." While those are strong signs, the U.S. housing market is still working its way out of the doldrums, and millions of Americans have lost their jobs. So, the Fed warned, "household spending appears to be expanding at a moderate rate, though it remains constrained by a weak labour market, modest income growth, lower housing wealth, and tight credit."
Separately, speaking to a Toronto business audience this afternoon, and later to reporters, Bank of Canada Governor Mark Carney also said the outlook is improving. He also cited signs of a stabilizing labour market, and said he expects the real estate sector to also continue to strengthen. Mr. Carney also warned again that borrowers should not take on more debt at today's low rates than they can handle when rates rise.
Read:
Rates to stay at record low, Fed says
Be 'vigilant,' Carney warns on debt
Time names Bernanke Person of the Year
Time magazine today named Mr. Bernanke its Person of the Year. One must wonder what thoughts are going through the mind of Mr. Carney, the 44-year-old governor who guided Canada through the financial mess. Let's revisit: Unemployment in the United States is running at 10 per cent, Canada's jobless rate is 8.5 per cent. The U.S. housing market, where the meltdown began, is still struggling out of its crisis, Canada's real estate market has rebounded in what can only be described as spectacular fashion. The big U.S. banks are repaying the money they took in a federal bailout, while, of course, Canada's banks didn't need to be saved. Read the story
Europe's troubled countries spark new fears
Call it the bread baskets versus the basket cases. While countries such as Germany are leading Europe's rebound, others, like Greece, Austria and Ireland, are sparking fears that their troubles could hold the recovery back. Greece and Ireland are buried in fiscal troubles, while Austria sparked new fears this week over the strength of its banks. It has already seized one bank with a load of bad loans in Eastern Europe. These concerns continued today to spread through currency markets. A budget spokesman for German Chancellor Angela Merkel's government party told the Wall Street Journal that Greece is just "the tip of the iceberg." The newspaper also noted a new term that sums up the troubles: PIGS, as in Portugal, Ireland, Italy, Greece and Spain, all of which are weighed under by budget deficits and stalled economies. Read the story
Manufacturing shipments pick up
Canada's factories turned in another strong month in October, as shipments rose 2 per cent, according to Statistics Canada today. That was the fourth increase in five months. TD Securities economics strategist Millan Mulraine also noted that given the jump in sales, the inventory-to-shipments ratio eased to its lowest level since October, 2008. "This was a very strong report, and it points to further positive momentum in Canadian manufacturing sector activity," he wrote. "Nevertheless, with the Canadian and U.S. economic recovery expected to be quite modest in the coming months, and the strong Canadian dollar likely to continue eroding the competitiveness of Canadian products on the global market, we expect the recent dramatic pickup in Canadian manufacturing sector activity to lose some steam." Read the story
Microsoft settles browser dispute with EU
In what one of its rivals called "an important victory for the Web," Microsoft Corp. today settled its long-running browser dispute with European regulators. After 10 years, the European Commission said it is dropping its case against the software giant in return for a promise that Microsoft will begin to market rival browsers along with its Internet Explorer. Under the deal, as of March Microsoft will offer users of its dominant Windows operating system a choice of up to 12 other browsers. This will be done via a pop-up screen that allows Windows users in Europe to add another browser, by way of an automatic update for Windows XP, Vista and 7 if Explorer is the default browser. Microsoft's Internet Explorer is the dominant browser, followed by Mozilla's Firefox.
"Anything that makes browsers easier for consumers to know about will ultimately help [the companies]" Neil MacDonald, a vice-president of the Gartner research firm, told the Reuters news agency. "I don't expect a monumental shift in browser market share."
FTC sues Intel
The U.S. Federal Trade Commission is suing Intel Corp., alleging, as its Bureau of Competition director Richard Feinstein put it today, of engaging in "a deliberate campaign to hamstring competitive threats to its monopoly." Intel accounts for 80 per cent of computer CPUs, and settlement talks between the company and the government have stalled. The company's general counsel said in response that the case "could have, and should have, been settled." Intel's stock dipped as shares of its rivals Advanced Micro Devices Inc. and Nvidia Corp. rose. Read the story
What's next for Boeing?
A win for Boeing Co. yesterday as its 787 Dreamliner, which promises to remake aviation through its design and anticipated lower fuel and maintenance costs for airlines, finally made its test flight. But after the glitz, what's next? The project had been dogged by delays, though the mid-sized jet has won about 840 orders, worth $140-billion (U.S.). "It's the first positive milestone we've seen Boeing achieve on this program in a long time," Macquarie analyst Robert Stallard told the Reuters news agency. "But they're not out of the woods."
The news agency said Boeing will have to compensate customers for late deliveries, and the lateness won't be known until flight tests are done and certification completed. Yesterday's test flight, said Credit Suisse analyst Robert Spingarn, was mostly priced into the stock, and it will be positive for some time. But, he warned, there will be "constant commentary on the certification program, some of which will likely be negative."
Related : A 'game change' for aviation
Reports say capital requirements to get grace period
Reports from Europe and Japan today say global banking regulators are poised to give financial institutions much more time than expected to meet new capital rules. The Basel Committee on Banking Supervision, a group of regulators and central bankers from around the world, is looking at 2012 as the date for the new rules, though Japan's Nikkei newspaper reported that it will announce a transition period of at least 10 years. Reuters also quoted unidentified sources as saying there will be a grace period, though Japanese regulators said no such deal has yet been struck. Shares in European and Asian banks rose.
Abu Dhabi fights Citigroup
Abu Dhabi's sovereign wealth fund is crying foul over its $7.5-billion (U.S.) investment in Citigroup Inc. Citigroup said yesterday that the Abu Dhabi Investment Authority is alleging misrepresentation in an arbitration filing, asking to kill the deal or be given more than $4-billion in damages. The fund acquired units that could be exchanged for Citigroup stock at between $31.83 and $37.24 a share beginning in 2010. Citigroup's common stock is now worth about $3.50. Read the story
Fight on the Death Star
As every boy between the ages of 6 and 60 knows, those Imperial Stormtrooper helmets are really cool. A British Court of Appeal panel apparently thinks so, too, ruling in favour of a British engineer who helped design the famous gear in the Star Wars franchise. Lucasfilm Ltd., the renowned production company run by George Lucas, had gone to court in Britain after it won $20-million (U.S.) in a California case over sales of the costumes. But the three-judge panel said the engineer, Andrew Ainsworth, didn't violate British copyrights by selling look-alikes of the helmets from the original moulds, Bloomberg News reports. Lucasfilm had argued that Mr. Lucas had already come up with the look of the gear before it asked Mr. Ainsworth to work on it, the news agency said, but the court said the California ruling couldn't be applied in Britain, though it warned that "Mr. Ainsworth is aware that were he to seek any further selling in the U.S. he would be in breach of its copyright laws." Lucasfilm plans to appeal the ruling.