Riot police in AthensYIORGOS KARAHALIS
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Euro crisis escalates Greece is in crisis today as European leaders continue to stumble in the dark without answers to the severe troubles plaguing their monetary union.
The euro sank and global stock markets shuddered as police clashed again with demonstrators protesting Prime Minister George Papandreou's harsh austerity measures. As the government slashes and burns, in a country where unemployment is running above 16 per cent, demonstrations and strikes are common.
At the same time, political wrangling threatens to become a crisis as well. Mr. Papandreou attempted to bring opposition parties onside with new austerity plans today with a promise of power-sharing, but that failed, leading the prime minister to promise a Cabinet shuffle and a vote of confidence in the government.
At the same time, there's a standoff between politicians in the euro zone and policy makers at the European Central Bank, who are opposed to any type of restructuring of Greek debt, which now appears inevitable. Officials met yesterday, and could come to no agreement.
Borrowing costs in the periphery nations such as Greece and Portugal spiked again. On another front, shares in some of the biggest banks in France slipped after a warning from Moody's Investors Service about potential downgrades, given their exposure to Greek debt.
"The single currency has reversed most of yesterday's gains on the back of deadlock surrounding a resolution to Greece's recent woes," said CMC Markets analyst Michael Hewson.
"The uncertainty has been reinforced by images of protests on the streets of Athens as unrest escalates in the Greek capital. With rumours that the Greek Prime Minister Papandreou may well resign, uncertainty looks set to continue and as a result the euro continues to get clobbered."
It's more than a year into the debt crisis now, and policy makers appear no closer to a resolution.
"We can be very sure that unless new external funding becomes available, Greece's government will run out of money by Aug. 20, when its next big bond redemption is due ... if not sooner," said Carl Weinberg, chief economist at High Frequency Economics.
"That means it will default on its bond obligations and will also likely have to shut down large parts of its public sector operations. Most banks in Greece will fail, the ECB will have to write down its sizeable holdings of Greek bonds and a ripple will spread through the Euroland financial system."
- Greek Socialists in power-sharing talks in wake of anti-austerity riots
- Greek default too costly: future ECB chief
- French banks in firing line over Greek debt crisis
Home prices climb Canada's housing market looks to be fairly well balanced ... if you forget Vancouver exists.
Sales of resale homes in Canada were basically flat in May, compared to April, falling by less than 1 per cent, though they gained on the year by 2.7 per cent, The Globe and Mail's Julien Russell Brunet reports today.
Prices climbed 8.6 per cent from a year earlier, but the Canadian Real Estate Association said the national average of $376,817 was skewed by strong sales in "selected pricey" areas of Vancouver and broad price increases in Toronto, where supply is still tight given demand.
Remove Vancouver, CREA said, and the year-over-year price increase was 5.6 per cent. Take out Toronto as well, and it was 3.7 per cent.
"Quite simply, no other city in the country is seeing anything remotely close to what's unfolding in Vancouver," said Douglas Porter, deputy chief economist at BMO Nesbitt Burns.
"In fact, many large cities have posted price declines over the past year, notably Calgary, Edmonton and Halifax ... Among the other largest cities, only Toronto is showing anything close to overheating, and its 8.7-per-cent year-over-year price gain seems to fall well shy of bubble territory."
He said the market overall appears to have enjoyed a healthy spring, despite poor weather and new mortgage rules.
But the average price in Vancouver, he said, was $831,555, up a stunning 25.7 per cent from a year earlier, pulled up by homes at the pricier end.
"Reported prices in that city are clearly being skewed by strong sales of high-end homes, as the Vancouver Real Estate Board notes that prices for a typical home have risen 6.2 per cent year over year (and have averaged $627,000 - which would still be, by far, the highest in the country)," Mr. Porter added. "Even so, the frantic activity for high-end houses may itself be a signal of an overheated market."
Thus, the stage is set for a speech this afternoon - in Vancouver - on housing by Bank of Canada Governor Mark Carney.
As for the overall market, there are few concerns.
"The Canadian housing market has seen some big ups and downs in recent years, making national sales activity so far this year look like something of a Goldilocks story by comparison - not too hot, not too cold," said Gary Morse, the group''s president.
Of course, it doesn't look like Goldilocks was eating breakfast in Vancouver.
Carney warns Bank of Canada Governor Mark Carney also had a housing-related warning today.
Vancouver is an "extreme example" of a market where sky-high prices will moderate but where some pockets could nonetheless be on the verge of overheating amid still-low borrowing costs and outside factors such as foreign investment, he told a Vancouver Board of Trade gathering.
As The Globe and Mail's Jeremy Torobin reports, Mr. Carney said that even as growth in mortgage credit has started to slow, residential investment nationwide is near peak levels, partly because of "historically favourable borrowing conditions" but also "potentially overly optimistic assumptions about future developments."
