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| Market News: News Archive : Morning News Call week ending |
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Mar 19, 2010
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THURSDAY, MARCH 18, 2010, CANADIAN EDITION
TOP NEWS
• European Goldfields full-year loss narrows
• Premium Brands Q4 results miss estimates
• BHP confident can seal iron ore jv with Rio in 2010
• Teva to pay over 3.5 bln eur for Ratiopharm - report
• FedEx reports higher Q3 profit
BEFORE THE BELL
Toronto’s main stock index could open lower on Thursday after hitting its highest point since September 2008 in the earlier session. Lower commodity prices could also weigh on the resource-heavy market. The Canadian dollar traded around 99 U.S. cents, its highest level in almost 20 months, as it moved tantalizingly close to being on a one-for-one footing with the U.S. dollar. U.S. stock index futures point to a slightly subdued open ahead of key economic data. European shares turned positive in early trade, with gains in drugmakers offsetting weakness in banks, while Adidas rose on upbeat results from peer Nike. Euro fell half a percent against the dollar on worries about Greece growing increasingly pessimistic about the prospect of help from the EU. Most Asian stocks fell, with Nikkei down 1 percent weighed in part by profit taking in technology-related shares. Oil slipped towards US$82 a barrel as the dollar bounced back, while gold was steady to trade at around US$1126.45 an ounce.
COMPANIES REPORTING RESULTS
• Flint Energy Services Ltd. (FES). Expected to report Q4 earnings of 24 cent a share, according to Thomson Reuters I/B/E/S
• MacDonald, Dettwiler and Associates Ltd. (MDA). Expected to report Q4 earnings of 69 cents a share
• North West Co. Fund (NWF_u). Expected to report Q4 earnings of 49 cents a share
• Taseko Mines (TKO). Expected to report Q4 earnings of 38 cents a share
STOCKS TO WATCH THIS MORNING
• Agrium Inc. (AGU). The fertilizer maker may have failed to clinch a deal to acquire U.S. rival CF Industries, but it continues to look for acquisition opportunities to expand its North American retail business, CEO Michael Wilson said at the Reuters Food and Agriculture Summit in Chicago on Wednesday.
• Atrium Innovations Inc. (ATB). The company on Thursday acquired the assets of Trophic Canada, a manufacturer and distributor of vitamins, minerals and herbal supplements, for a total cash consideration of about US$11 million and said the acquisition is immediately accretive to earnings.
• Cequence Energy Ltd. (CQE). The company reported on Wednesday a fourth-quarter profit and said average production for the period increased by 59 percent to 2,089 boepd from the third quarter.
• Consolidated Thompson Iron Mines Ltd. (CLM). The company on Thursday said the mine site development is near completion and moving towards commercial production. The company also said as of December 31, it had total cash resources 'of $185 million.
• Delphi Energy Corp. (DEE). The company reported a 13 percent decline in fourth-quarter revenue hurt by lower commodity prices and said at least 50 percent of capital will be focused on light oil and liquids-rich natural gas projects.
• European Goldfields (EGU). The company said its pretax loss narrowed last year, helped by record high gold concentrate sales from the Olympias project.
• Great Panther Silver Ltd. (GPR). The company reported a profit for the fourth-quarter helped partly by increase in revenue from minerals.
• New Gold (NGD). The gold miner said full operations will resume at its Cerro San Pedro mine in Mexico after a federal district court lifted restrictions on the use of explosives at the mine.
• Northern Property Real Estate Investment Trust (NPR_u). The company reported a 6 percent decline in fourth-quarter FFO, hurt by weak rental market in northern Alberta.
• Open Range Energy Corp. (ONR). The company reported a loss for the fourth-quarter hurt partly by decline petroleum and natural gas revenue.
• Petrominerales Ltd. (PMG). The company said it will case Candelilla-3 as potential oil well and is expected to be on production by the end of March.
• Premium Brands Holdings Corp. (PBH). The food products maker on Thursday posted fourth-quarter results that missed market estimates, weighed down by weakness in all its sales channels, but said it is optimistic about 2010.
• Sustainable Energy Technologies Ltd. (STG). The company appointed Sanjay Razdan as CEO, replacing Robert Bucher, who is leaving for personal reasons.
• Teck Resources (TCKb). The U.S. Environmental Protection Agency has cleared crucial aspects of a contentious permit that should allow the miner to continue operations at its Red Dog zinc mine in Alaska, an EPA official said on Wednesday.
• Timminco Ltd. (TIM). The company said it was suspending solar-grade silicon production and would not resume operations until customer demand recovered.
• Velan Inc. (VLN). The company said its President ,Tom Velan and Chairman, Ivan Velan will run the company with other members of the senior executive team, while A.K. Velan, its founder and CEO, is in the hospital recovering from successful heart surgery.
ECONOMIC CALENDAR
08:30 Foreign investment in Canadian securities for Jan: Prior $11.23 bln Expected $8.00 bln
08:30 Canadian investment in foreign securities for Jan: Prior -$0.66 bln
CORPORATE EVENTS
10:00 Semafo Inc. (SMF). Q4 earnings conference call
11:00 Delphi Energy Corp. (DEE). Q4 earnings conference call
11:00 European Goldfields Ltd. (EGU). Q4 earnings conference call
13:00 Northern Property Real Estate Investment Trust (NPR_u). Q4 earnings conference call
15:00 North West Co. Fund (NWF_u). Q4 earnings conference call
16:30 Ivanhoe Energy Inc. (IE). Q4 earnings conference call
17:30 Macdonald Dettwiler & Associates Ltd. (MDA). Q4 earnings conference call
ANALYST RECOMMENDATIONS
• Churchill Corp. (CUQ) started with outperform rating; price target of $25 at CI Capital
• Eastern Platinum (ELR) rating cut to market perform from outperform at Raymond James
• First Quantum Minerals (FM) price target raised to $165 from $130; keeps strong buy rating at Raymond James
IPO NEWS
• NorthWest Healthcare Properties Real Estate Investment Trust, a top Canadian manager of medical office buildings and health care facilities, said it plans to raise $175 million in an IPO.
STOCK SPLIT
• Celtic Exploration Ltd. (CLT). The oil and natural gas exploration company proposed on Wednesday a two-for-one stock split, and said shares will commence trading on a subdivided basis at the opening of business on May 4.
EXDIVIDENDS
• Aecon Group Inc. (ARE). Amount $0.05
• Prism Medical Ltd. (PM). Amount $0.075
Note: All values in Canadian currency, unless otherwise stated
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INSIGHT
BREAKINGVIEWS - Ticket home won't be cheap for U.S. energy firms
The demand for U.S. gas shale has become a global phenomenon. India's Reliance Industries is the latest overseas energy group to discover the allure of America's gas-filled rock.
