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Remember 40¢ ago? Canadian dollar no longer the 'northern peso'

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Loonie joins elite list
Remember 40 cents ago, when the Canadian dollar was a dog? Oh, yeah, and when, in early 1995, The Wall Street Journal described us as an "honorary member of the Third World" and our currency as the northern peso?

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No more. Now, as The Globe and Mail's Barrie McKenna reports, it's about to join a somewhat elite list.

The International Monetary fund wants to start including the Canadian and Australian dollars on a list of currencies in quarterly reports on the foreign exchange reserves held by central banks, something that Bodhi Ganguli of Moody's Analytics described as a "vote of confidence" from the global body.

Up until now, the composition of foreign exchanges reserves, or COFER, broke out the U.S. dollar, the euro, Japan's yen, Britain's pound and the Swiss franc. The Canadian and Aussie dollars fell in the "other" category.

As central banks such as those in Russia and Switzerland add the loonie, as the dollar coin is known in Canada, a survey showed it was worth breaking it out separately, according to the IMF.

"The Canadian dollar has actually become a de facto global currency as foreign central banks have been increasingly loading up loonies as part of their reserve portfolios, reflecting Canada's growing importance in the global economy as well as prudent monetary policy, a truly triple-A sovereign rating and a pro-business majority government," Mr. Rosenberg said.

"However, this move will go beyond symbolism as it will make official the Canadian dollar as international reserves, and the status upgrade from the IMF will certainly boost more global diversification into Canada, which will further strengthen the CAD value in our view - especially if in the next review of the SDR (Special Drawing Rights) basket, the Canadian dollar and the Aussie dollar are included," he added, referring to the loonie by its symbol.

Canada has been drawing in foreign money in a post-crisis era of investors looking for havens, which has helped buoy the currency, to the dismay of the country's exporters. That's been happening for a couple of years now, and it's not expected to end soon.

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The currency has bounced around parity with the U.S. dollar for some time now, a far cry from the historic low of just shy of 62 cents U.S. in early 2002.

"Global investors share the IMF's optimism: Over the past couple of years, investors wary of the euro zone's outlook have stepped up purchases of Canadian debt securities," said Mr. Ganguli.

"Nonresidents have acquired $55.8-billion of Canadian debt securities in the first nine months of 2012, on par with the same period in 2011. This trend is expected to continue over the near term."

Senior Scotiabank currency strategist Camilla Sutton also pointed out that reserve managers are seeking more and more to diversify their holdings as reserves grow, and "diversification is hard to find."

RIM gains on BB10
Research In Motion Ltd.'s new BlackBerry 10 is generating a fair amount of buzz, boosting the company's stock price in the process.

RIM has been showing off the new device ahead of the late-January launch, with The Globe and Mail's Iain Marlow getting a good look this week, and the response from wireless carriers is apparently better than expected.

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So much so that at least two analysts boosted their targets on RIM shares this week.

"With greater carrier shelf space and marketing support, we now believe BB10 has a 20 per cent to 30 per cent probability of success," said Peter Misek of Jefferies & Co., as he raised his target on the stock to $10 (U.S.) from $5 and his recommendation to "hold" from "underperform," adding that "preliminary results from our quarterly handset survey indicate developed market carriers have a much more positive view of BB10 than we expected."

In fact, the stock could be worth up to $43, depending on the scenario.

Kris Thompson of National Bank Financial also hiked his target, to $15 from $12, though arguing there's more money to be had in advance of the launch Jan. 30.

"The new management team is executing by maintaining the BlackBerry subscriber base, managing costs and cash, and seemingly readying a February, 2013, BB10 global platform launch," Mr. Thompson said in a research note. "Most analysts were expecting a March launch."

That means an extra month for shipments, which he now projects at 35.5 million for 2014, for a global market share of 4.5 per cent.

"Buy the stock ahead of the BB10 product launch when we expect shipment estimates to increase, especially from U.S. brokers where a break in negativity could lead to short covering and ongoing stock momentum."

RIM, of course, has faltered amid heightened competition from the likes of Apple Inc.'s iPhone and Google Inc.'s Android system.

Several corporate and government users have switched amid the growing popularity of the iPhone and Android, the latest being the National Transportation Safety Board in the United States.

BCE-Astral marriage back on
It's a similar deal, but a much different tone from BCE Inc. this time around.

