Saturday May 17, 2008
REPORT ON BUSINESS FRONT PAGE 
Warning to equity investors: 'Watch your tail'
Equity players are a wonderfully resilient lot. Not even the collapse of the U.S. housing bubble, the world's first truly global credit crisis, a battered economy and plunging consumption have been enough to send them to the sidelines for long.
FINANCIAL SERVICES
Sprott: Why resource bears are wrong Eric Sprott, who took his eponymous company public this past Thursday, is not concerned at the cool reception to the stock, which is trading below the IPO price. He takes the long view on resources, which have done well by Sprott Inc.
THE MARKETS
UPSandP/TSX14,984.20+156.14DOWNDow12,986.80-5.86DOWNNasdaq2,528.85-4.88UPDollar100.02+0.02UP
COLUMNISTS
Some ETFs to help you catch the bull
For rank and file investors, this bull market's a drag.The SandP/TSX composite index reached new highs this week, but many investors have had barely a taste of it. Popular equity funds have been lagging the index badly of late and, anyway, lots of investors have been avoiding the markets altogether. Last week, CIBC World Markets said investors are using bank accounts and money market funds to park $45-billion that would normally be in the stock market.
Excitement, curiosity and greed: Letting go of Apple wasn't easy
When I was much younger, I took a job in New Brunswick and drove my beat-up car out there from Toronto. It barely made the trip.My apartment had no parking, so I left my car across the street in a parking lot at an abandoned city building. Weeks went by, then months. One day, I crossed the street to look at my car and saw there were a number of notices - left on my windshield over a period of weeks - imploring me to move the car or it would be towed. I just couldn't bring myself to do so. I was curious to see how long it would take before they acted on the threats and actually towed the car.
Watching if Sprott can handle life in the heavyweight class
On my way to a breakfast meeting recently, I walked by the ''Opening Soon' Apple store in Vancouver's Pacific Centre Mall. I know how hot that store is going to be because I was shoehorned into the Toronto outlet the week before. But I thought to myself, I'm going to see a company that's even hotter - Sprott Inc.
Sharpen your pencil, Mr. McGuinty
Some days, it feels like Canada's auto industry is as preoccupied with making speeches as making pickup trucks. The unions say Canadian car factories are getting killed by the rising dollar and by unfair trade, and ask the government for financial aid. The auto manufacturers say they're getting killed by the rising dollar and high costs; they ask the unions for lower wages and the government for financial aid.
It's not too late for commodity latecomers
WHAT WE'RE UP TOInvestors who are underweight in commodities, this one's for you. TODAY'S SEARCHOur task is to find natural resources mutual funds for investors who are coming late to the stunning runup of energy, metal and fertilizer prices. Sure, they want a resource fund that has shown the ability to capitalize on high commodity prices. But given how elevated the entire commodity sector is, they also have to consider risk.
INTERNATIONAL BUSINESS
Trying to figure oil prices? So are the analysts
Oil's biggest booster has provided fresh momentum to an already red-hot market with a bullish forecast that prices will average $140 (U.S.) a barrel for the rest of this year, while the voices of more cautious observers predicting a correction get drowned out.
DEAD END FOR FREE TRADE
Peter Durant is getting edgy. The 41-year-old Ontario trucker should be on his way to Toledo, Ohio, to pick up a load of Oreo cookies for Kraft Canada.
Sorry Charlie, you're too fancy
Del Monte Foods Co. may sell its StarKist seafood division, known for the ''Charlie the Tuna'' cartoon character, as it faces higher fish costs.A sale may not occur, and its board hasn't approved a transaction, the San Francisco-based company said yesterday in a statement.
Peru plans $360-million Lima rail expansion
Peru's government plans to seek bids May 29 on a $360-million (U.S.) expansion of Lima's overhead railway to ease traffic congestion in the country's capital, a government official said. At least three international groups are expected to bid on the project, which will add 11.7 kilometres and nine stations to the 9.2-kilometre system, David Lemor, director of Peru's Proinversion investment agency, said yesterday in an interview in Lima.
HP to supply Russians from St. Petersburg hub
Hewlett-Packard Co. and Foxconn International Holdings started building a $50-million (U.S.) factory near St. Petersburg that will be able to produce half a million personal computers a year for the Russian market. HP expects to ship 40,000 desktop computers a month at the factory when it's completed within a year, the company said yesterday. Foxconn is a unit of Taipei-based Hon Hai Precision Industry Co., the world's largest contract electronics maker. St. Petersburg, on the Baltic Sea, is offering tax breaks and other incentives to lure foreign manufacturers to its new Kolpino industrial zone, Governor Valentina Matviyenko said. HPQ (NYSE) rose 56 cents to $47.29. 2317 (Taipei) rose 1 Taiwan dollar to 182 Taiwan dollars ($5.93).
