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Unemployment in Canada will continue to rise over the next year to almost 10 per cent, despite the federal government’s stimulus package and global signs that the great recession seems to be ending, the OECD said Wednesday.

Canada’s unemployment rate, which currently sits at 8.7 per cent, is predicted to rise to almost 10 per cent next year, the report said, bringing OECD unemployment to a record postwar high.

"There are growing signs that the worst may be over and that a recovery may be in sight," the report noted. "But the short-term employment outlook is grim."

For Canada, employment peaked in October 2008, but has since dropped off by more than 486,000 full-time jobs, many of them in Ontario’s hard-hit manufacturing sector.

The Organization for Economic Co-Operation and Development report, Employment Outlook 2009, noted Canada’s "above-average fiscal stimulus" package helped dampen the blow to overall job loss and that Canada has extended the maximum duration of Employment Insurance benefits.

The report warned, however, that if its forecasts about the current recession are accurate, job loss could go on to be worse than Canada’s recession of the early 90s. It also noted that job loss has been particularly acute among young adults (aged 15-24), with an unemployment rate of 16.3 per cent, about double the adult rate.

"Even if the unemployment rate has already peaked, Canada’s labour market typically takes a long time to recover from recessions," the report says. "The unemployment rate in the early 1990s recession peaked in early 1993, but did not drop below its prerecession level again until almost eight years later."

The overall unemployment rate in OECD member countries has already reached a postwar record high of 8.5 per cent, a slide which saw the ranks of the jobless swell by more than 15 million since the end of 2007 free credit report online.

The OECD predicts that should the various fiscal stimulus packages fail to quicken a general recovery, the group’s countries could see overall unemployment reach a new high of 10 per cent – with 57 million out of work.

"Employment is the bottom line of the current crisis," OECD secretary general Angel Gurria said. "It is essential that governments focus on helping jobseekers in the months to come."

However, the OECD warned that if government stimulus packaged were not "temporary and well-targeted," they could actually impede recovery by "propping up declining firms and making it harder for expanding ones to hire new workers" – an apparent nod to North America’s general government consensus to bail out the ailing auto sector.

There were some slight signs Wednesday morning that net employment losses might already have scraped bottom, according to a new Conference Board of Canada report. The new "Help Wanted Index," which measures online job postings, noted that in August there was a rise of 2.6 percentage points compared to July.

"While the Help Wanted Index does not yet point to a rebound in hiring, it suggests that the number of job losses is bottoming out," says Pedro Antunes, director for the non-profit research group’s national and provincial forecast, in a release Wednesday.

However, the Conference Board’s own research notes that the unemployed still greatly outnumber the amount of new job postings, with a ratio of 3.6 unemployed people for every job posted.

The OECD has 30 members states, including Canada, the United States, the United Kingdom, Australia and Japan.

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WILMINGTON, Del.–A Delaware bankruptcy judge has approved the sale of Magna Entertainment Corp.'s Thistledown race track in Ohio for $89.5 million.

The judge on Tuesday approved the results of an auction the previous day which resulted in the winning bid from Harrah's Operating Co. Harrah's offered $42 million in cash at closing and contingent payments of $47.5 million.

An attorney for Ontario-based Magna says the auction involved more than 40 rounds of bidding that started with Penn National's lead, or stalking-horse bid, of $22.3 million.

Magna Entertainment is the largest horse-track owner in the United States. Its holdings include Gulfstream Park in Florida, Lone Star Park in Grand Prairie, Texas, and Baltimore's Pimlico racetrack – host of the Preakness Stakes, the second leg of the Triple Crown.

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Bank of New York Mellon may restart trade-finance lending to Russia as a part of an out-of-court settlement of a $22.5 billion lawsuit against the bank, Kommersant business daily and the Wall Street Journal reported on Monday.

For more than two years, Russia has been seeking compensation from the U.S. bank after a former vice-president, Lucy Edwards, admitted to helping to launder $7 billion from Russia in the late 1990s through Bank of New York accounts.

The settlement could come before the next hearing, slated for October 20, according to The Wall Street Journal, citing a person close to the talks.

“The bank made this proposal late August as a part of preparing amicable settlement with Russian Customs Service. It is suggested the financing will be provided through $400 million tranches every 180 days,” a source in Russia’s Finance Ministry was quoted as saying.

Bank of New York’s exposure will be no more than $400 million, renewed every six months over five years, the person familiar with the talks told the WSJ. Russian media had reported the loan would be $4 billion.

The credit line would bear an interest rate of 2.5 percent over LIBOR and the final recipients of the funds would be Russian banks selected by the government.

