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U.S. President Barack Obama pauses while delivering a speech on the U.S. fiscal and budgetary deficit policy at the George Washington University in Washington, April 13, 2011. Obama proposed cutting ballooning U.S. budget deficits by $4 trillion over 12 years and called for talks with Democratic and Republican lawmakers to address the worsening fiscal woes. (Kevin Lamarque/Reuters)
U.S. President Barack Obama pauses while delivering a speech on the U.S. fiscal and budgetary deficit policy at the George Washington University in Washington, April 13, 2011. Obama proposed cutting ballooning U.S. budget deficits by $4 trillion over 12 years and called for talks with Democratic and Republican lawmakers to address the worsening fiscal woes. (Kevin Lamarque/Reuters)

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Obama urges end to tax breaks for oil, gas industry Add to ...

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Obama urges end to energy tax breaks Warning there is no "silver bullet" for surging gas pump prices, U.S. President Barack Obama urged Congressional leaders today for immediate end to unjustified tax breaks for the energy industry, and pump the money instead into clean energy that would cut dependence on foreign oil.

"High oil and gasoline prices are weighing on the minds and pocketbooks of every American family," the President said in a letter.

"The recent steep increase in gas prices, driven by increased global demand and compounded by unrest and supply disruptions in the Middle East, has only added to those struggles. If sustained, these high prices have the potential to slow down the pace of our economy's growth at precisely the moment when we need to be accelerating it."

The president's budget proposes killing tax breaks worth more than $45-billion over a decade. In his letter, he said he was "heartened" to hear House Speaker John Boehner express openness to killing the subsidies. In a TV interview, Mr. Boehner said the breaks were something to look at.

There are steps the U.S. can take, the president added in his letter.

"One of those steps is to eliminate unwarranted tax breaks to the oil and gas industry and invest that revenue into clean energy to reduce our dependence on foreign oil. Our outdated tax laws currently provide the oil and gas industry more than $4-billion per year in these subsidies, even though oil prices are high and the industry is projected to report outsized profits this quarter. In fact, in the past CEO's of the major oil companies made it clear that high oil prices provide more than enough profit motive to invest in domestic exploration and production without special tax breaks."

As Globe and Mail energy writer Shawn McCarthy reported last month, Mr. Obama has laid out a plan calling for the U.S. to cut its oil imports by a third over the next decade. The President, though, has singled out Canada as a secure source of oil.

"I recently laid out my approach to a comprehensive strategy in my Blueprint for a Secure Energy Future, which includes safe and responsible production of our domestic oil and gas resources and doubling down on fuel efficiency in the transportation sector while investing in everything from wind and solar to biofuels and natural gas," the President said in his letter.

"None of you will agree with every aspect of this strategy. But I am confident that, in many areas, we can work together to help show the American people that we can make progress on an energy policy that creates jobs and makes our country more secure."

Markets note poll results Markets have largely paid little attention to the federal election, but that's starting to change with the latest poll results that show a surge by the New Democratic Party.

"I think we have to pay attention at this point because I don't believe that's what the market expected," BMO Nesbitt Burns deputy chief economist Douglas Porter said today.

Where investors and economists are concerned, little change was anticipated when the election was first called. But as the NDP picks up support, according to opinion polls, interest is picking up, too.

"Note that the latest poll by EKOS finds that the NDP has moved into second, and could potentially take 100 seats, knocking the BQ to just 14 and the Conservatives to just over 130 seats," Mr. Porter told bank clients in a research note.

"While that's certainly an 'interesting' result, it's not exactly market-friendly. In other words, hang onto your hats!"

At Scotia Capital, economists Karen Cordes Woods, Gorica Djeric and Derek Holt also noted today that their global clients have also asked for occassional updates.

"Gains have been clocked by the left-leaning NDP which has risen from a low of 13.2 per cent of voter opinion on April 9 to 23.6 per cent today," they told their clients.

"The remaining Bloc Québécois and Green Party hold a combined 10 per cent of the vote which is about a couple of points lower than their peak share earlier in the month. By comparison, the 2008 election had the Conservatives winning 37.7 per cent of the vote, the Liberals 26.3 per cent, the NDP 18.2 per cent, the BQ 10 per cent and the Green Party 6.8 per cent.

"In short, while we again caution that share of vote doesn't necessarily mean anything in terms of the share of seats which is the only thing that matters, the outcome is looking like it may well yield another minority Conservative government following the fourth election in 11 years, but with the NDP rising at the expense of the BQ and Green Party."

