'Greece is now less broke than it was a few days ago'

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Greece averts crisis Greece has won enough support for its historic bond swap, a move that rippled through global markets today and triggered billions of dollars in insurance payouts.

It's a complex scheme aimed at easing Greece's debt crisis, but the bottom line is that Athens has averted a disorderly default that would have sent shock waves through the troubled euro zone.

"Questions still remain about the status of some foreign law bonds, the deadline of which has been extended to March 23, but it would appear that a disorderly default has been avoided for the time being and that Greece is now less broke than it was a few days ago," said senior market analyst Michael Hewson of CMC Markets in London.

As The Globe and Mail's Eric Reguly reports today, Greece announced in the early hours that it met its target where its private bondholders are concerned. Bonds worth €172-billion were tendered to the exchange, bringing the participation rate to 83.5 per cent. The creditors are taking a massive hit on their holdings.

That's enough to trigger what are known as collective action clauses, or CACs, to force the holdouts into the swap and bring the percentage to almost 96.

All in all, the scheme should shave more than €100-billion off Greece's debt.

Hours after the Greek announcement, the International Swaps and Derivatives Association said the committee responsible found that the move represented a "credit event" for the purposes of credit default swaps, which would mean more than $3-billion (U.S.) in payouts for those that hold the insurance-like CDS.

"The EMEA DC resolved that a restructuring credit event has occurred ... following the exercise by the Hellenic Republic of collective action clauses to amend the terms of Greek law governed bonds issued by the Hellenic Republic such that the right of all holders of the affected bonds to receive payments has been reduced."

In the long run, analysts speculate, today's actions should help in what has been a two-year crisis.

"We should see the [U.S. dollar]be bid on risk aversion while some financials suffer given the uncertainty regarding who is short or long initially of these CDS exposures," said Sebastien Galy, senior currency strategist at Société Générale.

"The CDS market is in any case concentrated amongst a very small amount of banks. Volatility should rise and profit-taking increase after the recent rally. Once we clear out through this event, the risk of contagion will be lower as investors realize that the risk was overpriced for a long time, hopefully."

Greece clinches largest sovereign debt overhaul in history

Viterra surges Shares of Canada's Viterra Inc. surged today after the agricultural products giant disclosed that it could be the target of a takeover.

Viterra said only that it had received expressions of interest. It didn't say much else, and it didn't have to.

A potential takeover of the company, whose operations run from Canada and the United States to Australia and China, was all it took to send the stock up sharply.

Viterra receives 'expressions of interest'

Job market lags Canada's jobs market continues to flatline, putting pressure on the country's Finance Minister to address the issue in his March 29 budget, in my mind, at least.

"Canada's economy is seeing reasonable growth, but that doesn’t seem to be generating the job gains that typically go along with it," said Avery Shenfeld, chief economist at CIBC World Markets.

Some 2,800 jobs were lost in February, Statistics Canada said today. The unemployment rate dipped, to 7.4 per cent, but that's because some people gave up searching for jobs and thus were no longer counted.

The jobs market has been lacklustre for months. Employment is up by more than 120,000 since a year ago, but it was mostly loaded at the front end. While many would disagree, I think Finance Minister Jim Flaherty has not only the flexibility to announce new measures in his budget, but also all the evidence he needs.

He's on track to beat his fiscal targets, while the jobless rate is expected to remain in the area of 7.5 per cent for some time.

"The performance of the Canadian labour market has been disappointing since July of last year, adding just 14,000 since," said Diana Petramala of Toronto-Dominion Bank.

"A softening labour market is largely consistent with the deceleration in economic growth experienced over 2011. In addition, the weakness in employment since mid-2011 largely reflects a small crisis of confidence, with businesses remaining reluctant to add to payrolls as rising financial risks in Europe threatened future demand prospects. While risks remain elevated, the potential for a global financial calamity have abated and hiring is likely to pick-up modestly along with business confidence over the remainder of the year."

