The Canadian economy slowed to 2% in the second quarter, on an annualized basis, compared to 5.8% in first quarter as global demand softened and domestic spending slowed. U.S. growth also slowed more than expected, to 1.6%, but the disappointment was offset by other good news. U.S. manufacturing expanded for a 13th straight month in August and retailers posted better-than-expected sales, while new jobless claims declined for the second straight week. Europe grew at its fastest pace in four years, with GDP up 1% from the first quarter, prompting the European Central Bank to raise its growth forecast for 2010 to 1.6%. The European Commission reported its “economic sentiment” indicator reached its highest level since the end of 2007.

 

India’s economy expanded 8.8%, its fastest growth in more than two years. In China, manufacturing and auto sales rebounded in August, suggesting the economy may not be slowing as quickly as feared. Auto sales were 1.2 million, up 50% from last August. Japan announced fresh stimulus measures in an effort to shore up its flagging economy, but the move failed to cool the rising yen that threatens to cause havoc in its crucial export sector. The UN food price index shot up 5% in August as global meat prices hit a 20-year high amid robust demand from emerging countries and a drought in Russia that drove up wheat prices.

Good news lifts global markets

 

After weeks of disappointing U.S. data and fears of a slowdown in China, stock markets were lifted on reports that Chinese manufacturing rose in August and U.S. manufacturing and retail sales jumped. 3M acquired Cogent and Attenti, expanding into biometric identification and people-tracking technology. Apple unveiled new iPods and a new Apple TV box, which delivers TV content without a cable or satellite subscription. Samsung announced its iPad rival, Galaxy Tab, two weeks after Dell’s Streak hit U.S. markets. IBM unveiled its fastest mainframes ever, which process information 17,000 times faster than systems in 1970.

 

Bell Canada and Bell Aliant will build a $170-million high-speed rural Internet network over two years, which will serve 1 million residents and businesses in eastern Ontario. After making inroads with Research In Motion, India has turned its attention to Google and Skype as it demands access to data, on fears that Internet-based phone communications may be used to aid terrorism. Number two fast food chain Burger King will be acquired for $3.6-billion by private-investment firm 3G Capital, with plans to catch up to McDonalds. McDonalds is expanding in India, adding 35 new stores this year and 45 next year.

 

 

 

Canada felt the effect of slowing growth in the U.S. and Europe as export demand from its key trading partners softened. Canada’s trade deficit widened to $1.1-billion in June, from $695-million a month earlier, as exports to the U.S. declined 1% and exports to Europe fell 20%. In the U.S., exports fell 1.3% while imports grew 3%, resulting in the largest trade deficit since October 2008. U.S. markets followed a downward trajectory in August, dogged by negative economic reports, and slowing growth in China fuelled concerns that the global recovery would be derailed.

Consumer confidence lags in west

Except in Australia and Canada where consumer confidence hovered around 70%, an opinion poll revealed consumer confidence in developed countries lags behind developing nations – 85% of consumers in India, 77% in China and 65% in Brazil see their country’s economic situation as good, compared to only 18% in the U.S., 13% in the U.K. and 5% in Spain.

Canadians save less
In the current environment, U.S. consumers remain cautious and would rather save than spend. U.S. personal savings rose to 6.4% in June versus less than 3% in Canada through the first quarter of 2010. Canadians are now saving significantly less than Americans for the first time since the early 1970s.

Europe battles back
Global ratings agencies affirmed France’s top-notch triple-A credit rating as President Sarkozy set out tough austerity measures. The French economy grew by 0.6% in the second quarter, stronger than most economists had expected. Despite the fastest economic growth in 20 years, Germany’s deficit doubled in the first half of 2010, as the government assumed €900-million of bad debt for a state-owned bank.

Mergers and acquisitions
BHP, the world’s largest mining company, is still trying to woo Potash Corp. shareholders after its hostile takeover bid of US$39-billion was rebuffed. Meanwhile, China, which buys 7% of Potash’s output, may be looking for ways to derail a takeover on fears that BHP may jeopardize supplies. Intel will buy security software maker McAfee for $7.7-billion, as security becomes vital to Internet-connected devices.

Teachers make slick investment
Ontario Teachers Pension Fund (OTPF) bet on a comeback by Transocean, the oil rig contractor involved in the Gulf disaster. Taking advantage of share prices that collapsed 40% after the April 20th accident, OTPF now owns a 1.7% equity stake.

IPOs – something old, something new
Internet-based phone service Skype filed for its initial public offering, expecting to raise $100-million. Video website Hulu, owned by three U.S. broadcast networks, plans an IPO that may value the company at more than $2-billion. GM filed for a potential $20-billion public offering that will ask investors to look past declining market share and an ailing European division.

Smartphone wars continue
The highly anticipated launch of the Torch, Research In Motion’s answer to the iPhone, was overshadowed as Saudi Arabia announced a ban on the BlackBerry, and India and Indonesia threatened to do the same, causing RIM stock to tumble $2.7-billion in two days. Google’s Android phone overtook the BlackBerry as America’s top selling smartphone, with 33% market share versus RIM at 28% and Apple at 22%.

Record drought affects global wheat market

Russia’s summer drought will lower economic growth by nearly 1%, as a heat wave destroyed one-fifth of crops. Global wheat prices soared as Russia announced a four-month ban on wheat exports. Profit rose 47% at John Deere, as U.S. farmers benefited from high crop prices and rushed to buy tractors before emission standards, and prices, rise next year.