Harper touts asbestos industry It's crucial that a government back its country's industries, and it's expected that politicians in the middle of an election campaign will stop at corporate sites and tout their benefits and talk about job creation, etc.

But asbestos? Seriously? I guess when you're looking for votes in Quebec, anything goes.

As The Globe and Mail's Steven Chase reports today, Stephen Harper stopped by the aptly named Asbestos, Que., to give the region a boost.

This is not to comment on the Conservative election platform, or to endorse or reject any political party, only to note that the Tories support one of the world's most shunned industries. And with good reason. However, where Mr. Harper's concerned, asbestos is a substance that's legally controlled in many places.

Asbestos has been a mainstay of the region since the late 1800s, and is used mostly now in developing countries. That's because developed countries don't want to touch it. Because it causes cancer. And there has been much pressure on Canada to let this industry die.

Here's what the World Health Organization said in 2005, when it adopted a resolution on cancer prevention:

"Currently about 125 million people in the world are exposed to asbestos at the workplace. According to global estimates, at least 90,000 people die each year from asbestos-related lung cancer, mesothelioma and asbestosis resulting from occupational exposures. In addition, it is believed that several thousands of deaths can be attributed to other asbestos-related diseases as well as to non-occupational exposures to asbestos. The burden of asbestos-related diseases is still rising, even in countries that have banned the use of asbestos in the early 1990s. Because of the long latency periods attached to the diseases in question, stopping the use of asbestos now will only result in a decrease in the number of asbestos-related deaths after a number of decades."

Here's what Canada's ministry of natural resources says on its website:

"In recent years, asbestos has come under close scrutiny as a potential health hazard. Most of these health hazards come from the past use of amphibole asbestos and from inappropriate practices such as sprayed-on insulation. These practices have been discontinued in Canada since the 1970s. Worldwide, the main varieties of amphibole asbestos used commercially are crocidolite (blue asbestos) and amosite (brown asbestos). Chrysotile is in a different class of silicate minerals. Scientific evidence has demonstrated that it can be used safely at low levels of exposure ... Regulations have been developed and are enforced rigorously to control exposure to chrysotile dust."

I wonder whether Mr. Harper's next stop will be the Imperial Tobacco head office in Montreal.

U.S. house prices slide Can the U.S. real estate industry ever get out of its funk?

The widely-watched S&P/Case-Shiller house price index today showed prices dipping again in February, its 10-city and 20-city measures both slipping by 1.1 per cent from January.

"The U.S. housing market recession continued in February, if the Case-Shiller house price index is any guide," said CIBC World Markets economist Krishen Rangasamy.

"The index's composite-20 fell for the eighth consecutive month and is now 3.3 per cent below year-ago levels. With a massive stock of unsold homes on the market, prices should remain depressed for much longer, keeping the residential construction sector as a likely drag on U.S. economic activity for the next little while."

What's the outlook?

"The massive amount of seriously delinquent mortgages and the substantial inventory of existing homes will keep downward pressure on home prices in the months ahead," said economist Christos Shiamptanis of Toronto-Dominion Bank.

"In turn, this will keep many mortgage holders underwater for some time to come, and discourage developers to boost construction. But, home price weakness is able to attract the needed buyers to help clear the market, which was supported by March's increase in existing home sales. Existing home sales have bounced off bottom by 32 per cent."

Minmetals bows out China-backed Minmetals Resources Ltd. is abandoning plans to bid for Equinox Minerals Ltd. after a surprise higher offer was tabled by Canadian bullion giant Barrick Gold Corp. , The Globe and Mail's Andy Hoffman and Brenda Bouw report today.

The subsidiary of state-backed enterprise China Minmetals Corp., known as MMR, said Barrick's $7.3-billion offer, announced on Monday, is simply too rich.

The rapid withdrawal suggests the Chinese company was not interested in picking a fight with Barrick's accomplished deal-making team. Chinese resource firms have been generally reluctant to enter controversial takeover battles.

UBS Securities Canada analyst Brian MacArthur cut his outlook for Barrick after the $7.3-billion bid, taking his 12-month price target to $64 (U.S.) from $68, but maintaining a "buy" rating.

"We revised our 2012 [earnings per share]estimate from $3.86 to $4.31," Mr. MacArthur said.

"We believe the deal is accretive to cash flow and earnings, but, it is dilutive to [net asset value]and raises Barrick's political risk due to higher exposure to Africa. Further, we note the multiple could compress as investors may be concerned about the dilution of gold."

