Here are our editors’ picks of some of the best reads of the week. (The articles are available to Globe Unlimited subscribers only.)
How Italy can hurt Canadian bank shares
With the commedia that was the Italian federal elections ending in such a mess, fears have risen over the country’s ability to stay the course on its austerity plans. ROB Insight’s Scott Barlow delved into the price of credit default swaps for the country’s two biggest banks and discovered an inverse correlation with Canadian bank stocks. When the cost to insure against default at Italian banks rises, Canadian bank shares head south.
Not worried yet?
Scott found an even greater connection with the spread between German and Italian bonds. A widening gap suggests a greater risk of a euro breakup and places greater stress on Canadian bank shares.
Minting it, and it’s not Canadian Tire money
The iconic Canadian retail chain is best known for bikes and car parts, but its financial services division led the way in growth last year, with a 26-per-cent advance, writes Streetwise’s Tim Kiladze. The unit cranked out $277-million in pretax profit, which, as Tim points out, tops earnings at “real” bank Laurentian.
Would-be lottery bidders taking a gamble
Cash-strapped Ontario is, sensibly, taking steps to privatizing its lucrative lottery business. But given the province’s track record, says ROB Insight’s Sean Silcoff, it’s a case of bidder beware for potential operators.
Teck’s iron ore hunt may lead to Rio’s door
Just a few weeks after Teck said it’s interested in adding some iron ore assets, up pops Rio Tinto looking for a buyer for its Canadian iron ore operations. One take, says Streetwise’s Boyd Erman, is that Teck could buy Rio’s Iron Ore Co. majority stake and either sell or spin off the port and rail assets to pay for the mining assets.