Morning Playbook: A budget recap round-up

If yesterday was all about speculation over the budget, today is all about parsing through the details, from tax changes to anti-terrorism funds. To help you out, Maclean’s has a special digital edition (and it’s free!), collecting political and economic analysis of the government’s balanced budged from every which way—including how it will affect your bottom line.

Otherwise, today is a day of tech news—where Yahoo! falls, will Facebook prosper?—and a couple great yarns, from a Kentucky bourbon heist, to the story of a 37-year-old trader who (allegedly) fuelled the “flash crash” from his parents’ house in the London suburbs.

There’s little in economic news today from Canada, but in the U.S., today is a day of housing numbers, from the home price index to existing home sales. In the eurozone, consumer confidence will be released this morning, and the Bank of England will release the minutes from its latest meeting, as the British general election heats up; it’s now just a couple of weeks away. Meanwhile, Japan announced a trade surplus, its first in three years, fuelled by low oil prices and U.S. growth. Other things to watch for today include an audit of the Brazilian state oil company Petrobras, which has been at the centre of a massive corruption and bribery scandal, the start of Google’s mobile algorithm (which could change the search results you get, starting today), and earnings from Boeing, Metro, McDonald’s and eBay.

Everything you ever wanted to know about the federal budget. After yesterday’s wind-up to the budget, there is lots and lots of coverage on Maclean’s today (click here to see it in one place), including a free special digital edition, which you can download now. If you’re looking for a way to jump into the coverage, start with John Geddes’ take-aways from the government’s balanced budget, which relies on a reduction in the contingency cushion from $3 billion to $1 billion (clever). What areas will see injections of cash? There are family and child-care benefits, an increase in defence and anti-terrorism spending, a near-doubling of the TFSA, a transit fund, and a big party for Canada’s 150th anniversary. You can then see an interactive, annotated version of Joe Oliver’s speech, ponder how the budget will affect your bottom line, look at the impact on manufacturing, and read Kevin Milligan’s take on the “seniors’ budget.” Prepare then to contemplate whom the budget benefits the most—is this the rich Canadian’s budget, as the opposition says?—and wade through the political theatre of budget time.

How do you cause a problem like a Flash Crash? In 2010, the market suddenly plummeted. The Dow lost 600 points in just minutes, with major companies suddenly trading for pennies. The cause was initially unknown, but, after a swift recovery, the cliff blip got a nickname, “the Flash Crash.” Since then, the crash has become a kind of poster child for the perils of high-frequency trading, which uses computer programs to trade at tiny fractions of a second, and features prominently in Michael Lewis’s book, Flash Boys. The crash also prompted legislation in the U.S. that shuts down markets that move too quickly, using “circuit breakers.” And today, this crash has a new, unexpected face, after U.S. authorities charged a British trader with several counts of fraud and commodities manipulation, alleging he contributed to the drop. The trader in question is a 37-year-old trader who appears to have been operating out of his parents’ suburban home in west London (very near Heathrow Airport), allegedly making $40 million between 2010 and 2014 by trading in S&P 500 futures. Navinder Singh Sarao has told authorities he did the work of putting up offers, often deleting them manually. But the U.S. Justice Department, which will attempt to have him extradited to Illinois to stand trial, says he used more modern means, including electronic strategies to “layer” multiple trades, creating an illusion of a willing market, then cancelling orders and profiting from subsequent moves in the market. Even if the allegations are true, this wouldn’t mean Sarao is single-handedly responsible for the flash crash, but it adds a lot of detail to the ongoing mystery of what happened that day.

It’s tech reporting time! Yes, today is the day that Facebook reports once again, and we get to contemplate the massive reserves of power and influence that today’s tech industry holds (although we can save the screaming headlines for next week, when we find out how many iPhones Apple sold in the last quarter). But, lest we forget, while tech companies rule our social and working lives, they don’t always beat earning expectations: Yesterday, Yahoo! announced that fees paid to generate traffic had outweighed revenue growth. That meant that net income fell from $311.6 million this time last year, to $21.2 million this year. That is a 93 per cent drop. Nonetheless, it doesn’t seem to be what investors are focusing on. Instead, the talk is about revenue growth in what Marissa Mayer, Yahoo!’s CEO, calls “mavens” (mobile, video, native and social), which grew by 58 per cent in the last quarter. Mayer has been arguing that the strategy can patch over declining desktop advertising, which has now seen a year of declines. Shares were also up later in the day after news the company will weigh spinning off its Japanese division after pushing from an activist investor. Meanwhile, re/code has a good list of what they’d like to see in Facebook’s earnings report today, but probably won’t. As the company expects another quarter of big earnings, it’s worth watching for signs of how its video revenue is doing (after a massive push to video), and whether or not WhatsApp and Instagram, which it owns, are actually making any money.

The Ballad of Pappy Van Winkle, and the Great Kentucky Bourbon Heist. There’s an old-fashioned heist story today, featuring, allegedly, a gang of rogue employees, a Kentucky distillery, and some very choice booze. After finding barrels with obscured labels behind a shack belonging to an distillery employee, local police say they have tracked down a ring of rogues who they allege had been siphoning off bourbon. Just the recovered whisky alone is worth about $100,000, including high-priced Pappy Van Winkle bourbon. Premium bourbon is enjoying something of a resurgence lately, according to Bloomberg, especially aged bourbon. The growth has come at the expense of Scotch whisky, which saw a rare decline in exports last year, by seven per cent.

Need to know:
TSX: 15,346.44 (-66.16), Tuesday
Loonie: 81.43 (-0.34), Tuesday
Oil (WTI): $55.99, Wednesday (3 a.m.)