Top Business Stories

Ottawa frets on airline strike, not so much on postal brawl

The Globe and Mail

These are stories Report on Business is following Wednesday, June 15. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.

Follow Michael Babad and Globe top business news on Twitter

Tale of two labour disputes Here's what Labour Minister Lisa Raitt said yesterday as she took less than a day to announce government plans to order members of the Canadian Auto Workers back to work at Air Canada: "We are concerned by the effect this strike will have on our economic recovery, which is still fragile, and on Canadians in general."

Story continues below ad

Here's what she said today about the lockout by Canada Post against the Canadian Union of Postal Workers, which had been in the midst of a series of rotating strikes: "We're going to see how this unfolds, and we're going to reassess the effect on the general public interest now that there's a complete work stoppage We really have to take a look at what the effect is on the Canadian interest and reassess the situation, but certainly it's a new development that's significant."

That's not to say Ms. Raitt won't eventually legislate an end to the postal dispute, which, of course, is a lockout by management as opposed to the union's less aggressive rotating walkouts. But it doesn't seem to be as much as a priority, at this point at least. And, she has let it go on this long already.

"The trigger is it's a national work stoppage so I am going to look at it seriously," Ms. Raitt told The Globe and Mail's Jane Taber today. "I want to see what the effect is still on the Canadian public and the economy."

A difference in the approach? Of course there is. The question is why. Perhaps it's because the inconvience to most Canadians, certain small businesses aside and some others aside, pale in comparison to headaches at the airport, at least in the public's mind.

"I guess the ultimate question is how much economic impact is happening, how much are Canadians being impacted, and how much is the government willing to tolerate on behalf of Canadians?" said George Smith, a fellow at the Queen's University School of Policy Studies.

Mr. Smith said he's not clear on why there would be different treatment. The Air Canada strike doesn't seem to be disrupting too much traffic, and there's no "public outcry" over either dispute.

"I would have hoped in both cases the government wouldn't have stepped in and let the parties sort it out themselves," he said.

"I have no knowledge as to why they wouldn't for Canada Post. To be consistent, we might hear something from the government today. In some cases the threat of back-to-work legislation is an impetus for the parties to solve it themselves rather than letting someone solve it for them in a way they might not like."

Home prices climb Canada's housing market looks to be fairly well balanced ... if you forget Vancouver exists.

Sales of resale homes in Canada were basically flat in May, compared to April, falling by less than 1 per cent, though they gained on the year by 2.7 per cent, The Globe and Mail's Julien Russell Brunet reports today.

Prices climbed 8.6 per cent from a year earlier, but the Canadian Real Estate Association said the national average of $376,817 was skewed by strong sales in "selected pricey" areas of Vancouver and broad price increases in Toronto, where supply is still tight given demand.

Remove Vancouver, CREA said, and the year-over-year price increase was 5.6 per cent. Take out Toronto as well, and it was 3.7 per cent.

"Quite simply, no other city in the country is seeing anything remotely close to what's unfolding in Vancouver," said Douglas Porter, deputy chief economist at BMO Nesbitt Burns.

"In fact, many large cities have posted price declines over the past year, notably Calgary, Edmonton and Halifax ... Among the other largest cities, only Toronto is showing anything close to overheating, and its 8.7-per-cent year-over-year price gain seems to fall well shy of bubble territory."

He said the market overall appears to have enjoyed a healthy spring, despite poor weather and new mortgage rules.

But the average price in Vancouver, he said, was $831,555, up a stunning 25.7 per cent from a year earlier, pulled up by homes at the pricier end.

"Reported prices in that city are clearly being skewed by strong sales of high-end homes, as the Vancouver Real Estate Board notes that prices for a typical home have risen 6.2 per cent year over year (and have averaged $627,000 - which would still be, by far, the highest in the country)," Mr. Porter added. "Even so, the frantic activity for high-end houses may itself be a signal of an overheated market."

Thus, the stage is set for a speech this afternoon - in Vancouver - on housing by Bank of Canada Governor Mark Carney.

As for the overall market, there are few concerns.

"The Canadian housing market has seen some big ups and downs in recent years, making national sales activity so far this year look like something of a Goldilocks story by comparison - not too hot, not too cold," said Gary Morse, the group''s president.

Of course, it doesn't look like Goldilocks was eating breakfast in Vancouver.

A hockey bubble? You'd have been better off investing in hockey than in the stock market.

Ticket prices for tonight's Stanley Cup final are looking as frothy as dot-com shares before the tech bust, on today on auction and reseller sites for staggering amounts. On Stubhub.com, for example, tickets are being pitched for between $1,500, for a single, to $17,999.99 for two third-row seats on one of the blue lines.

Or, you can opt for a suite for almost $206,000 for Game 7 between the Vancouver Canucks and the Boston Bruins.

On eBay, there are several bids at $3,800 for tickets at centre ice, row 8 of the Rogers Arena in Vancouver, but the seller wants $10,000 a pop. Then there are four tickets for almost $31,000 in the 25th row.

"This takes it to a new level," Christian Anderson of California-based FanSnap.com, told Bloomberg News. "The Canucks haven't won before and, with a Game 7, this is it, it's do or die. That definitely drives the prices."

