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the week

These are some of the major stories Report on Business followed this week. Get the top business stories on weekdays on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.

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Greece at the brink You'd be tempted to think that Europe's leaders have all but thrown in the towel when it comes to Greece.

EU leaders met in Brussels this week and said they want Athens to stay in the euro zone. But they did nothing aimed at making that happen, and many observers believe it's now only a matter of time before Greece exits the 17-member monetary union. Indeed, officials are talking openly about it now.

Markets are now closely watching the polls in the run-up to the second Greek election in mid-June. Anti-austerity forces made surprising gains in the last election, so much so that attempts to forge a coalition government failed, and a new vote had to be called.

This comes amid a sinking economic outlook for the euro zone.

"It's been three weeks since the Greek elections produced a stalemate between pro- and anti-bailout parties, unleashing a wave of doubts about Greece's future in the euro, and about the common currency itself," noted deputy chief economist Douglas Porter of BMO Nesbitt Burns.

"In that short span, the euro has dropped by more than 4 per cent to $1.251 (U.S.), 10-year Treasury yields have hit century-lows of 1.7 per cent, and global equity markets have dropped almost 5 per cent," he said in a report Friday.

The market capitalization of the MSCI World Index has lost about $2-trillion in value in that period, putting the benchmark just about back to early 2012 levels, Mr. Porter added in an interview, noting that while other factors have played into it, concern over Greece was the primary culprit.

"Putting the market cap loss of more than $2-trillion into some perspective, the value of Greece's nominal GDP was $265-billion (and falling) over the past four quarters, or roughly three Facebooks," he said.

"True, this comparison mixes stocks (equity values) and flows (GDP), but it gives a sense of just how much havoc a grand total of 0.16 per cent of the world's population can cause for financial markets."

You've got to have friends Facebook's first week as a publicly traded company was anything but friendly.

Shares of Facebook Inc. closed out at well below their initial public offering price of $38 (U.S.), amid mounting controversy surrounding the IPO.

Nasdaq went so far this week as to apologize for what it called an embarrassing showing on the launch last Friday.

Shareholders sued - the company said the suit was without merit - while Massachussetts subpoenaed the underwriter and two top regulators called for a review. The underwriter denied any wrongdoing.

"I think there is a lot of reason to have confidence in our markets and in the integrity of how they operate, but there are issues that we need to look at specifically with respect to Facebook," SEC chairman Mary Schapiro told reporters.

CP strikebound Some 4,800 members of the Teamsters union struck Canadian Pacific Ltd. this week, shutting down freight traffic and leaving companies scrambling, but the walkout is expected to be short-lived as the government prepares back-to-work legislation.

"This morning I have already put on notice a bill to ensure that we are in the position to be able to introduce legislation," Labour Minister Lisa Raitt said as the strike began.

"We want to make sure the effect on the economy is being brought to people's attention and that we're keeping it in mind as it proceeds."

Required reading this week A mantra in the auto industry is that product, product and product are the three most important factors in attracting customers, Greg Keenan writes. But something else is helping to keep sales of Canadian luxury vehicles red-hot – prices.

In the span of just months, industry executives who had never considered moving oil by train are not just tinkering with rail shipments, but embracing them, Nathan VanderKlippe reports.

Efforts by Argentina to fine tune its economy are forcing miners to reassess investment plans in the Andean country that is home to massive gold, copper and other resource deposits, Pav Jordan writes.

Crude oil prices have tumbled to their lowest level in nearly seven months, creating headaches for producers but promising some relief for vacation drivers this summer, Shawn McCarthy reports.

In the midst of the largest auction of Western Arctic oil and gas rights in Canadian history, two giant rectangles of land up for grabs in the northeastern stretches of the Beaufort Sea are particularly mysterious. Nathan VanderKlippe looks at the issue.

What to watch for next week While Greece and Spain have been grabbing the euro headlines lately, the focus will shift to Dublin next Thursday, when Ireland holds a referendum on the European Union's fiscal compact.

"Polls have shown a clear lead for the 'Yes' camp by about 60 per cent to 40 per cent, but the actual result may be a lot closer," said observers at RBC Dominion Securities.

"Although the fiscal compact does not require Irish ratification to come into effect, EU leaders have tied future bailout disbursements to Ireland to a positive outcome on the referendum."

Markets will also be watching for the release of some key indicators, in both Canada and the United States.

On Friday, Statistics Canada releases its report on how Canada's economy fared in the first quarter of the year, and analysts expect to see annualized growth of between 1.8 per cent and 2.2 per cent, compared to 1.8 per cent in the fourth quarter of 2011.

"Net trade and an unintended inventory build-up are expected to be significant contributors to growth," said economist Diana Petramala of Toronto-Dominion Bank.

"Real exports are estimated to have expanded by 9.2 per cent, met by a less sultry 5.3-per-cent gain in imports," she said in a report Friday.

"With housing starts running hot as builders continue to take advantage of a low interest rate environment, new home construction is also likely to have added favourably to growth. On the flip side, we expect the release to show a sharp deceleration in consumer spending (+1.5 per cent) and business investment (+4 per cent), both of which are coming off decent gains in the prior quarter. The government sector remains a wild card, as spending unwinds from past stimulus measures."

Friday also brings the widely watched U.S. jobs report, this one for May. Economists generally expect to see job creation of about 150,000 and an unemployment rate of 8.1 per cent.

"A slight improvement in May's payrolls will do little to alter the impression that hiring in the U.S. economy has slowed noticeably since the winter," said Andrew Grantham of CIBC World Markets.

"Job gains of this magnitude are consistent with the more moderate GDP growth of Q1, rather than the strong advance of [the fourth quarter of last year]"

For investors, bank earnings continue, with Bank of Nova Scotia on Tuesday, and Canadian Imperial Bank of Commerce and National Bank of Canada on Thursday.

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