The state banks would use the money to help fund imports and exports, the Journal reported.

A spokesman for the bank in New York declined to comment on the case.

A Finance Ministry official told Kommersant it received the bank’s proposal for the expertise a couple of weeks ago but declined to comment further.

For more than two years, the case had been bogged down in procedural issues, mainly over jurisdiction, and had not moved into arguing the merits of the case at the time the settlement talks began.

Settlement talks began in March 2009 after the Russian government called the bank to the table. But the two sides voiced radically different opinions on how much it should cost to end the case, ranging from $1.5 million to close to $1 billion.

(Reporting by Dmitry Sergeyev, additional reporting by Elinor Comlay in New York; editing by Simon Jessop, Bernard Orr)

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Oil companies are the elephant in the room.

The wide trading range and erratic movement of oil prices has been perplexing to pundits, investors and motorists alike. Prices go down, they go up, and they go nowhere.

You’re not hearing bold prognostications or definitive explanations about either oil prices or oil company stocks. Better to simply wait quietly for everything to play out, most rational people reason. When that will occur, however, no one knows for sure.

China’s oil consumption appears to be recovering, Americans are gassing up their cars more often, oil inventories are being reduced, and the release of economic data on any given day impacts the markets.

Yet everyone is couching their bets — if they bet at all — because they’ve been burned too many times before.

"I think the price of oil in a year is going to be higher than its recent range of around $70 a barrel," said Tim Parker, energy analyst with T. Rowe Price in Baltimore. "But it won’t be at $200 a barrel because demand would then drop to nothing, and it won’t be at $20 because no one would be able to make money at that price."

In this environment, investors have seen oil stocks decline even as most other energy stocks have risen significantly. Not that behemoth oil companies receive much sympathy from anyone other than their own investors.

Potential investors, on the belief that eventually oil prices always rise, are wondering whether the time is right to buy oil stocks at their current prices.

"As soon as oil bottoms, it starts to rise, and the best performers are always the exploration and production companies and the oil services companies," Parker said. "The major oil companies lag, but as the cycle continues they benefit and claw their way back."

While a weak economy won’t last forever, it continues to take a toll.

"The demand for fuels really dropped due to the downturn in the economy, with people not driving and also a lack of industrial demand," said Tina Vital, oil equity analyst with Standard & Poor’s in New York. "So it really shouldn’t be surprising that both the earnings and the share price of the refiners are down."

In this environment, "cash is king," noted Vital, so look for companies with strong balance sheets to ensure they can weather the storm and take advantage of market opportunities. They should have a mix of oil and gas operations with contracts 20 to 30 years long, providing greater earnings stability and a dividend as well.

The super-major oil companies best fill that bill, with Parker and Vital recommending the following:

— ExxonMobil Corp., the industry leader in sales and market capitalization, is a proven leader in efficiency, technology and development as well cheap credit report.

— ConocoPhillips, whose past acquisitions are expected to boost reserves and increase production, should benefit in the long run from a higher proportion of natural gas than its rivals.

— Chevron Corp., which was able to increase its production amid falling oil prices, has impressive exploration programs and also a significant number of Asian refineries.

"The stock prices of these companies have lagged, but as the economy recovers and demand heats up they will be good stocks again," Parker said.

Petroleo Brasileiro S.A., controlled by the Brazilian government, is a stock recommended by Parker. Its recent oil and gas discoveries could triple its resource base, and it is experienced in deep-water offshore operations.

Moving down a notch in size but with good growth in oil reserves and solid future expectations are companies such as Murphy Oil Corp. and Occidental Petroleum Corp., both recommended by Parker and Vital.

"Everyone should have exposure to energy, but the question is whether it should be more or less exposure than energy represents in the overall market, which is about 11 percent of the S&P 1500," said Derek Rollingson, portfolio manager of the ICON Energy Fund in Greenwood Village, Colo. "The fact is that, unlike deciding whether to shop in a department store or not, people will have to pay for heating their homes or running their vehicles."

His ICON Energy Fund, up 8 percent this year following last year’s 20 percent drop, has a five-year annualized return of 12 percent. Rollingson is banking on the inevitability of worldwide growth increasing consumption and driving oil prices and oil stocks upward.

"India has its new Nano car from manufacturer Tata, and whenever significant numbers of people move from a bicycle to a motorcycle or a car, they’re going to consume more energy," said Rollingson. "As developing markets become more developed, they use more energy."

He is adding to his fund’s shares of PetroChina Co. Ltd., that nation’s largest producer of oil and gas, which is controlled by the Chinese government. With China accounting for a large part of global energy demand going forward, that company will continue to grow.