If Reliance can seal a deal to buy acreage in the Marcellus Shale from Atlas Energy it will follow in the footsteps of Japan's Mitsui and Norway's Statoil. This enthusiasm is great news for independent producers that have snagged leases for much of the land. But for U.S. oil majors seeking to escape political turmoil and resource nationalism abroad it will raise the price of the return trip.
U.S oil companies went in search of richer opportunities overseas in the 1990s after years of ebbing domestic production. Now U.S. shale is offering a seductive combination of plentiful supply in a politically stable nation. The only problem is that plenty of others have had the same idea.
The near universal appeal of U.S. shale is easy to grasp. The volume alone is tempting. New drilling techniques have brought 616 trillion cubic feet of gas within reach -- equivalent to 30 years of U.S. gas consumption and 106 billion barrels of oil. This is roughly the same as Kuwait's proven oil reserves.
U.S. shale looks even more precious as so many other countries lock up their domestic energy reserves. Further, because shale wells typically produce several times more gas than conventional ones, the cost of production falls. Add to the mix that gas shale generates half the carbon emissions of coal. That provides a hedge against tougher climate change rules for the likes of U.S. coal producer Consol.
The demand has driven up prices. The average cost of an acre in the Marcellus Shale, for example, doubled in 2009 to US$4,000, according to research firm IHS Herold. Mitsui & Co acquired Anadarko's drilling expertise as part of its deal there, but also stumped up US$14,000 per acre. The inflation has come despite the fact that gas prices are still less than half their 2008 peak. Before the economic recovery revives them, globe-trotting U.S. oil majors would be well advised to book their tickets home.
CONTEXT NEWS
-- Indian energy major Reliance Industries is seeking a joint venture with Atlas Energy to develop the U.S. firm's Marcellus Shale gas operations, Reuters reported, citing a source with direct knowledge of the matter.
-- Atlas, an independent oil and gas company, wants a partner for its operations in the Marcellus Shale in the eastern United States. The deal could bring in US$1 billion or more for the firm. Reliance, India's largest listed company, has failed in recent attempts to gain a foothold outside its home country.
-- Consol Energy agreed on March 15 to buy gas assets in the Marcellus Shale from Dominion Resources for US$3.5 billion.
-- In February, Japan's Mitsui & Co paid US$1.4 billion to become a joint venture partner with Anadarko Petroleum in the Marcellus. Mitsui paid around US$14,000 an acre for about 100,000 acres in north-central Pennsylvania in a deal that also included the acquisition of Anadarko's drilling expertise.
--- Christopher Swann
The author is a Reuters Breakingviews columnist. The opinions expressed are his own
NEWS ACCESS MADE EASY
Reuters Top News page displays a range of market and sector-specific subjects including: US, Europe and Asian companies, fixed income, credit, the global economy, emerging markets, corporate finance and industry sectors.
To access Top News
-- Thomson ONE: Click News tab, Select Front Page from top right, Click Top News.
-- 3000 Xtra: Click Top News tab from the menu bar.
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This publication is not, nor is it to be construed as, a solicitation or recommendation to investors to purchase, sell or hold any of the securities referred to in this publication. Global Securities Corporation is a member of the Canadian Investor Protection Fund.
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FRIDAY, MARCH 19, 2010, CANADIAN EDITION
TOP NEWS
• Shell, Nexen make big find in Gulf of Mexico
• Canada core inflation jumps above 2 pct
• Rio, Chinalco sign iron ore JV as price talks drag
• Iteration Energy Q4 loss narrows
• Agnico-Eagle to privately place US$600 mln in notes
BEFORE THE BELL
Toronto’s main stock index may open flat on Friday as weak commodity prices hurt energy and metals producers and rising inflation adds pressure on the Bank of Canada to raise rates. Canada's annual core inflation rate unexpectedly rose in February to 2.1 percent from 2.0 percent as the central bank ponders when to withdraw extraordinary stimulus from the economy. The Canadian dollar rose sharply on inflation data to hit a session high of 99.01 U.S. cents. Wall Street is expected to open modestly higher as investors braced for possible volatility from options expiration. European shares rose, hitting a 17-month high led by banks after Lloyds Banking Group said it would return to profitability this year. Asian stocks rose led by Japanese exporters and consumer-related shares, while China said it was sending an envoy to the U.S. to try to cool yuan dispute. Oil fell below US$82 a barrel as the dollar strengthened and after a report suggested OPEC exports were rising. Copper climbed as investors expecting stronger global economic and demand growth bought the industrial metal, but concerns about demand from top consumer China capped gains.
STOCKS TO WATCH THIS MORNING
• Agnico-Eagle Mines Ltd. (AEM). The gold miner said on Friday it will privately place US$600 million in long-term unsecured senior notes in order to reduce outstanding credit lines.
• Anvil Mining Ltd. (AVM). The company on Friday reported a fourth-quarter profit helped by improved copper prices. The company produced 4,970 tonnes of copper during the period.
• Arctic Glacier Income Fund (AG_u). The producer of packaged ice on Friday reported fourth-quarter sales, which fell 8 percent to US$33.3 million, hurt by poor weather conditions.
• Aurizon Mines Ltd. (ARZ). The company on Friday reported a fourth-quarter profit helped by recognition of non-refundable tax credits. The company produced 36,459 ounces of gold during the period.
• Baffinland Iron Mines Corp. (BIM). The company said on Thursday CEO and President Gordon A. McCreary resigned. The company also said the board is conducting a search for an executive to assume the position of full time CEO.
• Bank of Nova Scotia (BNS). The bank could secure a 15 percent stake in Vietnam's VietinBank, a state-run magazine quoted the chairman of Southeast Asian nation's fourth-largest lender as saying. The 15 percent stake is valued at US$258.6 million, based on the market value of VietinBank's stock at 28,800 dong per share on Friday.
• Barrick Gold Corp. (ABX). African Barrick Gold, a unit of the world's largest gold miner, priced its initial public offering in London at 575 pence per share, at the bottom end of the 550 pence to 650 pence range, ahead of the start of conditional trading on Friday. Barrick said it is selling 100 million shares, or a quarter of ABG, and retaining the rest.
• Connacher Oil and Gas Ltd. (CLL). The company posted a narrower fourth-quarter loss on Thursday and said it is poised for significant production growth over the next two years.
• Dollarama Inc. (DOL). The operator of dollar stores on Thursday appointed Michael Ross as its CFO as interim CFO Nicholas Nomicos resigned.
• Eldorado Gold Corp. (ELD). The company on Thursday reported a fourth-quarter profit helped partly by increase in gold sales revenue.
• Enbridge Inc. (ENB). The company’s 190,000 barrel per day crude Line 65 from Canada to the U.S. carried no oil Wednesday, a company hotline said Thursday.