Euro crisis escalates Just when you thought Europe's debt crisis couldn't get much worse, along comes another massive Greek strike and a credit rating warning on French banks that spooks financial markets.

Athens is all but shut down today as several thousand demonstrators protest against the government's austerity measures, and police are out in force with pepper spray and tear gas at the ready. There have been some clashes, and the government is now offering to share power with the opposition in a bid to approve fresh reforms.

This comes amid a stalemate between politicians of the embattled euro zone and policy makers at the European Central Bank, who are opposed to any type of restructuring of Greek debt. Euro finance ministers met yesterday, and came to no conclusions, only to say they will continue to talk next week.

Borrowing costs in the periphery nations such as Greece and Portugal spiked again, and the euro, the currency shared by 17 countries in the monetary union, bounced around.

On another front, shares in some of the biggest banks in France slipped after a warning from Moody's Investors Service about potential downgrades given their exposure to Greek debt.

"The likelihood of any type of solution in the near term appears pretty slim today, let alone ahead of the EU summit on the 23/24th June given that the wrangling appears to be around what constitutes a credit event as peripheral 10-year bond yields for Greece, Portugal and Ireland continue to blow out to lifetime highs above 17.4 per cent, 10.7 per cent and 11.4 per cent," said CMC Markets analyst Michael Hewson.

"... A likely confirmation of further delay and prevarication with respect to a solution to the impasse between the ECB and Germany could well find that further upside in the single currency somewhat limited and see the gains of the past two days disappear rather rapidly."

Nyrstar to buy Breakwater Is Ned Goodman calling a top to the market's run? Because for the second time in seven months, Streetwise columnist Boyd Erman reports today, he's peddling a major asset.

After agreeing to sell DundeeWealth , the asset-management company his family built, to Bank of Nova Scotia late last year, he's agreed to sell zinc miner Breakwater Resources for about $663-million.

Core inflation picks up in U.S. Underlying inflation is heating up in the United States.

While consumer prices rose 0.2 per cent in May, the slowest pace in six months, so-called core prices, which strip out volatile items, climbed 0.3 per cent, for the fastest pace in about three years, the Labor Department reported today.

The overall annual inflation rate came in at 3.6 per cent, though the core rate is at 1.5 per cent.

"Inflation is now a touch closer to Fed targets with core at 1.5 per cent over the past year, but tame wages should be a barrier to an extended heating in core prices, and gasoline should provide further relief to the 3.6-per-cent headline CPI," said Avery Shenfeld, chief economist at CIBC World Markets.

Manufacturers hit Canadian factories suffered a setback in April, wiping out their gains from a month earlier.

Manufacturing sales slipped 1.3 per cent in the month, though it was almost all related to a drop in transportation equipment shipments.

"The decrease in total manufacturing sales for April reversed much of the 1.9-per-cent gain for March," Statistics Canada said today.

"The Tohoku earthquake has clearly been more disruptive on global supply chains than originally anticipated, being reflected both in today's report and last week's trade report," said economist Francis Fong of Toronto-Dominion Bank.

"The Canadian dollar yet remains well above parity. All the while, both global and Canadian economic growth is slowing," he said in a research note.

"However, despite all of those issues, we continue to expect the recovery in the manufacturing sector to persist. Volatility and uncertainty in this economic recovery are not exactly new developments and Canadian manufacturers have shown a considerable amount of resilience throughout these past two years."

Analysts downgrade Sherritt Analysts are cutting their targets on shares of Sherritt International Corp. after it boosted its estimates and extended the timeline at a Madagascar project yesterday.

Analyst John Hughes of Desjardins cut his earnings-per-share estimate for 2012 and his price target on the stock to $10.50 from $12. Matt Murphy of UBS Securities Canada cut his price target to $8 from $8.90. And CIBC analyst Alec Kodatsky cut his target to $9.25 from $10.20.

Yesterday, Sherritt sales sank after it boosted the estimate on its Ambatovy nickel-cobalt project, and said production is now expected to start early next year, rather than this year, Globe and Mail mining writer Brenda Bouw reports. It owns 40 per cent of the project.

"We delayed our startup estimate in line with the guidance, and continue to forecast a conservative three-year ramp-up in the context of observed challenges in ramping up large laterite-leach projects globally," Mr. Murphy said.

In Economy Lab today The economics behind the controversy surrounding the Conservative government's decision to remove the Canadian Wheat Board's legal monopsony in wheat and barley are somewhat opaque at first glance. Stephen Gordon examines the issue.

In International Business today Is it conceivable that China could learn that spectacular success is a precursor of surprising failure? Marin Wolf of The Finance Times finds that the answer is yes.

In Personal Finance today Not all seminars are equal, so it's worth your while to do some research before you go.

Author Peter Leeds, who is stocking up on non-perishables like paper towels, has some tips for protecting your purchasing power.

Part-time jobs, like selling furniture or delivering pizza, can provide a surprising amount of extra money, says Angela Self.

From today's Report on Business

Follow on Twitter: @michaelbabad

Companies & investments Mentioned In This Article (1)

Company Price Change Volume
Sherritt International
S-T
4.27 3.39 % 513,901