These are stories Report on Business is following Thursday, June 2. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.
Rosé wines make gains Scouring the financial results of the Liquor Control Board of Ontario, one finds what may be a surprise to wine conoisseurs: Growth in sales of rosés is outpacing that of reds, whites, beer and overall spirits.
Rosé sales at the LCBO climbed 14.7 per cent in its 2010-2011 fiscal year, compared to 7.4 per cent for white wines, 6.2 per cent for reds, 5 per cent for beer and 4.4 per cent for spirits.
As Globe and Mail wine writer Beppi Crosariol noted last summer, dry rosés have been enjoying healthy global sales, though "on this side of the Atlantic rosé has been stigmatized as a genteel ladies' libation, a sort of low-alcohol surrogate for the pink cosmopolitan cocktail on days when the mercury calls for something less potent than vodka."
Overall, the LCBO had a good year, with sales climbing 5.6 per cent to $4.55-billion and profit rising 8.8 per cent to $1.56-billion.
The Ontario government, which can sure use the money, got a record $1.55-billion, not including taxes, from the liquor agency.
ECB chief lays out vision The chief of the European Central Bank says there's no "crisis of the euro," only "challenges" for the future of the monetary union.
Jean-Claude Trichet was singing the praises of the euro zone in a speech in Aachen, Germany, today, stressing how the 17-member union has encouraged economic growth, fostered trade, created millions of jobs and led to price stability. But he does want change, including a central finance ministry.
"The euro is a solid and credible currency, trusted by our fellow citizens, investors and savers," Mr. Trichet said. "There is no 'crisis of the euro.'"
He didn't mention Greece, Portugal or Ireland by name, but did say that "countries that have not lived up to the letter or the spirit of the rules have experienced difficulties," and that, via contagion, "these difficulties have affected other countries in EMU."
Mr. Trichet, who is leaving his position, called for a second phase of union, with tougher fiscal rules and further central control, laying out what could be the next steps for the monetary union, including a central finance department.
"In this union of tomorrow, or of the day after tomorrow, would it be too bold, in the economic field, with a single market, a single currency and a single central bank, to envisage a ministry of finance of the union?" Mr. Trichet said.
"Not necessarily a ministry of finance that administers a large federal budget. But a ministry of finance that would exert direct responsibilities in at least three domains: first, the surveillance of both fiscal policies and competitiveness policies, as well as the direct responsibilities mentioned earlier as regards countries in a 'second stage' inside the euro area; second, all the typical responsibilities of the executive branches as regards the union’s integrated financial sector, so as to accompany the full integration of financial services; and third, the representation of the union confederation in international financial institutions."
Some observers believe Mr. Trichet's call for a central finance ministry makes sense.
"At the core of Europe’s troubles has always been market fragmentation and a lack of policy co-ordination," said economists Derek Holt and Karen Cordes Woods of Scotia Capital.
"The intellectual founding father of the euro zone, Canadian economist Robert Mundell, has remarked that a U.S.-style common Treasury market is needed in Europe," they said in a research note today.
"Trichet’s call for a common finance ministry is an important element of high level policy support for an institution designed to provide necessary broad fiscal oversight across the disparate array of nations – including Germany – that have long disregarded the 3-and-60 deficit- and debt-to-GDP guidelines of the Maastricht Treaty."
Mr. Trichet's comments came amid reports suggesting that European officials are moving closer to a rescue deal with Greece that would see Athens take additional budget measures slashing billions more.
According to Reuters, those added steps would be worth $6.4-billion. Yesterday, Moody's Investors Service downgraded Greece again.
CIBC World Markets economist Emanuella Enenajor believes the most likely scenario in terms of another rescue is an "enhanced package" that would see Greece past its 2012 refinancing needs. That would mean a minimum of €32.5-billion in new loans, which cover Athens through the first quarter of 2013. A fatter package that would carry Greece through to mid-2014 could be double that.
"A debt restructuring would be a last option if European authorities are unwilling to extend further loans," she said in a research report late yesterday.
"Although German authorities have been open to an eventual 'burden sharing,' the ECB has unequivocally opposed any form or debt restructuring, given its significant exposure to Greek sovereign debt as collateral in its liquidity operations. Even a 'soft restructuring' or 'reprofiling' could mean chaos for Greece, as writedowns of domestic holdings of sovereign debt would see a need for bank recapitalizations. If Greek banks are shut out of markets, that may require direct ECB intervention."
- Greece to present new austerity plan
- Moody's downgrades Greece
- Eric Reguly: EU kicking Greece when it's down
Consumers cautious Canadian consumers have clearly been tamed by high debt loads and rising prices at the gas pump. These "cautious spending patterns" of the first quarter have carried into the first two months of the second quarter, says Desjardins, citing challenges for Canadian discretionary retailers.
"This trend has been exacerbated by a wet and cool spring across the country, which contrasts sharply with the warm, dry and early spring a year ago," analyst Keith Howlett said today in a research note.
He noted a drop in auto sales in May, and a sales decline at one fashion retailer.
"We expect [the second quarter] to be challenging for all Canadian discretionary retailers, with the best sales and earnings performance expected to come from Dollarama," Mr. Howlett said. "Our preferred discretionary retailers are Dollarama and Canadian Tire. Amongst staples retailers, we prefer Metro."
