These are stories Report on Business is following Friday, Sept. 26, 2014.
Investors perk up
Markets settled down today to close out an anxious week.
The question is where it goes from here after yesterday's rout.
"U.S. markets look like pulling back from yesterday's ransacking with a higher open today after Nike beat earnings expectations and looking ahead to what should be a higher revision to second-quarter U.S. GDP growth," said analyst Jasper Lawler of CMC Markets in London, referring to economic data released after he circulated his research note.
Global markets are mixed today.
Tokyo's Nikkei slipped 0.9 per cent, and Hong Kong's Hang Seng 0.4 per cent.
In Europe, London's FTSE 100 and the Paris CAC 40 were up by between 0.2 per cent and 0.9 per cent, while Germany's DAX was down 0.2 per cent.
In North America, the S&P 500 and Dow Jones industrial average and Toronto's S&P/TSX composite all picked up.
Here's what market observers are saying:
"This lack of breadth in the stock market does not spell a definite decline or impending bear market and in fact would take the market back to healthier valuations. The risk is, if the top-flight companies start to show deterioration in corporate earnings and prices adjust accordingly then there are no stocks left to support the bull market." CMC's Mr. Lawler
"As a more bearish mindset takes hold, it pays to keep in mind that this selloff will bring with it a tremendous buying opportunity at more attractive price levels. All of a sudden, there are already some inexpensive stocks out there." David Rosenberg, chief economist, Gluskin Sheff + Associates
"Yesterday saw a hugely significant selloff in equity markets, as the threat of an ISIS attack in Paris and New York was compounded by rumours of an asset freeze being implemented by Russia in response to U.S. and European sanctions, finally impacted by a major selloff in Apple stock. The announcement by the current Iraqi PM that ISIS captives had admitted to plans for attacks on both the New York and Paris Metros heightened fears of another 9/11 style attack. This of course drove risk aversion as markets considered the impact that it would have to risk sentiment in the markets should it occur. Alongside this, the potential for an asset freeze in Russia provided a massive threat to European assets abroad and at a time when growth is hard to come by for euro zone countries, such a move would almost certainly move the economy towards yet another recession." Joshua Mahony, research analyst, Alpari
"We have seen continued strengthening in the dollar and there is growing uncertainty in the market about the U.S. tightening cycle. We have got a great deal of policy uncertainty in the next couple of months. I would imagine that people's risk premium expectations will continue to drift higher and that will continue to put downward pressure on equity markets." Ian Richards, global head of equities strategy, Exane BNP Paribas, to Reuters
"It doesn't look like traders are betting on some kind of relief rally. People are not willing to have a lot of risk on their books. There wasn't any particular news yesterday that triggered the risk-off mode. It just kept on accelerating with technology stocks leading the decline because of Apple. Now we are going into the weekend and we are not seeing many people willing to take the risk." Peter Garnry, head of equity strategy, Saxo Bank A/S, to Bloomberg
BlackBerry narrows loss
Shares of BlackBerry Ltd. climbed today as the company followed the launch of its new Passport with what chief executive officer John Chen boasted was a "solid quarter."
BlackBerry posted a narrower loss of $207-million (U.S.), or 39 cents a share, compared to a loss of $965-million or $1.84 a year earlier, The Globe and Mail's Sean Silcoff reports.
Excluding one-time items, the per-share loss was 2 cents, far better than the 16 cents expected by analysts. Revenue slipped to $916-million from $1.6-billion.
"We delivered a solid quarter against our key operational metrics, and we are confident that we will achieve break-even cash flow by the end of FY15," Mr. Chen said.
"Our work force restructuring is now complete, and we are focusing on revenue growth with judicious investments to further our leadership position in enterprise mobility and security, driving us towards non-GAAP profitability during FY16."
BlackBerry added in a statement that it "continues to anticipate maintaining its strong cash position, while increasingly looking for opportunities to prudently invest in growth."
Mr. Chen said later in a conference call with analysts that BlackBerry has seen strong initial demand for the Passport, with 200,000 already ordered as of the launch date, and sold out on Amazon.com.
- Sean Silcoff: BlackBerry climbs as loss narrows, Chen boasts of 'solid quarter'
- Video: Even with Passport, BlackBerry stock on 'No Fly List' for some
Gross quits Pimco
Bill Gross, the world's famous bond king, is leaving Pimco to join Janus Capital Group Inc., whose shares surged today.
Right in the middle of a regulatory probe of the former.
"While we are grateful for everything Bill contributed to building our firm and delivering value to Pimco's clients, over the course of this year it became increasingly clear that the firm's leadership and Bill have fundamental differences about how to take Pimco forward," chief executive officer Douglas Hodge said of the firm's co-founder.
Mr. Gross will be based in a new office in Newport Beach, California, and will manage the new Janus Global Unconstrained Bond Fund, among other duties, Janus announced today.
"I look forward to returning my full focus to the fixed income markets and investing, giving up many of the complexities that go with managing a large, complicated organization," Mr. Gross said in a statement.
Janus chief executive officer Richard Weil said Mr. Gross is coming to his company amid "today's increasingly risky markets."
He also leaves amid word this week that the Securities and Exchange Commission is investigating pricing in Pimco's Total Return Exchange-Traded fund.
Both Pimco and its parent, Allianz, have said they are co-operating with the SEC and that they "believe our pricing procedures are entirely appropriate."
- 'Bond King' Bill Gross leaves Pimco for rival Janus
- SEC probes Pimco chief Bill Gross's bond ETF
- Tim Kiladze in Streetwise (for subscribers): Pimco probe reflects a deeper problem for ETF industry
Bombardier gets boost
Bombardier Inc.'s C Series jet program got a big boost today with the announcement that Macquarie AirFinance of Australia has committed to buying 40 planes, The Globe and Mail's Bertrand Marotte reports.
While Bombardier did not disclose the value of the deal, it is estimated to be about $3-billion (U.S.) based on the list prices of previous transactions.
The agreement for 40 CS300 airliners, as well as options on an additional 10 aircraft, with a fully owned affiliate of Macquarie AirFinance is a much-needed vote of confidence in the all-new C Series jet, whose development has been plagued by delays and cost overruns as well as sluggish sales.
The deal with Macquarie AirFinance boosts the tally so far to 243 firm orders for the C Series, bringing it closer to the target of 300 firm orders by the time the plane flies commercially. Bombardier stands by its goal of entry-into-service by the second half of 2015, despite lost time in flight testing.
U.S. economic growth at 4.6 per cent
The U.S. economy is showing even more spunk than initially believed.
The economy expanded in the second quarter of the year at an annual pace of 4.6 per cent, better than the 4.2 per cent reported early by the U.S. Commerce Department.
Today's final reading of gross domestic product by the Commerce Department is the latest sign yet that America's economy is picking up steam, and right in line with what economists had expected.
"Today's revised Q2 GDP numbers indicate an even greater bounce-back in growth from weather-related weakness in the first quarter that sent growth into negative territory, declining 2.1 per cent," said assistant chief economist Paul Ferley of Royal Bank of Canada.
"Though partial data for the third quarter is indicating some slowing in growth, our forecast of a 3.3-per-cent gain is indicative of solid above-potential growth being sustained going into the second half of this year," he added.
"Activity at this pace is consistent with the Fed winding down its quantitative easing program with a full cessation expected to be announced at the next [Fed meeting] in October."
Streetwise (for subscribers)
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