These are stories Report on Business is following Thursday, March 15, 2012. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.
The 'almost psychopaths' The controversy over Goldman Sachs Group Inc. hit home with a lot of people yesterday, not only hitting the firm, but also the culture on Wall Street.
As The Globe and Mail's Boyd Erman writes in Report on Business today, an Op-Ed piece in The New York Times, written by Greg Smith as his resignation letter, was yet another blow to Goldman as it cited a "toxic" environment at the money-above-all-else firm.
But the impact goes far beyond the bank, bringing back memories of the financial crisis in an era still marked by a backlash against those who gave the world subprime mortgages.
It's more than that. Dr. Ronald Schouten, writing for the Harvard Business Review late yesterday, used the issue to delve into a look at Wall Street culture and psychopaths, which he noted "are the subject of endless fascination." He was not referring to Mr. Smith, rather using the former Goldman employee's allegations to study what's at play.
Dr. Schouten, director of the law and psychiatric service at Massachusetts General Hospital an an associate professor of psychiatry at Harvard Medical School, was referring in a blog post to another recent piece on the subject, an article in CFA Magazine that pegged the number of psychopaths in the financial services industry at 10 per cent.
Noting that it was an estimate, and likely an overestimate at that, Dr. Schouten, however, that it probably underestimates the number of "almost" psychopaths.
You can spot a psychopath, he said, as those who exhibit "glibness and superficial charm, conning and manipulative behavior, lack of remorse and empathy, refusal to take responsibility for one's behavior, and others."
Here are some other traits:
- "Consistent decisions in their self-interest, even where it is ethically questionable"
- "Chronic, sometimes transparent lies, even with regard to minor things."
- "Persistent focus on gratifying their own needs at the expense of others."
You want that type of person gone from your office, Dr. Schouten said, but there is some good news.
"While full-blown psychopaths are not deterred by fear and do not learn from punishment, 'almost psychopaths' can get the message that adverse consequences will follow misconduct," he wrote. "As a result, strictly enforced firm policies can be effective in deterring those who may be tempted to engage in illicit conduct. As long as the firm wants to deter them."
- Dr. Ronald Schouten: Psychopaths on Wall Street
- Boyd Erman's Streetwise: Resignation letter just the latest blow to Goldman's integrity
- JPMorgan CEO warns staff on schadenfreude after Goldman firestorm
- Official slams Goldman Sachs as he quits: 'Toxic culture, clients as 'muppets'
Viterra establishes 'process' Viterra Inc. has set up an auction process as potential suitors circle the Canadian agribusiness and grain-handling company.
Viterra said it was asked by the Toronto Stock Exchange to say something about what's happening, and so it did, though in a short statement with the slimmest of details. That was enough to send the stock up sharply again. The company has already said it has received expressions of interest.
It was responding to reports from speciality news service dealReporter that it was seeking minimum bids of $16 just to see its confidential financial information.
The service reported that Archer Daniels Midland Co. , Bunge Ltd. and Noble Group are reviewing Viterra’s data, according to Bloomberg News.
Viterra said investors shouldn't rely on such reports, but did acknowledge that "a process has been established by the board of directors of Viterra, which includes confidentiality agreements being entered into and the provision of due diligence ... Viterra has engaged financial and legal advisors to provide support with this process."
TMX deal moves closer The consortium vying for control of Canadian exchange operator X-T said today it expects conditional approval for its takeover bid from Quebec’s securities regulator and will hear back from Ontario’s soon..
The bidder, dubbed Maple Group Acquisition Corp., is composed of 13 financial institutions who hope to buy TMX Group, the owner of the Toronto Stock Exchange.
Maple said Quebec's regulator now “intends to approve” the bid, The Globe and Mail's Tim Kiladze reports, though it appears it will require specific conditions.
The Ontario Securities Commission isn’t as far along in its review, but has told Maple its staff is developing draft recognition orders with detailed terms and conditions.
Apple soars Shares of Apple Inc. hit an all-time high in early trading today, topping $600 (U.S.) for the first time, following several price target increases by analysts, The Globe and Mail's Simon Avery reports.
The milestone came a day ahead of the release of the company’s third-generation iPad computer, which goes on sale tomorrow in the U.S., Canada, Germany, Japan and seven other countries. Prices range from between $499 (U.S.) and $829 depending on the model.
Apple’s stock price has climbed 46 per cent this year alone and 71 per cent over the last 12 months, a performance that has left analysts scrambling to keep their price targets up to date. Forty-eight of the 55 analysts following the company rate it a buy and only one analyst labels it a sell.
Quebecor profit climbs Quebecor Inc. appears to have its eye not only on the ball, but the puck as well.
The Canadian media company said today it earned $85.4-million, or $1.34 a share, in the fourth quarter, compared to $46.6-million or 72 cents a year earlier. That beat the expectations of analysts, The Globe and Mail's media writer, Steve Ladurantaye, reports.
Quebecor now wants to turn its attention to bringing a National Hockey League team to Quebec City, and has struck a deal for naming rights to an arena yet to be constructed.
"Quebecor Media now has all the tools it needs to pursue its goals, which are to manage a world-class multipurpose centre and to bring a National Hockey League team to Quebec City," said chief executive officer Pierre Karl Peladeau.
Debt-to-income dips A key measure of how consumers can handle their debts is easing somewhat, but that's because income is rising at a faster pace.
Debt-to-disposable income among Canadian households dipped in the fourth quarter of last year to 152.9 per cent from 154.2 per cent, Statistics Canada said today. Those figures are not seasonally adjusted.
Household debt per capita rose in the quarter, but so too did net worth, and net worth as a percentage of disposable income.
"Household net worth was up nearly 1 per cent in the fourth quarter, led by gains in the values of household holdings of equities (including mutual funds) and pension assets," the federal agency said.
"Household credit market debt increased in the fourth quarter despite a slower rate of borrowing in consumer credit and mortgages," it added.
You can slice these things all different ways, but the bottom line is that consumers are stretching themselves thin, as many policy makers, notably Bank of Canada Governor Mark Carney, have warned.
- Household debt-to-income ratio declines
- Fat consumer debt biggest risk in Canada, Mark Carney says
- Carney sees an end to rock-bottom rates
- Why the latest mortgage war was months in the making
Home sales rise Home sales in Canada climbed 1.4 per cent in February from a year earlier, winning back some of the slippage earlier. Toronto remains a concern.
The number of new listings rose faster, at 1.9 per cent, the Canadian Real Estate Association said today, while the sales-to-new listings ratio held steady.
"While sales activity was solid last month, mild weather and the extra day likely pumped the figures," said deputy chief economist Douglas Porter of BMO Nesbitt Burns. "With the notable exception of Toronto, price increases are lukewarm, the market looks well balanced, and is broadly moderating on its own accord."
New listings are now at their highest level since May, 2010.
"A rebound in new listings in Toronto and Montreal, Canada’s two most active markets, offset a retreat in new listings in Vancouver, Canada’s third largest market," CREA said.
On a year-over-year basis, the group added, prices are up just 2 per cent as Vancouver cools somewhat but Toronto remains strong.
"In February 2011, the national average price was stretched upward by a spike in high-end home sales in some of Vancouver’s priciest neighbourhoods, and a replay of that was not expected this year,” said CREA economist Gregory Klump.
"February’s data bear this out, but other factors are now keeping the national average price aloft. The main one is the housing market in Toronto, where a tight balance between supply and demand continues to drive some of the strongest home price gains in the country, particularly for single detached properties."