These are stories Report on Business followed this week.
Should Flaherty intervene again?
The rebirth of Canada's housing market has observers wondering whether Finance Minister Jim Flaherty might intervene again.
He said this week he has no plans to do that at this point, but the powerful rebound means he certainly has a wary eye on the market.
As The Globe and Mail's Tara Perkins has chronicled, the market slumped in the summer of 2012 after Mr. Flaherty moved to head off a bubble with another round of restrictions.
But it seemed that the nation's real estate agents barely had time for a vacation before the effects wore off and a rise in mortgage rates, with expectations of further increases, pushed buyers into the market before they might have otherwise moved.
Add to that the fact that the Bank of Canada has now abandoned its long-held signal of a rate hike, promising an even longer period of cheap money.
There are different schools of thought here, as you'd expect.
Chief economist Avery Shenfeld of CIBC World Markets says there's no need for Mr. Flaherty to stick his nose in again.
"It's not the number of houses changing hands in a given month that is of concern, but whether the size of each mortgage being issued lines up with the borrower's ability to pay at current and future interest rates," Mr. Shenfeld said this week.
"On that score, there's no doubt that several rounds of tightening in mortgage insurance rules are having their desired effect. At a given income and down payment, it's simply not possible to qualify for as large a mortgage as was the case a few years back."
True, borrowing picked up again this fall, Mr. Shenfeld said, but "that's likely just pulling ahead activity from the future, as Canadians try to keep ahead of expected higher rates down the road."
Not only that, but there have been other regulatory moves that haven't yet had the chance to have an impact.
"In terms of any new regulatory measures, for now, it would be wise to let sleeping mortgage rules lie," Mr. Shenfeld said.
Michael Gregory, the deputy chief economist at BMO Nesbitt Burns, isn't so sure. For him, it's a wait-and-see thing.
"Poloz & Partners are obviously betting that the recent heating up of the housing market is a temporary phenomenon," Mr. Gregory said, referring to Bank of Canada Governor Stephen Poloz and his colleagues.
"And, if it turns out not to be temporary, that the government will act again on the macro-prudential policy front."
But what if it's not a one-time bump?
Mr. Gregory believes the recent surge in the market should ease. But there's a chance it won't, not completely, anyway, if this is a case of the market adjusting to the tighter rules.
Mr. Flaherty does have more in his toolkit, the BMO economist added, such as raising the minimum down payment or tightening the rules on uninsured loans.
"With the Bank of Canada shifting more of its policy focus from financial stability to price stability, the government might have to tighten mortgage insurance and lending rules further if the hotter housing market proves persistent," Mr. Gregory said.
"Now we wait."
- Brent Jang: B.C. housing rally expected to continue through 2014
- Tara Perkins: Economists press Flaherty on lack of clear data in housing sector
- Tara Perkins: Accuracy of Canada's housing data under scrutiny
- Tara Perkins: Falling rates, BoC's stand puts housing spotlight on Flaherty
- Tara Perkins: Bank of Canada rate stance could have adverse effect on housing market
- David Parkinson in ROB Insight (for subscribers): Poloz boxed in as embers of overheated housing market flare up
- Brian Milner in ROB Insight (for subscribers): Welcome to the bubble: Central banks drive real estate higher
- Tara Perkins: September home sales soar
- Richard Blackwell: Five countries with hot housing markets
Barrick moves forcefully
Barrick Gold Corp. is taking forceful steps to ease its debt burden and cut its costs.
But shareholders are less than impressed after the gold miner's $3-billion (U.S.) stock sale and its decision to halt construction at a key project in South America.
As The Globe and Mail's Rachelle Younglai reports, Barrick shares slumped Thursday and Friday, first after it released quarterly results and announced the halt in work on its costly Pascua Lama mine, and then again after it unveiled the stock sale, one of the biggest ever in Canada.
"It is disappointing that we have had to make this decision but it is the right one for us at this point," chief executive Jamie Sokalsky told analysts, referring to the project on the border between Chile and Argentina, a crucial mine with gold reserves of some 18 million ounces.
The project has been hit by cost overruns and regulatory issues.
- Rachelle Younglai: Barrick stock slumps on massive stock sale, halt at key mine
- Rachelle Younglai: Barrick unveils $3-billion stock sale, puts Pascua Lama on back burner
- Boyd Erman: Investors pass on Barrick offering, banks scramble
- David Parkinson in ROB Insight (for subscribers): Barrick makes shrewd moves, but markets don't buy in
- Boyd Erman in Streetwise (for subscribers): Barrick’s $3-billion offering to spin off big fees for bankers
- David Milstead: Barrick Gold’s brave (and scary) new world
The taper game
When and how the Federal Reserve will begin to "taper" has become quite the guessing game.
It didn't happen in September, when it was expected to. And it didn't happen this week, and it wasn't expected to. Now, markets are trying to decide just when it will come.
Tapering is the market word for the first move by the U.S. central bank to trim its monthly asset purchases from the current $85-billion (U.S.) a month under a stimulus policy known as quantitative easing, or QE, which is meant to hold down interest rates, among other things.
Markets had widely expected the Fed would start to pull back in September, and it was a jolt to the market when it didn't.
As our Washington correspondent Kevin Carmichael reports, at its meeting this week the Fed left the door open to still starting this year, after waiting to see how the jobs market and the broader economy fares.
Some observers believe this will happen late in the first quarter of next year, though others don't rule out a move in December.
