The big picture

One year later: Growth emerges

Tuesday marked one year since Lehman Brothers declared bankruptcy, setting off the worst financial crisis since the Great Depression. U.S. President Barack Obama spoke to a Wall Street audience, lauding his administration’s moves to prevent future financial calamities and warning that further bailouts are unlikely. Legendary investor Warren Buffett also praised the U.S. government for its efforts to heal the economy. Federal Reserve Chairman Ben Bernanke said the U.S. recession is technically over, with growth expected to show in the third quarter, but warned the economy may remain weak for some time.

In Canada, Finance Minister Jim Flaherty insisted that it would be a major mistake for developed economies not to continue stimulus, and the Bank of Canada repeated warnings that economic recovery may be hampered by the strong loonie. Inflation was negative for the third straight month, but economists said it’s not deflation – taking energy out of the calculation, inflation would have been a healthy 1.4%. The Bank of England may reduce the Bank’s deposit rate to discourage banks from hoarding reserves and encourage them to buy more assets. Beijing filed a complaint with the World Trade Organization as the U.S. raised tariffs on Chinese-made tires, which have cost 5,000 U.S. jobs since 2004. 

Markets

Stocks rally and book sellers rejoice

The TSX index had a three-day run-up, hitting its highest level in almost a year on Wednesday as commodities and financial shares rallied. But on Thursday, stocks in Canada and the U.S. slipped on concerns whether recent market gains were justified, despite the latest round of solid economic data. The benchmark S&P 500 is now up 58% since its early March lows.

Magna’s second-largest customer, BMW, warned that their relationship could be in jeopardy if the parts supplier turns into a competitor. Magna plans to buy a stake in Opel, GM’s European car division. Nova Scotia was given the green light to test turbines in the Bay of Fundy. If viable, sea power could meet 10% of the province’s energy needs. Suncor is making deep cuts after its $22.7-billion takeover of Petro-Canada, eliminating 1,000 jobs, selling properties and reducing natural gas production. Booksellers are rejoicing as bestselling author Dan Brown’s new book, The Lost Symbol, sold over a million copies in the first 24 hours of its release; however, Amazon reported the e-book edition for its Kindle reader had actually outsold the hardcover version.