Oil Pipelines to Drive Canada Economy Like 1880s Railroad

Oil Pipelines to Drive Canada Economy Like 1880s Railroad

Oil pipelines, under attack from environmentalists, are essential to Canada’s economic growth just as railroads were in the 1880s, Enbridge Inc. (ENB) Chief Executive Officer Al Monaco said.

“Pipelines are very similar to railroads,” Monaco said yesterday at the Bloomberg Canada Economic Summit in Toronto. “When you really get down to it, Canada is an export-driven resource economy. This is our foundation.”

Pipelines already carry 15 percent of Canadian exports in the form of crude, mostly to U.S. markets. Plans by Enbridge and TransCanada Corp. (TRP) to spend more than a combined C$50 billion ($49 billion) to expand networks to the Pacific and Atlantic coasts, are opposed by environmental groups such as ForestEthics. The nation’s oil trade rose 7 percent to about C$73 billion last year, according to Statistics Canada, and is set to grow faster than the total economy. Read more of this post

HSH Nordbank, the world’s largest shipping lender, Says Shipping Crisis May Worsen Through 2014

HSH Nordbank Says Shipping Crisis May Worsen Through 2014

HSH Nordbank AG, the world’s largest shipping lender, said the crisis buffeting the industry may worsen through 2014 as clients contend with a drop in demand and the arrival of a new generation of container vessels.

HSH Nordbank, which holds 27 billion euros ($35 billion) of shipping loans in its portfolio, has taken provisions to prepare for the worst-case scenario, HSH Chief Executive Officer Constantin von Oesterreich told journalists in Hamburg, the bank’s home city, last night. Read more of this post

The New Buyers of ETFs: According to Morningstar, hundreds of mutual funds now own passive ETFs

The New Buyers of ETFs

Stan Luxenberg

Fri, 2013-05-17 09:21

Many actively managed mutual funds are now in the market for ETFs for their low costs of ownership and ease of trading. But should shareholders be annoyed? During the past decade, ETFs have spread relentlessly, appealing to pensions, retail investors, and financial advisors. But lately a new group has begun buying: actively managed mutual funds. According to Morningstar, hundreds of mutual funds now own passive ETFs. More than 100 mutual funds hold SDPR S&P 500 (SPY), while more than 70 portfolios use iShares iBoxx High Yield Corporate (HYG). Mutual Funds with ETF stakes include Columbia Dividend Income (LBSAX), Monetta (MONTX) and Vanguard Windsor II (VWNFX). ETF provider SPDR says that 21 of the 25 largest fund companies hold at least some ETFs.

Read more of this post

To Spark Buyers for Electric Cars, Drop the Price to Nearly $0

Updated May 22, 2013, 3:34 a.m. ET

To Spark Buyers for Electric Cars, Drop the Price to Nearly $0

By JOSEPH B. WHITE

This car deal sounds too good to be true: Drive a car, almost free. To entice drivers to try electric-powered cars, auto makers are lowering the price of entry to the zero-emission lifestyle. A new round of discount leases on mainstream-brand plug-in cars such as theNissan 7201.TO -1.38% Leaf or Fiat F.MI +0.93% 500e, combined with federal, state and local electric-vehicle incentives, could make a battery-electric car an extraordinarily economical way to get around for drivers. There are two big caveats: Drivers need to live in states offering tax incentives and can’t drive very far in a single day.

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China’s Toxic Rice Bowl; 44% of rice samples collected locally contained dangerously high levels of cadmium, a heavy metal that causes cancer, kidney failure and other diseases

May 22, 2013, 12:47 p.m. ET

China’s Toxic Rice Bowl

Elections are the only antidote for cadmium rice and other horrors.

The Guangzhou Food and Drug Administration says that 44% of rice samples collected locally contained dangerously high levels of cadmium, a heavy metal that causes cancer, kidney failure and other diseases. Local residents are rightly worried—and furious. So are Chinese across the country: Rice is the staple food for most of the population, so widespread cadmium exposure is another wake-up call that unaccountable government causes public health disasters.

