These are stories Report on Business is following Wednesday, Oct. 9, 2013.
Lunch with your co-workers may not be the best noon getaway, a new study suggests.
Indeed, the study published by the Rotman School of Management at the University of Toronto indicates eating while working at your desk may be the way to go.
As long as it’s your decision.
According to the paper by associate professor John Trugakos, PhD student Bonnie Cheng and Wilfrid Laurier professor Ivona Hideg, workers who pursue relaxing activities at lunch are the least tired, as long as it’s their choice.
Those working through the break can appear more fatigued, but it’s not as bad if it’s a personal choice.
Their paper for the Academy of Management Journal is long, and complex, but Rotman sums it up well in an accompanying news release: If you’re in the cafeteria or somewhere else with colleagues, and your boss, for that matter, you may be concerned about choosing your words wisely or how you come across to your co-workers.
“You’re hanging out with people who you can’t necessarily kick back and be yourself with,” said Prof. Trugakos.
The main message, he added, is that “freedom to choose” is crucial.
“The autonomy aspect helps to offset what we had traditionally thought was not a good way to spend break time.”
The study’s authors say their results could be meaningful for companies and their employees.
“Our results show that employees should be aware of what they do during their lunch breaks, as even seemingly inconsequential activity choices made during the lunch break can impact their fatigue at the end of the day,” they write.
“Autonomy over the lunch break can offset the negative effects of work and social activities as not engaging in relaxing activities during lunch,” they add.
“In light of increased pressure to continue working or skip lunch in today’s workplace, however, it seems possible that autonomy over the lunch break may be relatively low. Indeed, other authors have suggested that the modern capitalist workplace is characterized by particularly low levels of autonomy.”
Investors are trying to set aside their angst over the Washington showdown this morning to celebrate the choice of Ben Bernanke’s successor.
As Société Générale’s Kit Juckes puts it, it’s a “dovish interlude” on Day 9 of the partial shutdown of the U.S. government as President Barack Obama prepares to nominate Janet Yellen as chief of the Federal Reserve.
“The news that Janet Yellen will be nominated to be the first Fed chairwoman today has triggered a rebound in risk sentiment,” said Mr. Juckes, the bank’s chief of foreign exchange.
“She may be the Queen of Doves in monetary policy circles but even if she were Superwoman, she wouldn’t be able to solve the U.S. fiscal/political crisis on her own.”
With no end in sight to the Washington stalemate, and an Oct. 17 deadline to raise the debt ceiling approaching, investors have been extremely anxiously, driving down stocks and pushing up U.S. borrowing costs.
The U.S. Treasury Department says it will be tapped out if the debt limit isn’t raised by that date, sparking concern over the possibility of another credit rating downgrade and, in an extreme scenario, a short-term default.
So far today, however, North American markets are stronger, though European exchanges are mixed.
Today’s somewhat more optimistic tone, however, may well be short-lived.
“Confidence that the U.S. will get its act together is slowly turning into fear,” warned market analyst Alastair McCaig of IG in London.
“The constant bickering by both the Republicans and the Democrats have seen almost 1,000 points wiped off the Dow in the last four weeks, and with no end in sight U.S. markets look set to tumble even further,” he added, though he expects a slight bounce when North American exchanges open this morning.
Nomination this afternoon
Ms. Yellen is seen as a steady hand at the helm of the world’s most powerful central bank, which is crucial as the global economy still struggles five years after the beginning of the financial crisis.
And, as our Washington correspondent Kevin Carmichael writes, her nomination cracks the glass ceiling where real influence in economics is concerned.
President Barack Obama is expected to nominate her this afternoon, elevating the current vice-chair of the Fed to the top job when Mr. Bernanke’s term expires Jan. 31.
“This choice of monetary policy dove makes it much more likely that the Fed will continue to remain accommodative into next year, though even sure won’t be able to apply a Band-Aid if Congress continues along its self-destructive path,” said senior analyst Michael Hewson of CMC Markets in London.
What he means is that, as a “dove,” Ms. Yellen’s leadership should see the Fed continue to keep the taps open in an ongoing effort to bolster the recovery and ease unemployment.
"Yellen, the current vice-chairmwoman of the Fed, is believed to be even more dovish than Ben Bernanke, whose term ends on 31 January," added market analyst Craig Erlam of Alpari in London.
"It's therefore no surprise to see investors respond positively to the news of President Barack Obama's nomination, especially given that he was previously believed to be more in favour of a much more hawkish Lawrence Summers."
Mr. Summers pulled out of the race amid a backlash from the Democrats.
CIBC World Markets economist Emanuella Enenajor doesn’t see Ms. Yellen as “more dovish,” though certainly part of the overall policy of the Federal Open Market Committee, the central bank’s deciding group.
“Yellen’s FOMC voting record has matched Bernanke’s and her speeches have largely echoed the themes of her predecessor,” Ms. Enenajor said.
“Bonds may see a temporary boost on the appointment of Yellen to the helm (pending Senate confirmation), given her support of the Fed’s overall dovish stance,” she added.
“However, assuming an amicable passing of the current debt ceiling and budgetary deadlock, we see longer-term risks of a sell-off as the drag from fiscal policy eases in 2014, giving even a Yellen-led Fed justification to scale back bond-buying by early next year.”