Brace for bumpy ride after stellar results: BA's Walsh
ThyssenKrupp hopes clients bend on contracts
ThyssenKrupp AG rose to a six-month high in Frankfurt trading after saying it will seek to renegotiate steel contracts because raw material costs jumped. The steel maker is trying to ''open'' annual and half-year contracts during the remainder of its financial year, which ends Sept. 30, chief financial officer Ulrich Middelmann said yesterday in London. ''The full-year contracts are legally binding, but you can apply a certain pressure on the clients,'' he said. Benchmark coking coal contract prices tripled this year on booming demand and supply disruptions. Iron ore contract prices have increased for a sixth successive year. TKA (Frankfurt) rose €1.01 to €45.86 ($71.45).
Neighbours' lifeline buoys Icelandic krona
Iceland was offered an emergency loan by the central banks of Denmark, Sweden and Norway to shore up the krona and avert an economic collapse. The currency rallied 3.7 per cent against the euro after the banks agreed to provide €1.5-billion ($2.3-billion), which would double the Atlantic island's foreign currency reserves. The krona has dropped as much as 26 per cent against the euro this year on concern Iceland's commercial banks have taken on too much foreign debt, prompting speculation the central bank may have to step in. Support for the currency may enable policy makers to halt a series of interest rate increases. Inflation accelerated to 11.8 per cent in April, the fastest pace in 18 years, even after the key rate increased to a record 15.5 per cent.
AOL unbrands itself
Unless you're looking carefully, you'll likely miss the fact that the new Asylum website for young men is a creation of Time Warner Inc.'s AOL. Same for WalletPop on personal finance, Spinner on indie music and StyleList on fashion.
U.S. consumer confidence falls; housing starts mixed
Fannie Mae relaxes down-payment policy
Closing bell tolls end of era for CME
GE confirms plans to exit appliance business
General Electric Co. plans to sell or spin off the appliance business that for a century has put refrigerators, washing machines and dishwashers in North American homes in a move that some analysts say shows one of the world's largest companies may shed other cherished assets. The industrial conglomerate said in a statement yesterday the move is part of a continuing plan to exit ''slower growth and more volatile businesses.'' Last year, GE shed its underperforming plastics business by selling it to a Saudi Arabian company for $11.6-billion (U.S.). GE's 101-year-old appliance business, headquartered in Louisville, Ky., has been hurt by the housing slump and economic slowdown in the U.S. The appliance division had revenues of $7-billion last year and employs about 13,000 people worldwide. GE (NYSE) fell 24 cents to $32.13.
Time Warner's Parsons likely to step down
Time Warner Inc. chairman Richard Parsons said he will probably step down after this year, a move that would allow chief executive officer Jeffrey Bewkes to take over the position at the world's biggest media company. ''We still have some work to do in the stock market, but our prospects for the future are bright,'' Mr. Parsons, 60, said at the New York-based company's annual shareholder meeting yesterday in Atlanta. ''I know I am leaving the company in good hands.'' Mr. Bewkes, who became CEO in January, has a contract that allows him to resign with a payout should he not be elected chairman by Jan. 1, 2009. He would also not be bound by a non-compete agreement. TWX (NYSE) fell 4 cents (U.S.) to $16.47.
Borders prove no barrier for dividends
Borders are for suckers. Long ago, multinational corporations figured out ways to virtually erase borders, giving them quick and easy access to whatever country they operate within, often freeing them from the costly hassles of tariffs and delays.
CANADIAN BUSINESS
Helping the 'Y,' a bygone refuge
The Donation: $12-millionThe Cause: The UJA Federation of Greater TorontoThe reason: To help build a new Jewish Community Centre.Martin Prosserman says he owes much of what he has accomplished in life to the ''Y.'' As a boy growing up in Montreal during the 1930s, Mr. Prosserman stumbled across the Young Men's Hebrew Association by chance one day. ''God was looking after me,'' he recalled.
Biovail settles U.S. case
Biovail Corp. yesterday settled another of the many legal and regulatory battles that began when founder Eugene Melnyk was running the drug maker, and urged shareholders to put Mr. Melnyk's era behind it.