Cases of cadmium in rice and other crops are not new. In February, a Guangdong newspaper reported that the state-owned Shenzhen Cereals Group distributed a large shipment of cadmium-tainted rice from Hunan in 2009. The company denied the report. But researchers at Nanjing Agricultural University found that 10% of China’s rice crop is contaminated with the metal. The full extent of soil pollution is deemed a state secret, and activists who expose polluters are regularly imprisoned. Read more of this post

Richemont Departure Signals Fashion Is an Accessory

Richemont Departure Signals Fashion Is an Accessory

For luxury-goods maker Richemont (CFR), clothing and bags are going out of fashion.

While Richemont last week reported a 30 percent gain in annual profit as shoppers spent more on its Cartier jewelry and IWC watches, leather goods and fashion brands such as Lancel and Chloe have struggled. Earnings at Richemont’s so-called soft luxury unit fell by more than half in the last fiscal year.

Chairman Johann Rupert last week said Richemont (CFR) should have been quicker to get rid of brands that disappoint. Then yesterday, the Geneva-based company announced the departure of Marty Wikstrom, the head of the fashion and accessories business — which accounts for less than a fifth of the company’s 10 billion euros ($12.9 billion) in revenue. Read more of this post

Hong Kong Police Probe Mercantile Exchange at SFC Request, which said it found “serious” suspected financial irregularities at the shuttered commodities market.

Hong Kong Police Probe Mercantile Exchange at SFC Request

Police began probing the Hong Kong Mercantile Exchange Ltd. at the request of the Securities and Futures Commission, which said it found “serious” suspected financial irregularities at the shuttered commodities market.

The financial regulator started its own investigation on May 15 and then referred the matter to Hong Kong Police’s Commercial Crime Bureau, according to a statement published on the SFC’s website yesterday. Read more of this post

Death in Parched Farm Field Reveals Growing India Water Tragedy

Death in Parched Farm Field Reveals Growing India Water Tragedy

Sachin Ingale slipped out of his family’s two-room, white-painted mud hut about 4 p.m. and walked into their farm field where the 22-year-old took a deep swig of pesticide from a plastic bottle. He died later that evening.

Four months later, the mercury is pushing 50 degrees Celsius (122 degrees Fahrenheit) in his village in India’s Maharashtra state. Inside the family hut, a picture of a serene Buddha decorates a wall above a cracked concrete floor.

Elder brother Satish Ingale is sitting on a plastic chair in a white singlet as he explains the pesticide killed Sachin, but it’s the loss of water rights to heavy industry, the worst drought in four decades and the rise in debt that follows that’s causing farmers to take their own lives. Read more of this post

Accounting graduates face job market squeeze. And the notion of an accounting degree as a safe bet is under threat.

Accounting graduates face job market squeeze

PUBLISHED: 12 HOURS 11 MINUTES AGO | UPDATE: 4 HOURS 20 MINUTES AGO

‘The supply of accounting education providers has increased – the market will become saturated and it will become difficult to get jobs,’ says Professor Raymond da Silva Rosa Photo: Bohdan Warchomij

AGNES KING

The trend towards offshoring low-level finance jobs and the fragmentation of financial services are affecting the job outcomes of accounting graduates. Confidential data being circulated among academics shows 25 per cent to 40 per cent of accounting graduates from the nation’s top universities haven’t secured work in the sector within a year of graduating. The market for accounting roles is becoming saturated. And the notion of an accounting degree as a safe bet is under threat. Read more of this post

Federal Reserve Bank of New York President Bill Dudley Says He Can’t Be Sure If Next QE Move Is ‘Up or Down’

Dudley Says He Can’t Be Sure If Next QE Move Is ‘Up or Down’

Federal Reserve Bank of New York President William C. Dudley said he has not decided whether the Fed’s next move should be to enlarge or shrink its bond buying program as he called for a fresh look at its eventual retreat from record asset purchases.