• Flint Energy Services Ltd. (FES). The oilfield services company on Thursday posted fourth-quarter earnings that beat market estimates on lower costs, and said it expects to see better utilization in 2010 for its production and oilfield services segments.
• Gazit America Inc. (GAA). The company on Thursday reported fourth-quarter profit and said its U.S. subsidiaries and primary U.S. lender agreed to extend credit facilities until January 2013.
• Iteration Energy Ltd. (ITX). The company on Friday reported a lower fourth-quarter loss, and said it was revising outlook for 2010, following the Alberta government's decision to cut royalties for oil and natural gas production in the province.
• MacDonald Dettwiler & Associates Ltd. (MDA). The satellite and data distribution company said on Thursday its fourth-quarter profit more than tripled, aided by a big gain.
• Nexen Inc. (NXY). The oil explorer and Royal Dutch Shell said on Friday they had made a "significant" discovery in the Gulf of Mexico, the latest in a string of big finds in the Gulf in the past year.
• Sterling Resources Ltd. (SLG). The company appointed Mike Azancot as its CEO, taking over Stewart Gibson, who resigned.
• Stream Oil & Gas Ltd. (SKO). The company said it received approval from the Albanian authorities to take full control of all wells in the Cakran-Mollaj oilfield and the Usoja Treatment facility, as of March 22, 2010. As a result of this takeover and corresponding production optimization control, the company's daily gross crude oil production has increased by 45 percent to 683 bopd.
• TransAlta Corp. (TA). The company’s 406-megawatt Unit 4 at the Sundance coal-fired power plant in Alberta returned to service on March 18, the Alberta Electric System Operator said in a report.
• Zenn Motor Co. (ZNN). The electric automaker said on Thursday it ceased the production of ZENN LSV, resulting in an overall reduction of 15 permanent employees.
ECONOMIC CALENDAR
08:30 Retail sales for Jan: Prior 0.4% Expected 0.6%
08:30 Retail ex-autos for Jan: Prior 0.4% Expected 0.6%
CORPORATE EVENTS
08:30 Anvil Mining Ltd. (AVM). Q4 earnings conference call
11:00 Arctic Glacier Income Fund (AG_u). Q4 earnings conference call
11:00 Aurizon Mines Ltd. (ARZ). Q4 earnings conference call
11:00 Connacher Oil and Gas Ltd. (CLL). Q4 earnings conference call
11:00 Flint Energy Services Ltd. (FES). Q4 earnings conference call
ANALYST RECOMMENDATIONS
• Exeter Resource (XRC) price target cut $11.50 from $11.75; rating speculative buy at Canaccord Adams
• Ivanhoe Energy (IE) rating cut to market perform from outperform at Raymond James
• MDA (MDA) Raises price target raised to $44 from $42; rating market perform at Raymond James
• Northern Property REIT (NPR_u) price target raised to $24.50 from $24; rating outperform at Raymond James
• Pure Energy Services (PSV) rating raised to strong buy from outperform at Raymond James
EXDIVIDENDS
• Power Corp of Canada (POW). Amount $0.29
• TVA Group Inc. (TVAb). Amount $0.05
Note: All values in Canadian currency, unless otherwise stated
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INSIGHT
BREAKINGVIEWS - Ticket home won't be cheap for U.S. energy firms
The demand for U.S. gas shale has become a global phenomenon. India's Reliance Industries is the latest overseas energy group to discover the allure of America's gas-filled rock.
If Reliance can seal a deal to buy acreage in the Marcellus Shale from Atlas Energy it will follow in the footsteps of Japan's Mitsui and Norway's Statoil. This enthusiasm is great news for independent producers that have snagged leases for much of the land. But for U.S. oil majors seeking to escape political turmoil and resource nationalism abroad it will raise the price of the return trip.
U.S oil companies went in search of richer opportunities overseas in the 1990s after years of ebbing domestic production. Now U.S. shale is offering a seductive combination of plentiful supply in a politically stable nation. The only problem is that plenty of others have had the same idea.
The near universal appeal of U.S. shale is easy to grasp. The volume alone is tempting. New drilling techniques have brought 616 trillion cubic feet of gas within reach -- equivalent to 30 years of U.S. gas consumption and 106 billion barrels of oil. This is roughly the same as Kuwait's proven oil reserves.
U.S. shale looks even more precious as so many other countries lock up their domestic energy reserves. Further, because shale wells typically produce several times more gas than conventional ones, the cost of production falls. Add to the mix that gas shale generates half the carbon emissions of coal. That provides a hedge against tougher climate change rules for the likes of U.S. coal producer Consol.
The demand has driven up prices. The average cost of an acre in the Marcellus Shale, for example, doubled in 2009 to US$4,000, according to research firm IHS Herold. Mitsui & Co acquired Anadarko's drilling expertise as part of its deal there, but also stumped up US$14,000 per acre. The inflation has come despite the fact that gas prices are still less than half their 2008 peak. Before the economic recovery revives them, globe-trotting U.S. oil majors would be well advised to book their tickets home.
CONTEXT NEWS
-- Indian energy major Reliance Industries is seeking a joint venture with Atlas Energy to develop the U.S. firm's Marcellus Shale gas operations, Reuters reported, citing a source with direct knowledge of the matter.
-- Atlas, an independent oil and gas company, wants a partner for its operations in the Marcellus Shale in the eastern United States. The deal could bring in US$1 billion or more for the firm. Reliance, India's largest listed company, has failed in recent attempts to gain a foothold outside its home country.
-- Consol Energy agreed on March 15 to buy gas assets in the Marcellus Shale from Dominion Resources for US$3.5 billion.
-- In February, Japan's Mitsui & Co paid US$1.4 billion to become a joint venture partner with Anadarko Petroleum in the Marcellus. Mitsui paid around US$14,000 an acre for about 100,000 acres in north-central Pennsylvania in a deal that also included the acquisition of Anadarko's drilling expertise.
--- Christopher Swann
The author is a Reuters Breakingviews columnist. The opinions expressed are his own
NEWS ACCESS MADE EASY
Reuters Top News page displays a range of market and sector-specific subjects including: US, Europe and Asian companies, fixed income, credit, the global economy, emerging markets, corporate finance and industry sectors.
To access Top News
-- Thomson ONE: Click News tab, Select Front Page from top right, Click Top News.
-- 3000 Xtra: Click Top News tab from the menu bar.
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This publication is not, nor is it to be construed as, a solicitation or recommendation to investors to purchase, sell or hold any of the securities referred to in this publication. Global Securities Corporation is a member of the Canadian Investor Protection Fund.