A master short-seller v. the shorts
Since starting his career as an investment analyst at brokerage Merrill Lynch Canada more than 40 years ago, Eric Sprott has built an enviable reputation as a Bay Street superstar.
Armoyan changes gears
When you've won kudos for successfully picking undervalued stocks and whipping broken-down companies into shape, living up to your stellar reputation can be no easy task.Take George Armoyan.
ABCP restructuring hits new roadblock
Asset-backed commercial paper investors are faced with at best another delay and at worst the failure of the nine-month, $32-billion restructuring of the market after the judge overseeing the plan said he isn't convinced it's fair.
Talisman joins renewed interest in Quebec assets
GENERAL BUSINESS
Milestone awards can go a long way
Five years. 10 years. 25 years. What does your company give employees when they hit milestone anniversaries? From tarnished lapel pins to trips to Mexico and everything in between, an organization's long-service rewards program often says a lot about how it treats its workers. Not that throwing a wad of money at the gift is the answer - who hasn't balked at receiving a gaudy piece of corporate-logo bling?
Spring cleaning time in the office
So-called spring-cleaning fever is a ritual followed by most of us at this time of the year. But is this concept ever applied to workplaces?I suspect there are many offices and job sites where desks, cupboards, storage sheds, bookshelves and even employee manuals, human resource practices and computer files haven't had a thorough cleaning for several years. So, this year, take it upon yourself to do just that - plan for spring cleaning at work.
Prettying up the workplace on the cheap
With companies more worried about layoffs than office design, how can you inject some life into your workplace without spending much money?Here are seven suggestions from architect and designer Stefan Camenzind, founder of Camenzind Evolution Ltd., which created Google's innovative new office in Zurich.
CORRECTIONS
A photo accompanying the Vox column yesterday was of Peter Imof, investment strategist at Sprott Inc., not Allan Jacobs, director of small-cap investments, as identified in the caption.Market demand for minivans will determine how Chrysler LLC deals with any production cuts at both of its minivan assembly plants in Windsor, Ont., and St. Louis. Incorrect information was published in a panel yesterday.
GLOBE INVESTOR
Some ETFs to help you catch the bull
For rank and file investors, this bull market's a drag.The SandP/TSX composite index reached new highs this week, but many investors have had barely a taste of it. Popular equity funds have been lagging the index badly of late and, anyway, lots of investors have been avoiding the markets altogether. Last week, CIBC World Markets said investors are using bank accounts and money market funds to park $45-billion that would normally be in the stock market.
Mortgage from parents helps couple get by
In Toronto, a couple we'll call Henry, 46, and Susan, 45, have a secure financial life. Their gross income, about $135,000, easily covers expenses - including the costs of raising their daughter, 4 - and the travel they enjoy.
Watching if Sprott can handle life in the heavyweight class
On my way to a breakfast meeting recently, I walked by the ''Opening Soon' Apple store in Vancouver's Pacific Centre Mall. I know how hot that store is going to be because I was shoehorned into the Toronto outlet the week before. But I thought to myself, I'm going to see a company that's even hotter - Sprott Inc.
Excitement, curiosity and greed: Letting go of Apple wasn't easy
When I was much younger, I took a job in New Brunswick and drove my beat-up car out there from Toronto. It barely made the trip.My apartment had no parking, so I left my car across the street in a parking lot at an abandoned city building. Weeks went by, then months. One day, I crossed the street to look at my car and saw there were a number of notices - left on my windshield over a period of weeks - imploring me to move the car or it would be towed. I just couldn't bring myself to do so. I was curious to see how long it would take before they acted on the threats and actually towed the car.
THREE STATS YOU JUST CAN'T BE WITHOUT ON A SATURDAY: THE WEEK IN ECONOMICS
Nominal GDP explains energetic drive of oil-rich provincesReal GDP, the former king of economic indicators, is passe in Canada, now that it's not doing anything much.Canada's gross domestic product - which measures economic output, and factors out rising prices - has been lethargic lately, flattened by sagging U.S. demand, high energy costs and the strong dollar. But many Canadians, especially in oil-rich provinces, don't feel that lethargy. Economists are now looking to nominal GDP to explain why.
It's not too late for commodity latecomers
WHAT WE'RE UP TOInvestors who are underweight in commodities, this one's for you. TODAY'S SEARCHOur task is to find natural resources mutual funds for investors who are coming late to the stunning runup of energy, metal and fertilizer prices. Sure, they want a resource fund that has shown the ability to capitalize on high commodity prices. But given how elevated the entire commodity sector is, they also have to consider risk.