“Because the outlook is uncertain, I cannot be sure which way — up or down — the next change will be,” Dudley said in a speech today in New York.

Dudley adds his voice to a debate on the Federal Open Market Committee about what to do with its program of bond purchases, designed to lower the 7.5 percent unemployment rate. While many Fed officials have voiced support for shrinking purchases as the next step, Dudley, who is also vice chairman of the FOMC, signaled willingness to increase purchases. Read more of this post

Gold ETF Sellers Facing Tax Surprises at 28% Gains Rate

Gold ETF Sellers Facing Tax Surprises at 28% Gains Rate

Investors who dumped shares in gold exchange-traded funds amid the biggest selloff in the metal in four years may be in for a shock: capital-gains taxes are higher than for stocks and bonds.

Profits from investments in ETFs that back their shares with physical holdings of precious metals face taxes as high as 28 percent for investments held at least a year. That’s the rate the U.S. Internal Revenue Service applies to items it considers “collectibles,” such as coins, art, silver and gold. Long-term gains from stocks and bonds, including equity and fixed-income ETFs, are taxed at a maximum 20 percent.

“There are some tax surprises out there lurking for them when they go to sell,” Tim Steffen, director of financial planning at wealth-management firm Robert W. Baird & Co. in Milwaukee, said of gold exchange-traded product investors. Read more of this post

Gold’s Fall Stings University Endowment, saddling the second-largest U.S. college endowment with more than $300 million in paper losse

May 21, 2013, 5:22 p.m. ET

Gold U. Takes It on the Chin

Hit Is $300 Million at Endowment for Texas Schools, Which Invests in the Metal

By GREGORY ZUCKERMAN

Gold’s slump has saddled the second-largest U.S. college endowment with more than $300 million in paper losses. But the swoon hasn’t shaken the faith of Bruce Zimmerman, who since 2007 has been chief executive of University of Texas Investment Management Co.

“We always prefer that our assets go up, rather than down, but we’re not day traders,” said Mr. Zimmerman, whose company invests $29.5 billion for the benefit of the University of Texas and Texas A&M systems. “Gold is a hedge, and it still fills that role.” Lately, investors have been dumping gold anew, citing limp inflation, a raging stock market and a reduced need for a safe-harbor investment. Gold prices fell Tuesday, their eighth decline in the past nine sessions. Few investors have suffered from the recent tumble like Utimco, which ranks behind only Harvard Management Co. in terms of assets in the university-endowment world. The organization holds about $1.1 billion of gold-related investments, down from about $1.4 billion before gold began heading south last October. Read more of this post

Hidden Bad Loans in Chinese Banks Raising Ponzi Risk

Hidden Bad Loans Raising Ponzi Risk

05-21 17:19 Caijing

Interest arbitrage practices, which constitute a self-loop within the financial sector, are likely to weaken the links between finance and the real economy and negatively impact the real economy.

By staff reporters Wang Peicheng, Dong Yuxiao, and You Xi

Official statistics show that the banking industry in China had 526.5 billion yuan worth of non-performing loans and a bad loan ratio of 0.96 percent by the end of the first quarter of 2013, which represents a 0.01 percent increase in the bad loan ratio since the end of 2012. However, the ratio is still below general expectations, given the slow and zigzagging growth in the real economy.

The real condition is far more serious than that reflected on financial reports, as are the potential risks in certain areas. “There is no point trying to gauge the actual risks facing the domestic banking industry with the bad loan ratio,” said an official at the China Banking Regulatory Commission (CBRC). Read more of this post

China’s banks face no-win situation; Given the continued downgrading of Chinese prospects, there may well be worse to come

May 21, 2013 5:29 pm

Inside Business: China’s banks face no-win situation

By Henny Sender

Given the continued downgrading of Chinese prospects, there may well be worse to come

When hundreds of private equity executives met in Washington last week to discuss emerging markets, China dominated the debate. This outcome at the International Finance Corporation and Emerging Markets Private Equity Association conference is hardly surprising, given how important China is for the health of the world economy and for the price of everything from coal to copper to credit.