Broadcasters gain Canada’s TV broadcasters are back in the black, Globe and Mail media writer Susan Krashinsky reports.
After the industry posted losses of $116.6-million in 2009, last year private television regained its footing with $11.5-million in profits before interest and taxes, according to numbers released today by the Canadian Radio-television and Telecommunications Commission.
U.S. jobless claims still high America's jobs crisis shows few signs of easing.
One day after ADP released a disappointing report, Labor Department numbers today showed new weekly claims for jobless benefits, while down slightly, are still above the key 400,000 mark.
Claims dipped last week by 6,000 to 422,000, the government said, while numbers from a week earlier were revised up to 428,000. The four-week moving average is now 425,000, down by 14,000 from a week earlier.
Economists say that the ADP report and today's claims reading could mean disappointing data tomorrow, when the government releases its official jobs report.
"The jobs data have been so gloomy, why stop now?" said senior economist Jennifer Lee of BMO Nesbitt Burns.
"While the decline itself was a bit better than expected, the resulting 422,000 read is still too high and, as we say until we're blue in the face, this is very, very volatile ... and besides, the upward trend is still not friendly," she added.
Fourth group looks at plans for terminal A fourth group is now studying plans for a West Coast natural gas export terminal, after Malaysia’s national energy company agreed to buy up a chunk of Canadian gas assets for more than $1-billion, The Globe and Mail's Nathan VanderKlippe reports.
Petronas, the company behind the landmark towers in Kuala Lumpur, has partnered with Progress Energy Corp. in a $1.07-billion deal that will see the Malaysian company gain access to a trio of promising natural gas plays in north-eastern British Columbia.
Smaller banks boost dividends Canadian Western Bank and Laurentian Bank of Canada are boosting their dividends as they report second quarter results.
CWB hiked its quarterly dividend by 8 per cent to 14 cents, and Laurentian by 3 cents to 42 cents a share.
CWB today posted a quarterly profit of $44.4-million or 58 cents a share, basic, compared to $43.9-million or 59 cents a year earlier.
"We will continue to deploy resources in sectors we believe will grow faster than the economy as a whole; areas where we have demonstrated expertise and can build on our competitive advantages," said chief executive officer Larry Pollock.
Laurentian's profit climbed to $30.1-million or $1.13 a share, diluted, from $28.3-million or $1.06.
“Efficiency remains a key priority for the bank," said chief executive officer Réjean Robitaille. "However, we believe our ongoing investments in business development, as well as in client service resources and systems support our long term growth objectives. We remain confident that these will help further entrench our distinctive business unit positioning and foster continued growth as we move forward.”
- Canadian Western profit rises 17%
- Laurentian Bank boosts dividend
- Focus turns to Canada's smaller banks
Globalive chief calls for change The chairman of Globalive Wireless Management Corp. is urging policy makers to open up Canada’s telecom sector to foreign players, telling a conference today how difficult incumbent wireless providers have made his journey to launch Wind Mobile.
On the last day of the Canadian Telecom Summit in Toronto, Anthony Lacavera told a crowd he has spent most of his time battling established wireless players in court and in regulatory hearings, rather than concentrating on rolling out his network, Globe and Mail telecom writer Iain Marlow reports.
Canada is “falling behind in wireless” as the government continues to delay making policy changes that would enable more foreign capital to flow into Canadian telecom companies, Mr. Lacavera said.
CIBC upbeat on Bombardier CIBC has raised its price targets on shares of Bombardier Inc. after the company posted better-than-expected first-quarter results and sealed another deal for its C Series yesterday.
Analyst Michael Willemse boosted his target to $8.50 from $8.25
Troubles on Skid Row Even on Skid Row in downtown Los Angeles, it costs more to live now.
Associated Press reporter Christina Hoag today takes an in-depth look at the famous area, where shelters have for years offered a free place to sleep and three meals a day. Recently, the news agency says, the Union Rescue Mission began charging $7 (U.S.) to sleep overnight, and is now offering just one free meal a day.
This was the result of budget troubles in an economy where millions are unemployed, many have been thrown out of their homes, and many are using food stamps.
In Los Angeles, the news agency reports, a 50-block section of the city represents the biggest concentration of homeless in the United States. Many sleep outside.
“We've increased our sustainability, but we really think people are feeling better about themselves if they're not just taking handouts,” said Andy Bales, the chief executive officer of the Union Rescue Mission.
In Economy Lab today
The Parliamentary Budget Office has decided to start producing its own economic forecasts. This is welcome news, but not because the PBO can be expected to make exceptionally good forecasts, Stephen Gordon writes.
In International Business today
A series of shocking events in the past year and a half - from the Chinese electronic break-in at Google, to the Stuxnet worm’s stealthy attack on the Iranian nuclear program, to mass breaches of consumer information at Sony and elsewhere - have forced a broad recognition that despite the hardships, all those using the net must accept cybersecurity as part of their mission. Financial Times writer Joseph Menn examines the issue.
In Personal Finance today
A thorn in the side of big firms, the Ombudsman for Banking Services and Investments is at risk of being sidelined into irrelevancy, Rob Carrick reports.
There are many factors to consider when comparing buying to renting. Janet Fowler looks at the major differences.
Fancy phrases and brand names don’t usually justify higher price tags for mattresses, writes Angela Self.
From today's Report on Business