These are stories Report on Business is following Wednesday, Jan. 22, 2014.
In case you missed it, shares of BlackBerry Ltd. have been staging something of an awesome comeback.
Short sellers haven’t missed it, seemingly sensing a change in the wind.
The stock has gained about 30 per cent this year, and was up again this morning to retake $10 (U.S.).
BlackBerry shares are still far below where they stood a year ago, by some 37 per cent, but clearly the smartphone maker’s new chief executive, John Chen, is making his mark.
Of late, BlackBerry stock has surged on brighter analyst reports, and a vote of confidence from the U.S. Defense Department.
And, as The Globe and Mail’s Sean Silcoff reports, the company unveiled plans late yesterday to sell the bulk of its Canadian real estate holdings, which analysts say could be worth more than $500-million.
Also, according to new numbers from Markit, the short positions in BlackBerry have fallen to 12 per cent of its stock from more than 20 per cent, Reuters reports.
Adding to the confidence is a move by Mr. Chen to snap up BlackBerry stock. According to information filed with regulators, he bought 25,000 shares on the open market on Jan. 13, at $8.25 each.
- Boyd Erman in Streetwise (for subscribers): BlackBerry’s fast-moving CEO inspires investors
- Sean Silcoff: BlackBerry to divest Canadian real estate holdings
- BlackBerry shares move higher on U.S. Defence Department’s support
- Sean Silcoff: Short sellers shy away from BlackBerry
Wink wink, nudge nudge
Governor Stephen Poloz and his colleagues at the Bank of Canada won’t actually do much of anything this morning. But watch for a wink wink, nudge nudge that could in turn nudge down the dollar.
Mr. Poloz and his policy-setting panel release their decision and monetary policy report at 10 a.m. ET, and are expected to set a very easy-going, or “dovish” tone where the economic outlook and stubbornly low inflation are concerned.
They won’t, of course, change the benchmark overnight rate from its current 1 per cent.
But it’s that dovish sense, coupled with soft economic readings, that have whacked the currency over the past several months, particularly this month alone. And the markets smell blood in the water.
While some observers believe Canadian policy makers are deliberately trying to hold down the loonie, as the country’s dollar coin is known, the Bank of Canada denies doing that.
That doesn’t mean that Mr. Poloz isn’t happy about a devalued currency that means a boost to exporters, however.
Nor should one expect that he’s going to say anything this morning that could send it higher.
“To reiterate our base case scenario, we anticipate a ‘dovish’ outcome today, with the BoC stopping short of formally adopting any sort of easing bias,” said Stephen Gallo, Bank of Montreal’s European chief of foreign exchange strategy.
“Under the base case, we expect a knee-jerk reaction higher in USDCAD,” Mr. Gallo added, meaning a sinking Canadian currency against the U.S. dollar.
“This would be before some fairly sizeable profit-taking sets in.”
- Anna Nicolaou in ROB Insight (for subscribers): Why today’s Bank of Canada statement is the one to watch
- Barrie McKenna: Poloz unlikely to cut rates, despite deflation concern
Really big blue
Shares of IBM Corp. slumped today in the wake of its disappointing fourth-quarter report after markets closed yesterday.
Revenue slipped 5 per cent in the quarter to $27.7-billion (U.S.), falling shy of what analysts had projected, while sales in its hardware business took it on the chin.
IBM profit rose to $6.2-billion or $5.73 a share, which included a tax-related gain, from $5.8-billion or $5.13 a year earlier.
What’s that mean for chief Ginni Rometty and her top managers?
“While we made solid progress in businesses that are powering our future, in view of the company’s overall full year results, my senior team and I have recommended that we forgo our personal annual incentive payments for 2013,” Ms. Rometty said.
- IBM misses revenue targets again after stumbling in China
- Follow our Inside the Market blog (for subscribers)
British unemployment eases
Britain’s unemployment rate has fallen to the lowest level in five years, putting Bank of England Governor Mark Carney in a tricky position as the jobless rate moves to within a fraction of a threshold he set to consider raising interest rates.
Britain’s economy has performed far better than expected in recent months and figures released today showed the unemployment rate had fallen to 7.1 per cent for the three months from September to November, 2013, The Globe and Mail's Paul Waldie reports from London.
Several economists have said the unemployment rate could fall to 7 per cent by March, matching a target Mr. Carney set to consider raising rates.
Mr. Carney set the target last summer, saying the bank would consider increasing its key lending rate, currently at 0.5 per cent, once unemployment hit 7 per cent. That wasn’t expected to happen until mid-2016. Some economists have suggested Mr. Carney may have to reset the threshold and drop it to 6.5 per cent since a hike in rates now could thwart the recovery.
Pension plan improves
Air Canada’s domestic pension plans have swung to a small surplus from a solvency deficit of $3.7-billion a year ago, The Globe and Mail's Bertrand Marotte reports.
The airline said today preliminary estimates indicate that its pension plans will be in a “small surplus position” at Jan. 1, 2014.
Elimination of the deficit came about as a result of several factors, including a 13.8-per-cent return on investments last year; amended pension benefits that are estimated to have trimmed the deficit by about $970-million; contributions by Air Canada for the year of $225-million; and the application of an estimated prescribed discount rate of 3.9 per cent to calculate future obligations.
Streetwise (for subscribers)
ROB Insight (for subscribers)