The Canadian telecommunications and media giant unveiled a new takeover deal with Astral Media Inc. this week, having been rejected by the country's regulator earlier.

"We heard Canadians and the CRTC loud and clear - they want assurance that Astral joining with Bell Media will directly benefit consumers and creators," BCE chief George Cope said as he unveiled the new proposal, sounding a far friendlier note than he did in October when he expressed his anger at the Canadian Radio-television and Telecommunications Commission's rejection.

As Steve Ladurantaye and Jacquie McNish report, the CRTC is signalling it could pave the way for BCE to use Astral to expand in Quebec, though it will have to dump TV and radio stations elsewhere.

I'm just waiting on a friend
Mick Jagger may not have been waiting on a lady, but, arguably, Antonis Samaras is.

"Greece has done what it had to and what it had committed to doing," the Greek Prime Minister said this week after European finance ministers and the International Monetary Fund failed for the second week running to strike a deal on Athens. "Our partners, along with the IMF, also must do what they have undertaken."

Thus, as our European correspondent Eric Reguly reports, they're going back to the table Monday.

And, yes, this is getting tedious.

The finance ministers and the IMF, whose chief Christine Lagarde opposed a decision to give Athens an extra two years to meet its fiscal targets, are struggling with Greece's debt plans, which is holding up the next tranche of its bailout money, some €31.5-billion ($40.1-billion U.S.).

The ministers of the embattled 17-member euro zone haven't said where the problems lie, only that there are "some elements" that need more technical work. But that comes after demands by Ms. Lagarde to find a solution that's based on reality rather than "wishful thinking."

The markets took this one in stride.

"Disappointment appears to have been tempered somewhat by expectations that EU leaders will, in the final analysis, agree something next week on Nov. 26, and ultimately unlock the extra money that Greece needs to keep funding itself," said senior analyst Michael Hewson of CMC Markets in London.

"It would appear that the same two issues remain the problem, namely the funding gap caused by the two-year extension agreed last week and the sustainability of Greece's overall debt burden which the IMF is opposed to pushing out to 2022."

Some officials were expected to talk again over the weekend.

Separately, a European Union summit aimed at striking a long-term budget ended Friday with no agreement, and talks have been kicked into next year.

"We are not yet at the point of reaching consensus," said European Commission chief Jose Manuel Barroso, a comment that seems like it's been playing on an endless loop for three years of the euro crisis now.

U.S. housing market gathers steam
America's housing market is showing even more signs of picking up from the devastating meltdown.

There have been several signs of late, the latest this week as the Commerce Department reported that construction starts climbed 3.6 per cent in October to an annual pace of 894,000 units, the best showing since July, 2008. On top of that, the National Association of Realtors reported that sales of existing properties rose 2.1 per cent in October, to an annual pace of 4.8 million units.

"The housing recovery continues to go from strength to strength," said Paul Ashworth of Capital Economics.

"Admittedly, the recovery is still in its infancy," he said in a report this week.

"Sales and construction remain depressed, much closer to record lows than normal levels. House prices are still down by 27 per cent from the peak in 2006. Mortgage delinquencies and foreclosures remain worryingly elevated. Almost a quarter of all mortgage borrowers are underwater on their loans. Nevertheless, the housing recovery could provide an important boost to the wider economy next year."

Hostess fields offers
Hostess Brands Inc. says it has been deluged with offers for some of its brands as it heads toward liquidation.

The Twinkie maker met in mediation with its bakers' union this week, at the urging of the judge overseeing its Chapter 11 proceedings, but that effort failed. A day later, the judge approved the plan to shut down.

Hostess had warned the union last week that it would cease operations, throwing 18,500 people out of work, if it didn't call an end to a week-old strike. It followed through the announced plan to liquidate and sell off its brands, which also include Ding Dongs and Wonder bread.

Some 50 potential bidders have agreed to non-disclosure pacts, according to the company's lawyer, Reuters reports.

Affected are 33 bakeries, more than 550 distribution operations and 570 stores in the U.S.

16 things
1. Showing there are, um, no hard feelings after the Supreme Court of Canada decided to allow generic versions of Viagra, Pfizer Inc. announced this week that "we are lowering original Viagra's price to be in line with generic versions because we are committed to ensuring that Viagra patients continue to have access to the original – made by Pfizer, and at a competitive price – simply by asking their pharmacist."

