These are stories Report on Business is following Wednesday, Feb. 15, 2012. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.
Greece says it's ready. Really Greece's finance minister promises to meet all the conditions needed for fresh bailout funds by the time his colleagues in the euro zone hold a key telephone conference today. Honest.
Finance ministers of the 17-member monetary union originally planned to meet face-to-face, but decided it wasn't worth the trip and they'd just chat by phone because Athens wasn't ready as of yesterday.
"There is no euro group meeting but there will be a conference call, although it appears the meat will not be put on the bailout bones until Monday’s full meeting," said fixed income and currency strategist Michael Turner of RBC.
But Finance Minister Evangelos Venizelos said today that "very few" issues are left to iron out to meet the terms dictated by the so-called Troika - the International Monetary Fund, the European Union and the European Central Bank - and other countries in the euro zone for the €130-billion.
In Greece, of course "very few" can translate into a very long time. And reports from Reuters today suggest the euro finance officials are looking at delaying part of the bailout.
Among the demands of other euro leaders are letters of commitment from Greek's politicians that they will adhere to their austerity plans no matter what happens in elections scheduled for April.
A spokesman for the EU said today that "we are running out of time," while Germany's outspoken finance minister, Wolfgang Schaeuble, said his government wants to help Athens but won't throw money into a "bottomless pit."
On the home front, Mr. Venizelos warned his own people that several other countries no longer want Greece in the euro zone, which shouldn't surprise anyone given that the debt crisis has run for two years now.
"At play for our generation is either sacrifices and cutbacks, or national catastrophe that can carry away our society, our institutions and democracy," he said, according to Agence France-Presse.
Greece is staring a default in the face, with a big bond redemption looming in late March.
"Yesterday’s late cancellation of today’s EU finance ministers meeting appears symptomatic of the brinkmanship being played out between EU officials and Greek politicians as they play cat and mouse with each other, and the markets over the ratification of the latest Greek bailout," said CMC Markets analyst Michael Hewson.
No matter the outcome of today's call, Monday's full meeting or even the bailout money, Greece is in deep trouble and many observers still expect a default. The issue is one of sustainability, and Germany's comments about Greece being a bottomless pit.
"One question that skeptical fixed income markets may be asking this morning concerns the fact that this is only one of the criteria that the euro area finance ministers required in advance of determining whether or not to extend another round of financing to Greece – and whether further required rounds of financing will be forthcoming," said Derek Holt and Dov Zigler of Scotia Capital.
"The other issue is that of debt sustainability given that the original goal of a debt to GDP ratio of no higher than 120 per cent over the next decade and following the currently pursued soft default has given way to considerably higher estimates," they said in a report.
"At some point the reality that good money is being thrown after bad will sink in across the euro area, begging the question why commit to ongoing bailouts and haircuts if the end result is still a very high debt burden? This is where Schaueble's comments come in such that Europe's greater preparedness for a Greek default today than earlier may just position all of this as buying time for European banks before the ultimate hard default and big bath hits."
Euro economy shrinks Amid the continuing troubles with the bailout talks, official numbers today show how badly some European nations are suffering.
The euro zone economy, as a whole, contracted by 0.3 per cent in the fourth quarter, and many believe the region is back in recession, the second in about three years.
Gross domestic product in the wider 27-member EU declined at the same pace, the statistics agency Eurostat said today.
There was at least one surprise, though. While Germany's economy dipped by 0.2 per cent, as expected, France actually eked out a gain of 0.2 per cent.
Oil jumps on Iran Oil prices are climbing today in the wake of Iranian reports that the country is cutting its exports to several European nations planning to bring in sanctions in July.
"In response to the latest sanctions imposed by the EU against Iran's energy and banking sectors, the Islamic Republic has cut oil exports to six European countries," said Press TV, a state-run group.
The countries involved are France, Italy, Greece, Portugal, Spain and the Netherlands.
This follows a decision by European governments in January to stop buying oil from Iran beginning July 1.
"We expect the impact to be short-lived for three main reasons," said Julian Jessop, chief global economist at Capital Economics in London.
"However, if oil prices do rise significantly further in the short term, we would add a fourth: the blow to demand in other economies, not least the U.S."
His initial three reasons: The announcement isn't a total surprise, and Saudi Arabia can meet shortfalls, the six countries involved will probably need less oil this year because their economies are hurting, and Iran will need oil customers regardless.
Home sales slip Further evidence of a cooling Canadian real estate market today.
