After hockey, hockey, and more hockey (maybe some street hockey in the summer), I’d wager watching the fortunes of BlackBerry rise and fall is one of Canada’s widest and most tortuous past times. With that in mind – who doesn’t love a little rumour and intrigue to keep the company’s fates in question? After yesterday’s reports of takeover talks with Samsung (since denied), the debate continues today.
Looking abroad, the picture today is a real mixed bag: yesterday, retail sales numbers from the U.S. came in lower than expected, spurring a collective round of hand-wringing (after all, the World Bank did just call the American economy basically the sole engine of growth at the moment). The news caused a drop in the strength of the greenback against all major currencies, as well as record lows in bond yields as investors look for safe havens – in Canada, but also in Germany, Switzerland and the U.K.
But wait! Things aren’t looking so dire this morning: following a bounce in oil prices – WTI ticked back up above $47 overnight – Asian markets had a good day, especially after India cut their central back rates. And more signs of quantitative easing to come have given a little fresh life to European indexes in the first couple hours of trading this morning.
Will they or won’t they? Yesterday was a blur of BlackBerry speculation, after Reuters said tech giant Samsung was looking at taking over the smartphone maker – causing shares to jump by almost 30 per cent. But the hubbub was short-lived – both Samsung and BlackBerry denied any talks had taken place later that day, and the company later emphasized that they’re not up for sale, despite what they say are multiple offers from mostly foreign companies to buy. Instead, the company says they’re sticking with a multi-year turnaround plan under John Chen, with investors backing them up. The beleaguered company is often known for its calamitous slide in market share to the iPhone, but the company says it plans to focus on its core business and government users, where its reputation for its software and strong security has many fans. Nonetheless, many analysts don’t believe them – saying a buyout is only a matter of time.
The TSX falls – on copper. The TSX had another triple-digit fall yesterday, but this time the culprit wasn’t just energy: it was copper. The selloff was something of a mystery: while market analysts say the copper market is slightly oversupplied, demand from China is still going strong. The selloff could be part of a sense of a global slowdown – copper is down 12 per cent already this year – but there’s speculation it was the result of a kind of commodities contagion – as investors have bulked up by going short on oil, metals seemed like the next natural step. This theory has had some support this morning, as copper is swiftly recovering, suggesting the selloff was “overdone.”
The woes of JP Morgan. U.S. bank season continues today – Citibank and Bank of America are reporting today – but in the meantime, there’s lots of talk about the travails of mega-bank JP Morgan, which reported yesterday. The bank reported record-breaking net profits for last year, at $21.7 billion. But CEO Jamie Dimon isn’t happy, declaring that “banks are under assault,” in relation to the amount of regulation. “You all should ask the question about how American that is.”
The bank has already faced more than a billion dollars in fines, he said, over its role in the “forex” scandal last year, which saw six major banks charged with manipulating foreign exchange markets, and has yet to settle with the U.S. Department of Justice, which has hurt its balance sheet. The bank is also facing claims it should be broken up into “Baby JP Morgans” – a suggestion made by rival Goldman Sachs – after American regulations last year set new requirements for the bank’s reserve capital, due to its size and systemic importance.
The other “will they or won’t they”? There’s another round of speculation that the European Central Bank could start quantitative easing (QE) – a massive government bond-buying program used as a form of monetary stimulus – as early as next week. The U.S. and the U.K. have both used QE, but it hasn’t been clear whether such aggressive stimulus falls within the remit of the central bank. Nonetheless, Mario Draghi has been under intense pressure to start the program – markets get a bump every time speculation heats up – especially after reports that prices are falling in general across the eurozone and inflation is low even in the strongest economies. After a statement from the advocate-general of the European Court of Justice that such a program would indeed be legal, all systems may be go.
Stephen Hawking gets new software. This story is more about engineering and design, but it never hurts to take a break from monetary stimulus and smartphone security and take a look at what tech can really do for communication. Realizing that the famous physicists’ communication software was wildly outdated, Intel stepped in. They also realized that Hawking, like most grandfathers, is a little lost when it comes to using an iPhone.
Need to know:
TSX: 14,084.43 (-102.73 points), Wednesday
Loonie: 83.72 (+0.07 cents), Wednesday
Oil (WTI): $47.66, Thursday morning