Rollingson’s favorites among the oil and gas drillers are Atwood Oceanics Inc. and Diamond Offshore Drilling Inc. because of their stock price and positioning in the industry. Meanwhile, Parker’s favorites in oil services are Schlumberger Ltd., Halliburton Co. and Baker Hughes Inc.

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Loblaw Cos. Ltd. is kicking off another round of grocery-store price wars, as rival Sobeys announces quarterly results showing it’s making gains on the market leader.

Starting today, Loblaw said its Big Brands event moves into the Ontario market, as well as Atlantic and western Canada. The event is already running in Quebec.

For three weeks, consumers will be able to stock up on popular national brands from Kraft, Pepsi and Nestlé as well as Loblaw’s own President’s Choice products, in some case saving up to 50 per cent off the regular price, the company said.

"We’re committed to making shopping easier and less stressful for our customers, especially during the hectic, back-to-school period," said Craig Hutchison, Loblaw senior vice-president of marketing.

The brand-focused blitz, the third since last fall, comes as Sobeys’s parent Empire Co. reported figures that show it continues to gain market share at a faster pace than its rival.

Sobeys’s sales grew 5.3 per cent to $3.91 billion in the quarter ended Aug. 1, as the company opened and expanded more stores, improved operations and benefited from inflation.

Same-store sales, considered a key measure of retail performance, grew 4 per cent, the company also said, while operating income grew 14.2 per cent to $121.6 million. Empire’s net earnings, including its real estate and other investments, rose 8.3 per cent to $89.7 million.

Sobeys operates 1,300 stores across Canada under its own name, as well as IGA and Price Chopper, its discount format.

Loblaw remains the far larger chain but is growing more slowly. Loblaw sales rose 2.8 per cent to $7.2 billion in its latest quarter, ending June 20. Same-store sales rose 2.5 per cent.

Metro Inc., which operates the former Dominion and A&P chains, said sales grew 4.3 per cent to $3.5 billion in its latest quarter, ending July 4. Same-store sales rose 4.2 per cent. Net earnings jumped 22.5 per cent to $112.6 million.

All three major supermarket chains are being challenged by the entry into fresh food retailing by global discount merchant Wal-Mart Canada Corp.

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Delta Air Lines, the world’s largest carrier, is in talks to take a minority stake in Japan Airlines Corp in a bid to expand its reach in Asia, a source familiar with the matter said on Friday.

The business alliance would likely include code-sharing on international flights, said the source, who spoke on condition of anonymity because the deal has not been decided and negotiations are not public.

Delta and Japan Airlines, or JAL, declined to comment.

Analysts said a tie-up would give Delta a major boost in expanding its international footprint after buying Northwest Airlines last year.

“Japan Airlines is a powerful carrier in the Far East. Strategically it’s a great move,” said Michael Boyd, an airline consultant.

Helane Becker, an analyst with Jesup & Lamont Securities, said Delta would get greater access to island nations in Asia that depend on air travel.

“Northwest is probably the second-largest airline operating out of Narita behind Japan Airlines, so it would give them huge access to the Asian-Pacific market,” Becker said.

She also said that Delta would soon lose Continental Airlines Inc, which has a fairly sizable presence in the Asia market, as an alliance partner with which it cooperates on scheduling and prices. Continental is set to leave the SkyTeam alliance, which includes Delta and Air France-KLM, in October to join the Star Alliance.

A deal could result in JAL’s defection to the SkyTeam network from the Oneworld alliance, which includes AMR Corp’s American and British Airways credit scores for free.

JAPAN’S MARKET

The U.S.-Japan market is dominated by four airlines — Delta, UAL Corp’s United Airlines, All Nippon Airways and JAL — in a restrictive aviation agreement that dates back years.

It is unclear if a Delta investment in JAL would trigger a U.S. government review to ensure the deal is not anticompetitive. A code-share partnership would likely require U.S. regulatory approval.

Unlike Europe, there is no U.S. “open-skies” agreement with Japan, so expanded alliances that allow carriers to coordinate on pricing and scheduling, like Delta does in a joint venture with AirFrance-KLM is not currently possible.

Delta has moved to ramp up its operations in high-growth markets even as weak air travel demand has hurt financial results and forced it to cut jobs.

Last month, Delta announced a deal with US Airways Group Inc to swap takeoff and landing rights at New York’s LaGuardia and Washington Reagan National airports. The accord, which must be approved by U.S. regulators, would enable Delta to more than double the nonstop destinations it serves from LaGuardia, bolstering its plans to build a major hub in New York. 

