Every day ROB Insight delivers exclusive analysis on breaking business news and market-moving events. Streetwise offers news and analysis on Bay Street and the world of finance. Inside the Market delivers up-to-the-minute insights on market news as it develops.
Here are our editors’ picks of some of the best reads available to Globe Unlimited subscribers this week.
U.K. takes closer look at sex and drugs
It sounds like one of those those sensational stories you find in a supermarket tabloid, but it’s completely on the level. Britain’s Office of National Statistics will now take into account the economic activity generated by the sex and drugs trades in order to bring itself in line with European standards. Those businesses are no small potatoes – the ONS estimates £10-billion ($18.1-billion) was spent on them in 2009, and over in Italy, the central bank says criminal activity was responsible for a 10th of total GDP in 2012. In ROB Insight, Carl Mortished explains how the underground economy in illegal activities is increasingly drawing the attention of authorities.
Why fall in bad loans is worrying banks
When banks are seeing fewer loan defaults and slash their provisions for credit losses, you’d think it’d be a cause for celebration, not concern. But while double-digit declines in the amount of cash set aside as a cushion has been chalked up to higher asset quality at TD, RBC is revisiting the books in case they’ve missed something. In Streetwise, Tim Kiladze looks at how dramatically the loan loss provision landscape has changed and the worries that the good news may be simply be the calm before a coming storm.
Can TSX and China keep going their separate ways?
Canada’s benchmark index has long tracked prices for iron ore in China, but in the past 11 months things have taken a surprising turn: the TSX has continued to soar even as the bottom fell out of the Chinese iron ore market. Is it just a short-term phenomenon, or should investors be prepared for Canadian equities to join this market in the dumps? In Inside the Market, Scott Barlow looks at what’s behind the rise in Canadian stocks and whether they can continue to defy the trend.
In a world without paper money …
Canada unveiled its latest issues of the new polymer bank notes in November with much fanfare, but such events could become a thing of the past. Harvard professor and former IMF chief economist Kenneth Rogoff recently touted the benefits of putting an end to physical currency and instead conducting all transactions electronically, a prospect that would hold much appeal to central bankers and have tax authorities absolutely salivating. Criminal enterprises would no longer be able to evade law authorities or revenue collectors but, more importantly, monetary policy makers would gain a powerful new tool to deploy in times of economic crises. In ROB Insight, Ian McGugan explains how an end to paper money could also mean an end to recessions.
French pension fund sticks to its ethics
The mandate of a new $25-billion pension plan for civil servants in France requires it to invest according to strict ethical and environmental criteria. That means taking stakes in green and socially responsible companies, but it also extends to eschewing sovereign bonds of states that have the death penalty, use child soldiers or practise torture. But despite its altruistic bent, the head of the recently formed RAFP insists the fund will not sacrifice performance at the expense of ethics. In Streetwise, Janet McFarland discusses the pensions fund’s strategy and its focus on investments with longer time horizon.
How bulls and bears can get along
Not sure which way to bet? Well, you can have it both ways with the “portfolio barbell,” making aggressive bets for market gains and defensive ones in the event of losses. In a market where equities have appeared confined to a tight trading range, this approach positions investors to benefit whichever way stocks decide to turn. In Inside the Market, David Berman examines the strategy and looks at some examples of stocks that can satisfy both criteria.