These are stories Report on Business is following Monday, Feb. 13, 2012. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.
Lin a boon to shareholders Jeremy Lin isn't just a phenomenon in the sports world. The 23-year-old behind "Linsanity" isn't doing badly for shareholders of The Madison Square Garden Co. either.
MSG stock, which has been climbing and is at an all-time high, gained another 3.8 per cent today after the point guard's dramatic run with the New York Knicks. The National Hockey League's New York Rangers aren't doing too badly, either. The two are among MSG's holdings.
"Rangers and Knicks fans do tend to buy the stock when the teams are doing well," Miller Tabak analyst David Joyce told The Associated Press.
Bloomberg News also reports that Mr. Lin has had the best-selling National Basketball Association jersey since early February, and Knicks merchandise is doing the best in the NBA.
- Lin, Rubio revive teams, bolster NBA abroad
- Lin proves he's a good player, as well as a good story
- 'Linsanity' takes the NBA by storm
Can Greece pull it off? Global markets climbed today on the approval of new austerity measures by Greece's parliament, but I'm not sure why. As CMC Markets analyst Michael Hewson put it, it was little more than "political theatre."
Yes, politicians approved the new program early today, but can they bring it in as promised given the mounting anger that saw Athens in flames? Even then, consider the outlook for the Greek economy, now in its fifth year of recession with jobless levels rising by the month.
As our European correspondent Eric Reguly reports in today's Globe and Mail, at least 45 buildings were burned as the government approved measures to slash public sector jobs, reform pensions and cutting the minimum wage markedly.
That the government approved the measures is meaningless if the program can't be implemented. And there are real doubts that that can be done.
"There's a lot of very angry people out there," Mr. Hewson said. If the population won't buy in, and it won't, bringing in the program will be extremely difficult.
Mr. Hewson is not alone. He and others feel the Greek government has now put the ball in the hands of the euro zone finance ministers, who told Athens last week that it hadn't cut deep enough, and had to go further if it wants further bailout money, which is desperately needed to stave off default as it heads toward a bond redemption in late March.
The Greeks will now go back to the euro finance ministers on Wednesday to show that they have met the terms dictated by the group, and the negotiating team known as the Troika, made up of the European Union, the International Monetary Fund and the European Central Bank.
"The decision to send the reform package back to Athens represented, in rugby parlance, a hospital pass of epic proportions and the decision to agree the terms sent from Brussels means the politicians are flattened by their own electorate," said Kit Juckes, the chief of foreign exchange at Société Générale.
"The extent of the rioting demonstrates how unpopular the current path is - Greek voters have lost faith in the notion that economic recovery can come through austerity every bit as much as northern euro zone politicians are losing faith in Greek politics."
Mr. Hewson noted that the young people of Greece would represent the engine of sustainable growth, but almost half of them are unemployed. Another route to growth would, of course, be devaluation of the local currency, but there is no local currency, rather the euro shared by 17 countries, and thus no ability to go that route.
Mr. Hewson is even more convinced now that Greece is heading toward a bankruptcy at some point even if, as expected, it gets its next round of bailout fund. That €130-billion is aimed at protecting bondholders and banks, he said, not stimulate the economy.
- Greece smoulders after riots engulf Athens over new austerity deal
- Athens burns as Greek austerity bill passes, avoiding default
Flaherty, Carney concerned on Volcker Rule Canadian officials came out in force today, warning about the impact on Canada from the proposed Volcker rule in the United States.
Canada's finance minister Jim Flaherty fired off a letter to his U.S. counterpart, warning of the "material adverse effects" the Volcker rule could have on Canada's banks and markets, while Bank of Canada Governor Mark Carney wrote to Federal Reserve Chairman Ben Bernanke.
"I am particularly concerned that the proposed rule could severely impact the liquidity of Canadian government debt markets and interfere with the risk management practices of banks in Canada," Mr. Flaherty said in his letter to Treasury Secretary Timothy Geithner today, the deadline for comments.