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Americans may soon be able to use their cell phones in Cuba, but U.S. telecommunications companies will find it tough to break into Cuba’s largely untapped market under a new relaxation of the U.S. embargo against the island, industry experts say.

They will face a tangle of political, legal and technical issues that reflect 50 years of bitterness between two countries that were closely allied before the 1959 Cuban revolution put Fidel Castro in power.

Chief among the hurdles is likely to be a cool reception from the Cuban government, which views American cell phones, satellite dishes and Internet service as a threat to its control over the flow of information to the island just 90 miles from Florida.

Potentially big obstacles loom on the U.S. side as well, despite enactment last week of regulations by President Barack Obama effectively granting U.S. telecoms companies a loophole in the 47-year-old U.S. trade embargo against communist-ruled Cuba.

Lawsuit judgments against Cuba have been stacking up for years in U.S. courts, creating hundreds of millions of dollars in financial liability for the cash-strapped island in the midst of its worst economic crisis since the 1990s.

U.S. companies also could face stiff competition from Latin American and European rivals said to be eyeing the Cuban market. All potential entrants will have to market to a Cuban population that makes on average $20 a month and so for whom modern communications are often a luxury.

On the plus side, Cuba is a close and potentially lucrative market where there are only 12.6 phones per 100 people, the lowest ratio in the region, and only 13 percent of the population has access to the Internet, or in most cases a local intranet restricted to Cuban sites.

Cuba has been mostly silent so far on the telecoms changes, which Obama originally announced in April along with the lifting of restrictions on family travel and remittances of money to Cuba by Cuban Americans.

But a high-ranking Cuban official, well placed to know the government’s telecoms policy, told Reuters last week Cuba was willing to meet with all U.S. companies.

HAPPY TO TALK

“We’d be happy to talk with them,” he said when asked if Cuba would consider doing business with U.S. telecommunications companies. “We’re prepared to talk about everything.”

John Kavulich, senior policy adviser at the U.S.-Cuba Trade and Economic Council in New York, said Cuba’s assurances should be taken with a grain of salt.

“The government of Cuba generally responds to overtures from the United States with a ‘willingness to discuss anything.’ When the ‘anything’ is defined as accountability and lessening of control, the willingness is likely to be minimal,” he said.

Most experts think Cuba will seriously consider any telecom proposal that holds the promise of rich revenues.

But security concerns will take precedence, and so they doubt the Cuban government will want anything to do with U.S. satellite television or Internet services. 

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Only 12 percent of U.S. homeowners eligible for loan modifications under the Obama administration’s housing rescue plan have had their mortgages reworked, and millions more foreclosures are coming, the Treasury Department said on Wednesday.

A Treasury report showed 360,165 people had their monthly payments reduced through August, up from 235,247 through July, but a senior Treasury official conceded much more must be done to soften the impact of a severe and prolonged housing crisis.

“The recent crisis in the housing sector has devastated families and communities across the country and is at the center of our financial crisis and economic downturn,” Michael Barr, assistant Treasury secretary for financial institutions, told a House Financial Services subcommittee.

Treasury has begun releasing monthly reports on the loan modification program, called the Home Affordable Modification Program, or HAMP, that it launched in February. At the time, it was suggested that millions of Americans might be able to get some relief through negotiations with their mortgage lenders.

But the program, which pays cash incentives to mortgage servicers to reduce monthly payments to 31 percent of a borrower’s income, is off to a relatively slow start.

In July, Treasury said that just 9 percent of the estimated number of homeowners eligible had had their payments reduced, so August’s 12 percent total represents only modest progress.

Barr said that Treasury was on track to achieve 500,000 trial modifications by November 1. The modification becomes permanent once a borrower makes three reduced monthly payments free credit report online.

Barr said that “even if HAMP is a total success, we should still expect millions of foreclosures” as administration and industry efforts continue to stabilize a crisis-stricken housing sector.

BANKRUPTCY REVISION BILL THREATENED

Lawmakers expressed frustration at the slow progress as unemployment-driven foreclosures rise and threatened to revive so-called “cram-down” legislation that would allow bankruptcy judges to reduce mortgage loan amounts owed.

“I am disappointed at the pace of this program,” said Rep. Barney Frank, chairman of the Financial Services Committee.

The House last year passed a cram-down bill but it was defeated in the Senate, which at the time had a narrower Democratic majority.

“The best lobbyists we have for getting bankruptcy legislation passed are the servicers who are not doing a very good job of modifying mortgages,” said Frank. “If they do not improve their performance, then they improve the chances of that legislation.”

Barr said President Barack Obama supports the idea of allowing bankruptcy judges to alter mortgage terms, but “the first and best answer has got to be ‘let’s figure out a way of keeping people in their home with a modification’ and that’s where we’re focused.”