Sales of existing homes slipped 4.5 per cent in January from December, the Canadian Real Estate Association said. It's the first decline since August 2011, the group added, and the biggest monthly drop since July 2010.
Average home prices were up by less than 2 per cent compared to a year earlier, The Globe and Mail's Steve Ladurantaye reports.
Cenovus boosts dividend Canada's Cenovus Energy Inc. closed out what it said was a strong 2011 with a 10-per-cent hike in its dividend and a surge in fourth-quarter profit.
Cenovus earned $266-million or 35 cents a share, diluted, in the quarter, compared to $78-million or 10 cents a year earlier.
Conventional oil and natural gas liquids production, before royalties, rose to almost 69,700 barrels a day. Production from Canada's oil sands climbed to more than 74,500 million.
Its reserves climbed 17 per cent to 1.9 billions of oil equivalent.
"The company continues to advance its oil projects by drilling stratigraphic test wells, moving applications through the regulatory process and constructing expansions as it works toward the goal of 500,000 barrels a day of net oil production by the end of 2021," Cenovus said.
It boosted its quarterly dividend to 22 cents, and said it expects its "continued financial strength will allow our board of directors to place a priority on continuing to grow the dividend."
Talisman loss shrinks Talisman Energy Inc. , in turn, posted a loss for the fourth quarter, though it was narrower than the shortfall of a year earlier.
Talisman lost $117-million (U.S.) or 11 cents a share in the quarter, compared to a loss of $350-million or 34 cents a year earlier.
Chief executive officer John Manzoni said last year was one of "successes as well as challenges" for Talisman.
"North American natural gas prices fell by a third, ending the year below $3, and we saw a significant tax increase in the U.K.," he said in a statement.
"In addition, our own delivery, particularly in the North Sea, fell short of expectations. There were also a large number of positives during the year. Oil prices remained high and helped drive annual cash flow up by 16 per cent. The company grew underlying production by 9 per cent with record shale volumes, two new projects in Southeast Asia and production from Colombia. We have built out our Eagle Ford organization to full capacity from a standing start and started piloting the liquids-rich Duvernay shale, which we will test through this year."
Let the chips fall Whoever thought there could be so much fuss over potato chips? Okay, Pringles are a touch above Wavy Lay's in my books, but still.
Here's what happened today: Diamond Foods Inc. was poised to buy Pringles from Procter & Gamble Co. , but the two companies called off the deal over Diamond's unrelated accounting issues. So Kellogg Co. .agreed to buy the chip business for $2.7-billion (U.S.).
Kellogg, best known for Corn Flakes, of course, is big in the snacks business, having acquired Keebler more than 10 years ago.
"Pringles has an extensive global footprint that catapults Kellogg to the number two position in the worldwide savory snacks category, helping us achieve our objective of becoming a truly global cereal and snacks company," said chief executive officer John Bryant.
Ontario faces the music Like Ontario's citizens and public service, Bay Street is waiting a fiscal report from economist Don Drummond this afternoon.
As The Globe and Mail's Adam Radwanski reports today, Premier Dalton McGuinty appointed Mr. Drummond to look into just what has to be done, which fills a "veritable encyclopedia."
"The 700-page report has been largely leaked, and will call for user fees on health care, an overall increase of 0.8 per cent annually for program spending (versus a recent trend of 7 per cent), and a re-think of all-day kindergarten," said deputy chief economist Douglas Porter of BMO Nesbitt Burns.
"Recall that this report is merely a lengthy list of recommendations, and many (most?) may never be acted upon," he added. "In the lead-up, Finance Minister [Dwight]Duncan is already making lots of noises about potential areas to restrain."
Remember that in mid-December, Moody's Investor Service took time out from its euro watch to focus on Ontario, revising its outlook to "negative" from "stable" and warned about the uncertain economic outlook.
"The much anticipated Drummond report ... on Ontario’s future fiscal challenges will be closely watched by that segment of our client base that follows provincial bonds and particularly the biggest issuer of the lot," said Scotia Capital's Mr. Holt and Mr. Zigler.
"The Ontario government has already noted that it is just advice which may or may not be heeded, albeit the case that rating agencies are keeping a careful eye on Ontario’s deficit projections versus what Drummond will argue to be the risks to the government’s fiscal projections," they said.
"Expect some splashy recommendations given the tone of the government’s comments today which included Finance Minister Dwight Duncan remarking that 'It is very sweeping and it will be very controversial,' and 'Listen, he brings an economist’s point of view to this. I don’t think he spent a whole lot of time figuring out who he’s going to make mad and not mad.'"