"The draft rule could also have serious unintended consequences for Canadian bank-sponsored mutual funds, hampering their ability to provide services to their Canadian clients."
The Volcker Rule would restrict proprietary trading among financial institutions doing business in the United States.
"I respect the right of U.S. regulators to extend any new restrictions on the activities of U.S. banks to activities carried out by Canadian banks in the United States," Mr. Flaherty said.
"However, the Volcker rule as drafted would also potentially apply to Canadian banks’ much larger Canadian operations, which pose no risk to U.S. taxpayers or U.S. financial stability. The Volcker rule could apply to transactions between Canadian banks that are simply facilitated by U.S.-based financial infrastructure, such as U.S. clearing houses. This could have unintended adverse consequences for the U.S. financial system. For example, by imposing a high compliance burden on the use of U.S. financial infrastructure, the proposed Volcker rule could force foreign banks to clear and settle transactions in non-U.S. jurisdictions, or to avoid U.S. exchanges altogether."
In his letter, Mr. Carney told Mr. Bernanke that "the proposed rule appears to extend well beyond U.S.-insured depository institutions and imposes significant restrictions on Canadian banking entities by limiting their use of U.S.-based resources, personnel and market infrastructure and by preventing them from trading with U.S. counterparties."
- Carney, Flaherty step up fight against U.S. Volcker rule
- Read the Flaherty letter
- Read the Carney letter
- Canadian banks to meet with U.S. regulators over Volcker rule
Barrick dumping Highland Barrick Gold Corp. is dumping its stake in Russia's Highland Gold Mining Ltd., determining the 20.4-per-cent holding is no longer strategic.
"Barrick intends to divest its shareholding in Highland in an orderly process which delivers proper value to Barrick and, accordingly, supports the interests and aims of Highland and its shareholders," Highland said in a statement today.
"Barrick, Highland, and Highland's largest shareholder, Primerod International Ltd., have agreed that each party will work together to achieve an orderly divestiture for Barrick."
Highland is minority controlled by Millhouse Capital, which in turn is partly owned by Russian financier Roman Abramovich.
"Barrick, which bought into Highland Gold in 2003, initially sought to use the company as a platform for expansion in Russia,” said VTB Capital analyst Nikolay Sosnovskiy, according to Bloomberg News. "Highland failed to increase production, and now Barrick is basically quitting Russia."
Japan's economy contracts The flooding in Thailand that disrupted supply chains helped shrink Japan's economy in the fourth quarter of last year. But that was just one factor, and others, such as the strong yen, threaten to hold back growth going forward.
The economy contracted by 2.3 per cent in the final quarter of 2011. Remember that just last month, the country posted its first trade deficit since 1980.
"The bottom line is that Japan is suffering from a confluence of negative factors that pose a tremendous challenge to the economy," said Derek Holt and Dov Zigler of Scotia Capital.
"The supply chain disruptions emanating from the flooding in Thailand and the lingering after-effects of the Tohoku tragedy are only part of the explanation for the weak performance. Barely-growing private demand and ongoing deflation have been the larger issues for some time, and the elevated yen’s effects on Japan’s exports are now taking what was Japan’s main source of growth and turning it into an economic drag."
Whither housing market Canada Mortgage and Housing Corp. expects two steady years for the real estate market.
The mortgage insurer said in a new forecast today that low interest rates and a growing economy will keep the market buoyant, The Globe and Mail's Steve Ladurantaye reports.
"With the Canadian economy set to expand at a moderate pace and mortgage rates expected to remain low, activity levels in 2012 in both new home construction and sales of existing homes will stay close to levels seen in 2011," deputy chief economist Mathieu Laberge said in the report.
CMHC projected housing starts of 190,000 this year and 193,800 next, existing home sales of 457,300 and 468,200, and average resale prices of $368,900 and $379,000.
- Obama unveils budget proposals, GOP goes on the attack
- Apple stock breaks $500 mark
- Tax cheats a problem, but so are those who overpay
- Valeant to buy Eyetech