These are stories Report on Business is following Wednesday, Oct. 30, 2013.
B.C. housing in 'soft landing'
Bank of Montreal economists have taken British Columbia’s housing market off the critical care list.
“Since bottoming in February, sales in the province have jumped nearly 40 per cent through September, and were more than 50 per cent above year-ago levels in Vancouver,” senior economist Robert Kavcic of BMO Nesbitt Burns said today.
“That, plus a falloff in new listings, has all but quashed concerns of a hard landing,” he said in a report on the economic fortunes of the provinces.
“Note that after a buyer’s market plagued the past two years, the sales-to-new-listings ratio now paints a decidedly balanced picture of the B.C. market.”
As The Globe and Mail’s Tara Perkins has reported, Canada’s housing market has rebounded from the slump of a year ago, when new mortgage restrictions from the federal government were brought in to prevent a bubble.
And as Brent Jang writes, the rally in the B.C. market is projected to continue through next year.
“British Columbia’s housing market has been in sharp focus recently, as stricter mortgage rules implemented in July 2012 and lofty valuations (particularly in Vancouver) sent sales sliding early in the year,” said Mr. Kavcic.
“Fortunately, the market appears to have carved out a soft landing, with sales volumes across the province rebounding more than 30 per cent from their February low to near the 10-year average.”
Over all, Mr. Kavcic projects that Alberta and Saskatchewan will lead Canada in economic growth this year, which should continue in 2014.
“Ontario and Quebec, however, desperately need to see stronger growth south of the border, while Atlantic Canada continues to struggle with a stimulus hangover.”
- Brent Jang: B.C. housing rally expected to continue through 2014
- Tara Perkins: Economists press Flaherty on lack of clear data in housing sector
- Tara Perkins: Accuracy of Canada's housing data under scrutiny
- Tara Perkins: Falling rates, BoC's stand puts housing spotlight on Flaherty
- Tara Perkins: Bank of Canada rate stance could have adverse effect on housing market
- David Parkinson in ROB Insight (for subscribers): Poloz boxed in as embers of overheated housing market flare up
- Brian Milner in ROB Insight (for subscribers): Welcome to the bubble: Central banks drive real estate higher
- Tara Perkins: September home sales soar
- Richard Blackwell: Five countries with hot housing markets
Facebook Inc. shares surged in after hours action today after the social network posted third-quarter results showing strong mobile advertising.
The stock was up by 8 per cent at about 5:30 p.m. ET.
Here are the highlights:
- Profit came in at $425-million (U.S.) or 17 cents a share, compared to a loss of $59-million or 2 cents a year earlier.
- Revenue surged to $2-billion from $1.3-billion.
- Mobile ad revenue now accounts for 49 per cent of the total.
- Daily active users rose 25 per cent from a year earlier to an average 728 million in September.
- Monthly active users rose by 18 per cent to 1.19 billion.
- Mobile active users surged 45 per cent to 874 million.
"The strong results we achieved this quarter show that we're prepared for the next phase of our company, as we work to bring the next five billion people online and into the knowledge economy,” said chief executive officer Mark Zuckerberg.
Fed holds the line
The Federal Reserve held firm on existing policy today, giving no clues as to where it’s headed while citing still moderate economic growth.
Markets, of course, have been looking for signals on when the U.S. central bank might begin to ease its monthly asset purchases that are now running at $85-billion (U.S.) a month.
The Fed had been expected to announce just such a move at its September meeting, but surprised markets by holding steady.
Today, the Federal Open Market Committee, the policy-setting panel of the central bank, said it wants to see what comes next. It said the same thing last month, The Globe and Mail's Kevin Carmichael reports.
“The committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases,” the policy makers said.
The Fed also didn’t change all that much in its statement, saying that “economic activity has continued to expand at a moderate pace.”
But it did add that “recovery in the housing sector slowed somewhat in recent months.”
Still, it also forecast that, all things being equal, growth will speed up and the jobless rate will “gradually” ease.
“The committee sees the downside risks to the outlook for the economy and labour market as having diminished, on net, since last fall,” it added.
Barclays caught up in probe
Barclays PLC is the latest bank to be caught up in a global probe into the possible manipulation of currency markets.
Indeed, Barclays shed more light on the investigation in its earnings statement today, saying the probes “appear to involve multiple market participants in various countries.”
Barclays said it has been asked about the matter by authorities.
It added it is “reviewing its foreign exchange trading covering a several year period through August 2013 and is co-operating with the relevant authorities in their investigations.”
This follows the disclosure yesterday by UBS and Deutsche Bank that they, too, are co-operating in the investigation.
No allegations have been proven.
The regulators involved have not said what exactly they’re looking into, but their investigations follow reports by Bloomberg News that have focused on what’s known as a “fix,” which pegs the value of a currency at a certain time of day, and is used as a benchmark.
Canada’s bank regulator, the Office of the Superintendent of Financial Institutions, has said only that it’s aware of the global probes, while the Bank of Canada has not commented.
The investigation also comes amid the latest settlement in a probe of Libor, a benchmark interest rate.
Lululemon hires product chief
Lululemon Athletica Inc. is bringing in a veteran retail executive as its product chief in the wake of its troubles with see-through pants.
The Vancouver-based retailer has hired Tara Poseley as chief product officer to run its global sales and design strategy.
Ms. Poseley, before now the chief of apparel for the Kmart operations of Sears Holdings Corp., will join Lululemon as it climbs back from the mishap with its top-selling yoga wear.
Ms. Poseley also previously headed up Disney Stores North America and held several senior positions at Gap Inc.
