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The Morning Playbook: Monday’s business news

March 9: A flurry of hype before Apple’s timely announcement. Plus, Greece, a Loblaw expansion, and the life and times of a Pigeon King


 

MORNING-PLAYBOOK-STORY
What’s so exciting about the Apple Watch?

We’ll find out today – maybe – as Apple prepares to present its new smartwatch in one of its much-hyped product talks in San Francisco. In the meantime, the Internet is abuzz with all the things a tech timepiece could do besides tell time. (Then again, remember the days when all your phone did was call people?)

In Europe, the mood is equal parts anxiety and anticipation, as the European Central Bank starts buying German bonds (according to Bloomberg) in its first dose of a massive asset-buying program to stoke growth in the eurozone. In the mean time, any worries over Greece, which appeared to have had a brief and misleading reprieve last week, are heating up again this morning, as it becomes increasingly clear the country doesn’t have the cash to pay this week’s dose of debt payments. Markets have also been feeding off a strong jobs report from the U.S. on Friday – which saw almost 300,000 new jobs last month – but elation translated quickly into concern over whether the bouncy labour market will mean a quicker rate hike from the Fed. In Canada, the TSX/S&P Compsosite Index closed the day down 150 points.

Today we’ll see housing starts from Statistics Canada. For the rest of the week, expect Greece to once again stay high on the agenda, with other highlights to include the results of the second round of bank stress testing – so far, all the banks have passed – on Wednesday, U.S. retail sales on Thursday, and Canadian jobs numbers on Friday.

What’s so great about a watch? A lot, according to Apple devotees, or anyone who is watching where the next stage of tech gadgets will go. We already knew the smartwatch was coming, after the announcement was made in September, but the announcement today could bring details ranging from how much it will cost, to where it will be available, what apps it will have and whether it will even get its own special stores. We already know it will have focus on health and fitness tracking, messaging and mobile payment. But the big question here is not only how fast and functional it is, but how stylish it looks. Will the fashion crowd wear it? An even biggest question: what kind of battery life are we talking here? The smartwatch market is fairly young – even younger than the MP3 market was before the iPod came to define it, as Quartz notes – so the release is a strong signal for where the market as a whole will go.

Loblaw gets ready to expand. As Target moves out, the Canadian grocery chain says it will step up: this morning, the company announced it would create 50 new stores and 5,000 jobs – a $1.2-billion investment. Loblaw is not the only chain that’s expanding: Wal-Mart has also pledged to open seven new stores, and create several more “super centres” (aka even larger Wal-Marts).

Greece is still in a fix. After securing an extension to a eurozone bailout last month under a nail-biting deadline, Greece was left with a problem: the bailout was tied to reforms, and until then, the country could still run out of cash, despite emergency loans from the European Central Bank. SYRIZA’s latest reforms proposals to the eurozone group, submitted on Friday – which include a proposal to have tourists and students report tax evasion – have also not gone over well, with the head of the finance ministers’ group saying the proposals are far from complete and the country is not likely to receive the money this month. That’s a very pressing problem: Greece has about 2 billion euros worth of debt payments due this Friday. The prime minister’s suggested a referendum might be in the offing if the reform proposals are rejected by the eurozone.
As for the proposal to wire up tourists and students to catch tax cheats, it’s far from the strangest thing countries do to catch tax evasion: if you have time this morning, NPR’s Planet Money has a great program on eccentric methods used by the tax authorities around the world.

Quantitative easing begins. After month after month of discussions, announcements, and warnings, the European Central Bank has put euros where its mouth is and begun a massive asset-buying program that will push historically low interest rates still lower and, ideally, give a boost in lending to Europeans and the economy. The program has a 1.1-trillion euro value, and ECB president Mario Draghi has said the 60 billion euro per month purchases will continue until September of next year – or even longer, if inflation doesn’t pick up. Last week, Draghi was already boasting of the merits of the QE program (before it had even begun) as a confidence booster, and the eurozone has been making some progress in the last couple of months, with the OECD backing him up this morning in predicting a turnaround for growth. But analysts are still divided on whether QE will actually solve the eurozone’s woes – we took a look at this in an earlier Weekend Playbook. 

The loonie goes down, prices go up. Several major retailers told the Globe they’re planning to raise their prices, after a study was leaked from the Retail Council of Canada which laid out price pressures from the fall of the loonie. The study said most retailers surveyed would raise prices – with 70 per cent saying between one and five per cent, and 18 per cent saying their prices would be hiked even further, according to the Globe. 

The Pigeon King, and the accountant vs. Putin. It’s Monday, so here’s some leisurely business reading: first, a New York Times Magazine story on the eccentric man behind a strange pigeon-breeding Ponzi scheme, which sold pigeons to Ontario farmers along with commitments to buy back baby birds – which were simply shuttled to other investors. And the cover story of Bloomberg Businessweek this week is a profile of the embattled Ukrainian finance minister, an American-born former accountant and hedge fund manager who is now in charge of shoring up the country’s war-torn economy.

Need to know:
TSX: 14,952.50 (-150.61), Friday
Loonie: 79.3 (-0.66), Friday
Oil (WTI): $49.58 (7:20 a.m.)


 

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