2. One of my colleagues got an e-mail from the World Taekwondo Federation this week, the subject line of which was "WTF press release." Which is what I say about many of the press releases I get every day.

3. "France's long-term economic growth outlook is negatively affected by multiple structural challenges, including its gradual, sustained loss of competitiveness and the long-standing rigidities of its labour, goods and service markets," Moody's Investors Service said as it cut France to AA1 from triple-A.

"The upgrade reflects the continued strengthening of Kazakhstan's sovereign external balance sheet, low level of government debt and healthy growth prospects, as well as tentative steps towards cleaning up the banking system," Fitch Ratings said as it upgraded the country to triple-B-plus from triple-B.

Just sayin', Borat.

4. Finance Minister Jim Flaherty referred five times in the text of a speech this week to "our children and grandchildren" and how we need to protect their futures. Well, Mr. Flaherty, almost 15 per cent of "our children and grandchildren" are still unemployed. Also just sayin'.

5. Dutch flower exports jumped 13 per cent in October, according to the group that tracks them. Again, just sayin' (for those too young to remember the Dutch tulip bubble of the 1600s).

6. You know how sometimes you think that the store mannequin is looking at you? Well, it is. Several retailers are now using dummies that employ technology used at airports, a way to get data, Bloomberg News reports. So think twice before you touch one again.

7. Colour commentary of the week, by chief economist David Rosenberg of Gluskin Sheff + Associates: "We are in a totally different world when on the same day we see Campbell, Heinz and Hormel all announce that they missed on their revenue targets. When soup and crackers, ketchup and pickles, and spam can't meet expectations, then you know that the term 'consumer frugality' has to be redefined."

8. Remember 1967's Summer of Love, and the free spirit that was San Francisco? Well, you've got to keep your clothes on now. The city's board of supervisors voted 6-5 this week to ban nudity in many public places, though there are free passes for some events, The Associated Press reports.

9. You won't see them in a Mustang with bald heads visible because the top's down, but, according to the journal nature, chimps and orangutans have mid-life crises, too. What may be important here, as nature suggests, is that this may show mid-life slumps are biological, not sociological. So there, you're in good company.

10. Pointing out that it's Thanksgiving week in the United States and Moody's has issued its report on ... Turkey.

11. "The 20th annual award for the most embarrassing passage of sexual description in a novel will take place on Tuesday 4 December 2012," Literary Review said of "Britain's most dreaded literary prize."

"The purpose of the prize is to draw attention to the crude, badly written, often perfunctory use of redundant passages of sexual description in the modern novel, and to discourage it ... In a year in which the country's obsession with mummy porn, red rooms of pain and Christian Grey has reached fever pitch, Literary Review is proud to continue its gentle chastisement of the worst excesses of the literary novel."

12. In my next life, I want to be a university researcher. They get to do fun stuff, like ponder whether people enjoy sex and partying more than work or chores. A study by New Zealand's University of Canterbury found that "sex/making love" (note the distinction there) ranked as the number one pleasure, followed by "drinking alcohol/partying," "listening to music/podcast," "hobbies/arts/crafts" and "socializing/talking/chatting." Way down the list were "paid work," "studying/working on education" and "housework/chores/DIY." As Time magazine put it, will wonders never cease?

13. Remember 1976's Network? "I'm as mad as hell and I'm not going to take this anymore?" WVII co-anchors Cindy Michaels and Tony Consiglio in Bangor, Me., frustrated with station management, according to The Associated Press, quit their jobs on air after Tuesday's 6 p.m. newscast. Watch them quit.

14. Canada is the ninth-best place in the world in which to be born, according to the Economist Intelligence Unit. Nigeria's the worst.

15. Journalists in Italy have called a walkout for next week in opposition to a yet-to-be passed law that could jail journalists for defamation while letting their editors off the hook with a monetary penalty, Reuters reports. Hey, boss, you reading this?

16. Some news releases from the Canadian government this week:

"On behalf of the Honourable Peter Kent, Canada's Environment Minister and Minister responsible for Parks Canada, the Honourable Peter Van Loan, Member of Parliament for York-Simcoe and Leader of the Government in the House of Commons, today recognized the Grey Cup as an event of national historic significance. Minister Van Loan made the announcement during a Historic Sites and Monuments Board of Canada plaque-unveiling ceremony at Varsity Centre in Toronto." (I have no idea why Mr. Kent couldn't recognize it himself.)

