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G20 leaders should pay heed to growing 'Occupy' protests Add to ...

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G20 meets amid anger G20 finance officials begin meeting in Paris today against a global backdrop of anger, frustration and protest.

The euro crisis will be the focus of the summit of finance ministers and central bank chiefs, though this is the run-up to a meeting of G20 leaders in early November. Reports today say euro zone officials are working on a crisis plan they hope to have ready by then, one that could call for bigger haircuts for holders of Greek debt, and more heft for the International Monetary Fund.

If they're smart, the G20 finance officials meeting this weekend will also discuss the growing anger around the world, as the "Occupy Wall Street" protest movement spreads, including to Canada, and the demonstrations and strikes in Greece illustrate the misery of the people.

If they ignore the growing protests, they do so at their peril. The people are telling them something, and it would be unwise to write it off as a temporary demonstration, rather than treat it as the phenomenon that it is. Several business leaders say they sympathize with the movement, and it only promises to spread further in this era of high unemployment, foreclosures in the United States and harsh cutbacks by debt-burdened governments.

That's not to suggest governments should put off getting their fiscal houses in order, but, as many observers have noted, what's needed are plans to get people back to work along with medium-term measures to bring down swollen deficits.

Some had expected a showdown in New York today as protesters streamed into Zuccotti Park and demonstrators rushed to clean the area before they were evicted. But Canada's Brookfield Office Properties called off its plans to power wash the plaza, thus averting trouble.

Markets mixed Global stock markets are mixed this morning, though seemingly buoyed by some hopes for the G20 and stronger earnings from the likes of Google Inc. yesterday, while shrugging off worries about China's economy and another euro credit downgrade, this one in Spain.

"North America is waking up to a more robust risk backdrop this morning as expectations that this weekend's G20 finance minister and central bank chiefs meeting in Paris will yield some positive results in thwarting global uncertainty (co-ordinated action?)," said Mark Chandler and Ian Pollick of RBC Dominion Securities.

Tokyo's Nikkei lost 0.9 per cent, and Hong Kong's Hang Seng 1.4 per cent. But European markets are on the rise, with London's FTSE 100, Germany's DAX and the Paris CAC 40 up by between 1.2 per cent and 1.4 per cent by about 9 a.m. ET.

Dow Jones industrial average and S&P 500 futures rose.

"Equity markets point to a firm open in the U.S. this morning after Google trounced earnings and revenue expectations last night, stirring some optimism that corporate profits will hold up this earnings season - that appears to be making up for JPMorgan’s lacklustre quarter," said Robert Kavcic of BMO Nesbitt Burns.

"European stocks are also up about 1 per cent despite S&P downgrading Spain to AA- on growth and banking sector risk, while commodity prices are mostly higher. Treasury yields are a tad higher at the long end, and the [Canadian dollar]continues to inch its way up, sitting just above the 98-cent mark this morning."

Manufacturing milestone Sales among Canadian manufacturers are now at their highest level since October 2008, when the economy was entering its ugliest phase after the collapse of Lehman Bros. in mid-September of that year.

Factory sales climbed in August by 1.4 per cent to $47.6-billion, Statistics Canada said today, noting the rebound from the recession. Increases were largely in the transportation equipment, food, and energy sectors, the agency said.

Inventory levels rose 0.3 per cent, continuing a largely flat trend we've seen over the last few months. The inventory-to-sales ratio dipped for the second time in a row, unfilled orders climbed 1.3 per cent, continuing on an eight-month upward path, and new order rose 0.8 per cent.

U.S. retail sales climb A reading on U.S. retail sales today was also better than expected, showing there's still some spunk left in the American consumer.

Sales climbed 1.1 per cent in September, while the U.S. Commerce Department also revised its August reading to show an increase of 0.3 per cent.

"This is the fourth month in a row of gains, or the 14th in the past 15 months," said senior economist Jennifer Lee of BMO Nesbitt Burns.

"Autos accounted for much of the improvement, accelerating 3.6 per cent in a month which almost all (but one) of the auto makers put more incentives in place than in August, with Honda and Toyota spending a record amount," she said in a research note.

"Looks like their program worked. But even excluding autos, sales were quite decent last month, rising for 16 consecutive months, with September's 0.6-per-cent gain the best reading since March.

China inflation slows China's inflation rate is slowing, but that may be small comfort. The pace declined in September to 6.1 per cent, according to official numbers released today, but that's not really down much from the 6.5-per-cent peak of July.

That suggests that the People's Bank of China isn't likely to ease its policies any time soon, a key fact given concerns among investors that the world's second-largest economy is slowing, eating into demand. Today's data follow yesterday's trade numbers, which have also raised fears

Lending has cooled in China but rising food prices - they were up more than 13 per cent in September from a year earlier - are still pressuring the pace of inflation.

"Last night's disappointing Chinese trade data has provoked concerns that the Chinese economy may be slowing down too quickly," said CMC Markets analyst Michael Hewson.

"This in turn has raised expectations in some quarters that the authorities could soon look at easing monetary policy to avert a hard landing," he said in a research note. "This seems unlikely given that Chinese CPI continues to remain elevated as this morning’s September numbers prove. Consumer prices came in at 6.1 per cent, slightly down on the previous month's 6.2 per cent, though [the producer price index]did fall back to 6.5 per cent from 7 per cent."

Slash R&D tax breaks, study says The Canadian government should slash its generous research and development tax breaks and plow the cash back into targeted grants for businesses, according to a new study by the University of Toronto’s Mowat Centre for Policy Innovation.

A radical overhaul is warranted because the nearly $5-billion a year in R&D tax incentives Ottawa and the provinces offer now aren’t working, according to a study being released today, The Globe and Mail's Barrie McKenna reports.

Headlines of note

In Economy Lab Emerging economies have obviously concluded they can live with a little inflation if it means keeping the growth train on track, The Globe and Mail's Brian Milner writes.

In International Business How should Britain escape from a slump that seems sure to be longer and costlier than the depression of the 1930s? Martin Wolf of The Financial Times examines the issue.

In Globe Careers Making a great first impression is about three key things: Self-confidence, knowing what you want to communicate, and doing your homework. Some advice from Katie Bennett.

From today's Report on Business

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  • Updated November 22 4:15 PM EST. Delayed by at least 15 minutes.

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