CBC bans paid appearances for on-air talent

News website Canadaland reported last week that Lang tried to “sabotage” an important story by colleague Kathy Tomlinson on RBC and temporary foreign workers, pointing out that she is in a personal relationship with a member of the bank’s board and had given speeches at events sponsored by, among other companies, RBC.

Lang previously denied to the Star that she tried to “kill the story,” that she was hiding a potential conflict and that she had received money from RBC for speaking engagements. She referred the Star on Thursday to an op-ed piece posted on the Globe and Mail’s website, where she wrote that she accepts the CBC’s new policy. She reiterated she stands by her work as a journalist.

 

Move follows controversial speaking engagements

The CBC announced Thursday it will no longer allow its on-air journalists to make paid appearances, a little over a week after senior business correspondent Amanda Lang publicly faced allegations about potential conflicts of interest for giving paid speeches.

CBC News and Centres editor-in-chief and general manager Jennifer McGuire told the Star the discussion around paid appearances had been ongoing, but that “the events of the last little while” impacted that discussion.

“The paid activity, just by virtue of being paid, was creating challenges in terms of our reputation,” she said. “So the idea was to just stop that from being the conversation and push our journalistic policies even further. It was creating a perception that we don’t think is right for our brand.”

McGuire and her Radio-Canada counterpart Michel Cormier broke the news to staff in a memo. She said reaction to the policy shift was “mixed” within the organization.

The union has already condemned the new rule and hinted that it will challenge it. The updated policy will not apply to freelancers, such as Rex Murphy. McGuire said the CBC, which had already been tracking on its website paid and unpaid appearances, will continue to monitor unpaid activity for any perception of conflict. The announcement comes on the heels of a very public spat at the Crown corporation over the issue of perceived conflicts of interest.

News website Canadaland reported last week that Lang tried to “sabotage” an important story by colleague Kathy Tomlinson on RBC and temporary foreign workers, pointing out that she is in a personal relationship with a member of the bank’s board and had given speeches at events sponsored by, among other companies, RBC.

Lang previously denied to the Star that she tried to “kill the story,” that she was hiding a potential conflict and that she had received money from RBC for speaking engagements. She referred the Star on Thursday to an op-ed piece posted on the Globe and Mail’s website, where she wrote that she accepts the CBC’s new policy. She reiterated she stands by her work as a journalist.

“I want to continue to do this work that I know and love, that I’m granted the privilege to do,” she wrote. “To do that, I need the full trust of the public.”

McGuire told the Star the “the whole situation around Amanda Lang is being reviewed,” including her past coverage of RBC. She declined to comment on whether Lang should have publicly disclosed that she is in a relationship with RBC board member Geoffrey Beattie, saying that is part of the review.

Lang wrote in the Globe that in retrospect, she should have disclosed the relationship at the time of the RBC story, writing “In my mind, it was then a private matter.”

Tomlinson told the Star she approved of the change in policy.

“I think it’s an excellent outcome for our audience and for everyone who works at the CBC,” she said. “All the people involved in this decision deserve a lot of credit for doing what I believe is the right thing.”

The developments at the CBC have brought the issue of potential conflicts for journalists stemming from speaking engagements to the forefront. The Toronto Star’s policy reads:

“Before appearing before an outside group, whether through an event organized by the Toronto Star Speaker’s Bureau or independently, editorial staff must consider whether an actual or apparent conflict of interest or threat to the impartiality of the Star’s journalism exists.

“Staff members may not accept invitations to speak before a single company (for example, at a corporate executive retreat) or an industry event unless the managing editor or ME designate agree the appearance does not undermine our impartiality. In such a case, the Star should pay any expenses; no speaker’s fee should be accepted.

“Employees should not accept invitations from outside companies to speak where the function is to attract customers to an event primarily intended as profit-making,” the Star’s policy states.

McGuire said while the CBC will no longer approve paid speeches, those that have already been confirmed will go ahead. She said paid activity will likely cease by February. She said some of the highest-profile personalities at the CBC have been supportive of the move.

“I was fully aware the decision was coming,” said The National anchor Peter Mansbridge, who has faced criticism in the past for giving paid speeches. “I’ve been part of the discussions for quite some time, agreed with the decision and as always will follow CBC policy.”

The public broadcaster’s union, the Canadian Media Guild, called the new policy a “blanket prohibition,” saying it violates its collective agreement. In a statement, CMG said the CBC already had tools at its disposal to avoid potential conflicts by having managers approve paid and unpaid appearances.