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WEDNESDAY, MARCH 17, 2010, CANADIAN EDITION
TOP NEWS
• OPEC ministers agree no change to output - delegate
• Hochschild Mining sues Minera Andes over San Jose
• Senior Chinese diplomat rejects currency move
• TSO3 Q4 loss wider than expected
BEFORE THE BELL
Toronto’s main stock index is likely to open higher on Wednesday aided by stronger commodity prices after hitting its highest point since September 2008 on Tuesday. On the macro front, markets await data on wholesale trade. Wall Street is also set to open higher building on gains from previous session as the Federal Reserve maintained its pledge to keep interest rates near zero for an “extended period” even as it said the labor market was “stabilizing”. Banks led the rally in Europe on further support from Standard & Poor's as it affirmed Greece’s rating. Technology stocks pushed Asian shares higher powered by expectations that Intel is expected to release positive guidance for the current quarter. Oil extended gains to above US$82 a barrel as OPEC ministers agree to no output change ahead of inventories data. Gold and copper rose to near one-week highs.
COMPANIES REPORTING RESULTS
• Northern Property REIT (NPR_u). Expected to report Q4 earnings of 29 cents a share, according to Thomson Reuters I/B/E/S
• Transcontinental Inc. (TCLa). Expected to report Q1 earnings of 27 cents a share
STOCKS TO WATCH THIS MORNING
• Advantage Oil and Gas Ltd. (AAV). The company reported on Tuesday a decline in fourth-quarter results, hurt partly by decrease in royalties.
• Brookfield Properties Corp. (BPO). The company, one of Manhattan's biggest landlords, may buy some 20 buildings around the Washington D.C area that fell into default last summer, the WSJ said, citing people familiar with the situation.
• Cangene Corp. (CNJ). The biopharmaceutical company reported on Tuesday a decline in second-quarter results hurt partly by increase in expenses.
• Minera Andes (MAI). Latin American precious metal producer Hochschild Mining Plc has sued the company for repayment of financing relating to the San Jose gold and silver project in Argentina.
• Petrobank Energy and Resources Ltd. (PBG). The company’s fourth-quarter profit rose helped by increase in oil and natural gas revenue.
• Timminco Ltd. (TIM). The reported a loss for the fourth-quarter on Tuesday hurt partly by a one-time costs related to the strategic turnaround of the company.
• TSO3 Inc. (TOS). The company, which designs low temperature sterilization technology for medical devices using ozone, on Wednesday, posted a fourth-quarter loss that missed estimates by a penny, hurt by lower sales of its sterilizers.
ECONOMIC CALENDAR
08:30 Wholesale trade for Jan: Prior 0.7% Expected 0.5%
CORPORATE EVENTS
11:00 Cangene Corp. (CNJ). Q2 earnings conference call
11:00 Petrobank Energy and Resources Ltd. (PBG). Q4 earnings conference call
16:00 Artis Real Estate Investment Trust (AX_u). Q4 earnings conference call
16:15 Transcontinental Inc. (TCLa). Q1 earnings conference call
ANALYST RECOMMENDATIONS
• Cervus Equipment (CVL) rating cut to market perform from outperform at Raymond James
• Encana Corp. (ECA) price target raised to $36.50 from $35; rating market perform at Raymond James
• First Quantum Minerals (FM) target price raised to $110 from $95; rating outperform at Macquarie
• Pacific Rubiales Energy (PRE) price target raised to $36 from $30; rating buy at Canaccord Adams
• Western Coal (WTN) price target raised to $5.50 from $5; rating buy at UBS
• Wireless Matrix (WRX) price target cut to $1.50 from $1.80; rating outperform at Macquarie
EXDIVIDENDS
• ShawCor Ltd. (SCLa). Amount $0.07
• SNC-Lavalin Group (SNC). Amount $0.17
• Sprott Inc. (SII). Amount $0.04
• West Fraser Timber Co. (WFT). Amount $0.03
Note: All values in Canadian currency, unless otherwise stated
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INSIGHT
Coming soon: "oil-less" economic growth
The world may soon achieve something long dreamed of by governments and policymakers: higher economic growth without using more oil.
Rising efficiency, conservation and substitution are steadily reducing the amount of oil needed to fuel an increase in the goods and services produced around the world.
Oil demand in the rich, industrialised countries of the West already appears to have peaked and the trend in developing economies is toward an ever-smaller increase in the amount of oil consumed for every extra unit of economic growth.
Global oil intensity -- oil demand growth divided by economic growth -- has fallen by about 2 percent a year over the last decade and the decline is now accelerating, spurred by high oil prices, moves to alternative fuels and measures to curb global warming.
This does not yet mean that absolute oil consumption is falling because population growth and rising wealth in poorer parts of the world will push up oil consumption for some time.
But it does mean global oil use will eventually peak and start declining -- and "oil-less growth" may not be far away.
"The rate of decline of oil intensity will accelerate," said Eduardo Lopez, oil demand analyst at the International Energy Agency (IEA) in Paris, which advises industrialised countries.
"There is a structural change -- difficult to measure admittedly, but clear -- that demand for burning fuels is no longer what it used to be."
DECLINING
David Fyfe, head of the IEA's oil industry and markets division, says price controls and subsidies as well as economic stimulus packages in China and elsewhere, will help prop up oil demand short-term, but longer-term the trend is downwards.
"Globally speaking, oil intensity has been declining by around 2 percent annually over the past decade," Fyfe said.
"Our working assumption is that with fuel economy standards, fuel diversification and substitution ... oil intensity lessens by just under 2.5 percent over the next five or six years."
This acceleration is probably partly due to prices: crude oil hit a record high of almost US$150 per barrel in 2008 and are now fairly high historically at around US$80.
Estimates of when global oil consumption will stop rising vary but many analysts see it happening over the next 15 years.
BP Chief Executive Tony Hayward said last month world oil demand would peak sometime after 2020 at between 95 million and 110 million barrels per day (bpd), compared with current oil demand of around 85 million bpd.
The trend toward better fuel economy for cars and other vehicles has been clear for some time and it is no surprise that developed economies are using less oil for power generation.
But data from the IEA shows it is not just the richer parts of the world that are weaning themselves off oil.
Although fuel intensity in the developed countries of the Organisation for Economic Co-operation and Development (OECD) has consistently been far lower than in non-OECD countries, the rate of decline has been very similar, IEA figures show.
"MARKET AT WORK"
The top energy forecasters, the IEA, the U.S. Energy Information Administration (EIA) and the Organization of the Petroleum Exporting Countries all make different assumptions of oil demand, economic growth and the ratio between them.
The IEA says 1 percent of global economic growth now needs about 0.47 percent more oil, the EIA says it needs 0.51 percent, while OPEC suggests it needs only about 0.31 percent more oil.
The lower OPEC estimate may reflect a policy bias, analysts say, since the 12-country grouping represents oil producers who take a cautious, conservative approach to demand for their oil.
A Deutsche Bank analysis of oil intensity shows over the last 30 years the annual percentage change in oil demand has equalled 0.9 percent of global economic growth minus 2 percentage points.
