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A high-stakes day in Greece

Feb 16: It’s a crucial day in the eurozone, as a CP strike hits home. Plus, Japan is out of recession, and the end of a chocolate billionaire.


 

MORNING-PLAYBOOK-STORY
Today, the big headlines are crisis, negotiation, and intervention: for Canadian Pacific, and of course, for Greece.

Engineers are on strike at CP, which is expected to stall rail traffic and some commuter lines today – even as a bill is expected to end the strike. In Brussels, today is perhaps the biggest show down day for Greece and the eurozone (so far) over whether a compromise can be reached on extending the bailout.

Otherwise, at least in North America, the scheduled week ahead looks fairly placid – today, markets are closed in Canada for Family Day, and to the south, markets are closed for President’s Day.  Starting this Wednesday, markets in China will be also be closed for almost a week for Chinese New Year.

This morning, Japan also announced their fourth quarter GDP, and the Japanese central bank will meet Tuesday and Wednesday. For Canada, tomorrow will see housing numbers for January, while Wednesday will be wholesale trade and on Friday there will be retail sales, both for December. A report by a Russian security agency is also expected out today, detailing what they say are $1 billion worth of cyber attacks on financial institutions in the last two years.

A CP rail showdown. After the union and company failed to come to an agreement on Saturday night over rest hours for employees, Canadian Pacific engineers and conductors walked off the job on Sunday. This morning, a bill is expected to be tabled ordering more than 3,000 employees back to work. The strike is expected to affect Montreal commuters, as well as country-wide shipments, including of crude oil – CP delivered 110,000 carloads in 2014, a 22 per cent increase from the previous year. Meanwhile, the trucking industry is facing its own driver shortage, and so doesn’t have the resources to make up the space.

Show time for Greece. Will this be the day that leads Greece out of the eurozone? Either way, it’s yet another high-stakes day of negotiating over Greece’s bailout and the future of the country’s membership in the euro, after negotiations last week failed to produce any results. The Greek government says it is feeling confident that a deal can be reached today on a bridging loan,  as Alexis Tsipras maintained that his party will not accept an extension of the bailout. Markets may be tentatively positive for a deal as well, as the euro edged upwards this morning. But the German finance minister is not so sure: he said he was “very skeptical” a deal will be reached today. The country’s debt-to-GDP ratio is at 175 per cent, and the country could face running out of cash by the end of the month.

Japan is out of recession. But not as fast as expected. The country’s fourth-quarter growth was 2.2 per cent, largely fuelled by consumption, an increase from the previous quarter but coming in slow. The country is in the midst of its own long running stimulus plan, including quantitative easing, aimed at permanently ending deflation. The program, called “Abenomics” after Prime Minister Shinzo Abe, has had mixed success: Abe made it into another term late last year, but his inflation target is still well out of sight. Even still, the Nikkei 225 average hit a post-financial crisis high this morning, reaching 18,000 for the first time since 2007, extending a rally from last week.

The end of Michael Ferrero. The Italian creator of all your favourite chocolate hazelnut treats – from Nutella, to Ferrero Roche, to Kinder – died on Valentine’s Day. He was also a billionaire – estimated worth: 23.4 billion – and Italy’s richest man. Hazelnuts were plentiful in Ferrero’s home region, and the Italian took a paste made by his baker father that combined the nuts with chocolate, turning it into a global brand that celebrated its 50th birthday just last year. Just because it’s not Valentine’s Day anymore, doesn’t mean you have to stop thinking about chocolate – for the latest Weekend Playbook, we explored the economics of cocoa, from futures trading in London to bean farming in the Ivory Coast.

Need to know:
TSX: 15,264.81 (+36.29), Friday
Loonie: 80.25 (+0.19), Friday
Oil (WTI): $52.36, Monday morning (3:30 a.m.)


 

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