Today's top stories from Report on Business :
Home buying rush expected in spring
Canada's housing market remained vibrant in January, though showed signs of cooling from December. Year over year, resales rose 58 per cent in January, though from a depressed state a year earlier, the Canadian Real Estate Association said today, and prices rose almost 20 per cent, bringing the national average to $328,537. From a record-setting December, though, January sales dipped 2.8 per cent.
That may be the calm before the storm. Analysts expect a hot spring real estate market given Finance Minister Jim Flaherty's move to tighten mortgage standards yesterday. Even before Mr. Flaherty's announcement, home buyers had been expected to rush to beat the harmonized sales tax in Ontario and British Columbia. Now, there's added pressure for the spring with an expected rush to beat Mr. Flaherty's new qualifying standards that come into effect April 19. Economists project a spike in sales, and prices, followed by a cooling period. "The effect of the tightened mortgage rules will be to spur avoidance activity before the new rules become truly effective in July after the pipeline commitments on preapprovals burn off," Scotia Capital economists Derek Holt and Karen Cordes said in a research note today. "That avoidance behaviour will also apply to the HST that dings new homes in Ontario and B.C. after Canada Day. Thus, look for a very strong spring market that transfers sales from [the second half of]2010 and beyond into [the first half]of 2010 and drives house prices even further into record territory."
Read
Housing market strong but cooling
Flaherty moves to cool mortgages
'Reckless' speculators get a cold shower
Why Flaherty's mortgage rules won't hurt home buyers
U.S. home construction on rise
Housing starts in the United States surpassed expectations for January, rising 2.8 per cent to the best level in half a year. While that raises hopes for the battered U.S. housing sector, building permits fell 4.9 per cent. Referring to the construction starts, BMO Nesbitt Burns senior economist Jennifer Lee said "January's rise is akin to expecting a quad-triple combination from Plushenko and getting a double-axel instead. It's okay, but not great." Read the story
Fed sees better growth, high unemployment
The Federal Reserve sees unemployment continuing to run high, despite better-than-expected projections for economic growth. In a forecast released today, the U.S. central bank expects the jobless rate to run at 9.6 per cent in the last few months of the year, down only a notch from January's 9.7 per cent. It expects unemployment to fall next year to as low as 8.2 per cent, and then to as low as 6.6 per cent, though as high as 7.5 per cent, by 2012. The Fed also projects the U.S. economy will expand by somewhere between 2.8 per cent and 3.5 per cent this year. Read the story
Toyota to install brake override mechanism
Toyota Motor Corp. said today it plans to put brake-override systems in its cars that would see the brakes engaged, but not the accelerator, when both pedals are pushed. Toyota also said it is studying the possibility of a recall of the Corolla in the wake of complaints over power steering, which number less than 100. In Tokyo today, Toyota president Akio Toyoda also told reporters he will not appear at U.S. congressional hearings related to the auto maker's massive recalls. And in a frank admission, he said the company may have expanded too quickly, and will establish centres for quality improvement at operations globally. "The basic rule of the Toyota Production System is to only build as many cars as there is demand for, and we ourselves broke that rule," he said. Read the story
Britain, Argentina feud over Falklands again
Argentina and Britain are at it again over the Falkland Islands, but this time it's over the vast energy resources in the region. Tensions between the two countries, which went to war over the islands in 1982, have been mounting. British oil companies want to explore in the region, and some areas have been licensed for development, the Associated Press reported. Argentina, the wire service said, has warned that vessels heading from the mainland to the Falklands will need a license, but Britain rejects that. Almost 1,000 people died in the brief war in the 1980s. Argentina's deputy foreign minister Victorio Taccetti told a local radio station today that the country will take measures to block exploration but "obviously by peaceful means." Read the story
Rogers boosts dividend
Rogers Communications Inc. hiked its annual dividend by 10 per cent this morning, to $1.28 a share, as it posted a stronger fourth quarter, swinging to a profit of $310-million or 51 cents a share from a loss of $138-million or 22 cents a year earlier. Revenue increased to $3.06-billion from $2.94-billion, on the back of a 5-per-cent rise in wireless revenue and 3-per-cent increase in cable revenue. Rogers also projected that its adjusted operating profit would rise 2 per cent to 7 per cent this year. It forecast wireless and cable revenue will each increase 3 per cent to 6 per cent this year, while media revenue gains 4 per cent to 9 per cent. Citing "good results and conservative guidance against high expectations," UBS Securities Canada analyst Phillip Huang wrote that "we believe an established track record of dividend growth will help lower the stock's risk profile, appeal to a broader base of investors, and provide downside support." Read the story
Loblaw profit, sales dip
Three years into a renewal effort, Loblaw Cos. Ltd. expects a challenging year. The grocery chain this morning posted a fourth-quarter profit of $165-million or 60 cents a share, compared to $190-million or 70 cents a year earlier as sales fell to $7.31-billion from $7.75-billion. Same-store sales, a key measure, fell 7.8 per cent but there was an extra week in the same quarter of last year. On an equivalent 12-week basis, Loblaw said, same-store sales dipped 0.7 per cent. "We are three years into our renewal program and making progress with two of the toughest years ahead," executive chairman Galen G. Weston said in a statement. "As we enter 2010, we continue to expect sales and margins to be challenged by deflation and increased competitive intensity." Read the story
WestJet profit slumps
WestJet Airlines Ltd. posted a 52-per-cent drop in profit in the fourth quarter, its 19th consecutive quarter of profitability and seen by analysts as good results. WestJet profit fell to $20.2-million or 14 cents a share from $42-million or 33 cents. Excluding a tax credit, WestJet's profit was $15.1-million or 11 cents a share. The airline cited the industry's challenges of reduced business spending, rising unemployment, lower consumer confidence, fears of the H1N1 flu and additional security measures. The company noted that four quarters of profitability in the horrendous year that was 2009 demonstrated its "solid" business model, while chief executive officer Sean Durfy said on a conference call that "I still am seeing some softness domestically and we are still seeing tremendous pricing pressure in the industry." Read the story
Gartman in 'hockey crazy' Canada
Dennis Gartman appears to be enjoying his time in "hockey crazy" Canada. The author of The Gartman Letter on financial markets was speaking in Edmonton today and is scheduled to speak tomorrow in Calgary before flying back to Suffolk, Virginia. "We do like Canada's TV coverage of the Olympics better than the U.S. coverage, and golly is this place hockey crazy as [Jarome] Iginla scored a 'hat trick' defeating Norway 8-0," Mr. Gartman said in his news letter today. "The streets of Edmonton were deserted while the game was being televised, and well they should."
From today's Report on Business
China unloads $34-billion of U.S. government debt
A slipup on the oval shatters Olympic debut