Every day ROB Insight delivers exclusive analysis on breaking business news and market-moving events. Streetwise offers news and analysis on Bay Street and the world of finance. Insight the Market delivers up-to-the-minute insights on developing market news.
Here are our editors’ picks of some of the best reads available to Globe Unlimited subscribers this week.
Robots on the march
Had a raise recently? If so, you may be one step closer to getting a pink slip. A new study suggests that the chances a job will be automated increases with upward wage pressure, which has now poked its head above the parapets in the U.S. As a company’s labour costs rise, Scott Barlow explains in ROB Insight, so does its motivation to replace workers with automation or software. That’s bad news for retail stocks, which would suffer from fewer consumers with cash to spend, but good news for companies that produce the labour-saving technology. Carl Mortished also takes up the theme, looking to the coming shift toward automation in China that is destined to restructure its manufacturing base and upend patterns of global trade.
Care for a credit card with your Timbits?
Revenues at the big banks are down in some areas, but with the credit card business becoming increasingly lucrative, many institutions are ramping up their efforts to win customers, Tim Kiladze writes in Streetwise. Following similar deals such as RBC’s partnership with Shoppers Drug Mart, CIBC and Tim Hortons have struck a deal that will see the chain advertise CIBC cards while cardholders accrue “Tim Cash” by using them. And don’t expect it to end there. Canadian Tire is actively seeking a partner and other financial institutions and retailers are said to be sniffing around for similar deals.
How ETFs muddy the waters on fees
Mutual funds have long come under criticism for management fees that can be high, or not clearly disclosed. But wipe that smug smirk off your face, ETFs, because some of you are no better. Investors depend on looking up MERs (management expense ratios) on funds to compare their costs. While some make their total costs clear, others prefer to prominently display their management fees but bury the MERs somewhere else on their websites. In Inside the Market, Rob Carrick rates which companies are being most upfront, and which ones need to be a little more transparent.
Fear and loathing in Chattanooga
You’d expect a union ratification vote would stand a pretty good chance of succeeding when the company – rather than making veiled threats – is actually accommodating to organizers. That’s what makes the failure of a vote at the Volkswagen assembly plant in Chattanooga, Tenn., so mystifying, writes Brian Milner in ROB Insight. VW believes labour relations, and consequently, productivity, is best served by working together, but political pressure and fear-mongering about jobs going south of the border ultimately won the day. As for the supposed dangers of higher pay that come with UAW association, wages account for only about 10 per cent of overall costs, and VW and other German car makers remain extremely competitive even in their high-cost home market. For most car makers, continuing to assemble vehicles in the world’s biggest consumer market makes economic sense for a variety of reasons.
Miners scurry to finance as gold shines again
The mining sector has been starved of cash as of late, so it comes as a welcome relief that the spigots are being opened up a bit as gold moves upward again, writes Boyd Erman in Streetwise. Detour Gold was first up to bat with a $150-million bought deal on Tuesday, and three more sizable financings and a handful of smaller ones have followed. Although it’s the boutiques that have been hit hardest by the deal drought, BMO, RBC and TD have been the lead players in the latest offerings.
Has Soros got S&P 500 in a bear hug?
Recent SEC quarterly filings of investor holdings have generated a few attention-grabbing headlines to the effect that George Soros – famed as an investor and infamous as the Man Who Broke the Bank of England – had doubled his big bearish bet on the S&P 500. David Berman parses the details in Inside the Market, and finds a different picture emerging. Although it’s a record high bet against the benchmark for Mr. Soros in nominal terms, it’s not as a proportion of his fund’s value, and his strategy appears to be different from the one the headlines are suggesting.