Bull Market Continues Worldwide

Can’t keep a good bull market down. Markets around the world continue to respond to largesse of central bank with virtually every market that is trading right now in the green and the U.S. futures tracking higher. For reference, the S&P 500 is a very modest 27 points from its all-time highs. Bonds continue to be well bid with yields this morning down pretty much everywhere as well (although Canadian and U.S. government yields are marginally up off recent lows). Where does it stop? And if you wish to get vertigo take a look at a one year graph of the U.S. traded weighted dollar spiking higher again yesterday. On a long term basis though – breaking out of a base and more to go technicians say.

In the news – flash PMIs from Markit are out and are generally decent relative to expectations and the previous month. China remains below 50 but it is better than last month. We’re awaiting PMI in the U.S. after 9 a.m. k and existing home sales and the leading index.

The new low list is virtually empty (with the exception usually of energy and materials names) however, one surprising name on the TSX – TMX Group trading at $46.89 and a 3.4% dividend yield is plumbing the depths trading at the lowest level since October 2013. Increasing competition and listing worries likely to blame – but is there value? On another interesting note, bulls have been lining up for Bank of America (BAC) if the options market is any indication with 60,000 March 16 calls traded yesterday.

Finally, according to Barclays, one of the ways (of course, just one) to look for the next takeover in the mid-cap U.S. banking space is look at the age of the CEO. Goldsmith, the CEO of City National is 63. Banks with CEOs of 63+ in Barclays coverage includes M&T Bank (MTB) , TCF Financial (TCB) and Comerica (CMA).

www.bnn.ca

Bank of Canada rallies stocks on rate cut

But stocks rally after Bank of Canada move sparked by oil price crash, federal defict fears

OTTAWA— Jobs will be harder to find and the economy will slow as the oil price crash bites in coming months, the Bank of Canada said as it sought to cushion the blow by unexpectedly lowering its key interest rate.

In a signal that fallout from sliding oil prices could be much worse than expected, the central bank reduced its overnight interest rate to 0.75 per cent from 1 per cent.

The Bank of Canada uses the key rate to influence the borrowing costs that commercial banks charge business and consumers, which allows the central bank to boost economic growth if there is a risk of sharp downturn.

“We decided that it was appropriate to take out some insurance against that downside risk in the form of a lower interest rate profile,” bank governor Stephen Poloz said after the rate announcement.

It likely means lower mortgage costs for homebuyers and a longer grace period — probably until next year at least — before mortgage holders are squeezed when the Bank of Canada begins to drive up borrowing costs to head off a burst of inflation.

The bank had not altered its key interest rate since September 2010 and the surprise decision went off like a bomb in financial markets. The prospect of increased business investment and commercial activity from lower rates prompted a sharp rally on the Toronto Stock Exchange. The S&P/TSX composite index jumped 251.98 points to 14,560.42.

But the Canadian dollar plummeted, closing on exchange markets at 81.07 (U.S.) cents, down1.53 cents from its close on Tuesday.

“The dollar has tanked. There is a run to the U.S. dollar,” Rahim Madhavji of Knightsbridge Foreign Exchange wrote in a research note. The oil price slide is hammering the economy, Poloz said. He predicted growth will stumble to 1.5 per cent in the first half of this year. For 2015 as a whole, the bank now predicts growth of 2.1per cent, well below its previous forecast of 2.4 per cent.

While Poloz’s move may help the economy, in the short run it could increase pressure on Prime Minister Stephen Harper’s government to revise its economic approach. The strategy currently hinges on eliminating the budget deficit to open the way for $5 billion a year in new spending and tax breaks for families, particularly a controversial plan to let spouses split income for tax purposes. Only about 15 per cent of families would benefit from this $2-billion annual measure, and it has been sharply criticized as a waste of valuable financial resources.

Taking into account the new spending announcements by Harper in the fall, falling oil prices put Ottawa in danger of running another budget deficit in 2015 instead of meeting its claim that the books will be balanced this year, economists say.

Thrown off course by the oil shock, Finance Minister Joe Oliver took the rare step last week of rescheduling the 2015 budget announcement from the usual February-March time slot until April at the earliest.

“This rate cut shows that the Bank of Canada believes the Canadian economy is facing more trouble than the Conservatives are admitting,” NDP finance critic Nathan Cullen said.

“We need to make sure that the government’s priority is focused on creating growth and jobs for the middle class,” Liberal Leader Justin Trudeau told reporters.

Canadian Labour Congress economist Angella MacEwan said Poloz appears to have felt he had to move to stimulate the economy because Oliver had no plan to do so.

“The bank was listening to what the federal government was saying in response to what the bank saw as a huge impact on the Canadian economy and felt that they (the central bank) had to step in and take some action,” she told the Star.