"Some excesses may exist in certain areas and market segments," he said. "The elevated level of 'multiples' inventories, the ample pipeline of developments under way, and heavy investor demand (much of it foreign) reinforces the possibility of an overshoot in the condo market in some major cities."
A hockey bubble? You'd have been better off investing in hockey than in the stock market.
Ticket prices for tonight's Stanley Cup final are looking as frothy as dot-com shares before the tech bust, on today on auction and reseller sites for staggering amounts. On Stubhub.com, for example, tickets are being pitched for between $1,500, for a single, to $17,999.99 for two third-row seats on one of the blue lines.
Or, you can opt for a suite for almost $206,000 for Game 7 between the Vancouver Canucks and the Boston Bruins.
On eBay, there are several bids at $3,800 for tickets at centre ice, row 8 of the Rogers Arena in Vancouver, but the seller wants $10,000 a pop. Then there are four tickets for almost $31,000 in the 25th row.
"This takes it to a new level," Christian Anderson of California-based FanSnap.com, told Bloomberg News. "The Canucks haven't won before and, with a Game 7, this is it, it's do or die. That definitely drives the prices."
Nyrstar to buy Breakwater Is Ned Goodman calling a top to the market's run? Because for the second time in seven months, Streetwise columnist Boyd Erman reports today, he's peddling a major asset.
After agreeing to sell DundeeWealth , the asset-management company his family built, to Bank of Nova Scotia late last year, he's agreed to sell zinc miner Breakwater Resources for about $663-million.
- Ned Goodman unloads another big asset in Breakwater
- Breakwater to be acquired by Nyrstar in $663-million deal
Core inflation picks up in U.S. Underlying inflation is heating up in the United States.
While consumer prices rose 0.2 per cent in May, the slowest pace in six months, so-called core prices, which strip out volatile items, climbed 0.3 per cent, for the fastest pace in about three years, the Labor Department reported today.
The overall annual inflation rate came in at 3.6 per cent, though the core rate is at 1.5 per cent.
"Inflation is now a touch closer to Fed targets with core at 1.5 per cent over the past year, but tame wages should be a barrier to an extended heating in core prices, and gasoline should provide further relief to the 3.6-per-cent headline CPI," said Avery Shenfeld, chief economist at CIBC World Markets.
Manufacturers hit Canadian factories suffered a setback in April, wiping out their gains from a month earlier.
Manufacturing sales slipped 1.3 per cent in the month, though it was almost all related to a drop in transportation equipment shipments.
"The decrease in total manufacturing sales for April reversed much of the 1.9-per-cent gain for March," Statistics Canada said today.
"The Tohoku earthquake has clearly been more disruptive on global supply chains than originally anticipated, being reflected both in today's report and last week's trade report," said economist Francis Fong of Toronto-Dominion Bank.
"The Canadian dollar yet remains well above parity. All the while, both global and Canadian economic growth is slowing," he said in a research note.
"However, despite all of those issues, we continue to expect the recovery in the manufacturing sector to persist. Volatility and uncertainty in this economic recovery are not exactly new developments and Canadian manufacturers have shown a considerable amount of resilience throughout these past two years."
Analysts downgrade Sherritt Analysts are cutting their targets on shares of Sherritt International Corp. after it boosted its estimates and extended the timeline at a Madagascar project yesterday.
Analyst John Hughes of Desjardins cut his earnings-per-share estimate for 2012 and his price target on the stock to $10.50 from $12. Matt Murphy of UBS Securities Canada cut his price target to $8 from $8.90. And CIBC analyst Alec Kodatsky cut his target to $9.25 from $10.20.
Yesterday, Sherritt sales sank after it boosted the estimate on its Ambatovy nickel-cobalt project, and said production is now expected to start early next year, rather than this year, Globe and Mail mining writer Brenda Bouw reports. It owns 40 per cent of the project.
"We delayed our startup estimate in line with the guidance, and continue to forecast a conservative three-year ramp-up in the context of observed challenges in ramping up large laterite-leach projects globally," Mr. Murphy said.
In Economy Lab today The economics behind the controversy surrounding the Conservative government's decision to remove the Canadian Wheat Board's legal monopsony in wheat and barley are somewhat opaque at first glance. Stephen Gordon examines the issue.
In International Business today Is it conceivable that China could learn that spectacular success is a precursor of surprising failure? Marin Wolf of The Finance Times finds that the answer is yes.
In Personal Finance today Not all seminars are equal, so it's worth your while to do some research before you go.
Author Peter Leeds, who is stocking up on non-perishables like paper towels, has some tips for protecting your purchasing power.
Part-time jobs, like selling furniture or delivering pizza, can provide a surprising amount of extra money, says Angela Self.
From today's Report on Business