Saturday July 19, 2008
REPORT ON BUSINESS FRONT PAGE 
Good time for bonds. No, really
The U.S. is headed for recession, if it isn't there already, more and more companies are running into financial troubles and concern about inflation has people talking about a Federal Reserve rate increase. Amid all that, Matt Lloyd thinks you should buy corporate bonds.
Rescuing Fantasy Island
How does a coal-shipping operation flounder amidst an unprecedented boom? When Dan Veniez took over as chairman of Ridley Terminals, he discovered high wages, waste and a looming labour dispute. Getting the port operation back on its feet is a tough assignment, one well suited for a man with something to prove. PATRICK BRETHOUR and JOHN LEHMANN visit Prince Rupert, B.C. PAGE 3
THE MARKETS
(Up)SandP/TSX13,515.96+55.71(Up)Dow11,496.57+49.91(Down)Nasdaq2,282.78-29.52(Up)Dollar99. 43+0.11(Down)
COLUMNISTS
On the offence: Where to invest in a down market
The most common, and most ignored, piece of investment advice ever? Buy low, of course.We know this to be true because there was a stunning $70-billion sitting in safe but low-paying money market funds at midyear, almost 45 per cent more than in the same period last year. Investors aren't buying low as the stock markets fall; they're buying safety.
An investment plan is a lifeline when you get that sinking feeling
It's funny how when the market plunges, you can feel it physically. It's that sinking feeling. It's how I felt for a brief moment on Tuesday evening, after bad economic news continued to pour in and the SandP/TSX composite had just closed 383.73 points lower at 13,357.56.
You don't cobble your own shoes, so why invest your own money?
One of the best pieces of financial advice I've read was given by an amateur, one Woody Allen, who said: Comedian, if you want to save the world, don't do politics; tell better jokes.
This Bud's gone ... is Coke next?
In hindsight, it seems all too obvious that Carlos Brito had a master plan. It was the summer of 2005, and Mr. Brito was chatting in the pub they have at Labatt Brewing's head office in Toronto. But his mind was elsewhere - specifically, St. Louis and the colossus of Anheuser-Busch. ''Bud Light is the number one brand by volume in the world,'' he said, explaining why Labatt, Anheuser's distributor in Canada, would be spending more to advertise Budweiser products. ''Why not believe that a brand that performs well in so many markets could perform well in Canada?''
Don't lump this regional with its Big Five brothers
IndyMac Bancorp has given a bad name to regional bank stocks. But as long as you pick a region that's booming, you stand to do far better with a regional bank than with a behemoth that extends its tentacles into every city and town.
INTERNATIONAL BUSINESS
THE HOUSE THAT INDYMAC BUILT
Patricia Ramirez's home, which sits on a ragged dead-end street at the edge of East Los Angeles in the shadow of an elevated freeway, cost $445,000 (U.S.) when she and her husband bought it in February, 2007.
Sinopec says price controls will decrease profit by half
Chinese oil giant Sinopec, formally known as China Petroleum and Chemical Corp., says its first-half profit will fall more than 50 per cent from the same period last year due to government controls that limit its ability to pass on record high crude costs to consumers. A Sinopec statement gave no estimate of first-half earnings, but Asia's biggest refiner reported a profit of 36.2 billion yuan ($5.34-billion) in the year-earlier period. Sinopec is due to release results in late August. Sinopec and oil producer China National Petroleum Corp. say they are suffering heavy losses due to price controls. Sinopec's problem is bigger - it refines much more oil than it produces.
Qantas to cut 1,500 jobs as fuel costs erode profit
Qantas Airways Ltd., Australia's largest airline, will cut 1,500 jobs worldwide to cope with an almost doubling of fuel prices in the past year. Qantas will chop about 4 per cent of jobs and also cancel plans to hire 1,200 additional workers, the carrier said yesterday. It will also ground as many as 22 aircraft. Qantas follows AMR Corp.'s American Airlines, Delta Air Lines Inc. and SAS Group's Scandinavian Airlines in eliminating staff as record fuel costs erode earnings. Industry-wide losses may total more than $6.1-billion this year, the worst since 2003, according to the International Air Transport Association. QAN (Sydney) was unchanged at $3.30 Australian ($3.22).
TNK-BP head Dudley gets extension to Russian visa
Robert Dudley, the head of the Russian oil venture being fought over by BP PLC and its billionaire partners, received permission to stay in the country for 10 days after his current visa expires tomorrow. Mr. Dudley was issued a transitional visa until July 29 to give him time to prove his work contract at TNK-BP is valid, a Federal Migration Service spokesperson said yesterday. BP's billionaire partners - Mikhail Fridman, German Khan, Len Blavatnik and Viktor Vekselberg - are trying to oust Mr. Dudley, accusing him of promoting BP's interests in the 50-50 venture and calling TNK-BP's stock price and profit unsatisfactory. BP (London) rose & 1.25 to & 5.21.