The bank noted lower petroleum costs will have a different impact in different sections of the country. Economists have said the Ontario economy should pick up.

Poloz acknowledged lower borrowing costs may worsen Canada’s record level of household debt. But he said the need to stabilize the economy in the long run outweighed the risk of financial instability in the household sector.

Oliver said he doesn’t comment on Bank of Canada decisions but added in a statement: “As we’ve always said, Canada is not immune to the economic challenges and decisions made beyond our borders. That is why our government continues our focus on jobs and economic growth. Our plan is working, with one of the strongest job and growth records in the G7 group of countries.”

Poloz said the economy had been showing signs of growth before oil prices dived. “We are beginning to see the anticipated sequence of increased foreign demand, stronger exports, improved business confidence and investment and employment growth.”

Bank of Canada cuts key interest rate quarter-percentage-point- markets rally!

The Bank of Canada announced a surprise quarter-percentage-point cut to its key interest rate Wednesday – a move it calls “insurance” against the potentially destructive effects of the oil price collapse.

The reduction in the bank’s overnight rate to 0.75 per cent from 1 per cent – its first move since September, 2010 – comes as a precipitous drop in the price of crude slams Canada’s oil-dependent economy.

The oil shock will be “negative for growth and underlying inflation in Canada,” the bank warned in a statement.

Bank of Canada Governor Stephen Poloz is expected to explain his dramatic decision at an 11.15 a.m. news conference in Ottawa Wednesday.

The rate move, which few analysts anticipated, is an attempt by Mr. Poloz to shield highly indebted Canadian households from an oil-induced hit to their jobs and incomes – signs of which are already evident in Alberta.

The rate cut is a signal to private-sector banks to lower their own rates on mortgages and other loans.

It’s also likely to accelerate a slide in the Canadian dollar, now at roughly 83 cents (U.S.).

Cheaper crude, while good for the U.S. and global economies, is unequivocally bad for Canada.

The bank warned that lower oil prices would take a sizeable bite out of economic growth in 2015, delay a return to full capacity and hurt business investment – a trend that has already triggered mass layoffs and production cuts in Alberta’s oil patch.

But the effects could spread further, threatening financial stability as a result of possible losses to jobs and incomes, according to the central bank.

“The oil price shock increases both downside risks to the inflation profile and financial stability risks,” the bank acknowledged. “The Bank’s policy action is intended to provide insurance against these risks.”

The bank’s new forecast assumes a price of “around” $60 per barrel for Brent crude, more than $10 above where it is now. But the central bank said prices “over the medium term are likely to be higher” than $60.

As recently as June, oil was selling for $110 a barrel.

The bank also lowered its bank rate and the deposit rate by a quarter percentage point Wednesday, to 1 per cent and ½ per cent, respectively. And it removed any indication of which way rates might go next.

The bank’s decision coincides with a much more pessimistic economic forecast than the bank issued just three months ago.

Following the lead of most private-sector forecasters, the bank slashed its GDP growth forecast to 2.1 per cent this year (from 2.4 per cent), before rebounding to 2.4 per cent in 2016. The worst effects of the oil collapse will be felt in the first half of this year, when the bank expects annualized growth of 1.5 per cent, nearly a full percentage point lower than its October forecast.

The Canadian economy grew at an estimated rate of 2.4 per cent in 2014.

The bank said the economy won’t return to full capacity until the end of 2016, several months later than its previous estimate of the second half of next year. Among other things, the central bank pointed to significant “labour market slack.”

Crude’s effects on the economy will be broad and profound, the bank warned. Investment in the oil and gas sector will decline by as much as 30 per cent this year, while lower returns on energy exports will eat into Canadian incomes, wealth and household spending.

The bank also hinted at a possible spread to other parts of the country of a real estate slump already under way in Alberta. “The extent to which the downturn already evident in Alberta will spill over into other regions remains to be seen,” the bank pointed out in its monetary policy report.

“The ramifications of the oil-price shock for household imbalances will depend importantly on the impact of the shock on income and employment,” the bank added.

The bank also expressed growing angst about the impact that oil could have on inflation, which it said has been propped up by temporary effects, such as the “pass-through” effect of the lower Canadian dollar.

Consumer price increases, now running at roughly 2 per cent a year, are “starting to reflect the fall in oil prices,” the bank said.

The bank’s new forecast calls for overall inflation to fall well below its 2-per-cent target this year, averaging just 0.6 per cent. Core inflation, which strips out volatile food and energy prices, is expected to average 1.9 per cent in 2015.