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. Inside the Market delivers up-to-the-minute insights on market news as it develops.
Here are our editors’ picks of some of the best reads available to Globe Unlimited subscribers this week.
Dragging online income out of the closets
People sell pretty much everything online these days, so it’s no surprise that enterprising homeowners with an extra bed to spare have jumped into the fray. And so along comes website Airbnb, acting as a middleman connecting travellers with these shadow-market hoteliers for a cut of the action. Who could have a problem with that? Step forward New York Attorney-General Eric Schneiderman, who has slapped Airbnb with a subpoena demanding information on some 15,000 New Yorkers who have advertised rooms on the website. It’s not the legality of the business model that he’s all worked up about, explains Carl Mortished in ROB Insight, but the fact that it allows the revenue generated to slip through the taxman’s net. It’s just one battle being fought on countless fronts as the online economy grows by leaps and bounds.
A drug maker on steroids
There’s a flurry of activity in Big Pharma these days, with major global names making acquisitions or swapping assets to focus on what they do best. Canada’s own Valeant Pharmaceuticals has long been in on the action, and its latest move – a $47-billion bid with activist investor Bill Ackman for Allergan – would mark its 22nd and biggest acquisition in just three years. Investors seem to think Valeant is doing something right, bidding up the stock more than 400 per cent since the start of 2011. But have the shares got ahead of themselves? In Streetwise, Tim Kiladze looks at possible red flags investors should keep an eye out for.
Markets play musical chairs
Market rotation has been a big theme among strategists of late, as investors sell stronger performers to lock in profits and snap up the laggards. What’s drawing their attention is the fact that, historically, rotations have signalled a surge in equity markets. At first glance, writes David Berman in Inside the Market, it appears not much has been going on with the S&P 500, which has risen just 1 per cent in the past seven weeks. But investors who scratch beneath the surface will note that some sectors have enjoyed 3-per-cent advances while others have fallen off.
Feel poorer? Well, you probably are
Unless you’re fortunate enough to be a top earner in Canada, you’re probably falling behind in relative terms as income inequality continues to grow. But if you want some company for your misery, just look at what’s happening abroad. Not only are most Canadians suffering, but the nation as a whole is losing ground on the global stage: Poorer emerging-market countries are generating a steadily rising portion of the global economy at the expense of higher-wage countries like Canada (hello, offshoring.) In ROB Insight, Scott Barlow explores the challenges facing policy makers, the limited number of levers they have to pull in addressing the problem at home, and their relative helplessness in defending against the rise of emerging nations.
CIBC faces different kind of risk
The passing of the torch at the top of Canadian Imperial Bank of Commerce will mark a change in leadership, but will there be a change in strategy? Departing CEO Gerald McCaughey has done a good job of reducing risk, a much needed task given the bank’s past experiences of getting burned, with Enron and U.S. subprime mortgages producing some of the bigger headaches. But that has shifted attention away from growth, and investors are paying the price. In Streetwise, Boyd Erman explores how CIBC has fared against its rivals (hint: not well) who have been more aggressive in their expansion, and looks at the challenges the bank faces in getting back on the road to growth.
The energy stocks worth betting on
Energy stocks have been on a roll, but in a market that is so distorted, there are bound to be some producers who fare much better than others. The key to picking winners may lie in valuations. Poring over the TSX, Inside the Market’s Scott Barlow finds 33 stocks that have maintained positive earnings over the past three years, and finds the seven that are trading at significant valuation discounts.