European math Can markets trust anything from Greece and the European authorities?

Eurostat, the European Union's statistics agency, said today that Greece's deficit was much bigger than projected last year, at 10.5 per cent of gross domestic product, compared to the 9.6 per cent predicted last fall.

While markets increasingly may have come to beware Greeks bearing deficit gifts, credibility actually does matter as the embattled country stresses time and time again that it's not going to default. Markets don't believe it, just like they didn't believe Greece wouldn't seek a bailout despite repeated protestations on that front.

Government bond yields hit fresh records again today for Greece, Ireland and Portugal, with Greek 10-year paper touching 15.26 per cent, as Eurostat reported where individual deficits stood at the end of last year.

Aside from Greece, the fattest deficits included Ireland, at 32.4 per cent, Britain, at 10.4 per cent, Spain, at 9.2 per cent, and Portugal, at 9.1 per cent. The lowest took in Luxembourg, at 1.7 per cent, Finland at 2.5 per cent, and Denmark at 2.7 per cent. Estonia actually posted a marginal surplus and Sweden was bang on balanced.

Ford in the fast lane Ford Motor Co. , the only one of the Detroit Three to ride through the recession without a court filing, today came in with its best first-quarter profit in 13 years, highlighting how the industry continues to rebound.

Ford earned $2.6-billion (U.S.), or 61 cents a share, up from $2.09-billion, or 50 cents, a year earlier, beating the forecasts of analysts. Revenue climbed to $33.1-billion.

"Our progress toward delivering profitable growth for all will continue as we aggressively manage short-term challenges and opportunities," chief executive officer Alan Mulally said in a statement.

"We expect our annual volumes to continue to grow substantially, driven primarily by our growing product strength, a gradually strengthening global economy and an unrelenting focus on improving the competitiveness of all of our operations."

Precision Drilling profit, revenue climb Precision Drilling Corp. , a "well-oiled machine," as UBS puts it, posted a jump in first-quarter profit today, to $66-million or 23 cents a diluted share, from $57-million or 20 cents a year earlier. And it boosted plans for new rigs.

Revenue climbed to $535-million from $373-million.

"A prolonged Canadian winter drilling season characterized by the highest utilization since 2006 illustrated the persistent industry shortage of Tier 1 drilling rigs," noted chief executive officer Kevin Neveu.

"Across North America, approximately 70 per cent of Precision's rigs working during the first quarter were drilling for oil or liquids rich natural gas targets and over 80 per cent were drilling complex horizontal or directional wells," he added in a statement.

"In the United States over the past nine months, we have seen the strong oil and liquids rich natural gas demand for Tier 1 and Tier 2 rigs continue to absorb rigs that have been released as our customers reduce activity in dry gas resource plays."

UBS Securities Canada analyst Chad Friess said the revenue results were slightly better than expected.

"Citing strong demand for oil-directed drilling, [the company]has expanded its 2011 new build program by seven rigs for a total of 12 rigs now," Mr. Friess said.

Accordingly, the 2011 capital budget has been raised from $423-million to $595-million or an increase of $172-million (more than we would have expected). Although some deterioration in gas drilling is feared, oil should continue to pick up the slack."

Raymond James analyst Andrew Bradford also boosted his 6-12-month target to $15.25 from $13.

Sony unveils tablets The market for tablet computers is started to look a bit crowded.

With the iPad from Apple Inc. , the PlayBook from Research In Motion Ltd. , and the Galaxy from Samsung to name but a handful, Sony Corp. today unveiled two tablets.

Its goal is to grab the No. 2 spot. The devices will use the Android operating system from Google Inc. , and, giving Sony a leg up, will be able to play PlayStation games.

In Economy Lab today

How could the IMF have two dramatically different forecasts of China's economic ascension? Brian Milner reports.

Carolynne Wheeler in Beijing takes a close look at the gold market in China.

There's a hole in the Conservative platform, one so big that you could fit Canada's oil and gas sector or every single one of our fossil-fuel power plants into it, Andrew Leach writes.

In Personal Finance today

The housing market has been rising at almost double its long-term rate. Don't expect this to continue, Rob Carrick warns.

If you're one of the ones getting money back this year, you might just want to listen to your id and spend some of it on yourself, Dakshana Bascaramurty writes.

Tara Perkins is being hounded by debt collectors, but they're not after her. There are limits on what a collection agency can do, she writes. But if you actually owe money, a credit counsellor might be able to help.

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