Zentiva rejects bid by Sanofi as too low
Zentiva NV rejected as too low French drug maker Sanofi-Aventis SA's $2.02-billion (U.S.) offer for the shares of the Czech generic drug maker that it doesn't already own. The bid, made last week, doesn't value Zentiva's improving operations or the potential of its Eastern European markets, the company said yesterday. Sanofi already owns a 24.9-per-cent stake and published its 1,050 koruna ($73.06 Canadian) a share bid on July 11, valuing the company at 40 billion koruna. PPF Group NV, the Czech Republic's biggest closely held financial group, is offering 950 koruna a share. ZEN (Prague) fell 2.8 koruna to 1,124 koruna. SAN (Paris) rose €1.09 to €45.69 ($72.80).
Sony Ericsson profit tumbles, job cuts on tap
Mobile phone maker Sony Ericsson Mobile Communications AB posted a 97-per-cent drop in second-quarter profit yesterday and said it would slash 2,000 jobs worldwide to cut costs. The Telefon AB LM Ericsson and Sony Corp. joint venture blamed the earnings drop on tougher market conditions, higher development costs and negative effects from exchange rate fluctuations. The company said it would cut 2,000 jobs within 12 months as part of an effort to reduce operational costs by €300-million ($478.5-million) per year. Profit in the quarter fell to €6-million, down sharply from €220-million in the same period a year ago. Sales dropped about 9 per cent to €2.8-billion, from €3.1-million last year. ERICB (Stockholm) rose 2.5 kronor to 72.30 kronor ($12.20). 6758 (Tokyo) fell yen80 to yen4,310 ($40.53).
WTO blasts China over auto part taxes
The World Trade Organization made public its first official condemnation of Chinese commercial practices yesterday, releasing a February ruling that sided with the United States, the European Union and Canada in a dispute over car parts. The verdict found that China was breaking trade rules by taxing imports of auto parts at the same rate as foreign-made finished cars. It's demand: ''The dispute settlement body requests China bring these inconsistent measures ... into conformity with its obligations.''
Teva buys Barr to create dominant drug maker
Freddie Mac CEO Syron paid nearly $19.8-million
Freddie Mac chairman and chief executive officer Richard Syron pocketed nearly $19.8-million (U.S.) in compensation last year, according to a Securities and Exchange Commission filing yesterday, even though the mortgage company's stock lost half its value in 2007. If Mr. Syron stays at the helm of Freddie Mac through the end of next year, he will receive nearly $20-million in stock awards if the board says he has met certain goals. This year, he is guaranteed to get $8.8-million in stock grants regardless of performance. For 2007, Syron received a $1.2-million salary, a $3.45-million bonus, including $1.25-million to remain at the company, and $771,585 in other compensation. He also received stock and options valued at $14.3-million. FRE (NYSE) rose 85 cents to $9.18.
U.S. ponders more charges against Bear officials
The U.S. government is considering bringing further criminal charges in the case involving two former Bear Stearns executives indicted last month related to the collapse of two hedge funds they oversaw, a federal prosecutor said yesterday. In a court hearing in U.S. District Court in Brooklyn, Assistant U.S. Attorney Patrick Sinclair said ''the government is indeed contemplating additional charges.'' He did not provide any details about the potential charges. ''We are looking to have that resolved by early fall at the absolute latest,'' he told U.S. District Judge Frederic Block. Ralph Cioffi and Matthew Tannin were charged on June 19 with conspiracy and securities fraud related to the demise of the two funds last year.
Citigroup posts loss of $2.5-billion in quarter
Black market iPhones all the rage in China, Russia
In the Soviet days, Russians asked their American friends to bring blue jeans, rock records and other Western goods into the country. Today Russians can buy almost anything they want here - but they are still begging for one item: Apple Inc.'s slick iPhone.
Legg Mason to vote for Yahoo board
One of Yahoo Inc.'s largest shareholders is supporting the re-election of the Internet company's incumbent board, delivering a significant blow to an attempted coup being led by activist investor Carl Icahn.
CANADIAN BUSINESS
Information - please!
In the fiercely competitive world of business travel, value-added services - especially those that help travellers get the most out of their days and nights on the road - are rising in importance. Helping corporate travellers find everything from a latte at Starbucks to the best route from point A to point B has become a competitive edge.
