These are stories Report on Business is following Tuesday, Sept. 16, 2014.
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Loonie rises
The Canadian dollar topped the 91-cent mark today, driven by events in Beijing, Washington and Ottawa.
These events happened to occur, by the way, on the day that Bank of Canada Governor Stephen Poloz declared that "trying to control the loonie is off the table."
The loonie, as Canada's currency is known, opened the day at 90.46 cents U.S., and by late in the day sat at 91.14 cents.
Scotiabank chief currency strategist Camilla Sutton noted three drivers: Stimulus measures from China's central bank aimed at the country's biggest banks, a strong report from Statistics Canada on the country's manufacturing sector, and suggestions from The Wall Street Journal that tomorrow's policy statement from the Federal Reserve may not be what many observers expect.
Buoying China's economy is seen as good for commodities and commodity-linked currencies like the Canadian dollar.
The Statistics Canada report, Ms. Sutton noted, was the third consecutive measure showing stronger manufacturing.
And comments by a Wall Street Journal reporter on the Fed, a repeat from yesterday, still fed into moves on the U.S. dollar today.
The Fed releases its policy statement tomorrow afternoon, and some observers expect a shift, changing the language to indicate that the next move in interest rates will depend more on economic data.
That would be a change from its oft-stated signal that its rock-bottom key rate will hold steady for "a considerable time" after its asset-buying program is done.
Despite what many expect, the Journal comments suggested the U.S. central bank would hold the line.
The Fed meeting is just one of this week's events that could well spur volatility across financial markets.
"The build-up to this month's Fed meeting is such that there could be a big reaction either way the Fed moves," said analyst Jasper Lawyer of CMC Markets.
"If the Fed keeps a more dovish tone then the U.S. dollar is extremely overbought and subject to a sharp snapback. If market expectations of a more hawkish tone play out then stocks are near all-time highs and have plenty of room to fall."
Thursday could really change the world, should Scotland vote for independence, though many market players expect the "No" camp to rule the day.
"Today is the anniversary of 'Black Wednesday,' when the pound collapsed in value," noted market analyst David Madden of IG in London.
"The Scots go to the polls on Thursday, and we could have a 'Black Friday' on our hands depending on which way the vote goes," he added.
"Our binary bet is now pricing in a 22-per-cent chance of Scotland voting 'Yes.'"
- Follow our Inside the Market blog (for subscribers)
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- CPI report expected to reveal rise in Canada's 'core' inflation rate
- Economists dial down China growth forecasts after weak August data
Poloz optimistic
Mr. Poloz also again today pointed to better times for Canadian trade.
"All things considered, then, we are cautiously optimistic about our exporting future," he said in the text of his luncheon speech.
"It will take more than a few months to establish a trend, and then still longer for it to translate into more investment and hiring by companies, but it looks like the natural sequence we've been hoping for is getting under way."
The central bank chief also stressed there's no tinkering with the currency, as noted above and as The Globe and Mail's Barrie McKenna reports.
"But trying to control the loonie is off the table, as far as we are concerned at the Bank of Canada. A floating loon is a thing of beauty, and so is a floating loonie, at least from this economist's perspective."
Canada's manufacturers gain
Canada's factories have bested their previous sales record.
Shipments climbed 2.5 per cent in July to $53.7-billion, Statistics Canada said today, topping the prior record of $53.2-billion in July, 2008, The Globe and Mail's David Parkinson writes.
Notably, sales rose 2.8 per cent in dollar terms, meaning the "gain was mainly due to a rise in volumes rather than prices," the agency said.
"July was a hot month for Canadian manufactured goods exports, so the only surprise was that shipments were not just hot, but scorching," said chief economist Avery Shenfeld of CIBC World Markets.
July's increase was driven largely by the auto and aerospace industries.
Sales climbed in 16 of 21 sectors measured by Statistics Canada, or 56 per cent of all manufacturing.