She was referring to the central bank’s anticipated pull-back from its massive asset-buying stimulus program known as quantitative easing, or QE.
The Fed had been expected to announce at its last meeting that it would start trimming those purchases, but surprised markets by holding the line.
Ms. Yellen still has to be confirmed. That’s expected to happen but there may be some turmoil along the way, particularly given the atmosphere in Washington.
“Yellen will be nominated today to be the chairman of the Fed and has the support of key Democrats for her Senate confirmation,” said Sébastien Galy, a colleague of Mr. Juckes at Société Générale
“While the Senate is the senior body, it doesn't necessarily mean the process will be smooth or fast,” he added in a research note.
“Being painted an ultra-dove is not going to go down well with the tea party. For now, this nomination is boosting expectations of money printing.”
- Kevin Carmichael in Economy Lab: Why Janet Yellen is the right person to lead the Fed
- Economists weigh risks after Yellen tapped to lead the Fed
- Kevin Carmichael: Despite 'taper' delay, Yellen still favourite to head Fed
When all is said and done today, however, markets will still be grappling with the fact that this is Day 9 of the shutdown and tomorrow will be the dawn of Day 10.
There’s still no end in sight to the fiscal deadlock as Oct. 17 draws nearer.
“It would appear that markets are starting to wake up to the fact that what is going on in Washington could well be pretty serious for the U.S. and global economy,” said CMC’s Mr. Hewson.
“Last night’s comments by President Obama that ‘there is no magic bullet’ to resolve the budget showdown saw the biggest one-day slide in the U.S. markets for 11 months,” he said in his research note.
“Quite why it took the utterances of those five little words to reinforce what has been blindingly obvious for the last eight days seems beyond me, but the S&P 500 dropped sharply to its lowest levels since early September. In addition it can’t help overall sentiment when you hear a Republican Congressman coming out with financially illiterate comments that the price of U.S. Treasurys has no effect on Main Street.”
He was referring to the fact that U.S. borrowing costs are also spiking amid the turmoil in financial markets over the fiscal crisis.
As my colleague Mr. Carmichael reports, a Treasury Department sale of one-month bills yesterday went at 0.35 of a percentage point.
What’s happening here is that markets are “partly pricing in” a technical default by the U.S., said senior economist Sal Guatieri of BMO Nesbitt Burns.
When he looked late yesterday, the yield on a one-month bill was 0.33 of a percentage point, up by 32 basis points from three weeks ago in a sign of extreme caution, though “nobody in their right mind” believes the Washington impasse could be so protracted as to cause the ultimate damage.
“They’re cautious about lending the government for the next 30 days because there may be a short period sometime over the next few weeks where the government would miss an interest payment on its debt, largely for logistical reasons,” Mr. Guatieri said.
“So it’s safer to lend money for three months or beyond that, just to get over this hurdle,” he added.
- The Doomsday scenario of a U.S. default
- Kevin Carmichael: U.S. budget showdown drives up borrowing costs
- Things you can't do amid U.S. shutdown (But spies laid off so 'sext' away)
Demarais dies at 86
Paul Desmarais, one of French Canada’s leading business figures, has died at the age of 86.
Mr. Desmarais, the controlling shareholder of Power Corp. of Canada, died last night, The Globe and Mail's Sophie Cousineau reports.
“Known for his vision, leadership and his innate sense of entrepreneurship and for his profound attachment to his country, Mr. Desmarais contributed greatly to turning Power Corporation into an international management and holding company with interests across North America , Europe and Asia,” the company said.
Mr. Desmarais, who was chairman and chief executive officer from 1968 through 1996, had already given over power to his sons, Paul Jr. and André, as co-CEOs.
- Sophie Cousineau: Canadian business icon Paul Desmarais dead at 86
- Eric Reguly: How the Desmarais family clinched its power play
What happened at MTS Allstream?
Streetwise columnist Boyd Erman today looks at Monday's decision by the Canadian government to reject an Egyptian-led group for Manitoba Telecom Services Inc.'s Allstream unit, and offers three theories.
- Boyd Erman: Three theories on why the government rejected Allstream bid
- Rita Trichur, Steven Chase and Boyd Erman: MTS, Sawiris is search of answers after shock Allstream decision
Coutu unveils payout
Jean Coutu Group (PJC) Inc. says it plans to distribute up to $502-million to shareholders through a share buyback program as well as a one-time dividend of 50 cents, The Globe and Mail's Bertrand Marotte reports.
The drugstore giant said today it intends to buy back up to 22 million class A subordinate voting shares at $18.50 each in addition to the 50-cent per class A and B share dividend following the sale of its equity stake in U.S. pharmacy chain Rite Aid Corp. and given its strong cash flow from operations.
Coutu also posted a jump in second-quarter profit to $208.2- million or 99 cents a share, largely on gains related to Rite Aid, from $51.2-million or 23 cents a year earlier.
The Organization for Economic Co-operation and Development says Canada’s economic outlook is picking up.
The group released its composite leading indicators today, which suggests “a positive change in momentum” for Canada.
Over all, it said, the indicators “continue to signal improvements in growth in most major OECD countries with divergent patterns among large emerging economies.”
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