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These are stories Report on Business is following Friday, Nov. 15, 2013.

Follow Michael Babad and The Globe's Business Briefing on Twitter.

Markets on rise again
Analysts are raising red flags over the risk of a U.S. stock market bubble as markets continue to reach new highs.

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At the heart of it, says senior economist Sal Guatieri of BMO Nesbitt Burns, are ultralow interest rates that encourage investors to plunge into riskier assets in search of better returns.

To be clear, Mr. Guatieri doesn't see a bubble in U.S. stock prices at this point. But he warns there's a risk of one in a couple of years as central bank benchmark rates remain at rock bottom, possibly leading to stock prices continuing to outpace the growth of corporate profits and economic fundamentals.

"While low interest rates justify higher stock values, the gain of the past year can't be explained by improved fundamentals, as the economy has grown less than 2 per cent  year-over-year and profits have risen a pedestrian 4 per cent," he said in a recent report.

"A few technology stocks, with big dreams but even bigger losses, are partying like it's 1999 again – witness Twitter's opening day 73-per-cent IPO surge," he added.

"Surging margin debt (27 per cent year-over-year on the NYSE) suggests leverage is at play, fuelled by the Fed's unprecedented balance sheet expansion."

Having said that, stocks at this point are not "nearly as expensive" as they were in the runup to the dot-com bust.

Mr. Guatieri is not alone. Witness some of the comments that followed Janet Yellen's statements at her confirmation hearing yesterday as she prepares to take the helm of the Federal Reserve.

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"It's almost ironic that equity indices are close to five-year highs, and adding to those gains, following Janet Yellen's dovish testimony," said senior market strategist Brenda Kelly of IG in London, referring to the central banker's appearance before the Senate banking committee, where she signalled continued easy money under her reign when she takes over from Ben Bernanke.

"This tends to negate the incoming Fed chairwoman's categorical denials that a bubble may be forming in equities on the back of easy monetary policies."

Many of the world's exchanges are up sharply this  year, noted senior economist Robert Kavcic, Mr. Guatieri's colleague at BMO: Tokyo's Nikkei has gained 46 per cent, the Nasdaq and S&P 500 some 30 per cent, and Germany's DAX 20 per cent.

Toronto's S&P/TSX composite is up 8 per cent, lagging its peers.

"Equity investors are feasting on the sweet spot of the policy cycle – that time from late easing to early tightening, and the latter is still well off on the horizon," Mr. Kavcic said today.

His comments came as global markets continued to push higher today.

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The time-line for the Fed's stimulus programs has been a guessing game for the markets, which have slipped and rebounded with the speculation over when the central bank could begin to pull back on its huge bond-program, known as quantitative easing or QE.

The central bank's policy-setting panel, the Federal Open Market Committee, had been expected to cut back in September, but surprised investors by holding firm as it awaits a lower jobless rate. Such signs of continued stimulus have buoyed the markets, but, as always, this could well change.

"The belief that somehow the Bernanke 'put' will be replaced by the Yellen 'put' may well be driving markets now but investors would do well to note that voting members on the FOMC change next year and the committee will have a much less dovish outlook in January than it does now," said chief analyst Michael Hewson of CMC Markets.

"While the S&P 500 may look to test 1,800 in the not-too-distant future, the outlook for earnings, even in the U.S., remains uncertain with retail bellwether Wal-Mart warning of a tough holiday season in the lead-up to Thanksgiving and Christmas."

Home sales rise
The number of existing homes that changed hands in Canada during October was 8.3 per cent higher than a year earlier, while the average price was up 8.5 per cent, The Globe and Mail's Tara Perkins reports.

Slightly more than half of the markets tracked by the Canadian Real Estate Association registered year-over-year sales increases, with Vancouver, Calgary, Edmonton and Toronto showing the largest rebounds from last year's sales slump.

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The average sales price is being driven in part by the renewed strength in some of the country's pricier markets. The MLS Home Price Index, which seeks to create a more apples-to-apples comparison of prices by accounting for changes in the types and locations of homes that are selling, was up 3.5 per cent.

WestJet unveils new service
Canada's WestJet Airlines Ltd., is going trans-Atlantic for the first time, The Globe and Mail's Greg Keenan reports.

The Calgary-based airline said today it will begin daily 737 aircraft flights to Dublin from St. John's beginning next June.

The service will be seasonal and will include direct flights to Dublin from Toronto. Direct flights stop, but use one aircraft so passengers don't need to change planes.

In addition, the airline will offer daily non-stop flights between Ottawa and St. John's, connecting to Dublin.

Factories gain
Canada's manufacturing sector eked out a sales gain of 0.6 per cent in September, its fourth in five months and marking the best total since mid-2012.

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That was largely on the back of cars and food, Statistics Canada said today.

Eleven of the 21 industries measured notched up increases, representing about 55 per cent of the sector.

"The introduction of new 2014 models may have spurred some of the gains on the motor vehicle side," said economist Emanuella Enenajor of CIBC World Markets.

"On a trend basis, factory sales appear to be gradually improving, with a clear trend of increases seen since the spring," she added.

"In volume terms, sales were up a healthy 1 per cent, pointing to a significant contribution from manufacturing in the month's GDP print. The gain in factory volumes, taken together with signs that energy sector output was up that month, suggests September GDP could be shaping up for a healthy gain."

Inventories among manufacturers, which had been generally declining before now, fell by 0.9 per cent, primarily in the oil and coal industries.

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The inventory-to-sales ratio dipped to 1.37 from 1.39, while the level of unfilled orders slipped 2.2 per cent.

They eat horses, don't they?
This is only marginally connected to the business world, but one can't resist.

Princess Anne has sparked some controversy by raising the possibility of Britons eating horse meat, like the French do, because it would be better for the welfare of the animals.

She reportedly made the comments to the annual meeting of World Horse Welfare, of which she is president.

"Should we be considering a real market for horsemeat and would that reduce the number of welfare cases if there was a real value in the horsemeat sector?" she said, according to the Express.

"I chuck that out for what it is worth because I think it needs a debate."

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