And, for that matter, the "bulk of the gain" was in the central province of Ontario.
Inventory levels were relatively flat, while the inventory-to-sales ratio dipped to 1.33.
Unfilled orders rose 0.6 per cent, and new orders 4.3 per cent.
Deal for Wind
The Canadian government's plan to spur competition in the telecom industry is back in focus today with a deal to buy upstart Wind Mobile.
As The Globe and Mail's Christine Dobby and Boyd Erman report, the bid to buy out the carrier's foreign owner is aimed at allowing Wind to become the so-called fourth player in the country's wireless sector.
Under the deal unveiled this morning, Globalive Capital will buy the debt and equity interests in Wind held by VimpelCom Ltd.
Also involved in the purchase are West Face Capital, a Canadian hedge fund, U.S. private equity firm Tennenbaum Capital Partners and LG Capital Investors.
"The federal government's delivery on its promise to create the conditions for viable long-term wireless competition has not gone unnoticed by the investment community," said West Face chief executive officer Greg Boland.
- Christine Dobby and Boyd Erman: Consortium of investors to buy Wind Mobile
- Christine Dobby: Who's who in the Wind Mobile deal
The pursuit of Tim Hortons
Burger King Worldwide Inc.'s pursuit of Tim Hortons Inc. began in March with a conversation with Warren Buffett, in which the billionaire agreed to support a takeover, according to documents filed with regulators today.
Over the ensuing months, through intensive talks, Tim Hortons pushed the price higher three times, The Globe and Mail's Boyd Erman reports.
Armed with that knowledge, a banker for Burger King called the chief executive officer of Tim Hortons on March 12. On that call the banker told CEO Mark Caira that 3G Capital, the majority owner of Burger King, wanted to do a deal to put Tims and Burger King together. Mr. Caira agreed to have dinner with Burger King's chairman, 3G executive Alexandre Behring.
That kicked off months of intensive negotiations that saw Burger King raise the price three times, from an original bid of $73 a share, and commit to extensive demands from Tim Hortons for protections of its business interests in Canada.
OECD moves on taxes
The Organization for Economic Co-operation and Development released a series of measures on Tuesday that it says, if implemented, would restrict the ability of global corporations to use national borders to game the international tax system.
The plans, agreed to by delegates from 44 countries in the Paris-based OECD and the Group of 20, are a response to worldwide controversy in recent years over aggressive tax strategies used by multinational companies sto move billions in profits out of higher-tax countries into low- or no-tax jurisdictions, The Globe and Mail's Jeff Gray reports.
The proposals, to to be submitted this weekend to the G20 finance ministers meeting in Cairns, Australia, call for new laws to "neutralize" loopholes in the international tax system that allow companies to avoid paying tax by using what are known as "hybrid mismatch arrangements," such as the multiple tax deductions that some companies can make in multiple countries for a single expense.
The plans would also impose new rules on companies trying to take unfair advantage of tax treaties between countries (so-called "treaty shopping") and the aggressive use of "transfer pricing," or the practice of assigning inflated prices to intra-company movements of goods or services for tax purposes, which allows companies to slide profits across borders.
- Jeff Gray: OECD proposals target gaming of tax system by global companies
- Barrie McKenna: The threat of treaty shopping
- Hate taxes? See how Canada ranks
Allergan reaches deal on meeting
Allergan Inc. and its suitors Valeant Pharmaceuticals International Inc. and Pershing Square Capital Management LP have reached a settlement in the dispute over the holding of a special shareholders' meeting, The Globe and Mail's Bertrand Marotte reports.
Under terms of the agreement announced today, Allergan will hold a special meeting on Dec. 18, as previously intended, at which Pershing Square and Valeant will seek to remove a majority of Allergan's board in a hostile $53-billion (U.S.) attempt to take over the Botox maker.
Bill Ackman's Pershing Square and Laval, Que.-based Valeant went to court last month to force a recalcitrant Allergan to hold the special meeting.
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