Plus, why gold continues to climb. U.S. government raises millions from Madoff auctions. And, how British tailors are supporting their Tories
Stories Report on Business is following today:
Gold hits fresh high
Investors continue to pile into gold, pushing bullion ever higher. Gold topped $1,150 (U.S.) an ounce this morning, continuing its recent climb. Bullion’s ascent has been driven by a weak U.S. dollar and, analysts say, the push through key levels. Gold also acts as a safe haven investment in uncertain times. “It is attracting new speculative capital,” one analyst told Reuters. Read the story
Not too hot, not too cold
The effective bottom line from this morning’s Statistics Canada report on consumer prices in October: No one need worry about either deflation or inflation. Month over month, consumer prices fell 0.1 per cent in October, but on an annual basis the inflation rate is now 0.1 per cent. It’s the first annual increase since May, which means there is no threat of deflation at this point. Core inflation, which factors out volatile items, came in at 1.8 per cent. On a monthly basis, the costs of shelter, clothing, alcohol and tobacco rose, while prices for health and personal products, recreation and food fell. Transportation costs were also lower on the month, pushed down by lower gasoline prices. There’s nothing in the report that would knock the Bank of Canada off its current course of low interest rates. Read the story
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Debt concerns mount
Concern continues to mount over surging government debt levels. In Beijing today, U.S. President Barack Obama went so far as to warn that too much debt could push the United States into a double-dip recession. Mr. Obama told Fox News in an interview that he faces a juggling act, trying to keep debt in line while still acting to juice the economy. He said the government is looking at measures that would boost growth, among them the possibility of tax incentives that would prompt companies to hire. “It is important, though, to recognize if we keep on adding to debt, even in the midst of this recovery, that at some point, people could lose confidence in the U.S. economy in a way that could actually lead to a double-dip recession,” Mr. Obama said. Read the story
In London today, the British government opened the legislative session promising to hold the budget deficit in check. Prime Minister Gordon Brown’s government is looking at legislation that would force the Treasury to slash the deficit by half over four years. Also on tap is a bill that would limit bankers’ bonuses. Britain’s deficit is on track to hit 12.4 per cent of gross domestic product. “We were dealing with a financial crisis that if we hadn’t acted when we did could have turned into a human disaster,” said Business Secretary Peter Mandelson, according to reports from Bloomberg News. “What we’re locking in is a commitment and strong discipline for this and future governments that they will act in a fiscally responsible way, that we will rebalance the public finances over the medium term.”
And in Tokyo, the OECD’s secretary general, Angel Gurria, expressed worries over Japan’s massive debt, warning that its deficit is near 10 per cent of GDP. “Any small increase in the nominal level of rates [of public debt to GDP] will be extremely difficult to handle in the budgets,” Mr. Gurria said, according to the Reuters news agency.
New home construction drops in U.S.
New home construction in the United States fell sharply in October, but economists said home builders were basically waiting see whether a popular tax credit would be extended. The U.S. Commerce Department said today construction of new homes fell 10.6 per cent last month, well below what economists had expected. The tax credit – up to $8,000 (U.S.) for first-time buyers, had been set to expire at the end of this month, but it is now being extended and expanded. Said BMO Nesbitt Burns: “There will still be people buying homes, either for the first time or moving moving up, thanks to the extended and expanded government tax credit … It will take a while before residential construction begins to contribute meaningfully to growth.”
Cosmos takes another run at Cossette
It turns out the fight for Cossette Inc. wasn’t over after all. Many observers had believed that U.S. private equity firm Mill Road Capital had basically won the Canadian ad agency with an offer earlier this month, outbidding Cosmos Capital. But Cosmos came back late yesterday for its third run at the agency, valuing the company at $131.5-million. Read the story
Madoff auction raises more than expected
The U.S. Marshals Service has collected almost $3-million (U.S.) by auctioning off some of the personal belongings of Bernard Madoff and his wife Ruth over the course of about a week, more than expected, according to Bloomberg News today. There are still more sales to come, all of which will raise money for the victims of the massive Ponzi scheme for which Mr. Madoff is serving a 150-year sentence. Among the items sold were Ms. Madoff’s diamond earrings, Mr. Madoff’s Mets sports jacket and three powerboats.
Will chocolate bids get sweeter?
Shareholders of Cadbury PLC are positively salivating over the prospect of a bidding war for the well known British candy maker. Hershey Co. and Italy’s Ferrero International SA confirm they are considering a joint bid for Cadbury, which would rival advances from U.S. food giant Kraft Foods Inc. Cadbury has already rejected Kraft’s bid. Hershey and Ferrero say they’re in the early stages of evaluating options, enough to push Cadbury’s share price higher. Read the story
Metro posts strong quarter
Recession or no, people have to eat. Couple with that the fact that Metro Inc. (MRU.A) has also been working on merchandising efforts and overhauling its Ontario operations, pushing the Montreal-based company to a third-quarter profit of $84.4-million or 77 cents a year, up from last year’s $72.5-million or 65 cents. Revenue rose to $2.53-billion from $2.47-billion as same-store sales, a key measure, rose 2 per cent. “We are proud to have posted record net earnings in every quarter of fiscal 2009,” chief executive officer Eric La Fleche boasted in a statement. “… Despite the challenging economic environment, we are confident that we will continue to grow in the coming year.”
British business moves to support Tories
British businesses are adding heft to the Tory bid to defeat Prime Minister Gordon Brown’s Labour in the election next year. There are some interesting types involved. You’d expect accounts, management consultants and the like to support the Conservatives. Bloomberg News reports today that Britain’s renowned custom tailors are also jumping on board. Crombie Concessions Ltd., a well known suit tailor, gave £19,000 in staff time in the second quarter, while Bain & Co. Holdings Ltd. donated a consultant.
You better not cough, I’m telling you why
Many of America’s Santa Clauses want priority for the H1N1 flu shot. The Amalgamated Order of Real Bearded Santas held a seminar on the flu recently in Philadelphia, while the president of a separate group known as Santa America asked his congressman last week to designate Santas a priority group, The Associated Press reports. The news service notes that it’s not just because flu-infected children may climb onto Santa’s lap, but also because of research that suggests obesity can be a risk factor. Santa America president Ernest Berger, who represents about 200 volunteer Santas, asked Alabama Rep. Jo Bonner for the priority designation, and wants both Santas and children to use hand sanitizer. “It’s a delicate balance here,” he told the news agency. “This is not an exercise in health care. This is visiting Santa.”
From today’s Report on Business
New home buyers take risks with low mortgage rate
Calls rise for new global currency
Feds eye move into battle over cable fees
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