But all the big forecasters expect the decline in oil intensity to pick up speed over the next decade.
The trend in the biggest oil consumer, the United States, is relatively easy to assess. Mary Novak, director of energy services at Global Insight, which offers the EIA estimates for oil demand growth, says jobs and income are the key indicators.
"We have based our model on jobs ... Oil is a transport fuel (in the United States). It is not used for much more," she said.
The EIA uses Global Insight's macroeconomic data to come up with the agency's own oil demand forecast.
In non-OECD countries, including China, it is more difficult to estimate since detailed oil data is not available. But it is becoming clear that oil intensity is declining everywhere.
"This is the market at work," said Mike Wittner, global head of oil research at Societe Generale. "The very high prices we have seen recently are driving consumers away from oil."
--- Christopher Johnson, Reuters
NEWS ACCESS MADE EASY
Reuters Top News page displays a range of market and sector-specific subjects including: US, Europe and Asian companies, fixed income, credit, the global economy, emerging markets, corporate finance and industry sectors.
To access Top News
-- Thomson ONE: Click News tab, Select Front Page from top right, Click Top News.
-- 3000 Xtra: Click Top News tab from the menu bar.
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This publication is not, nor is it to be construed as, a solicitation or recommendation to investors to purchase, sell or hold any of the securities referred to in this publication. Global Securities Corporation is a member of the Canadian Investor Protection Fund.
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TUESDAY, MARCH 16, 2010, CANADIAN EDITION
TOP NEWS
• First Quantum posts better-than-expected Q4 results
• Sino-Forest posts higher Q4 net profit
• Canada's MDS posts Q1 loss as revenue falls
• Alamos Gold Q4 results beat estimates
• European Goldfields gets key Romania permit
BEFORE THE BELL
Toronto’s stock market is expected to open higher on Tuesday as gold rose on concerns over sovereign debt and currency risks. Markets also await decision from the U.S. Federal Reserve policy meeting that is widely expected to repeat a pledge to keep rates low for a long time. On the macro front, investors will take cues from data on the manufacturing sector. European shares bounced back lifted by banks and commodities, while most Asian shares rose modestly with the Shanghai index gaining as China shunned mounting U.S. demands for a stronger yuan. Energy shares will be in focus as the market awaits the outcome of OPEC output policy meeting, with oil trading around at US$80. Canadian dollar was little changed trading around $1.0174 to the greenback.
COMPANIES REPORTING RESULTS
• Artis Real Estate Investment Trust (AX_u). Expected to report Q4 loss of 2 cents a share, according to Thomson Reuters I/B/E/S
• Pacific Rubiales Energy Corp. (PRE). Expected to report Q4 earnings of 8 U.S. cents a share
• Petrobank Energy and Resources Ltd. (PBG). Expected to report Q4 earnings of 40 cents a share
STOCKS TO WATCH THIS MORNING
• Alamos Gold Inc. (AGI). The miner on Tuesday reported fourth-quarter results that narrowly beat analysts' estimates, as the company was helped by higher production and lower costs at its key Mexican mine.
• BioExx Specialty Proteins Ltd. (BXI). The agricultural company said on Monday it would raise $15 million in a bought deal, and use the proceeds partly to fund development and construction at its North Dakota plant.
• Bombardier Inc. (BBDb). The world’s largest train maker raised its previously announced notes offering to US$1 billion from US$550 million and said the terms remains unchanged.
• Coalcorp Mining Inc. (CCJ). The company said on Monday it received US$17 million in payment from Xira Investment Inc in accordance with the settlement agreement entered on January 31, 2010 as previously announced.
• COM DEV International Ltd. (CDV). The manufacturer of space hardware subsystems said on Tuesday it has been selected by EADS Astrium to provide passive microwave equipment for a series of four commercial communications satellites.
• Crocodile Gold Corp. (CRK). The company on Tuesday said David Keough will succeed Grant Davey as COO in Australia effective April 2010.
• Day4 Energy Inc. (DFE). The solar module maker reported fourth-quarter profit, helped partly by recovery in demand.
• European Goldfields Ltd. (EGU). The company, which mines metals in Greece, on Tuesday won a key environmental permit for its Certej gold-silver project in Romania, which may give confidence to investors the group can become a significant gold producer.
• First Quantum Minerals Ltd. (FM). The copper and gold miner on Tuesday posted better-than-expected fourth-quarter results, helped by higher copper prices and lower production costs, and said it sees increased production of copper and gold in 2010.
• Kinross (K). The gold miner said on Tuesday it has entered into a definitive agreement to acquire exploration company Underworld Resources (UW) that involves 0.141 of a Kinross common share plus 1 cent per share. The company also said it expects to issue about 6.8 million common shares.
• MDS Inc. (MDS). The life sciences company said on Tuesday it posted a first-quarter loss from continuing operations, due to falling revenue and restructuring charges.
• MGM Energy Corp. (MGX). The company reported a full-year loss on Monday hurt partly by previously announced dry-hole cost related to wells drilled in 2009. The company also said certain insiders agreed to subscribe for 25 million common shares by way of private placement at 20 cents per share.
• Pacific Rubiales Energy Corp. (PRE). The oil firm on Tuesday reported a new oil discovery at the Quifa 24X exploratory well and said petrophysical evaluation of well indicates net pay zone of 22 feet with 32 percent average porosity.
• ProspEx Resources Ltd. (PSX). The company reported on Tuesday fourth-quarter loss hurt partly by decline in oil and gas revenue, and said production for the first quarter of is expected to average about 3,000 boe per day.
• Pulse Seismic Inc. (PSD). The company reported on Monday fourth-quarter profit helped partly by seismic library sales.
• Sino Forest Corp. (TRE). The China-based commercial forest plantations operator on Tuesday posted an 18 percent jump in fourth-quarter net profit as it continued to witness higher demand for its products.
• Suncor Energy Inc. (SU). Canada's largest oil company shut down part of its 135,000 barrel a day Edmonton, Alberta, refinery due to a mechanical problem on Monday and does not know when full output will resume, it said.
• Technicoil Corp. (TEC). The company reported a narrower fourth-quarter loss helped partly by lower general and administrative costs.
• WestJet Airlines Ltd. (WJA). Canada's second-largest carrier on Monday said President and CEO Sean Durfy will resign from the company and its board of directors on April 1, citing personal reasons.