Shaken by chocolate woes, Ganong goes outside for help
In 1977, David Ganong, a young pup of just 34, took over the president's job at his family's chocolate company from his aging Uncle Whidden. He was woefully unprepared, and Ganong Bros. Ltd. suffered while David was learning the ropes.
First, crush the 'general attitude of defeat'
It wasn't until his glaring seatmate began to talk that Dan Veniez began to worry.Mr. Veniez was on a return flight to Vancouver last December, the end of his first trip to Prince Rupert since he shut down the Skeena pulp plant in 2004, gutting the city's economy and earning him the nickname Darth Vader.
FIVE THINGS
1Well-aged brewInBev's corporate existence only began in 2004 and it didn't hit the top of the global brewing heap until 2007, when its sales surpassed those of Anheuser-Busch. But the company is just the latest incarnation of a brewing enterprise that can trace its roots back to the Middle Ages. The oldest records for the Den Horen Brewery in Leuven, Belgium, where InBev's Stella Artois was first made, are from 1366, when ale could be both sipped and chewed, its composition a mix of liquid and solid parts. 2Who's left?
A son's autism opens a door for others
The Donation: nearly $1-million and climbingThe Cause: Unity for AutismThe Reason: To help people with autism find servicesKathy Deschenes once became so exhausted caring for her son Lee, who has autism, that she called 911 and begged them to take him away. ''I couldn't take it any more,'' Ms. Deschenes recalled from her home in Toronto.
Wilkins resigns post at Barrick Gold
MDS to take charge, cut jobs to boost profits
Life sciences company MDS Inc. expects to notch up $28-million in charges as it cuts 210 jobs and records an asset impairment charge related to its troubled MDS Pharma Services business in an effort to boost its sagging bottom line. The Toronto-area company said yesterday the restructuring charges and writedowns, which come after it cut its 2008 financial forecast, will likely chop this year's profit by $20-million or 16 cents per share after taxes. The cuts affect just under 4 per cent of its work force of more than 5,500. Philadelphia-based MDS Pharma provides drug testing services for major pharmaceutical companies. MDS (TSX) fell 15 cents to $14.44.
B.C. court extends life of Pope & Talbot mill
Workers at the Mackenzie pulp mill in northern B.C. gained renewed hope yesterday that a buyer will come along this summer to purchase their shut-down operation. B.C. Supreme Court extended a stay that gives potential buyers of the mill until Sept. 2 to make a bid and restart the business, formerly run by bankrupt U.S. forestry company Pope and Talbot Inc. The ruling came alongside the dismissal of an application by Canfor Corp. to have its wood chip supply agreement with the mill cancelled. The court heard the agreement is crucial to the mill's operations and was needed to find a buyer.
GENERAL BUSINESS
Get this: Lame summer internships now sizzle
You remember life as a student summer intern. The harried manager didn't have a desk ready for your first day on the job, the grown-ups offered encouragement ... and a stack of filing. And let's not forget the non-existent paycheque.
GLOBE INVESTOR
On the offence: Where to invest in a down market
The most common, and most ignored, piece of investment advice ever? Buy low, of course.We know this to be true because there was a stunning $70-billion sitting in safe but low-paying money market funds at midyear, almost 45 per cent more than in the same period last year. Investors aren't buying low as the stock markets fall; they're buying safety.
Big bucks - with too little to show for it
In Toronto, a couple we'll call Ellen and Tom are in the ''sandwich generation.'' Their children, ages 22 and 20, have jobs; the eldest child plans to begin university this fall and will be financially dependent.
Lots of red ink in financial services funds
WHAT ARE WE LOOKING FOR?Damages to financial services stock funds.With the continuing fallout from the U.S. subprime mortgage crisis and ensuing global credit crunch, financial services stocks have been on another roller-coaster ride this week.
An investment plan is a lifeline when you get that sinking feeling
It's funny how when the market plunges, you can feel it physically. It's that sinking feeling. It's how I felt for a brief moment on Tuesday evening, after bad economic news continued to pour in and the SandP/TSX composite had just closed 383.73 points lower at 13,357.56.
You don't cobble your own shoes, so why invest your own money?
One of the best pieces of financial advice I've read was given by an amateur, one Woody Allen, who said: Comedian, if you want to save the world, don't do politics; tell better jokes.
THREE STATS YOU JUST CAN'T BE WITHOUT ON A SATURDAY: THE WEEK IN ECONOMICS
TOTAL INFLATION EXPECTED TO FALL DOWN TO CORE INFLATIONA 4-per-cent pace of total inflation is far and above the Bank of Canada's target band of 1 to 3 per cent. But the bank seems to take comfort in the fact that core inflation was just 1.5 per cent in May, and it seems to be well under control. Core inflation excludes the most volatile prices, such as energy and some food.
