News

Today's top stories from Report on Business :

Analyst downgrade knocks RIM stock

A Citigroup analyst took the steam out of Research in Motion Ltd. RIM-T shares, downgrading the stock to a “sell.” Analyst Jim Suva said in a note that the maker of the iconic BlackBerry faces heightened competition from other smart phone companies and that “simply put, there is an invasion of new phones, applications and competition.” He put a $50 (U.S.) target on RIM stock, sending a chill through the TSX. Mr. Suva said RIM products and applications from other companies already appear to be swaying the loyalty of some of the Canadian company's U.S. carriers. RIM executives have been trying to quell investor concerns recently. Read the story

Cost of H1N1 to oustrip SARS

The H1N1 flu is shaping up to be a hit to the economy. Estimates indicate up to 8 million more Canadians could fall ill, meaning absenteeism will pose a threat to productivity just as the economy is struggling out of recession. The World Bank pegs the potential hit of a global pandemic, in general, at 0.7 per cent to 4.8 per cent of global gross domestic product, depending on the severity, while Bank of Montreal has calculated that a mild pandemic would cut annual growth by 2 percentage points and a severe outbreak by 6 percentage points. The costs are projected to top those of the SARS outbreak. Read the story

Home construction forecast to rebound

Canada Mortgage and Housing Corp. projected new house construction will rebound sharply next year. The agency said in its fourth-quarter housing market outlook that housing starts will probably fall more than 30 per cent this year, to 141,900, but recover in 2010 with a projected level at almost 165,000. The average national listed price, CMHC said, is forecast to rise to $312,950 this year and $324,500 in 2010. Canada's real estate downturn has been remarkably short, and demand has rebounded since the beginning of the year. British Columbia will continue to be the most expensive place to live. Read the story

Recommended reading : Easy credit, soaring prices raise new housing fears

Ford posts surprise profit

Ford Motor Co. F-N , alone among the Detroit auto makers in not filing for bankruptcy protection, posted a surprise third-quarter profit of $997-million (U.S.), or 29 cents a share, and forecast a “solidly profitable” 2011, better than its previous projections. The company is riding on gains in U.S. market share, cost-cutting and the U.S. government's popular “cash for clunkers” rebate program. Today's results signal that Ford's turnaround is on more solid ground: It lost more than $14.6-billion last year and has not had a full-year profit since 2005. And while it announced a profit in the second quarter, that was largely thanks to debt reductions that resulted in lower interest payments. Last week, Ford's American workers rejected a contract that would have brought its labour costs in line with those of General Motors and Chrysler, although in Canada members of the Canadian Auto Workers accepted a new deal. Read the story

Lookahead : Canadian and U.S. auto makers report October sales throughout the day Tuesday

U.S. economy gains on three fronts

The U.S. economy appears to be gathering more steam, based on three indicators released today. The Institute for Supply Management, a trade group of purchasing executives, said its widely watched manufacturing index rose to 55.7 in October from 52.6 a month earlier. That was stronger than expected, and raised the hopes of investors searching for signs of a sustained recovery. It marked the third consecutive month of a reading above 50, the level that separates expansion from contraction. Still, there are fears in the U.S. of whether the manufacturing sector can continue to recover once the government winds down its huge stimulus programs. Surveys in Europe also showed stronger factory activity. A similar index that measures activity in the euro zone, where 16 countries share a common currency, expanded for the first time in a year and a half. Also in the United States today, fresh data showed construction spending rose 0.8 per cent in September, the first move up since April. And pending home sales, or signed contracts for deals, jumped more than 6 per cent, defying market expectations. This, said BMO Nesbitt Burns, was “pretty amazing considering this came after straight increases and as the first-time home buyer tax credit draws to an end.” Read:

U.S. manufacturing

U.S. pending homes sales

Global manufacturing

Lookahead : U.S. factory orders for September to be reported Tuesday, 10 a.m. ET.

Quality of jobs deteriorating, CIBC says

A new CIBC report says fewer Canadians are losing their jobs now but the quality of the jobs they hold is deteriorating. The bank's job quality index, which measures areas such as wages and whether work is full- or part-time, has dipped 3.8 per cent in the past six months. For example, part-time employment rose by about 0.2 per cent, while full-time employment fell and self-employment surged. “But the most important factor that has contributed to the recent decline in our quality index is that any gain in employment over the past six months was among low-paying jobs while the number of high-paying jobs has, in fact, declined at least 3 per cent,” the report by economist Benjamin Tal said. Read the story

Nouriel Roubini eyes an asset bubble

Risky asset prices have risen too much, too soon and too fast, Nouriel Roubini, a professor at New York University's Stern School of Business and chairman of Roubini Global Economics, writes in the Financial Times. “... The longer and bigger the carry trades and the larger the asset bubble, the bigger will be the ensuing asset bubble crash,” the man nicknamed Dr. Doom writes. “The Fed and other policymakers seem unaware of the monster bubble they are creating. The longer they remain blind, the harder the markets will fall.” Read his article

Markets watch for Australian rate hike

Keep an eye on Australia's central bank. The Reserve Bank of Australia, already the first of the world's major central banks to raise its benchmark interest rate, meets again Tuesday and some economists believe it will tighten monetary policy again, by another quarter of a percentage point. That would bring the benchmark cash rate to 3.5 per cent. This was bolstered this morning by the government saying that Australia will see faster growth, and shrinking deficits, amid yet another strong sign: National house prices jumped 4.2 per cent in the third quarter to a record high. Some observers, comparing the Australian central bank with the Bank of Canada, have suggested Governor Mark Carney may follow his mates down under earlier than expected. But many economists don't expect that. Scotia Capital said this morning, for example, that while there are similarities between the two countries, there are also big differences that will likely keep the Bank of Canada's benchmark rate at a record low for much longer. Read the story

Terminator franchise to be auctioned

“I'll be back.” That comment uttered by Arnold Schwarzenegger's character in the first Terminator movie – and often mimicked by 14-year-old boys and their fathers – turned out to be more prophetic than anyone realized. The movie spawned sequels, toys and a TV series. Now, the Financial Times reports, the rights to the franchise will be auctioned later this month in a deal the newspaper says will test intellectual property valuations in Hollywood, just as the industry's profits are pressured by lower sales of DVDs. Only weeks ago, the rights to Teenage Mutant Ninja Turtles went for $60-million (U.S.), and Terminator will likely beat that. Several parties are watching closely the sale by Halcyon, including Summit Entertainment, the company behind the hugely successful Twilight series. Read the story

Investing: Which stocks gain from a strong Canadian dollar?

Analysts say Canadian banks, utilities, property companies and some retailers appear to become long-term winners if the Canadian dollar resumes its recent rally to top the U.S. dollar in value, as many observers project. But manufacturers, including auto-parts makers, forestry companies and other export-dependent sectors, would continue to suffer as a stronger dollar bites into sales and profit margins. Observers say the Bank of Canada will keep interest rates low for quite a while to bolster the export sector. Read the story

From today's Report on Business

Chrysler's revival to lean heavily on Fiat

The future of the supermarket

Volcker says banks should stick to banking