CORPORATE EVENTS
08:30 Sino Forest Corp. (TRE). Q4 earnings conference call
09:00 First Quantum Minerals Ltd. (FM). Q4 earnings conference call
09:30 Laurentian Bank of Canada (LB). Shareholders meeting
09:30 MDS Inc. (MDS). Q1 earnings conference call
10:00 MEGA Brands Inc. (MB). Special shareholders meeting
10:00 Pacific Rubiales Energy Corp. (PRE). Q4 earnings conference call
11:00 Alamos Gold Inc. (AGI). Q4 earnings conference call
ANALYST RECOMMENDATION
• Boralex Inc. (BLX) price target raised to $14.25 from $14; rating buy at Versant
• Ensign Energy Services (ESI) price target cut to $19 from $20; rating sector perform at RBC
• Petrominerales (PMG) price target raised to $39 from $26; rating outperform at RBC
• Resverlogix (RVX) price target raised to $11; rating market outperform at Rodman & Renshaw
EXDIVIDEND
• Alimentation Couche-Tard Inc. (ATDa). Amount $0.04
• Canadian Western Bank (CWB). Amount $0.11
• DundeeWealth Inc. (DW). Amount $0.035
• NewGrowth Corp. (NEWa). Amount $0.1875
• Rocky Mountain Dealerships Inc. (RME). Amount $0.045
Note: All values in Canadian currency, unless otherwise stated
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INSIGHT
BREAKINGVIEWS - Wind-down powers helpful if applied with resolve
Regulators need to approach resolution with resolve. To avoid the next Lehman or American International Group, Senator Chris Dodd's new bill for reforming U.S. financial regulation gives watchdogs powers to liquidate all big financial firms, not just banks.
This resolution authority should be a useful addition to their toolkit -- provided they aren't tempted to keep firms afloat instead.
Few disagree with the idea that regulators need power to wind down big financial players even if they aren't banks. This was seen in stark relief in September 2008. Whereas the collapse of Lehman and AIG brought the specter of financial Armageddon, a failing Washington Mutual was seized by the Federal Deposit Insurance Corp and its assets handed off to JPMorgan with relative ease.
The difference was that WaMu was a bank and FDIC had the regulatory muscle to impose an orderly resolution, forcing shareholders and creditors to take losses so as to right-size the balance sheet. Regulators had no such powers when it came to Lehman or AIG.
The Dodd bill would give FDIC those powers. Among other things, it would also require systemically-risky financial firms to submit "funeral plans" -- known as "living wills" in the UK -- to serve as a roadmap in the event they needed to be shut down.
So far, so good. But Dodd's plans aren't ideal. A proposed us$50 billion bailout fund, though financed up-front by a levy on financial firms themselves, could create a morally hazardous expectation of bailouts. And skeptics won't like the fact that the bill contemplates FDIC borrowing from Treasury, even if only for "working capital" purposes.
Dodd's proposals also allow for FDIC guaranteeing banks' debt to avoid a run on their deposits. The guarantee program enacted during the recent crisis was justified as an emergency measure to prevent wider financial calamity. But if made permanently available, even in the limited circumstances envisioned, there could be a temptation to use it. Seizing the next AIG before it's too late will take significant courage; regulators shouldn't have excuses to put the decision off.
CONTEXT NEWS
-- Senator Chris Dodd on March 15 unveiled his latest proposals for legislation that would reform financial regulation in the United States.
--- Rolfe Winkler
The author is a Reuters Breakingviews columnist. The opinions expressed are his own
NEWS ACCESS MADE EASY
Reuters Top News page displays a range of market and sector-specific subjects including: US, Europe and Asian companies, fixed income, credit, the global economy, emerging markets, corporate finance and industry sectors.
To access Top News
-- Thomson ONE: Click News tab, Select Front Page from top right, Click Top News.
-- 3000 Xtra: Click Top News tab from the menu bar.
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This publication is not, nor is it to be construed as, a solicitation or recommendation to investors to purchase, sell or hold any of the securities referred to in this publication. Global Securities Corporation is a member of the Canadian Investor Protection Fund.
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MONDAY, MARCH 15, 2010, CANADIAN EDITION
TOP NEWS
• Ensign Energy Q4 earnings miss market estimates
• Patheon Q1 loss widens; sees higher 2010 rev
• Capital One credit card defaults fall in February
• Phillips-Van Heusen to buy Hilfiger for US$3 billion
• Intermap gets Garmin deal for 3D mapping technology
BEFORE THE BELL
Toronto’s main stock index could open lower on Monday as commodity prices are pressured by persistent concerns over a possible monetary tightening in China, the top consumer of resources. Wall Street is also set for a lower open ahead of key economic data. European shares were down, led by miners. Asian stocks fell from near seven-week highs as a currency spat between China and the U.S. kept investors away from riskier assets. Oil fell below US$81 a barrel, extending Friday's losses, while gold rose to trade at around US$1,105.85 an ounce.
COMPANIES REPORTING RESULTS
• ProspEx Resources Ltd. (PSX). Expected to report Q4 loss of 3 cents a share, according to Thomson Reuters I/B/E/S
• First Quantum Minerals Ltd. (FM). Expected to report Q4 earnings of US$2.19 cents a share
STOCKS TO WATCH THIS MORNING
• Bird Construction Income Fund (BDT_u). The company reported on Friday lower fourth-quarter results hurts partly by decline in construction revenue.
• Canwest Global Communications (CGS). The Canada's biggest media company said on Friday it will extend the auction for its newspapers until April 30 to seek a better offer.
• Ensign Energy Services Inc. (ESI). The oilfield services firm reported fourth-quarter earnings below analysts' estimates, mainly on weaker demand for oilfield services and lower margins.
• Intermap Technologies Corp. (IMP). The 3D digital mapping technology firm said on Monday U.S. navigation device maker Garmin Ltd signed a three-year agreement for Intermap's NEXTMap technology. Financial terms of the contract were not disclosed.
• Kirkland Lake Gold Inc. (KGI). The gold mining company on Monday reported third-quarter loss of 13 cents a share and it forecast to produce and pour between 45,000 and 55,000 ounces in fiscal 2010. The gold production for the quarter was 8,221 ounces.
• Nortel Networks Corp. (NRTLQ). The bankrupt telecommunications equipment maker on Friday posted a 62 percent drop in fourth-quarter revenue, as customers cut spending in the face of uncertainty about its bankruptcy proceedings and the shaky economy.
• Patheon Inc. (PTI). The drugmaker on Monday posted a wider first-quarter loss, hurt by lower revenue in its pharmaceutical development services unit, and said it sees higher revenue in fiscal 2010. Separately, biopharmaceutical company Orexigen Therapeutics Inc said on Friday it has enlisted Patheon to manufacture its experimental weight loss drug Contrave, as well as future formulations of the drug. Financial terms of the Patheon deal were not disclosed.
• Riverstone Resources Inc. (RVS). The company said on Friday it entered into a bought-deal agreement for $9.7 million and plans to use the proceeds for exploration and development of its projects and for general corporate purposes.
