These are stories Report on Business followed this week.
KKR, HSBC recruit new blood
Two major players in the global financial services industry are bringing former spymasters on board, one to help out on deals, the other to beef up its defences.
Kohlberg Kravis Roberts & Co., known in the industry simply by its initials, announced this week that is bringing in David Petraeus, a retired general and former chief of the Central Intelligence Agency, who resigned late last year over an affair with his biographer.
He'll chair the private equity company's new KKR Global Institute.
"As the world changes and we expand how and where we invest, we are always looking to sharpen the ‘KKR edge,'" co-founder Henry Kravis said in a statement.
"With the addition of General Petraeus, we are building on the work we have done to understand the investment implications of public policy, macro-economic, regulatory and technology trends globally. We are pleased to bring all of this expertise together under one umbrella, the KKR Global Institute, to deliver the best of KKR's insights for our investors."
The other appointment was made by HSBC Holdings PLC, which is bringing in Sir Jonathan Evans, the former chief of Britain's MI5, as a non-executive director and a member of its financial system vulnerabilities committee.
"During his career Sir Jonathan’s experience included counter-espionage, protection of classified information and the security of critical national infrastructure," HSBC said. "His main focus was, however, counter-terrorism, both international and domestic including, increasingly, initiatives against cyber threats."
This comes in the wake of a financial scandal and a hefty fine by U.S. regulators.
Has Carney left rate signal change to Poloz?
Economists wonder whether the new governor of the Bank of Canada will change the central bank’s rate signal.
Stephen Poloz, who takes over Monday, won’t be changing the benchmark rate any time soon, but observers think he could change the Bank of Canada’s “bias.”
That’s the signal to markets as to whether the central bank is leaning toward hiking its overnight rate, or simply taking no stance with a neutral tone.
After his last meeting this week, at which the policy-setting panel held the benchmark rate at 1 per cent, outgoing Governor Mark Carney still indicated that the next move will be up, not down, though that’s not expected to happen until the second half of 2014 at the earliest.
But some observers raised the possibility that the panel could alter the statement, opting for the neutral stance.
“It will thus be up to incoming governor Stephen Poloz to oversee potentially altering or dropping the bias, which we judge is likely during the months ahead, not because of the change in leadership, but because the evolution of household debt will have been completed (a flat or falling debt-to-disposable-income ratio),” said senior economist Michael Gregory of BMO Nesbitt Burns.
- Bank of Canada still signalling higher rates down the road
- With Carney set to leave, calls grow for shift in rate stance
- Economy Lab: With a new boss coming, will the Bank of Canada change its tune?
- Christopher Ragan in Economy Lab: Bank of Canada’s growth view is clouded with hazy thinking
- Why Mark Carney is dubbed the 'Gretzky of central banking'
- Canada's economy rebounds, sets stage for muted 2013
- OECD cuts world growth forecast despite improving U.S., rebounding Japan
Valeant strikes deal for Bausch & Lomb
Valeant Pharmaceuticals International Inc. is gaining a foothold in China with its $8.7-billion deal for Bausch & Lomb Holdings Inc.
The deal would marry Canada's biggest public pharmaceutical concern with one of the world's best-known eye care companies, Richard Blackwell, Sean Silcoff and Bertrand Marotte report.
It's the biggest deal ever for Montreal's Valeant, which is reaching deeper into emerging markets.
Valeant is borrowing most of the money for the acquisition.
- Valeant Pharmaceuticals eyes China with Bausch deal
- Valeant has eye on more acquisitions, possible 'merger of equals'
- Boyd Erman in Streetwise (for subscribers): Who needs bankers? Try a DIY merger
- Sean Silcoff in ROB Insight (for subscribers): As Valeant's profile rises, tax avoidance will raise ire
Ontario eyes ways to boost women
Ontario is looking at new ways to increase the number of women in senior corporate positions as the world looks on and finds its progress "glacial."
