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These are stories Report on Business is following Wednesday, Oct. 8, 2014.

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Markets perk up
Stocks rallied late today and the U.S. dollar weakened, thus pushing up Canada's currency, on a "dovish" Federal Reserve that is fretting over the greenback's recent rally.

According to the minutes of the mid-September Fed meeting, released this afternoon, some at the the U.S. central bank are troubled by overseas economies, and how the stronger dollar could hurt exports.

"Some participants expressed concern that the persistent shortfall of economic growth and inflation in the euro area could lead to a further appreciation of the dollar and have adverse effects on the U.S. external sector," the minutes showed.

"Several participants added that slower economic growth in China or Japan or unanticipated events in the Middle East or Ukraine might pose a similar risk."

Observers had been worried that the minutes from chair Janet Yellen's Fed could sink markets even more.

But North American stocks climbed after the release of the minutes, and the U.S. dollar softened, in turn helping to boost the loonie, as Canada's dollar coin is known.

The warning about the U.S. dollar was a new risk, noted chief currency strategist Camilla Sutton of Bank of Nova Scotia.

"And it highlights that the Fed will be uncomfortable if we see any further U.S.-dollar strength, so I think it gives a great excuse for profit-taking," she said of the currency.

Asian and European markets had suffered earlier, closing before the minutes from the policy-making panel, the Federal Open Market Committee, were released.

But in North America, the S&P 500 and the Dow Jones industrial average shot up, while Toronto's S&P/TSX composite was up to a lesser extent. The S&P 500 jumped about 1.75 per cent, or more than 33 points, and the DJIA surged almost 275 points, or 1.6 per cent. Toronto chalked up a gain of about 90 points, or 0.6 per cent.

The Canadian dollar, meanwhile, shot up above the 90-cent mark as the greenback weakened, having been as low as 89.2 cents (U.S.) earlier in the day.

The central bankers also worried about whether they might mislead the markets if they changed their signal, or forward guidance, as it's known, on where interest rates could head.

Some observers had speculated that they might alter the language in their Sept. 17 policy statement to remove the pledge to hold rates at current levels for "a considerable time" after they wind down their asset-buying program this month.

In the end, they didn't change that, concerned over how the markets might react.

"Several participants thought that the current forward guidance regarding the federal funds rate suggested a longer period before liftoff, and perhaps also a more gradual increase in the federal funds rate thereafter, than they believed was likely to be appropriate given economic and financial conditions," the Fed minutes said.

"In addition, the concern was raised that the reference to 'considerable time' in the current forward guidance could be misunderstood as a commitment rather than as data dependent," they added.

"However, it was noted that the current formulation of the committee's forward guidance clearly indicated that the committee's policy decisions were conditional on its ongoing assessment of realized and expected progress toward its objectives of maximum employment and 2-per-cent inflation, and that its assessment reflected its review of a broad array of economic indicators."

Paul Ashworth of Capital Economics said he thinks that language is "now living on borrowed time," and that the Fed's first rate hike will come as early as next March.

Mr. Ashworth believes the Fed's first rate hike will come as early as next March.

Assistant chief economist Dawn Desjardins of Royal Bank of Canada said she believes the rate increase will come in June, given that she expects the U.S. economy will probably "continue to grow at an above-potential pace."

(Brad Majors loved Janet Weiss in The Rocky Horror Show and the cult classic movie that followed in 1975, and from whence this headline comes: Dammit, Janet, I love you. Having said that, it's been a long time since I've seen someone throw a piece of toast at the movie screen.)

Gap names new chief
Gap Inc. today named Glenn Murphy's successor when he leaves as chief executive officer early next year.

The U.S. clothing retailer said today it chose its digital chief, Art Peck, to jump into the role in February.

"Murphy and Peck have worked side by side for the better part of a decade as Gap Inc. dramatically improved its financial performance while expanding globally," the company said.

Pace of borrowing picks up
The central bank likes to call it the "constructive evolution of household imbalances."

But, based on a Royal Bank of Canada report today, suddenly it's not so "constructive" any longer.