Enwave chief likes to invest in what he knows
DENNIS FOTINOSAGE: 43OCCUPATION: President and chief executive officer, Enwave Energy Corp., former Toronto city councillor. INVESTING PERSONALITYRisk averse. ''In my career path I haven't been averse to taking risks, from running for election to getting into energy, that I really at the time in 2000 knew very little about,'' he said. ''When it comes to my investing style, I'm a little more conservative.''
STARS AND DOGS
STARSotheby'sIn a world plagued by starvation and natural disasters, it's comforting to know someone could afford to shell out $86.3-million for a painting of a headless man being devoured by vultures. With Francis Bacon's ''Triptych, 1976'' topping the list, Sotheby's pulled in a record $362-million at an auction this week, sending the stock up faster than you can say, ''My three-year-old could paint that.''
Canadians no longer spared U.S.-style gas hikes
What the data will showMarkets are reeling these days with every new bit of information about inflation, trying to decide whether it's a problem or not. Recent figures from the United Kingdom, where annual inflation is expected to rise to about 3.8 per cent, and China, where inflation is 8.5 per cent, suggest it's a problem. The U.S. consumer price index for April suggests it's just a food and energy issue.
SPENDING AND SAVING
MORTGAGESBased on a $100,000 mortgageNat'l Av. RateNat'l Best RateMthly PaymentTotal Interest Costs (lifetime)Variable, closed4.3262.250$543.84$63,152.68 1 year, open8.5014.250$795.42$138,634.25 1 year, closed6.1744.750$650.18$95,057.90 3 years, closed6.2554.890$655.04$96,513.17 5 years, closed6.1694.990$649.88$94,968.46 7 years, closed6.5685.290$673.95$102,185.86
STOCK AROUND THE WORLD THIS WEEK
NETHERLANDS: The Amsterdam Stock Exchanges index increased 2 per cent this week, reaching its highest level in four months. Companies leading the way included Heineken, Royal Dutch Shell and two chemical producers, Akzo Nobel and Koninklijke DSM. The index is down 5 per cent on a year-to-date basis.
COMMODITIES
Aluminum and zinc prices jumped yesterday amid mounting fears over supplies from China and worries about infrastructure in Sichuan province after this week's devastating earthquake. Copper, a popular alternative investment, also rallied.
WHAT THE CHARTS SAY
BULLISH ON K.C. SOUTHERNKansas City Southern Industries Inc., (yesterday's close $47 U.S.), built a large base from 2001 to 2005 (see chart) and then had a sharp rise from $12.60 in May, 2004, to $43 in June, 2007 (A-B). Subsequently, the stock settled into a large wedge pattern (see solid lines) and found support along the long-term rising trend (see dashed line - C). Kansas City Southern rallied above this wedge recently to signal the resumption of the uptrend toward higher targets (D). Although a better buying opportunity may occur around $41, only a decline below $36 would reverse the positive status.
FRIDAY'S MARKETS: WHAT HAPPENED
UPCanadian stocks extend record on oil, goldThe SandP/TSX composite index rose to a record for the third time this week, led by Suncor Energy Inc., Barrick Gold Corp. and other energy and raw materials producers, as record crude oil and higher metals prices improved the companies' earnings outlook.
BONDS
U.S. government debt prices turned lower in afternoon trade yesterday as stocks erased a majority of their losses and Treasuries ran into technical resistance. Canadian bonds ended lower in quiet trading.
WEEKLY STOCK TRACKER
+40%Crystallex International, the developer of the Las Cristinas gold project in Venezuela climbed after the country's environment minister said that President Hugo Chavez may issue the company a mining permit. The Toronto-based company's stock - which is down 63 per cent year to date - has been battered in recent weeks as news filtered out suggesting the permit would be denied. The stock rose 40 per cent this week, from 60 cents to 84 cents.
FOREIGN EXCHANGE CROSS RATES
The U.S. dollar fell the most against the euro in a month and depreciated versus the yen as a drop in consumer confidence and a surge in crude oil to a record increased concern U.S. economic growth will slow. The Canadian dollar gained for a second week.
WHAT THE FUTURES HOLD: WHERE TRADERS SEE PRICES ARE HEADED
Gold closed at US$903.10 an ounce yesterday. The market is pricing it at US$927.90 in one year. SOURCE: ESIGNALThree-month interest rates are at 2.91%. The market expects the rate will be 3.24% in one year. SOURCE: MONTREAL EXCHANGE
