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An underground potash mine at Potash Corp.'s Lanigan, Sask. mine. Potash is expected to soar as rising wheat and corn prices spark more demand for fertilizer. (Handout/ Potash Corp./Handout/ Potash Corp.)
An underground potash mine at Potash Corp.'s Lanigan, Sask. mine. Potash is expected to soar as rising wheat and corn prices spark more demand for fertilizer. (Handout/ Potash Corp./Handout/ Potash Corp.)

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BHP hits a brick Wall, but will that kill its Potash bid? Add to ...

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Wall says no to BHP Saskatchewan Premier Brad Wall said today his government won't back BHP Billiton Ltd.'s hostile bid forPotash Corp. of Saskatchewan .

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"As of today, I still don't see how this takeover is a net benefit," Mr. Wall told reporters in Regina.

"These are promises and in every single takeover of a natural resources company in our country of late promises have been made and promises are broken and Investment Canada has been letting the companies off the hook."

Federal Industry Minister Tony Clement said in Ottawa that his government is discussing the bid with both Saskatchewan and BHP.

Desjardins analyst John Redstone said he still believes BHP will succeed in its bid. Mr. Wall's announcement, he said, shows "the extent of negotiations required to finalize this transaction," while the talks should deter a counterbidder. As well, he added, "ultimately, the Canadian Prime Minister is the only one who can 'block' this deal."

But, added analyst David Lennox of Fat Prophets in Sydney, in an interview with Bloomberg News, "if the local government rejects the deal, you will find that will flow through to the national level. The Canadian government will then probably reject the deal as well. That will be the finish."

In a research note, Nomura analyst Paul Cliff said he believes BHP will boost its bid to about $150 (U.S.) a share.

Analysts question RIM As the Titans of Tech engage in a war of words over who has the smartest phone, analysts at UBS Securities Canada warn in a new report that Research In Motion Ltd. had better get its act in gear.

Make no mistake - RIM has consistently surprised markets against increasing competition from the likes of the iPhone from Apple Inc. and the Android operating system from Google Inc.

Apple's Steve Jobs took after RIM when the technology giant released record quarterly earnings two days ago. Then yesterday, RIM's Jim Balsillie fired back.

Today, UBS analysts Phillip Huang and Maynard Um and associate analyst Christian Idicula said the timing of RIM's many challenges are overstated, though the BlackBerry maker must address its strategy on a longer-term basis.

"Although we believe RIM still offers a level of differentiation in its platform, innovation has exploded from its competition, often raising the concern that RIM's platform is aging," the analysts said in a research note.

"... Additionally, RIM is going to have to battle directly against the likes of Apple, Google and Microsoft to create a strong ecosystem that will be attractive for users long-term. RIM will have to spend more heavily and efficiently in order to keep up with these tech titans in all facets of the ecosystem if it wishes to do well with the consumer.

"The necessity to bring content, hardware and software together in a simple seamlessly integrated way is a challenge RIM needs to meet. Although RIM is acknowledged as a pioneer of network architecture for push-based applications, the company is less known for its cloud offerings though it does offer a hosted BlackBerry App World."

U.S. foreclosure crisis grows The foreclosure crisis in the United States is escalating into a fight between the major banks and the U.S. government and big institutional investors, The New York Times reports today.

The Federal Reserve has now joined the fray, calling for the banks to buy back some of the mortgage securities it purchased during the bailouts at the height of the crisis. Like others, the newspaper reports, the U.S. central bank is questioning documentation, which has been at the heart of the scandal.

Lenders such as Bank of America have said their foreclosures were proper. In fact, Bank of America said it would resume foreclosures in many of the states were it had halted proceedings.

Now, The New York Times says, the Federal Reserve Bank of New York and major investors such as Pimco and BlackRock want Bank of America to buy back some of the $47-billion mortgages originated by Countrywide Financial, which Bank of America acquired in the summer of 2008. The fight could cost billions of dollars.

"It's very serious," Nomura Securities analyst Glenn Schorr told the newspaper. "The numbers are all over the map."

Encana cuts production guidance Encana Corp. today cut its production outlook for the year as natural gas prices suffer.

The Calgary-based energy giant, which last year split in two, earned $569-million or 77 cents a share in the quarter, and posted operating earnings of 13 cents a share, below estimates of 20 cents, according to Dow Jones.

It cut its guidance for production this year to 3.315 billion cubic feet of gas equivalent a day from its earlier projection of 3.365 billion. It also cut its capital investment projection to $4.8-billion, down by $200-million, and scaled back the top end of its range for cash flow.

"During this period of continued low prices, we remain focused on capital discipline and long-term value creation for every Encana share," said chief executive officer Randy Eresman. "We will not pursue growth at any cost ... North America's ongoing oversupply of natural gas production has driven prices for the near term to levels that we believe are unsustainably low. As such, we are slowing the near-term growth rate of our resource plays. For the longer term, we continue to build the underlying productive capacity of our enormous resource portfolio for future years' growth."

Carney in spotlight The amount of slack in the economy actually grew in the third quarter as Canada's recovery briefly lagged that of the United States, the Bank of Canada said today in a forecast detailing why the economy won't be at full tilt until the end of 2012, a year later than previously believed.

The Canadian economy expanded at a meager 1.6-per-cent annual pace from July to September, the central bank said in its latest quarterly outlook, compared with 2.3 per cent in the United States and well below the central bank's July projection of 2.8 per cent. The economy was operating about 1.75 per cent below its production capacity in the quarter, after running about 1.5 per cent under during the previous three-month period, the central bank said.

Strong earnings season so far While some major companies have disappointed the markets with quarterly results, earnings season is off to a generally solid start.

"More than 81 per cent of S&P 500 companies have beaten earnings expectations, while 68 per cent have beaten on revenues (according to Bloomberg) - both are running ahead of the prior quarter and their long-term averages," BMO Nesbitt Burns economist Robert Kavcic says.

"Still, stock prices have not responded well after a strong rally leading up to the reporting season. This has been common behaviour in recent quarters as both the [second-quarter]and [first-quarter]seasons saw mini-corrections of about 5 per cent in the month after Alcoa got things under way."

Britain unveils austerity measures Britain today ushered in a new age of austerity aimed at trimming the government's bloated deficit. Among the measures unveiled by Chancellor of the Exchequer George Osborne are almost 500,000 public sector job cuts over several years, a scaling back of departmental budgets, and cuts to welfare and other social benefits.

Mr. Osborne said many of the job cuts will be achieved through attrition. There's also a permanent levy for banks.

"Today's the day when Britain steps back from the brink," Mr. Osborne declared.

The Royal Family also takes a hit, though presumably no one loses their jobs or benefits. Mr. Osborne said Queen Elizabeth has "graciously" agreed to freezing allowances and, by 2012-2013, to have Royal Household spending cut by 14 per cent. Grants will be frozen.

Mr. Osborne unveiled proposed cuts equivalent to $130-billion (U.S.) through 2015. The deficit is forecast to fall from 10.1 per cent of GDP this year to 2.1 per cent by the 2014-15 fiscal year.

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