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EU calls special summit It's about time someone in authority in Europe decided they had an emergency on their hands.
Leaders of the EU have been criticized over the past year for a lack of unity, decisiveness and action as their debt crisis escalated and began jumping borders.
There have been several meetings, among finance ministers, policy makers and leaders, but they have failed to ease market angst for any meaningful period of time. First, there's the issue of Greece, and the possibility of a second bailout, and then there's the broader euro zone, whose fault lines are spreading.
Today, Herman Van Rompuy, the president of the European Council, called an emergency summit of heads of state for next Thursday in Brussels.
(The EU doesn't call it an "emergency" summit - those are my words - but instead a spokesperson told me it's an extraordinary meeting that has been added to the schedule.)
"I have decided to convene a meeting of the euro area heads of state or government on Thursday, 21 July, at 12.00 in Brussels," Mr. Van Rompuy said in a Tweet today.
"Our agenda will be the financial stability of the euro area as a whole and the future financing of the Greek program. I have asked the preparatory work to be brought forward inter alia by the finance ministries."
(Actually, he used something known as TwitLonger, for people who can't keep their messages to 140 characters.)
Eight banks flunk stress tests The results of the latest round of stress tests on 90 European banks are sure to raise some eyebrows.
The European Banking Authority said today that just eight banks failed the tests, which look at capital under recession-like conditions, and found them to be short by €2.5-billion. Another 16 just scraped by. Spain accounted for five of the banks that failed, Greece two, and Austria one.
Observers were exceptionally skeptical of the tests last year, when seven banks didn't make the grade, and today's results may well be met in similar fashion.
"Today's results are unlikely to do much to allay concerns about banking fragility in the EU for a number of reasons," said Peter Buchanan of CIBC World Markets.
"Investors' confidence in the process was never all that high, to begin with. The tests did not make allowance for what by most counts is the largest and most obvious financial event risk on the horizon, a default by Greece. Tests by some independent rating agencies, like Standard & Poor's, moreover have suggested that added bank capital needs could dwarf the sum announced today in the case of a sharp rise in yields and severe downturn in growth."
A tragedy in 10 acts It's getting increasingly difficult to keep track of the developments and characters in a play that is still being penned as we speak. So here's something of a program:
Act 1: Greece gets into trouble.
Act 2: Greece gets into more trouble.
Act 3: Greeks riot in the streets and decide to have round-the-clock strikes.
Act 4: Portugal gets into trouble.
Act 5: Ireland gets into trouble.
Act 6: Italy and Spain sort of get into trouble.
Intermission: Actually, it's been one long intermission for Europe's policy makers, who've been talking throughout the play, annoying everyone else in the audience but doing very little.
Act 7: Europe's leaders point fingers at U.S.-based credit rating agencies, saying they're really not being nice to the euro zone and they'd like their own rating agency.
Act 8: The U.S. has been in trouble all along, but suddenly it's really in trouble as an Aug. 2 deadline to raise the debt limit fast approaches.
Act 9: The U.S.-based credit rating agencies try to make nice with Europe by being equally mean to the United States, warning America, too, will suffer the consequences with a downgrade if doesn't act quickly and present a meaningful plan to cut its deficit.
Act 10 (today): There's some thought of compromise in the U.S. debt fight. In Europe, there's the issue of those eight banks failing the regulatory stress tests, and the special summit next week in Brussels.
The audience reviews:
"Given the current problems in Europe it is questionable how valuable these stress tests will be," said Michael Hewson of CMC Markets. "If they are too weak they will lack credibility, just like last year's did, and if they reveal too many problems that could well set off the contagion so many European leaders fear. You therefore have a no win situation."
"S&P has said it will need a resolution to the debt ceiling and it will look for a medium term fiscal consolidation package of $4-trillion," said senior currency strategist Camilla Sutton of Scotia Capital. "We are not yet convinced such a plan can be agreed to; leaving significant hurdles ahead for the U.S. and a medium-term weight against the [U.S. dollar]"
- As U.S. debt deadline nears, Bernanke adds to calls for reason
- Summit on Greek crisis now up in the air
Brooks, Hinton call it quits As corporate intrigue goes, it doesn't get much better than the phone-hacking scandal in the Murdoch empire. Which is why I would have loved to have been a fly on the wall for the discussions between Rupert Murdoch, Rebekah Brooks and the others in this saga. Or, more appropriately in this case, to have hacked into Ms. Brooks' cellphone.
