When the daffodils are blooming and the skies are getting brighter, love is in the air – or at least, a reunion – between the IMF and the World Bank, who are in Washington for their spring meetings.
Prepare for stories of slowing global growth, speculation over Greek debt, worries over quantitative easing and concerns about Ukraine’s (crumbling) economy. If we’re lucky, there will also be lots of references to the enroaching power of the Chinese-backed Asian Investment Infrastructure Bank (AIIB), which has lately attracted many new European members. The stories are already starting this morning, with Christine Lagarde further dashing Greek hopes that debt repayment dates could be put off. No, she says, we haven’t done that for 30 years – we’re not planning to start now.
Yesterday, the TSX wiped out the previous days gains with a 60-point fall, but the world’s major indexes are largely faring well in March, lingering about a per cent below new highs. Meanwhile, the loonie ended the day above 82 cents yesterday, and this morning, oil is sitting above $56.
It’s also inflation day today, as both Canada, the U.S. and the eurozone announce their latest numbers on consumer prices. At home, we’ll also see retail sales and securities inflows. Numbers are out already from the eurozone, showing prices fell 0.1 per cent last month, with the eurozone’s quantitative easing program credited for slowing deflation. In the U.K., this morning came with news unemployment is at its lowest since the financial crisis. In the meantime, analysts and traders are fuming around the world, due to a mass outage of Bloomberg terminals, which provide market data to traders and financial journalists alike (subscriptions run to $24,000 a year). General Electric will announce their earnings today.
Hydro One, and the Big Beer Reform. If you live in Ontario, yesterday had a few announcements that could be key for your daily life: the Ontario government will sell off 60 per cent of the province’s utility company, and beer will be sold in grocery stores. Since air conditioning and beer prices are the cornerstones of any Ontario summer, both will draw plenty of attention. The privatization of Hydro One will begin with a sale of 15 per cent of the company, but would eventually extend to 60 per cent – which could raise as much as $9 billion – with the funds intended to pay off debt and transit investment. But the beer reforms made perhaps even bigger headlines (such is the sexy allure of beer over electricity), with claims that the Beer Store would be taken to task: with new liquor licenses for smaller packs to be given to grocery stores, as well as cheaper prices for restaurants and bars, a beer ombudsman, and a “beer tax” intended to raise $100 million. The Beer Store will also be ordered to update its utilitarian (ahem, hideous) décor. The move was welcomed by the province’s craft breweries, who have often said they’re being strangled by the monopoly. The Beer Store itself is highly unusual – a privately owned consortium of foreign-owned beer companies, with exclusive rights to sell 12 and 24 packs of beer in the province. (The Globe has a good run down of why the Beer Store is so loathed here.) Unfortunately for those who want to pick up a couple of cans at their grocery store this summer, you’re in for a disappointment. You won’t get grocery beer until two years from now – and then stores will be limited to selling six-packs. Not such a dazzling jump after all, and, perhaps, an alcoholic smokescreen for the privatization of Hydro One.
When the Cirque gets sold. In other news about Canadian institutions, reports are swirling – not yet confirmed by Guy Laliberté himself – that Quebec’s acrobatic poster-child, Cirque du Soleil, will be bought by two foreign companies. News outlets, including CBC, reported that a deal had been finalized with two private equity companies, one American, the other Chinese. Laliberté has been searching for a buyer for the circus, on the condition the company’s headquarters stay in Montreal, and has enlisted Goldman Sachs to source the deal. Notably, the Quebec government has pledged not to intervene in the deal, says Maclean’s Jason Kirby – especially given the premier’s rush to pledge support for Bombardier on its most recent shakeup. With high-profile performances appearing around the globe, Laliberté has said the circus has effectively become a victim of its own, elaborately costumed success – you’ve seen five contortionists, you’ve seen them all, perhaps – and after expanding quickly, the company has found it increasingly hard to turn profits, resulting in cutbacks to shows and layoffs of executives and performers.
Back to basics (a.k.a., massive profits) for the world’s big banks. Have the world’s biggest names in investment banking finally shaken off the financial crisis? It may look that way: expectation-beating quarterly results for Goldman Sachs and Citigroup yesterday pointed toward revenues and profits that are at their highest point since the crisis. Goldman saw its largest revenue in investment banking since 2007 (up by 14 per cent), and the highest profits since 2011, as Citigroup’s quarterly profit hit a seven-year high. The results put a few numbers behind the long-running debate over the big banks’ post-crisis profits, and whether they had been “dampened” by the business cycle, or were facing a new reality of lower profits due the regulations enacted after the world economy’s massive highway pileup. A discussion of the rigours of new banking regulation, and whether such banks should make the same profits they were making on the eve of the crisis, is a bit more than we have time for today (since it may well be one of the major questions of the last five years), so I’ll leave that fabulous moral speculation up to you.
It’s Friday – go relax. Or read about an app that will help you do it, at least. Seventeen-year-old Abdou Sarr’s “Celestial” app has been making the rounds lately, designed with panoramic scenes and natural noises to help stressed teenagers focus on their homework, or just get to sleep. (Hey, those problems never stop.) Sarr got a lot of attention when he launched the app in March, but he was also on Bloomberg a couple days ago, as his app has continued to climb the charts. The high-schooler has been coding since he was in fourth grade, and worked on the app for two years. He now gives part of the profits to Unicef, because “there’s some people in tthe world whose problems can’t be solved with an app,” he says. To overachieving Abdou, I say, you deserve it – take the weekend off.
Need to know:
TSX: 15,386.77 (+64.1), Thursday
Loonie: 82.10 (+0.80), Thursday
Oil (WTI): $56.11, Friday (7 a.m.)