In an interview with Janet McFarland this week, Laurel Broten, Ontario's minister responsible for women's issues, said the province is working with the Ontario Securities Commission to force companies to establish targets for women as directors and in senior management.
At this point, Ontario is looking at requirements for companies to disclose their policies and goals or explain why they don't have them.
"We must do something different than is being done right now," Ms. Broten said.
"The world is describing our progress right now as 'glacial' in relation to the other countries, and we are slipping."
- New rules aim for equality in Ontario's corporate boardrooms
- Globe editorial: 'Comply or explain' a smart way to get more women on boards
Condo overhang holds down prices
Prices for new condos are being kept in line by the “modestly elevated” number up for sale, while those for detached houses continue to rise even as the real estate market cools, BMO Nesbitt Burns says in a new report.
Over all, senior economist Sal Guatieri believes Canada’s housing market is “calming,” not crashing, though Toronto’s condo segment needs to be monitored.
“The supply of unsold new homes is modestly elevated and concentrated in the multi-unit segment, holding condo prices in check,” Mr. Guatieri said in his report this week.
“By contrast, the detached segment remains tight, lifting prices of single-family homes. This ‘tale of two markets’ is most notable in the Greater Toronto Area.”
The supply of condos is “particularly elevated” in Winnipeg and Toronto, as well as Vancouver, though not as much, he added.
“Toronto condo builders have slammed the brakes on new construction in response to weaker demand, record units under construction and in the planning stages … and record unsold inventory,” Mr. Guatieri said.
“The market bears monitoring as it digests this overhang. Investors have purchased about half of new units in recent years, and could sell if prices weaken further.”
Because 88 per cent of those units being built are pre-sold, the market needs only a “moderate pickup in demand” to take care of the stock.
“As well, rising rents could encourage investors to hold on even in a soft price environment.”
The week in Business Briefing
- How OPEC lost its mojo
- Exxon Mobil CEO: 'What good is it to save the planet if humanity suffers?'
- How Target, cross-border shopping are wreaking havoc on Canada's inflation rate
- No 'pot of gold' option for funding massive Toronto area transit plan
- 'I wish them bad luck,' Jim Flaherty says of those shorting Canada
The week in Streetwise (for subscribers)
- Loblaw, Canadian Tire late to the REIT party
- The social media merger: A new way to make deals
- In Canadian banking, growth is vanishing fast
- Who needs bankers? Try a DIY merger
- New required reading on the state of the oil sands
The week in Economy Lab
- Is being a mom still a bad career move?
- Wage gains an ominous sign for Canada's inflation outlook
- Will Bill C-60 influence Bank of Canada's independence? Flaherty should explain
- Canadian businesses spend far less on software than in U.S.
- Europe's problem isn't a recession - it's a depression
The week in ROB Insight (for subscribers)
- OPEC puts on a brave face as it eyes North America
- S&P warning highlights Kathleen Wynne's tall task
- As advertisers bolt, Facebook can't deny its responsibility for scandal
- In hunt for gold miners, fortune favours the brave
- When Fed withdraws QE, TSX could shrink in tandem
A fevered pace of CEO turnover at Canada’s largest companies is leading to high compensation bills as firms pay millions in severance to former executives while also shelling out to attract new leaders, Janet McFarland reports in her annual look at executive compensation.
Bombardier, the company known for planes and trains, has a new plan to captivate commuters: A bus that never needs to gas up. Eric Reguly reports from Geneva.
Oxford Properties Group’s latest foray into London, a joint venture with an ancient royal real estate concern, underscores how Canadian pension funds are gobbling up prime properties across the globe, Paul Waldie and Tara Perkins write.
Canada's major banks have warned for months of headwinds in the domestic market, Tim Kiladze writes, but the Big Six have still managed to turn in relatively strong second-quarter results.
The 11th semi-annual Munk Debate digs into what the World Economic Forum calls the most pressing problem of our time: income inequality. Tavia Grant reports.