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Watching Janet Yellen

March 16: All eyes are on the American central banker in the lead-up to the Fed’s next interest rate announcement. Plus, Etsy goes public and Blackberry goes secure


 

MORNING-PLAYBOOK-STORY

This week, it’s all about the Fed.

On Wednesday, the Federal Open Reserve Committee (FOMC), source of the U.S.’s interest-rate changes as well as forecasts for the American economy, will make its latest announcement, followed by a press conference from Fed chair Janet Yellen. That doesn’t mean that the benchmark rate, which has been historically low since the financial crisis, will change. But as each piece of economic data, from the jobs report to retail sales, sends markets speculating on when a rate hike could come, any change in wording can be significant. Last week, as the euro sunk on the launch of the ECB’s quantitative easing program and as the U.S. dollar was already pushing upwards, markets were feeling shaky on worries the hike was on its way. The price of oil has also shaken markets, as the U.S. benchmark oil price has fallen below $45 once again.

Today, the week is starting off slow. There will be international securities inflows and outflows for Canada for January. In the U.S., there will be industrial production and capacity utilization numbers for February. Japan’s central bank will also start their monetary policy meeting. Over the weekend, SXSW, the Texan festival of music, film and technology, kicked off, so there may be some fun tech stories in the next few days. In Brazil, the weekend was tumultuous, as more than a million people protested on the streets for the impeachment of President Dilma Rousseff. Rousseff recently announced major austerity cuts, as the central bank hiked the benchmark rate still further. The economy has been rocked by surging inflation and the fallout of a corruption scandal at the state oil company.

Other highlights this week will include Saskatchewan’s budget, a hearing in the U.S. on large financial institutions, a central bank announcement from Switzerland (which shook currency markets with their surprise cut last time around), and Apple joining the Dow Jones Industrial Average.

The job market feels the oil pinch. Unemployment was up to 6.8 per cent last month, from 6.6 per cent last month, while employment numbers were largely unchanged, as the impact of the oil crisis on jobs starts to make its mark. The losses were particularly marked in Alberta, where 14,000 jobs were lost – half of those in the natural resources sector – with B.C.’s natural resources industry losing a comparable amount. Manufacturing across the country also lost about 20,000 jobs. January’s jobs report had some interesting trends, largely in a gain in part-time and self-employment, with women over 55 heading back into the labour market and men over 25 actually losing full-time jobs. In February, by contrast, men over 25 saw the biggest gains in employment, and they were finding full-time work. The youth unemployment rate went up half a percent, from 12.8 to 13.3 per cent.

A secure tablet? BlackBerry has launched a new tablet which it says will make work information impenetrable to spies and hackers. The company said the German government would certify the device’s cybersecurity, after it was launched at a trade event in Hanover. “Secure” devices are increasingly in demand over revelations of leaky Internet privacy issues as well as hacking attacks made on major companies. Mobile manufacturers played up security at the recent World Mobile Congress, including launching a line of secure smartphones and tablets.

Homemade growing pains. Online retailer Etsy, known for its whimsical, handmade products – from knitted knee socks to vintage typewriters – is feeling the strain from customers and dealers as its handmade philosophy bumps up against its popularity and size. Inspired by crafts fairs, the website has long put constraints on sellers’ ability to scale up their operations by hiring employees, outsourcing, and using mass production techniques. Earlier this month, the Brooklyn-based company filed for an IPO, which could come as soon as next month, and which the company hopes will raise at least $100 million. In the mean time, the company has also struggled to root out “resellers” that place mass-manufactured products on the site, but as sellers gain popularity, the line between “manufactured” and “handmade” has become ever harder to define.

The profitable economics of airline luggage. If you haven’t read it yet, Chris Sorensen’s Maclean’s cover piece on the evil genius of airlines is a journey through the underbelly of our airports – literally – as well as the economics of new policies that charge for checked baggage. The new charges have given some breathing room to airlines looking to save costs, at the same time as sinking oil prices have benefited airlines, without passing the savings onto consumers. But the new policies have also enacted a cost: on passenger’s wallets, and their happiness,  as well as the infrastructure designed to keep flights running smoothly.

Need to know:
TSX: 14,731.50 (-39.22), Friday
Loonie: 78.19 (-0.53), Frday
Oil (WTI): $ 44.55 (7:15)


 

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