A Federal Reserve economist, however, said that an effective plan to mitigate foreclosures must deal with rising unemployed borrowers. 

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Food and household products makers are rethinking the way they work with suppliers to trim costs and get a first crack at new products, as they try to increase sales in mature industries.

Too many companies use the old approach of cutting spending during a downturn rather than thinking more strategically about relationships with suppliers, said Carlos Niezen, head of Bain & Co’s purchasing practice. Smarter companies are “taking a risk management approach” to their supply base, he said.

Several manufacturers have trimmed the number of suppliers with which they do business, largely to cut down on costs but also to eliminate some risks. Executives said how they work with suppliers is evolving.

“It’s really not a price thing; it’s really a total value in the relationship we’re looking for,” said James Foster, Clorox Co’s chief product supply officer.

Hormel Foods Corp, meanwhile, has become more systematic in its purchasing after making acquisitions in the early and middle part of the decade.

Hormel used to have about 100 flavorings suppliers and now has less than 20, a consolidation that took about two years, Chairman and Chief Executive Jeffrey Ettinger said. Part of the reason for cutting back on suppliers is to save money, but it also stems from concerns about food safety, Ettinger said. Having fewer suppliers makes it easier for Hormel to keep track of their safety.

Kleenex tissue maker Kimberly-Clark Corp made a major push this year to reduce costs and manage spending with a greater global perspective, said Peter Heaver, director of North Atlantic sourcing and supply management quick payday loan.

“It’s not all about: ‘We’ve got to squeeze supplier margins so we can be profitable’,” Heaver said. “We need suppliers to be profitable and healthy long term, so we can be healthy long term; that’s the delicate balance.”

CONCERNS IN DOWNTURN

After the recession set in, some companies walked away from suppliers with financial risks. Overall, they said they have not had major concerns.

“There’s still time for the smaller suppliers to struggle, but for the most part most of our suppliers have weathered the storm fairly well,” Clorox’s Foster said.

Kimberly-Clark said it cut back to two suppliers from three on a particular commodity, since one supplier was in financial trouble. That supplier, which Heaver declined to name, then filed for Chapter 11 bankruptcy protection.

Still, Heaver said that in some areas his company is actually inviting new suppliers to bid for business, a move that creates “healthy competitive tension.”

The number of supplier bankruptcies has not been large, but “we do think that there’s still going to be a good amount of bankruptcies,” Bain’s Niezen said.

NEW APPROACH FOR CURRENT TIMES 

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When Lehman Brothers collapsed last September, Japan’s Mizuho Securities elbowed past bigger rival Nomura Holdings to scoop up one of Lehman’s prized assets in Tokyo: its hotshot team of electronic traders.

A year later, that team of whiz-kid traders, cloistered from the rest of the trading floor by a wall of glass, has produced scant revenue, according to three people with direct knowledge of the matter.

Meanwhile, Mizuho’s dream of becoming an Asian equities powerhouse gathers dust, held back by caution and a slow-moving corporate culture.

“The firm has hired all the right people to do this and made a small investment in product development, but has yet to commit the budget to let this project go live,” said one source.

“There’s been no business. This crack team is still sitting there and in the meantime Nomura has been creeping up,” the source added.

The Mizuho team is made up of around 20 people and led by Anthony Brooker, former head of Asian electronic trading sales at Lehman. Members are broadly split between electronic trading and prime brokerage services.

Electronic trading is the routing of stock orders across a network, usually on behalf of hedge funds and other institutional investors. The Lehman team placed orders across Asia. Prime broking refers to a suite of services offered by securities firms and banks, usually to hedge funds.

A key Lehman offering was high-frequency trading on the Tokyo Stock Exchange, where it placed thousands of orders per second on behalf of clients, using algorithms and automated trading strategies.

In its heyday, Lehman was responsible for about 7 percent of the volume on the Tokyo exchange TSE.UL, with much of that driven by the team’s high-volume trades.

Mizuho, the securities arm of Japan’s second-largest bank, Mizuho Financial Group, has so far balked at pursuing the prime brokerage business, the sources said.

The sources spoke on condition of anonymity as they are not authorized to speak publicly.

STRICT ON RULES

Much of the delay is due to a cautious corporate culture that emphasizes planning and documentation, the sources said.

“Compared with Lehman or Morgan Stanley or other foreign banks, Mizuho is much stricter on the rules. But if you are too strict, you lose customers,” one said.

“(The team) wants to get this started quickly. They want to be doing electronic trading and prime services, but Mizuho wants to get its rules in place first.” 

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