She also clearly has a fitness thing going.
“Tara practices yoga, is an avid telemark skier, loves spending time in outdoor activities with her family and looks forward to living in Vancouver, B.C.,” the company said.
The announcement of Ms. Poseley’s hiring ends one of the uncertainties that had dogged Lululemon.
- David Parkinson in ROB Insight (for subscribers): Lululemon growth story beginning to fray at the edges
- David Berman's Inside the Market (for subscribers): Beware the love affair with department store stocks
Wi-LAN looks at alternatives
Wi-LAN Inc. has put out the “for sale” sign.
As The Globe and Mail’s Bertrand Marotte reports, the patent licensing concern said today it is exploring strategic alternatives, including a possible sale.
Wi-LAN is involved with buying and developing technology patents for licensing.
“The company strongly believes in its current business strategy but does not believe that its current share price accurately reflects its strong balance sheet, the value of its signed license agreements, its business prospects or the residual value of its broad intellectual property portfolio,” it said in a statement.
“Strategic alternatives to be considered may include changes to the company’s dividend policy or other forms of return of capital to shareholders, the acquisition or disposition of assets, joint ventures, the sale of the company, alternative operating models or continuing with the current business plan, among other potential alternatives.”
Shares of LinkedIn Corp. sank today even as analysts painted a brighter picture for the Facebook of the professional world.
Several analysts raised their price targets on LinkedIn shares, which slipped regardless after its third-quarter results late yesterday.
Credit Suisse, for example, boosted its price target to $288 (U.S.) from $251, while UBS hiked its to $250 from $230, and Canaccord Genuity raised its to $270 from $230.
LinkedIn lost $3.4-million or 3 cents a share in the quarter as revenue surged 56 per cent to $393-million.
The company also projected fourth-quarter revenue of between $415-million and $420-million, and for the year of some $1.5-billion.
The professional network now boasts more than 259 million members.
“With several positives on the horizon, including the continued ramp of sales solutions, China expansion, and continued operating leverage, we continue to like the stock despite its super-premium valuation,” said Canaccord analyst Michael Graham.
- LinkedIn posts loss, but revenue tops expectations
- Darcy Keith: Today’s analyst upgrades and downgrades
Auto makers rebound
General Motors Co. and Chrysler Group LLC continue to rebound from the dark days of the recession.
GM today posted a drop in third-quarter profit, but beat analysts’ estimates by earning $757-million (U.S.) or 45 cents a share.
That was down from $1.5-billion or 89 cents a year earlier, though included one-time hits. When those are stripped out, the auto maker brought in 96 cents a share.
Revenue climbed to $39-billion from $37.6-billion.
Chrysler, in turn, reported that its third-quarter profit climbed 22 per cent to $464-million while sales gained 13.5 per cent to $17.6-billion.
- GM posts strong profit on U.S. demand, smaller loss in Europe
- Chrysler profit jumps 22%, confirms 2013 sales outlook
Maple Leaf profit slips
Maple Leaf Foods Inc.’s profit fell by 60 per cent to $18.6-million in the third quarter as restructuring costs and lower meat sales offset a rise in the company’s bakery division, The Globe and Mail's Eric Atkins reports.
“This is a very challenging period of transition for the Maple Leaf organization, as the short-term impact of volatile protein market conditions, combined with the significant cost of change, has been material,” Michael McCain, chief executive officer of Maple Leaf Foods, said in a statement today.
The maker of Shopsy’s and Schneiders prepared meats, which is selling its Canada Bread unit, is three years into a $575-million five-year restructuring of its meats business, revamping its product lines, shedding staff, closing old plants while upgrading and opening others. It spent $15-million during the quarter expanding new facilities in central and eastern Canada.
- Eric Atkins: Maple Leaf profit drops 60% in 'challenging period of transition'
- Eric Atkins: Maple Leaf Foods expects restructuring to pay off
In wolf's clothing
It’s got booze, bucks and boobs. Pool parties, fast cars and yachts. Heart-throb Leonardo DiCaprio throwing money in the trash. And a trading floor dwarf-tossing competition.
The high life on Wall Street has always been fodder for Hollywood, from Dan Aykroyd and Eddie Murphy in Trading Places to Michael Douglas as Gordon Gekko.
But Martin Scorsese’s The Wolf of Wall Street looks particularly engaging, based on the two trailers released so far by Paramount.
Mr. DiCaprio plays the real life Jordan Belfort, who, in his tell-all of the same name, chronicled his rise and fall from stock broker to inmate.
He’s supported by the likes of Jonah Hill, Matthew McConaughey, Jon Favreau and Australia’s Margot Robbie.
And they seem to be having a lot of fun. At least in the beginning.
Here are just two choice lines from the trailers:
Mr. DiCaprio’s Belfort: “The year I turned 26, I made $49-million, which really pissed me off because it was three shy of a million a week.”
Mr. McConaughey’s Mark Hanna: “Nobody knows if a stock is gonna go up, down, sideways or in circles.”
Rob Reiner’s Max Belfort: “$26,000! For one dinner!”
Mr. DiCaprio’s Belfort: “The real question was this: Was all this legal?
- Liam Lacey: 16 movies to watch for the 2014 Oscars race
- James Adams: The Wolf of Wall Street: The mighty shouldn’t monkey around
- Trailer 1
- Trailer 2
Streetwise (for subscribers)
- PwC strikes deal to buy corporate consulting firm Booz & Co.
- U.S. private sector adds 130,000 jobs in October: ADP
- Fragile Spanish economy limps out of recession