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The Morning Playbook: Joe Oliver is up

April 2: It’s a spring shower – or maybe an all-out flood – of business news, from Greece to McDonalds to manufacturing and wheat fixing


 

MORNING-PLAYBOOK-STORYYou know what they say: when it rains, it pours, and it is technically April (sure, freezing rain counts, too, Ottawa).

That’s business and economic news today, which had some kind of spring buildup and is now spilling forth from all directions, just in time for Easter holidays. You know you’re looking forward to dissecting Greek reform proposals with your grandmother this weekend over brunch! Other stories to look for? A massive outflow of capital from emerging markets (the largest since the financial crisis), the push for Swiss Chalet stock (or, at least, the company behind Swiss Chalet, which is heading for an IPO), TransCanada Corp. giving up their plans for a Quebec oil port, and an EU crackdown on tech companies – particularly its archrival: Google. (Insert foreboding theme music here.)

Resisting the urge to give you a comprehensive look at the news today – we would be here forever – let’s just pretend the holidays have already started and look at some of the most interesting trends we’re seeing at the moment (with an obligatory nod toward Greece.)

Today in Canada the merchandise trade deficit for February is out, and there will be a bunch of U.S. data – including factory orders for October – but the real highlight will be a speech by Janet Yellen first thing this morning in Washington. In the eurozone, there will be minutes from the ECB’s latest monetary policy meeting – the one where they launched quantitative easing. But the thing to watch for is actually tomorrow: when markets in the U.S. are closed (and elsewhere in the West), but the jobs report, one of the most closely watched pieces of economic data in the world right now, will be released. That’s right, folks. The U.S. Department of Labour has ruined Easter.

A new export order: services and auto parts. Why don’t we talk about the Canadian services industry? In this Maclean’s story, John Greenwood looks at the industry that makes up 15 per cent of national exports, from engineering services behind Chinese infrastructure and theme parks, to major banks like RBC. The industry is growing, but amidst talk of oil and gas, mining, and manufacturing, we miss out on the work some of the most innovative Canadian companies are doing. In another piece, Maclean’s editor Jason Kirby looks ahead to today’s manufacturing numbers: and stakes his bets on a reversal, with auto parts knocking oil and gas out of the top spot. Unfortunately, it still won’t be enough to patch up exports. We’ll see if he’s right later today.

A new round of reforms for Greece? Part of the real question here is “how new are we talking?” The FT published the full reform proposals yesterday, which the real enthusiasts among you can see here. The first question here involves the ongoing cash crunch, and whether Greece can make it to the next meeting, which will be in Latvia on April 24, with enough cash to meet an IMF payment due next week. The country seems to have so far made it through various debt payments by gathering funds from under the couch cushions of the economy, and they say they can meet this one, too. But the more persistent problem remains whether these reforms actually represent progress. A proposal submitted on Friday was deemed insufficient by the eurozone finance ministers, with talks stalling earlier this week (previous reform proposals were also deemed insufficient). But as the FT points out, the latest set, which includes plans to gain more revenue from taxes as well as offshore accounts, actually backtrack on several reforms, including reforms that have been insisted on by lenders, including upping pension payments. The release of the latest round of money is dependent on the approval of more structural reforms, and while the eurozone’s nerves are frayed and Germany is increasingly unhappy about the bill, the Greek government says (not without reason) that wave after wave of austerity have simply crippled the economy beyond repair, preventing it from growing enough to chip back its debt. While the mood of negotiations is said to have “improved” in recent days, it’s been a long and rocky road the last couple of months, and the country’s bonds remain volatile.

McDonald’s gives 1,000 employees a raise. The chain is giving a $1 bump (above minimum wage) at its company restaurants, along with time off, following a similar move by Wal-Mart in February. There are a few things going on here: first, the move may not make much of a difference, as only about one in 10 U.S. locations are owned by the company (where the bump would be), and the rest are franchised. But the other is both the story of McDonald’s, which has been battling profit slumps, food-safety scandals, and Americans’ changing tastes, and the U.S. labour market, which is finally seeing some firepower. The increases in employment were initially weighed down by still-low wages, but moves like these suggest wage increases are actually showing upward movement as well. The final story is one of the U.S. service industry as a whole, and growing recognition (just maybe) that fast-food wages are not living wages.

How much wheat does it take to make an Oreo cookie?  The U.S. regulator has turned its sights to wheat fixing, amidst allegations of price manipulation by Kraft, the company behind the cookie. Kraft (which is set to merge with Heinz), and its former parent company, Mondelez, are facing claims they used the futures markets to lower their costs for wheat in 2011. Following a drought in Europe and Asia, wheat prices spiked, and the company – which purchases 30 million bushels of wheat a year for its cookies and crackers – allegedly created a false signal they would be buying wheat in December, artificially lowering prices in the near-term. The company allegedly gained $5.4 million in profits and savings. 

Need to know:
TSX: 14,942.55, (-40.11), Wednesday
Loonie: 79.20 (+0.25), Wednesday
Oil (WTI): $49.57, Thursday (6:30 a.m.)

 


 

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