Analysts have downgraded China’s growth prospects once more, making it clear that its slowdown is more than a cyclical phenomenon. Growth of 8 per cent used to be the floor and has instead become the ceiling, as Ruchir Sharma, managing director of Morgan Stanley Investment Management, puts it. Slowing growth is not necessarily a bad thing, if the quality of the growth improves. Maybe in time, it will. But not today. The rebalancing is still more aspiration than reality. Read more of this post

Korean chaebol CJ Group is under a prosecution investigation over an alleged slush fund

CJ hit by slush fund probe

2013-05-21

By Kim Jae-won prosecutors target chairman, raid offices

Prosecutors on Tuesday raided CJ Group’s Main Office and Affiliate firms, along with The Homes of a Number of executives in What appears to be an Investigation targeting Chairman Lee Jay-Hyun who is Suspected of Running a Slush Fund.  Read more of this post

Pesticides Make a Comeback; Many Corn Farmers Go Back to Using Chemicals as Mother Nature Outwits Genetically Modified Seeds

May 21, 2013, 8:28 p.m. ET

Pesticides Make a Comeback

Many Corn Farmers Go Back to Using Chemicals as Mother Nature Outwits Genetically Modified Seeds

By IAN BERRY

Insecticide sales are surging after years of decline, as American farmers plant more corn and a genetic modification designed to protect the crop from pests has started to lose its effectiveness. The sales are a boon for big pesticide makers, such as American Vanguard Corp.AVD +0.94% and Syngenta SYNN.VX -2.64% AG. But it has sparked fresh concerns among environmental groups and some scientists that one of the most widely touted benefits of genetically modified crops—that they reduce the need for chemical pest control—is unraveling. At the same time, the resurgence of insecticides could expose both farmers and beneficial insects to potential harm. Read more of this post

The Debt Problem Hasn’t Vanished; While deficit projections have recently moderated, the cost of servicing the national debt will explode once interest rates begin to rise

May 21, 2013, 6:59 p.m. ET

Gramm and McMillin: The Debt Problem Hasn’t Vanished

While deficit projections have recently moderated, the cost of servicing the national debt will explode once interest rates begin to rise.

By PHIL GRAMM AND STEVE MCMILLIN

President Obama has raised the national debt by nearly $6.2 trillion, the equivalent of $78,385 per family of four. It is true that projected deficits recently have been reduced. April tax filings increased 28% from 2012, but much of this was thanks to a one-time rush at the end of 2012 to report income before rates rose in January. The second largest reduction in the deficit came from Fannie Mae FNMA +11.04% taking a one-time accounting adjustment.

But unless the economy soars, or a significant budget agreement is reached, the most lasting legacy of the Obama presidency will be a $10 trillion increase in the national debt—a burden that bodes ill for the nation’s future.

Once the Federal Reserve’s easy-money policy comes to an end and interest rates return to their post-World War II norms, the cost of servicing this debt will explode. The cost will increase further as the Fed sells down its $1.85 trillion holding of government bonds, and the Social Security system runs deeper and deeper into the red. The Treasury will then have to pay interest on an ever-growing percentage of the debt. Read more of this post

Canada Real Estate Slump Only Just Beginning, Madani Says

Canada Real Estate Slump Only Just Beginning, Madani Says

Canada’s housing slump has only just begun and it is premature to say the market will have a so-called soft landing, said David Madani, an economist at Toronto-based Capital Economics Ltd.

“We don’t expect prices to rebound this year,” Madani said today at the Bloomberg Economic Summit in Toronto.

Finance Minister Jim Flaherty has acted four times in the past five years to make mortgage-lending rules more restrictive amid concern that the Vancouver and Toronto markets were overheating. Flaherty has said he welcomes a slowdown of condominium construction in the two cities and has warned consumers, who have a record debt-to-disposable-income ratio of 165 percent, not to become overextended. Read more of this post