"On behalf of the Honourable Peter Kent, Canada's Environment Minister and Minister responsible for Parks Canada, Cathy McLeod, Member of Parliament for Kamloops-Thompson-Cariboo, today recognized Jean-Baptiste Lolo and Andrew Paull for their significant contributions to Canadian history." (Seriously, I have no idea why Mr. Kent couldn't recognize them himself.)

"Today, Cathy McLeod, Member of Parliament for Kamloops-Thompson-Cariboo, on behalf of the Honourable Lynne Yelich, Minister of State for Western Economic Diversification, announced federal funding for improvements to sports facilities and trail systems in Sun Peaks, under the Harper Government's Community Infrastructure Improvement Fund (CIIF)." (I have no idea why Ms. Yelich couldn't announce it herself.)

"MP Russ Hiebert (South Surrey-White Rock-Cloverdale), on behalf of the Honourable Rona Ambrose, Minister of Public Works and Government Services and Minister for Status of Women, is pleased to announce that the Government of Canada has awarded a $238,417 contract to FSR Fluvial Systems Research Inc. for their pre-qualified innovation through the Canadian Innovation Commercialization Program (CICP)." (I have no idea why Ms. Ambrose couldn't announce it herself. I'm also not sure what constitutes 'pre-qualified innovation.')

"An investment in arts and culture in Erin will help boost the regional economy. Porcupine's Quill will continue to produce high-quality books for readers everywhere, thanks to funding from the Government of Canada . This was announced today by the Honourable Michael Chong , Member of Parliament (Wellington-Halton Hills), on behalf of the Honourable James Moore , Minister of Canadian Heritage and Official Languages." (I have no idea why Mr. Moore couldn't announce it himself.)

"The Harper Government is helping the agricultural sector to foster a new generation of farm leaders. Member of Parliament Mark Adler (York Centre), on behalf of Agriculture Minister Gerry Ritz, announced at the Ontario Young Farmers Forum in Toronto today an investment for two initiatives that will help to identify opportunities and address issues facing the next generation of farmers." (I have no idea why Mr. Ritz couldn't announce it himself.)

"David Anderson, Parliamentary Secretary to the Minister of Natural Resources and for the Canadian Wheat Board and Member of Parliament (Cypress Hills-Grasslands), will be at the Grain Industry Symposium in Ottawa, Ontario, on November 21 to make an announcement in support of the grain industry on behalf of Agriculture Minister Gerry Ritz." (I have no idea why Mr. Ritz couldn't be there himself.)

"Agriculture Minister Gerry Ritz and Parliamentary Secretary Pierre Lemieux will make a statement regarding the Safe Food for Canadians Act." (Okay, they actually can do some things for themselves.)

Required reading this week
There's a surprise in Rob Carrick's 14th annual online brokers survey.

Another large Canadian company is facing a battle in the boardroom, as the biggest shareholder of Agrium Inc. attempts to replace almost half of the company's directors as part of a campaign to break up the business, Boyd Erman reports.

The decline in house prices that has hit Vancouver is spreading to Toronto, a shift that economists say marks the beginning of a national price correction, Tara Perkins writes.

A cottage industry of startups has sprung up around the slow but steady transformation of the business card from something you keep in your wallet to something you keep in your smartphone, Omar El Akkad reports.

The surge in Canadian oil production must now face a new reality: The biggest mover of crude says the pipes out of the country are full. Nathan VanderKlippe reports.

What to watch for next week
We should get a sense of how the Canadian recovery is slowing when Statistics Canada reports on how the economy performed in the third quarter of the year.

The bottom line, as Benjamin Reitzes of BMO Nesbitt Burns put it, is that "the Canadian economy likely sputtered in Q3."

Economists expect Friday's report to show gross domestic product expanded at an annual pace of less than 1 per cent, down from 1.9 per cent in the second quarter and brought down by softer exports.

"The main factor contributing to the slowing are indications of a weakening in net exports which are expected to subtract 1.7 percentage points from Q3 growth after adding 0.4 [of a percentage point] in Q2," said Paul Ferley and Tom Porcelli of RBC Dominion Securities.

"This deterioration mainly reflects indications of a 5-per-cent annualized decline in exports after rising 4 per cent in Q2."

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