Spare a thought for Canada's young people, who suffered a loss of 27,000 jobs. The unemployment rate in the 15-24 age group is now 14.7 per cent, and employment is down by 2.8 per cent from a year ago.

Canada's job market struggles for growth

U.S. continues to gain While Canada struggles on the jobs front, the United States continues to gain traction.

Not only did the U.S. economy create 227,000 jobs in February, the U.S. Labor Department revised its data for December and January to show about 61,000 more jobs than originally reported.

The unemployment rate held steady at 8.3 per cent.

Notable, too, is that the private sector is coming on strong, with job gains of more than 230,000 in February.

"Over all," said Mr. Shenfeld of CIBC World Markets, "more confirmation that the U.S. economy now has enough of a head of steam to generate a reasonably solid pace of job creation, and with that, the income gains that will help make this a self-sustaining recovery in 2012."

Of course, you've got to put it in perspective. It's a good sign, but the United States still has a long way to go.

"The 'effective' unemployment rate, which adjusts for discouraged workers and part-time workers who want full-time work, eased to 14.9 per cent, more than two-percentage points below the cycle high," said senior economist Sal Guatieri of BMO Nesbitt Burns.

"The average duration of unemployment slipped a notch from near-record highs to 40 weeks. The number of people working part-time for economic reasons fell for the fourth time in five months. Thus, while the labour market 'remains far from normal,' according to Chairman Bernanke, it is making progress."

Trade surplus shrinks Canada's trade surplus narrowed in January as a decline in exports eclipsed the dip in imports.

The surplus decreased to $2.1-billion from $2.9-billion in December, Statistics Canada said today, with exports falling by 2.3 per cent, and imports by 0.6 per cent.

Still, it's the third monthly surplus in a row.

Export prices slipped by 2.2 per cent, but there were lower volumes as well. It was the same thing on imports, whose prices slipped by 4 per cent.

Exports to the United States, Canada's biggest market, rose.

"The small drop in exports and the trade surplus has to be looked at in context," noted senior economist Krishen Rangasamy of National Bank.

"Those come after a very strong December results. The good handoff from December puts Q1 in a good position, with trade set to be a contributor to GDP. Real exports are now tracking +17.3 per cent annualized in Q1 while import volumes are tracking +0.5 per cent. The drop in imports of machinery and equipment is a bit concerning though. That item is now tracking -2.7 per cent annualized in Q1, not a good sign for business investment in the quarter."

In the United States, the trade deficit grew to $52.6-billion (U.S.) as imports climbed to a record.

Lower exports cut into Canada's trade surplus

China inflation dips China continues to win its battle against rising prices as its economy slows.

Annual inflation fell in February to 3.2 per cent, down from 4.5 per cent January, amid tighter earlier policies and a softer economy. January's numbers were skewed by Chinese New Year, so a two-month average of 3.9 per cent is a better way to look at it, said Mark Williams and Qinwei Wang of Capital Economics.

"Today’s data show that the moderation in growth and price pressures seen in the second half of 2011 has extended into 2012, partly reflecting the impact of the weaker global economy, but also partly due to the deliberate tightening of monetary policy put in place by Beijing in late 2010 and early 2011 as part of its efforts to curb inflation and rebalance the economy," added Brian Jackson of RBC.

"We expect this slowdown in the Chinese economy to continue over [the first half of the year]but then stabilize around mid-year as the impact of earlier policy tightening fades and global growth begins to recover. As a result, we do not expect a big shift in monetary policy settings in the near term, with any move to ease liquidity conditions likely to take the form of further cuts in banks' reserve requirements rather than lower policy rates."

There are trouble spots in China, said Capital Economics, notably disappointing data on spending and home sales, which are down 16 per cent from a year ago.

"But big falls in inflation have given policy makers space to respond," the economists said. "We expect more concerted policy loosening over the next few months."

China's hard landing risks ease

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