These are stories Report on Business is following Wednesday, Sept. 19, 2012.
Zuckerberg's declining fortune
Mark Zuckerberg and other social media types have taken a big hit as their stock declines.
Mr. Zuckerberg’s net worth plunged in the latest Forbes ranking of America’s 400 wealthiest people, driven down by the poor stock debut of Facebook Inc.
Indeed, Forbes said today, the 28-year-old whiz kid took a bigger hit than the other 399 on the list, as his wealth plunged by $8.1-billion (U.S.) to $9.4-billion.
“The drop isn't likely to change the hoodie-wearing CEO's lifestyle much,” said Forbes, which ranked Mr. Zuckerberg as No. 36 on the list.
“What's less clear: whether the young executive, who married his longtime girlfriend Priscilla Chan the day after the IPO and headed off for an Italian honeymoon, can right the ship and make Facebook into a winning public company.”
Some of Mr. Zuckerberg’s social media peers also slipped.
No. 1 on the Forbes list, of course, is Bill Gates, at $66-billion, followed by Warren Buffett at $46-billion, Larry Ellison at $41-billion, and, tied at No. 4, Charles and David Koch at $31-billion.
A new currency war?
The Bank of Japan surprised markets today with a boost to its stimulus measures, following in the footsteps of the U.S. and European central banks over the past few weeks.
Japan’s central bank pumped an extra ¥10-trillion into its asset-buying program, which it extended to the end of next year, citing troubles in other economies and inside its own borders.
The move immediately knocked down the yen, raising the question of whether the world is heading back into a currency war, though it soon gained back ground.
“With concerns about a rising yen continuing to trouble Japanese policy makers and economic activity starting to slow, the Bank of Japan decided once again to try and deal with the problem of their appreciating currency, which is continuing to hurt the country’s exporters,” said senior analyst Michael Hewson of CMC Markets.
“Last week’s Fed action won’t have done the Japanese any favours, strengthening the yen further and the central bank has decided to respond early .. in order to try and mitigate the Fed’s actions, on its own currency as well as attempt to stimulate growth.”
Last week, chairman Ben Bernanke and his colleagues at the Federal Reserve unveiled a new bond-buying program, dubbed QE3 because it marked the third round of quantitative easing. The European Central Bank under chief Mario Draghi moved a week earlier.
The Fed, of course, says its programs are not aimed at weakening the U.S. dollar, though, as senior currency strategist Camilla Sutton of Bank of Nova Scotia noted, the central bank is aware that its policy is “U.S. dollar negative.”
The latest moves by the world’s big central banks – and we’ll see what comes next from the People’s Bank of China – reminds some observers of the where the world stood during the currency cold war of last fall.
"We would suggest markets have almost come full circle from the fall of 2011, when the G4 central banks announced increasingly aggressive monetary policy, unleashing a risk rally and adding fuel to the ‘currency war,'" said Ms. Sutton. "The chances of reliving this are increasing."
Indeed, it threatens a tit-for-tat of sorts.
"The likelihood of a similar pushback by emerging market economies is likely to be easing of their own or capital controls to try and stem the flow of hot money looking for yield," said Mr. Hewson.
A weaker currency helps a country’s exporters by reducing the cost of their goods in foreign markets. And a stronger currency hurts. Just look at Canada’s widening trade deficit of late, and you can see the impact the strong dollar is having.
“They say the definition of madness is repeating the same thing over and over again, expecting a different result,” Mr. Hewson said.
“Japan has had an easy monetary policy for years with no discernible improvement in the country’s economic outlook,” he added.
“The Bank of Japan’s actions were inevitable once the Fed acted last week given the pressure their exporters are under. Even though they have only done an extra ¥10-trillion they do have scope to do much more, given the pledges by Bernanke and Draghi to do unlimited buying.”
At this point, the outcome of the Bank of Japan’s move today is uncertain. Adam Cole of RBC in Europe, for example, believes it will be “largely irrelevant” for the yen.
“Whether the BOJ will squeeze domestic investors out of the yen and into foreign currencies is uncertain but more aggressive monetary easing is always to be welcomed in deflation-struck Japan,” added Kit Juckes, the chief of foreign exchange at Société Générale.