CORPORATE EVENTS
10:00 Patheon Inc. (PTI). Q1 earnings conference call
16:00 Ensign Energy Services Inc. (ESI). Q4 earnings conference call
ANALYST RECOMMENDATION
• Bird Construction Income Fund (BDT_u) target price raised to $40 from $38; keeps outperform rating at Raymond James
• Crescent Point Energy (CPG) price target cut to $47 from $49; keeps outperform rating at Raymond James
• First Uranium (FIU) rating raised to outperform from market perform at Raymond James
• McCoy Corp. (MCB) rating raised to strong buy from market perform at Raymond James
• Petrolifera Petroleum (PDP) rating cut to underperform from market perform at Raymond James
EXDIVIDEND
• Exco Technologies Ltd. (XTC). Amount $0.02
• Methanex Corp. (MX). Amount US$0.155
• CPI Preferred Equity Ltd. (CZPa). Amount $0.3031
• Constellation Software Inc. (CSU). Amount US$0.26
• CCl Industries Inc. (CCLb). Amount $0.16
• Canam Group Inc. (CAM). Amount $0.04
• Becker Milk Ltd. (BEKb). Amount $0.30
• Groupe Aeroplan Inc. (AER). Amount $0.3116
Note: All values in Canadian currency, unless otherwise stated
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INSIGHT
Surging C$ eyes parity with US$ as economy improves
Conditions are ripe for the Canadian dollar to again test parity with the the greenback as more evidence emerges of an entrenched economic recovery and policymakers, including the Bank of Canada, seem more comfortable with the currency's latest rise.
Rallying for an eleventh straight session on Friday, the Canadian dollar is homing in on parity with the greenback, a level it has not seen since July 2008.
The currency's road to 20-month highs has been helped by firm commodity prices, such as important Canadian export oil, and a growing sense that the Bank of Canada might raise interest rates sooner rather than later as economic data such as jobs numbers and trade data continue to top forecasts.
Also, compared to other economies that are running deep deficits, Canada's record deficit of nearly $54 billion seems downright manageable.
"Just take a step outside of Canada and it looks fantastic compared to the rest of the world, and hence one of the reasons why the currency continues to appreciate and draw buyers," said Andrew Busch, global currency strategist at BMO Capital Markets in Chicago.
At 3:45 p.m. (2045 GMT), the Canadian dollar was at $1.0180 to the U.S. dollar, or 98.23 U.S. cents.
Increasingly, reaching parity against the U.S. dollar is a question of when, not if, and whether it can stay there.
"We'll need a lot of good economic data and positive developments to give the market comfort that it is achievable in the near term, sustainably," said Sacha Tihanyi, currency strategist at Scotia Capital.
Parity views are mounting. CIBC World Markets said this week it now expects the Canadian dollar to soar above par with the U.S. dollar by September, a reflection of its view that the Bank of Canada will raise interest rates a full six months ahead of the U.S. Federal Reserve.
Yields on overnight index swaps, which trade based on expectations for the Bank of Canada's key policy rate, edged higher on Friday after data showed the economy added more jobs than expected and the unemployment rate fell.
WHERE'S THE TOUGH TALK?
A level of comfort with the improving economy may also be at play amongst policymakers, suggesting that the Canadian dollar's move higher has been justified by economic fundamentals -- which they can put up with -- rather than speculation.
Finance Minister Jim Flaherty said on Friday he is always worried about volatility in the currency.
But for a second time in a week, he also noted that a stronger currency did have advantages, in that it helped Canadian manufacturers acquire foreign technology and thereby become more competitive.
That is a far cry from last summer when Flaherty raised the possibility that "some steps" could be taken to slow the rise of the Canadian dollar that seemed to be partially spurred by speculative buyers, recalled Matthew Strauss, senior currency strategist at RBC Capital Markets.
Without much verbal intervention, the currency may find itself a little freer to keep heading higher, particularly with the economic data proving supportive.
"It's a very interesting shift compared to last year," said Strauss. "I think it also suggests that the government is accepting that the current levels of the Canadian dollar is driven by fundamentals and, even more importantly, we got to these levels in a more coherent way."
And while it has been popular opinion that manufacturers are the most pressured by fluctuations in the currency, a new study on Friday from the Conference Board of Canada found this is not necessarily the case. Instead, the services sector may potentially be more exposed because these firms typically do not have as solid a currency hedging strategy.
The Bank of Canada has also scaled back its views of the impact of a stronger currency. Last year it said a stronger Canadian dollar could "more than fully offset" favorable economic developments, but its latest statement earlier this month noted the "persistent strength" of the currency continues to act as a "significant" drag on the economy.
"I think as long as the Canadian dollar appreciates on a more stable basis, I think it's probably something the Bank of Canada is willing to put up with. It's really the volatility that's the big issue," said Tihanyi.
--- Ka Yan Ng, Reuters
NEWS ACCESS MADE EASY
Reuters Top News page displays a range of market and sector-specific subjects including: US, Europe and Asian companies, fixed income, credit, the global economy, emerging markets, corporate finance and industry sectors.
To access Top News
-- Thomson ONE: Click News tab, Select Front Page from top right, Click Top News.
-- 3000 Xtra: Click Top News tab from the menu bar.
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This publication is not, nor is it to be construed as, a solicitation or recommendation to investors to purchase, sell or hold any of the securities referred to in this publication. Global Securities Corporation is a member of the Canadian Investor Protection Fund.
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MONDAY, MARCH 15, 2010, CANADIAN EDITION
TOP NEWS
• Ensign Energy Q4 earnings miss market estimates
• Patheon Q1 loss widens; sees higher 2010 rev
• Capital One credit card defaults fall in February
• Phillips-Van Heusen to buy Hilfiger for US$3 billion
• Intermap gets Garmin deal for 3D mapping technology
BEFORE THE BELL
Toronto’s main stock index could open lower on Monday as commodity prices are pressured by persistent concerns over a possible monetary tightening in China, the top consumer of resources. Wall Street is also set for a lower open ahead of key economic data. European shares were down, led by miners. Asian stocks fell from near seven-week highs as a currency spat between China and the U.S. kept investors away from riskier assets. Oil fell below US$81 a barrel, extending Friday's losses, while gold rose to trade at around US$1,105.85 an ounce.
COMPANIES REPORTING RESULTS
• ProspEx Resources Ltd. (PSX). Expected to report Q4 loss of 3 cents a share, according to Thomson Reuters I/B/E/S
• First Quantum Minerals Ltd. (FM). Expected to report Q4 earnings of US$2.19 cents a share
STOCKS TO WATCH THIS MORNING
• Bird Construction Income Fund (BDT_u). The company reported on Friday lower fourth-quarter results hurts partly by decline in construction revenue.
• Canwest Global Communications (CGS). The Canada's biggest media company said on Friday it will extend the auction for its newspapers until April 30 to seek a better offer.
• Ensign Energy Services Inc. (ESI). The oilfield services firm reported fourth-quarter earnings below analysts' estimates, mainly on weaker demand for oilfield services and lower margins.