You know you've made it when even Britain's prime minister says good riddance. Actually, David Cameron put it a bit more politely, his spokesman saying that Ms. Brooks made the right decision when she resigned today as the chief of Mr. Murdoch's News International.
Ms. Brooks resigned amid a scandal over allegations that the News of the World, which Mr. Murdoch has now shut down, hacked into the voice mails of murder victims, including a teenage girl. Ms. Brooks had hung on for a couple of weeks amid intense pressure.
"As you can imagine recent times have been tough. I now need to concentrate on correcting the distortions and rebutting the allegations about my record as a journalist, an editor and executive," she told her staff at News International, according to Reuters.
"My resignation makes it possible for me to have the freedom and the time to give my full co-operation to all the current and future inquiries, the police investigations and the CMS appearance."
Reuters today recounts the amazing career of Ms. Brooks, who the news agency describes as a "trailblazing" tabloid editor, who rose through the ranks in Britain's tabloid market to become editor of the News of the World in 2000, a key lieutenant to Mr. Murdoch, and a friend to Mr. Cameron.
Separately, Dow Jones chief Les Hinton also stepped down from his job.
- News International CEO Rebekah Brooks resigns over phone hacking scandal
- Full text of Rebekah Brooks' resignation letter
- Rebekah Brooks: Murdoch's fiery favourite
- Murdoch offers apologies to family of murdered schoolgirl
CIBC buys into U.S. asset management firm Canadian Imperial Bank of Commerce is taking a 41-per-cent stake in American Century Investments, a U.S. asset management firm, for $848-million (U.S.), The Globe and Mail's Tara Perkins reports.
The bank is buying the minority interest in the Kansas City-based asset manager, which has $112-billion under management, from JPMorgan Chase & Co.
"As we see it, this transaction sends the unmistakable message that [CIBC's]board and senior executive team will expand their strategic intent beyond maintaining a Canadian universal banking utility model," said National Bank Financial analyst Peter Routledge.
"We expect [CIBC]to generate a recurring level of excess capital which it will deploy with increasing frequency beyond its domestic borders, with particular emphasis on the wealth management line of business."
Home sales climb Canadian home sales rose by a seasonally adjusted 2.6 per cent in June from the previous month, showing the housing market remains resilient, the Canadian Real Estate Association said today.
While major gains were made in several markets including Calgary, Montreal, Ottawa, London, Hamilton, and Victoria, monthly sales declined in Vancouver and Fraser Valley in B.C. Toronto's market remained stable, The Globe and Mail's Tamara Baluja reports.
Manufacturing sales slip Canada's manufacturing sector is having something of a soft year.
Sales in May slipped by 0.8 per cent, Statistics Canada said today, noting that shipments have been "relatively flat" since the beginning of 2011. Eleven of 21 industries monitored posted lower sales, the federal agency said, adding the declines were largely in the food, petroleum and coal product and chemical sectors. Durable goods industries marked a gain of 0.8 per cent.
Inventory levels rose 0.7 per cent, hitting their highest since April of 2009, while the inventory-to-sales ratio inched up to 1.37 from 1.35 in April. May's reading is the highest since February of last year, highlighting "eight months of increases in inventory levels and declining sales in April and May," Statistics Canada said.
Unfilled orders were also up, by 0.9 per cent, for the fifth month in a row.
"Looking beyond the current quarter, while certain industries are clearly still grappling with supply disruptions from the Japanese earthquake, we expect these to be temporary," said economic analyst Leslie Preston of Toronto-Dominion bank.
U.S. prices slip Lower energy costs pushed down overall consumer prices in the United States by 0.2 per cent last month - that's the first dip in inflation in about a year - though so-called core prices rose 0.3 per cent.
Annual inflation, reported today by the U.S. Labor Department, came in at 3.6 per cent, unchanged from the May reading.
"That still leaves the year-on-year core running at 1.6 per cent, higher than a few months ago, but still somewhat below the Fed's 'preferred' range of 1.75 per cent to 2 per cent for underlying inflation," said Peter Buchanan of CIBC World Markets.
Core measures strip out volatile items such as energy.
In International Business today Rebekah Brooks is used to getting what she wants. The trailblazing tabloid editor and News International chief finally quit today, but she will leave the company with her charm and networking skills, as well as plenty of secrets. Georgina Prodhan looks at her life and times.
In Personal Finance today Many investors could save big bucks by managing their own portfolios, but there are plenty of others who need some advice.
Keep an eye on the cost of these food staples as you may be paying more in the near future.
From today's Report on Business