- Kevin Carmichael: U.S. Federal Reserve leaves tapering on table despite shutdown
- Expect the Canadian dollar to continue eroding
- Scott Barlow in ROB Insight (for subscribers): Krugman, Gross spat highlights end of the financial era
- Barrie McKenna: Poloz paints gloomy picture, puts rate hike on hold
- Canadian dollar slips, CIBC sees 94-cent currency earlier next year
- Bank of Canada, 5 other major central banks, make currency swap accords permanent
Crucial weekend for BlackBerry
BlackBerry Ltd. shares closed out the week well below a proposed takeover price as it headed into a crucial weekend.
The smartphone maker is nearing what should be the final chapter in an auction for all or part of the company. If all goes according to plan, Canada's Fairfax Financial Holdings Ltd. will firm up a takeover proposal on Monday, or another suitor will come forward with a sweeter offer.
Fairfax is supposed to complete its due diligence by then, having signed a letter of intent to lead a consortium that would pay stockholders $9 (U.S.) a share. But BlackBerry shares have traded below that, closing on Nasdaq Friday at $7.77 and indicating doubts that a deal at that price will get done.
Having said that, Fairfax chief Prem Watsa has said more than once that he's confident the $4.7-billion proposal will go ahead.
There's a lot of interest in BlackBerry, which has fallen from grace since it ruled its industry, with several players having kicked the tires.
As The Globe and Mail's Sean Silcoff reports, U.S. private equity firm Cerberus is in talks aimed at a joint bid with Qualcomm and BlackBerry co-founders Mike Lazaridis and Doug Fregin, who hold 8 per cent of the company and have expressed their interest.
- Complete coverage of BlackBerry
- Sean SIlcoff: Cerberus in talks with BlackBerry co-founders on potential joint bid
- BlackBerry boasts of 'smashing success' with 20 million new BBM users
- Molly's back on BBM: Why BlackBerry's 'forbidden fruit' is such a hit
- BlackBerry met with Facebook to discuss potential takeover: Report
- Google's Android grabs 81% of smartphone market as BlackBerry, Apple slip
- Explainer: How does the wildly popular BBM differ from regular text messaging?
- Sean Silcoff: 'Incredible demand' for BlackBerry's BBM service
- Sean Silcoff, Jacquie McNish and Steve Ladurantaye: An exclusive report on the fall of BlackBerry
- Boyd Erman in Streetwise (for subscribers): BlackBerry's noisy auction: The unspoken truth
- How BlackBerry lost World War Z
The week in Business Briefing
- How fun online is eating into work and sleep (and parties and prayer)
- Slump in Canadian corporate profits worst since dot-com bust, recessions aside: TD
- The buzz over Scorsese's 'Wolf of Wall Street' (Viewer discretion advised)
- Expect the Canadian dollar to continue eroding
- Canada's record pay gap: Why so many are leaving home for Alberta
The week in Streetwise (for subscribers)
- Tim Kiladze and Jacqueline Nelson: Raymond James will not cut and run from Canada
- Carrie Tait: Bill Sembo, banker who oversaw birth of Cenovus, Nexen retires
- Rachelle Younglai: Junior miners scramble for financing
- Jacqueline Nelson: Alternative investments too rich for AIMCo's de Bever
- Boyd Erman: TD: Green bonds can work, but not greenwashed ones
The week in Economy Lab
- Sheryl King: Don't count Bank of Canada out of the rate-hike game just yet
- Christopher Ragan: No to balanced-budget laws, yes to sound budgeting
- Eric Reguly: ECB, domestic investors take pressure off Spanish and Italian bond yields
- Linda Nazareth: If money talks, older workers are more productive - but for how long?
- Brian Lee Crowley: Lessons from the East Coast native fishery
The week in ROB Insight (for subscribers)
- Anna Nicolaou: Amazon takes Vancouver, but to do what?
- Brian Milner: Europe looms on the verge of deflation
- David Parkinson: What really killed Hamilton steel
- Jeffrey Jones: Redford's Keystone sales pitch in Washington getting tricky
- Scott Barlow: Krugman, Gross spat highlights end of the financial era
Tweeting is reshaping corporate disclosure and demand for measures of investor sentiment. TIm Kiladze looks at the impact.
Apple Inc. is selling more smartphones, but making less money. Omar El Akkad reports on the tech giant's fourth-quarter results.
United States Steel Corp. is ending steel production at its Hamilton mill. Greg Keenan looks at an operation that spanned more than a century.
Facebook Inc. is generating big profits from mobile ads, but it's losing popularity to the younger set, Omar El Akkad writes.
Barrick is taking bold steps to cut costs and debt, halting construction at an expensive mine and raising billions in a stock sale. Rachelle Younglai reports.Report Typo/Error
- Barrick Gold Corp$20.550.00(0.00%)
- BlackBerry Ltd$7.570.00(0.00%)
- S&P/TSX Composite15,125.800.00(0.00%)
- S&P 500 INDEX2,212.230.00(0.00%)
- Dow Jones Industrials19,251.78+35.54(+0.18%)
- Canadian Dollar / US Dollar FX Spot Rate0.7531+0.0001(+0.01%)
- Gold Front Month Futures$1,172.50+4.90(+0.42%)
- Crude Oil Front Month Futures$50.57-0.36(-0.71%)
- Updated December 6 4:00 PM EST. Delayed by at least 15 minutes.