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These are stories Report on Business is following Thursday, April 10, 2014.

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A decent return
Currency speculators appear to have made a pretty penny off the Canadian dollar.

And those speculators are one of the reasons for the recent strength in the loonie, as the country's dollar coin is known, just as they were one of the reasons for its decline.

Chief currency strategist Camilla Sutton of Bank of Nova Scotia says there's some guesswork involved here, but she bases her findings on the buildup in short positions in the loonie last fall, and the recent unwinding of those positions.

Speculators built up those bets against the currency when it was much stronger, an average 96 cents last October and November.

Now that the loonie is sitting at about 91.5 cents, they're unwinding positions and taking profits that amount to a return of more than 4.5 per cent.

Not bad for a few months' work.

"They're quite pleased with the profits and they're taking them," Ms. Sutton said of such short-term traders.

The loonie had been in a long decline, plumbing new depths earlier this year for several reasons, among them the difference in tone between the Bank of Canada and its U.S. counterpart, the Federal Reserve.

An increase in short positions helped drive the loonie lower, just as the unwinding is helping to push it up now.

"The speed of the shift in CAD highlights how extended the shorts were and the power they have in driving markets as they unwind," Ms. Sutton said.

The thinking up to this point among observers had been that the currency would sit at a lower level for some time, before picking up later in the year as the U.S. economy, which is key to Canada's fortunes, picks up steam and the lower loonie itself helps pump up Canadian exports.

Canadian exports have welcomed the lower currency. And while the Bank of Canada says it doesn't try to talk down the dollar, Governor Stephen Poloz, who would like an export recovery, can't be anything but pleased.

The recent move up, though, must be affecting his comfort level.

In a lengthy report yesterday, chief economist David Rosenberg of Gluskin Sheff + Associates said the loonie was not in a bear market, but rather a "contained policy-induced depreciation," much of which may have passed.

Former finance minister dead at 64
Tributes poured in today for Jim Flaherty, Canada's former finance minister, who died at the age of 64.

He was known around the world for Canada's strong fiscal standing, and how he and then Bank of Canada governor Mark Carney led the country out of the financial crisis.

"We appreciate that he was so well supported in his public life by Canadians from coast to coast to coast and by his international colleagues," his family said in a statement.

The business and political communities paid tribute to Mr. Flaherty, who had stepped down from the post just last month.

"His leadership helped Canada to overcome the most serious financial crisis since the 1930s," said John Manley, who heads a group of the country's chief executive officers.

"His astute judgment, thoughtful pragmatism and strength of character inspired confidence during a period of profound uncertainty and economic risk."

Stocks tumble
Stocks plunged again today, picking up where they left off earlier in the week.

While Tokyo's Nikkei was flat and Hong Kong's Hang Seng gained 1.5 per cent, European markets largely sank and North American stocks tumbled.

London's FTSE 100 eked out a slim gain, but Germany's DAX and the Paris CAC 40 slipped by between 0.6 per cent and 0.7 per cent.

The S&P 500 fell 2.1 per cent, the Dow Jones industrial average 1.6 per cent and the Nasdaq 3.1 per cent.

Toronto's S&P/TSX composite also slipped, by 0.9 per cent.

"After some temporary respite post-FOMC minutes, stocks were hammered again on Thursday amid concerns over valuations, earnings season and eventual Fed tightening," said senior economist Robert Kavcic of BMO Nesbitt Burns, referring to yesterday's minutes of the latest meeting of the U.S. central bank's federal open market committee, which gave investors some solace.

"The Nasdaq gave back more than 3 per cent as some of the recently best-performing sectors were under assault - technology, biotech and regional banks," Mr. Kavcic added.

"With valuations richer than they've been through much of the recovery to date and sentiment high, the end of [the Fed's quantitative easing stimulus program] and an eventual shift to tightening could be a tough pill for stocks to take in the near term."

GM to take hefty charge
General Motors expects its recalls to hit its first quarter by some $1.3-billion (U.S.).

That includes the charge of $750-million it unveiled at the end of March.

The total figure takes in recall-related repairs and "related courtesy transportation" so far this year.

"On a preliminary basis,  despite the $1.3-billion recall charge, GM currently expects to report solid core operating performance in the first-quarter financial results," the company said in a statement as it announced that added to its recall will be fixes to ignition lock cylinders.

Factory shakeout
A new manufacturing sector is taking hold in Canada after a "survival of the fittest" shakeout, a new study suggests.

"An overvalued currency, compounded by the trauma of a deep U.S. recession, has overwhelmed segments of the sector and caused many to question whether there is any future for manufacturing in Canada," economists Benjamin Tal and Nick Exarhos of CIBC World Markets said in their report today.

"But a closer look suggests that a different manufacturing sector is rising from the ashes," they added.

"Though some failed to survive, many who did are stronger, leaner and more productive."

The CIBC economists note that, six years later, manufacturing in Canada remains 10 per cent below the pre-crisis levels.

Manufacturing's share of the economy has plunged to 12 per cent from 16 per cent in the past 10 years, at the fastest pace ever.

Looked at another way, manufacturing companies disappeared at a rate of 20 per cent, while other firms were created to the tune of 10 per cent.

In the United States, manufacturing slumped to 13 per cent of gross domestic product, from 16 per cent in the 1970s.

"De-industrialization is not a uniquely Canadian story, but a common reality in the developed world," they said.

But what they see is a different world, based on growth in productivity since 2009, sensitivity to changes in net exports, labour costs, and how much of the Canadian market foreigners hold in a given industry, among others.

The "brightest prospects" under those measures put the wood products industry at the top, followed by the primary metals, machinery and aerospace industries.

"Talks regarding large scale repatriation of manufacturing activity to North America are highly premature," said the CIBC analysts.

"But there is no denying that the post-recession leaner and smarter North American manufacturing sector is better positioned to stop the bleeding," they added, noting that U.S. producers can rely on a better competitive standing and "brand advantage" to forge further into emerging markets.

"As for Canadian firms, the long and painful adjustment is starting to pay off, with many industries better positioned to take advantage of the weaker dollar to regain positions in U.S. markets and to better integrate into global supply chain opportunities."

Goldcorp ups the ante
Goldcorp Inc. is raising its hostile bid for Osisko Mining Corp. to $7.65 per share or $3.6-billion in an attempt to knock out a friendly deal between Osisko and Yamana Gold Inc., The Globe and Mail's Bertrand Marotte reports.

Vancouver-based Goldcorp said today its offer now stands at 0.17 of a Goldcorp common share plus an increase in the cash portion of its offer to $2.92 for each Osisko share, from 0.146 and $2.26, respectively.

Goldcorp's previous unsolicited bid was valued at about $6.30 per share, while the agreement between Montreal-based Osisko, Yamana and two of Canada's biggest pension funds is valued at $7.57 a share.

Greek bond issue better than expected
Greece made a dramatic return to the sovereign debt markets today with a bond sale that attracted enormous demand, indicating that global investors are convinced the euro zone crisis is truly over, our European correspondent Eric Reguly reports.

The sale was expected to raise at least €3-billion – about €1-billion more than expected – at a yield, or coupon, of 4.95 per cent. The yield was also better than expected. Before the sale, economists predicted the treasury would have to pay 5 per cent, perhaps 5.25 per cent.

While the sale was greeted with jubilation within the government, a car bomb that exploded in central Athens as a reminder that violent social upheaval is still an ever present danger even if the Greek economy is slowly on the mend. The bomb detonated outside a Bank of Greece building, though not near the main bank building itself, causing no injuries.

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