Conservative fund investor goes high-risk
MARK BINNSAGE: 33OCCUPATION: Marketing consultant, founder of Toronto marketing firm Torque Customer Strategy.INVESTMENT PERSONALITYOnce a conservative fund investor, Mr. Binns said he has ''reinvented'' himself into an aggressive small- and micro-cap investor.
STARS AND DOGS
STARDuvernay Oil Corp.(DDV-TSX)Yesterday's close$82.18, up $23.74over week ''Tight gas'' - sounds like a gastrointestinal ailment. But it's the latest rage in the Canadian oil patch. I fail to see the fun in squeezing a stone to see if natural gas comes out, but Royal Dutch Shell loves the idea. It's forking out almost $6-billion - a 42-per-cent premium over the market price - to buy little Duvernay and its tight-gas properties. Have fun with your pet rocks, guys.
SPENDING & SAVINGS
MORTGAGESBased on a $100,000 mortgageNat'l Av. RateNat'l Best RateMthly paymentTotal interest costs (lifetime) Variable, closed4.3403.750$544.61$63,384.68 1 year, open8.2894.250$781.73$134,527.06 1 year, closed6.0474.650$642.60$92,781.96 3 years, closed6.1404.890$648.15$94,446.18 5 years, closed6.2715.240$656.00$96,802.13 7 years, closed6.7375.650$684.25$105,278.15
The math behind a 4-per-cent inflation rate
The Bank of Canada's warning this week that inflation will rise above 4 per cent early next year may sound ominous, but much of that surge to 4 per cent is a question of math.
STOCKS AROUNG THE WORLD THIS WEEK
SWEDEN: When a stock like LM Ericsson, which accounts for about 10 per cent of the Stockholm market's OMX index, rallies, it has an impact on the index, especially when it is coupled with a solid improvement in Nordea Bank AB and retailer Hennes and Mauritz AB. Each of those stocks also represent about a 10-per-cent weighting in the index.
COMMODITIES
Commodities fell yesterday, capping their longest slide since November, dropping as much as 10 per cent from a record two weeks ago, on concern that slowing global growth will erode demand for energy, grains and metals.
WEEKLY STOCK TRACKER
PLUS 40.6%Duvernay Oil Corp. soared 40.6 per cent this week after Royal Dutch Shell PLC offered to buy the Calgary-based company for around $5.9-billion. The companies said Monday Shell made a cash offer of $83 a share, which was unanimously accepted by Duvernay's board and is open for acceptance by shareholders until Aug. 22. Duvernay shares closed at $82.18 yesterday, up from $58.44 July 11. Duvernay has 1,800 square kilometres of land holdings and has reported over 25,000 barrels oil equivalent per day of production, predominantly in natural gas.DOWN 18.2%
FRIDAY'S MARKETS: WHAT HAPPENED
DOWNBig moves beneath Wall Street's calmTech stocks took a tumble on Wall Street as Microsoft fell 6 per cent, Google fell 9.8 per cent and Advanced Micro Devices Inc. fell 12.3 per cent. The tech-heavy Nasdaq was down more than 1 per cent. Meanwhile, a rise in financial stocks gave a slight boost to the Dow and to the broader SandP 500.
WHAT THE CHARTS SAY
BULLISH ON GALLEON ENERGY Galleon Energy Inc., (yesterday's close $17.45), had a sharp rise from $5.83 (A) to $25 (B) and then settled into a large horizontal trading range between $13 and $18 for almost a year and a half (see dashed lines). More recently, it pierced above this area of accumulation to a high of $20.15 (C), pulled back to the rising 40-week moving average (D) and now appears ready to resume the uptrend (E). Only a decline below $16 would reverse the positive status of this stock.
BONDS
Canadian bonds ended slightly lower, as the market continued to sag from the drying up of previous safe-haven bids that has resulted from a stronger tone in North American equity markets recently.
FOREIGN EXCHANGE CROSS RATES
Canada's dollar strengthened for a second week after the central bank cited improved trade and reports on manufacturing shipments and wholesale sales exceeded forecasts. The Canadian dollar increased versus 11 of the 16 most-traded currencies.
What the futures hold: WHERE TRADERS SEE PRICES ARE HEADED
Gold closed at US$954.83 an ounce yesterday. The market is pricing it at US$989.60 in one year. SOURCE: ESIGNALThree-month interest rates are at 3.23%. The market expects the rate will be 3.46% in one year. SOURCE: MONTREAL EXCHANGE