It's just one month, so that's something to keep in mind, but RBC economist Laura Cooper pointed out that the pace of consumer borrowing picked up in August, to 4.4 per cent, ending three months of "stable" readings of 4.2 per cent.

True, it's a modest increase, but it comes after repeated warnings from the Bank of Canada and the government for Canadian consumers to get their act in gear.

A key measure of our swollen debts is the debt-to-income ratio, which sits close to its record, according to the latest from Statistics Canada.

But that didn't worry observers all that much because it was a case of income growth lagging that of credit growth, rather than lending get way out of hand.

Ms. Cooper's report today, though muted, may nonetheless serve as a warning.

"A quicker pace of household credit growth in August predominantly reflected a 5.2-rise in residential mortgage borrowing while consumer credit increases more modestly by 2.5 per cent," she said.

"Residential mortgage debt reached $1.26-trillion in August, a $62-billion increase from a year ago and marked an acceleration from the 5-per-cent year-over-year increases recorded in June and July."

Thus, a "brief respite in the constructive evolution of household imbalances" at this point.

Ms. Cooper noted the usual one- to six-month lag from when the purchase of a home actually shows up in credit data, which means "renewed vigour in the country's housing market late in the spring and into the summer months."

She wasn't overly worried, however, because a stronger economy and the pressure for interest rates to move up "will likely temper mortgage borrowing and support sustained low rates of household credit growth."

Accounting for cross-border shopping
Cross-border shopping may be a favourite sport for Canadians, but it apparently makes up only a small piece of the pie.

According to a Statistics Canada study released today, crossing the border to shop surged 72 per cent between 2006 and 2012, to $8-billion from $4.7-billion.

Still, the federal agency said, that accounted for just 1 per cent to 2 per cent of all Canadian retail sales.

But for 2009,  overall sales have climbed every year. In dollar terms, Canadian sales jumped to $468-billion two years ago from $389-billion in 2006.

"Comparing the two figures, cross-border shopping accounted for 1.7 per cent of total Canadian retail sales in 2012."

Of course, I'm sure Canadian retailers would have liked to hold onto that 1.7 per cent.

Starts steady
Canada's construction industry held relatively steady last month as housing starts rose "modestly" from a month earlier.

Construction starts rose to an annual pace of 197,343 from 196,283 in August, Canada Mortgage and Housing Corp. said today.

The six-month moving average, though, was stronger, at 197,747, compared to 191,095.

"The increase in the trend reflects stronger starts activity since April, largely concentrated in multi-unit dwellings including condominiums," said Bob Dugan, the agency's chief economist.

"However, the currently elevated level of condominium units under construction supports our view that condominium starts should trend lower over the coming months."

Siri, how's my driving?
The American Automobile Association is warning that hands-free technology may not be as safe behind the wheel as you may think.

Research from the U.S. driving group suggests "developers can improve the safety of their products by making them less complicated, more accurate and generally easier to use," the AAA says, adding it plans to work with auto makers to produce better systems.

According to the AAA, University of Utah tests, which included heart-rate monitors and "instrumented" test cars, found, among other things, that the accuracy of such software "significantly influences the rate of distraction."

Updating earlier research, they used a five-point ranking system like the one for hurricanes, and found that the accuracy issue was a "high" level of 3 where distraction is concerned.

Also a 3 was in-car composition of text messages and e-mails. Listening to them, in turn, was a category 2.

Quality of the systems was also an issue: Listening to a "natural or synthetic voice" each came in as a category 2.

"We already know that drivers can miss stop signs, pedestrians and other cars while using voice technologies because their minds are not fully focused on the road ahead," AAA chief executive officer Bob Darbelnet said in the group's statement.

"We now understand that current shortcomings in these products, intended as safety features, may unintentionally cause greater levels of cognitive distraction."

Researchers also looked specifically at Siri, that genius on Apple Inc. devices, using the tech giant's own insight on the iOS 7 version.

"Researchers used the same metrics to measure a broader range of tasks including using social media, sending texts and updating calendars. The research uncovered that hands- and eyes-free use of Apple's Siri generated a relatively high category 4 level of mental distraction."

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