• Intermap Technologies Corp. (IMP). The 3D digital mapping technology firm said on Monday U.S. navigation device maker Garmin Ltd signed a three-year agreement for Intermap's NEXTMap technology. Financial terms of the contract were not disclosed.
• Kirkland Lake Gold Inc. (KGI). The gold mining company on Monday reported third-quarter loss of 13 cents a share and it forecast to produce and pour between 45,000 and 55,000 ounces in fiscal 2010. The gold production for the quarter was 8,221 ounces.
• Nortel Networks Corp. (NRTLQ). The bankrupt telecommunications equipment maker on Friday posted a 62 percent drop in fourth-quarter revenue, as customers cut spending in the face of uncertainty about its bankruptcy proceedings and the shaky economy.
• Patheon Inc. (PTI). The drugmaker on Monday posted a wider first-quarter loss, hurt by lower revenue in its pharmaceutical development services unit, and said it sees higher revenue in fiscal 2010. Separately, biopharmaceutical company Orexigen Therapeutics Inc said on Friday it has enlisted Patheon to manufacture its experimental weight loss drug Contrave, as well as future formulations of the drug. Financial terms of the Patheon deal were not disclosed.
• Riverstone Resources Inc. (RVS). The company said on Friday it entered into a bought-deal agreement for $9.7 million and plans to use the proceeds for exploration and development of its projects and for general corporate purposes.
CORPORATE EVENTS
10:00 Patheon Inc. (PTI). Q1 earnings conference call
16:00 Ensign Energy Services Inc. (ESI). Q4 earnings conference call
ANALYST RECOMMENDATION
• Bird Construction Income Fund (BDT_u) target price raised to $40 from $38; keeps outperform rating at Raymond James
• Crescent Point Energy (CPG) price target cut to $47 from $49; keeps outperform rating at Raymond James
• First Uranium (FIU) rating raised to outperform from market perform at Raymond James
• McCoy Corp. (MCB) rating raised to strong buy from market perform at Raymond James
• Petrolifera Petroleum (PDP) rating cut to underperform from market perform at Raymond James
EXDIVIDEND
• Exco Technologies Ltd. (XTC). Amount $0.02
• Methanex Corp. (MX). Amount US$0.155
• CPI Preferred Equity Ltd. (CZPa). Amount $0.3031
• Constellation Software Inc. (CSU). Amount US$0.26
• CCl Industries Inc. (CCLb). Amount $0.16
• Canam Group Inc. (CAM). Amount $0.04
• Becker Milk Ltd. (BEKb). Amount $0.30
• Groupe Aeroplan Inc. (AER). Amount $0.3116
Note: All values in Canadian currency, unless otherwise stated
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INSIGHT
Surging C$ eyes parity with US$ as economy improves
Conditions are ripe for the Canadian dollar to again test parity with the the greenback as more evidence emerges of an entrenched economic recovery and policymakers, including the Bank of Canada, seem more comfortable with the currency's latest rise.
Rallying for an eleventh straight session on Friday, the Canadian dollar is homing in on parity with the greenback, a level it has not seen since July 2008.
The currency's road to 20-month highs has been helped by firm commodity prices, such as important Canadian export oil, and a growing sense that the Bank of Canada might raise interest rates sooner rather than later as economic data such as jobs numbers and trade data continue to top forecasts.
Also, compared to other economies that are running deep deficits, Canada's record deficit of nearly $54 billion seems downright manageable.
"Just take a step outside of Canada and it looks fantastic compared to the rest of the world, and hence one of the reasons why the currency continues to appreciate and draw buyers," said Andrew Busch, global currency strategist at BMO Capital Markets in Chicago.
At 3:45 p.m. (2045 GMT), the Canadian dollar was at $1.0180 to the U.S. dollar, or 98.23 U.S. cents.
Increasingly, reaching parity against the U.S. dollar is a question of when, not if, and whether it can stay there.
"We'll need a lot of good economic data and positive developments to give the market comfort that it is achievable in the near term, sustainably," said Sacha Tihanyi, currency strategist at Scotia Capital.
Parity views are mounting. CIBC World Markets said this week it now expects the Canadian dollar to soar above par with the U.S. dollar by September, a reflection of its view that the Bank of Canada will raise interest rates a full six months ahead of the U.S. Federal Reserve.
Yields on overnight index swaps, which trade based on expectations for the Bank of Canada's key policy rate, edged higher on Friday after data showed the economy added more jobs than expected and the unemployment rate fell.
WHERE'S THE TOUGH TALK?
A level of comfort with the improving economy may also be at play amongst policymakers, suggesting that the Canadian dollar's move higher has been justified by economic fundamentals -- which they can put up with -- rather than speculation.
Finance Minister Jim Flaherty said on Friday he is always worried about volatility in the currency.
But for a second time in a week, he also noted that a stronger currency did have advantages, in that it helped Canadian manufacturers acquire foreign technology and thereby become more competitive.
That is a far cry from last summer when Flaherty raised the possibility that "some steps" could be taken to slow the rise of the Canadian dollar that seemed to be partially spurred by speculative buyers, recalled Matthew Strauss, senior currency strategist at RBC Capital Markets.
Without much verbal intervention, the currency may find itself a little freer to keep heading higher, particularly with the economic data proving supportive.
"It's a very interesting shift compared to last year," said Strauss. "I think it also suggests that the government is accepting that the current levels of the Canadian dollar is driven by fundamentals and, even more importantly, we got to these levels in a more coherent way."
And while it has been popular opinion that manufacturers are the most pressured by fluctuations in the currency, a new study on Friday from the Conference Board of Canada found this is not necessarily the case. Instead, the services sector may potentially be more exposed because these firms typically do not have as solid a currency hedging strategy.
The Bank of Canada has also scaled back its views of the impact of a stronger currency. Last year it said a stronger Canadian dollar could "more than fully offset" favorable economic developments, but its latest statement earlier this month noted the "persistent strength" of the currency continues to act as a "significant" drag on the economy.
"I think as long as the Canadian dollar appreciates on a more stable basis, I think it's probably something the Bank of Canada is willing to put up with. It's really the volatility that's the big issue," said Tihanyi.
--- Ka Yan Ng, Reuters
NEWS ACCESS MADE EASY
Reuters Top News page displays a range of market and sector-specific subjects including: US, Europe and Asian companies, fixed income, credit, the global economy, emerging markets, corporate finance and industry sectors.
To access Top News
-- Thomson ONE: Click News tab, Select Front Page from top right, Click Top News.
-- 3000 Xtra: Click Top News tab from the menu bar.
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This publication is not, nor is it to be construed as, a solicitation or recommendation to investors to purchase, sell or hold any of the securities referred to in this publication. Global Securities Corporation is a member of the Canadian Investor Protection Fund.
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(Please note Canadian quotes are delayed 15 min)
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