Progress in auto talks
Chrysler Group LLC and General Motors Co. have still not agreed to match the terms of a contract the Canadian Auto Workers union has negotiated with Ford Motor Co., but progress is being made in negotiations, the CAW says.
The union is pushing Chrysler and GM to match the Ford deal in what is known as pattern bargaining, where an agreement reached with one of the Detroit Three auto makers serves as a template for all of them, The Globe and Mail's Greg Keenan reports.
Why homes are getting smaller
It’s not so much that we’re running out of space as we are people.
Today’s census numbers from Statistics Canada highlights why Canadian houses and condos are getting smaller.
It’s partly because households are getting smaller, and that’s filtering through the housing and related sectors.
First, notes senior economist Sonya Gulati of Toronto-Dominion Bank, there’s a trend toward households of just one or two people. At the same time, Canadians are having fewer children, according to the 2011 data.
So, over all there are smaller households.
“The trend towards one- and two-person households helps explain why new houses and condo units are being built smaller than they once were,” Ms. Gulati said.
“There is also growing demand for furniture for urban living and/or tight spaces. High home and land prices and reduced home affordability also help explain why living spaces are getting smaller.”
And as The Canadian Press reports, today’s numbers also show how high-rise apartments have sprung up across the country.
Ms. Gulati also noted that households increased at a pace of about 189,000 a year between 2006 and 2011. That’s below, for example, the annual pace of construction starts in Canada so far this year, at 218,000.
“This reaffirms TD Economics’ long-standing notion that the pace of homebuilding in Canada is getting ahead of housing demand and underlying demographic fundamentals.”
- Canadian families shrinking, married couples in decline: Census
- Census reveals growth in high-rise apartments, especially in big cities
- Everything you need to know about census family data in one post
Housing market cools
Home prices rose just 0.2 per cent in August from July, the smallest increase for the month of August in 12 years, according to the Teranet-National Bank National Composite House Price Index.
Prices declined in three of the three metropolitan housing markets that were surveyed, The Globe and Mail's Tara Perkins reports. In Vancouver they dropped 1.2 per cent, in Victoria 0.7 per cent, and in Quebec City 0.6 per cent.
The house price index was up 4.1 per cent from a year ago.
- Home prices see weakest August increase in 12 years
- B.C. housing slowdown signals wider slump
- Housing market correction 'appears to be under way'
What the iPhone means
Even as Apple Inc. processes a record 2 million pre-orders for the iPhone 5, an analyst report released today notes Canada’s major wireless companies see less of a positive return from each successive iPhone launch, The Globe and Mail's Iain Marlow rites.
Huge pent up demand for Apple Inc.’s incredibly popular smartphone usually crimps profit margins at big wireless carriers. Telecoms such as BCE Inc., Telus Corp. and Rogers Communications Inc. have to pay out in order to subsidize consumers’ purchases of the expensive devices, though they benefit in the long term by tossing them on lengthy contracts.
But as wireless companies’ subscribers increasingly opt for smartphones – and pay for both voice and data plans in greater numbers than ever before – the benefit from each new iPhone launch shrinks, says Maher Yaghi of Desjardins Securities Inc.
Canada promises Asia on energy
Canada's Natural Resources Minister is offering assurances to Asian customers that Canada will move quickly to build liquefied natural gas plants capacity on the west coast to feed their growing demand, The Globe and Mail's Shawn McCarthy reports.
Accompanied by several companies involved in proposed projects in British Columbia, Joe Oliver spoke at an international LNG conference today in Tokyo, where he promoted Canada as a secure source of gas and a welcoming place for Asian investment.
When the choice isn't yours
Despite their best-laid plans, a new poll says more than one-third of retired baby boomers did not choose when they left the work force, The Globe and Mail's Roma Luciw writes.
The poll of Canadians aged 50-plus with financial assets of at least $100,000, released by Royal Bank of Canada today, found 85 per cent of not-yet-retired baby boomers believe they will work until they decide not to. But among those who have actually retired, only 62 per cent had that choice.