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Call it a massive, not-too-subtle health warning label for the oil sands industry. Regulators have approved a giant expansion of an oil sands project proposed by Royal Dutch Shell PLC – but included an unprecedented list of warnings about the negative impacts on the environment and on Aboriginal communities, reports the Financial Post‘s Claudia Cattaneo. While finding the 100,000-barrel a day expansion of Shell’s Jackpine mine is in the public interest based on economic benefits, the panel, representing the Alberta Energy Regulator and the Canadian Environmental Assessment Agency, dedicated large parts of its 405-page ruling to the cumulative environmental costs, some of them irreversible. The takeaway: With the oil sands industry under growing public scrutiny, the regulators are signalling they are not willing to take responsibility for broader societal choices and want governments to step up and take the heat for them. “Politicians have used regulators to insulate them from the political aspects of ongoing development, and it would appear that this ruling is saying: ‘This is going to be a political decision and we need direction’,” said David Yager, national leader, oil field services, at MNP LLP, in Calgary.
Related: First Nation wants Shell Jackpine hearing adjourned to file appeal – Financial Post
Bernanke bump: S&P hits new record
U.S. stocks jumped, sending the Standard & Poor’s 500 Index above its record closing level, after Federal Reserve Chairman Ben S. Bernanke backed sustained stimulus. The S&P 500 gained 1.1% to 1,670.30 at 9:36 a.m. in New York, topping a record close of 1,669.16 reached on May 21. The benchmark gauge is up 17% for the year. The Toronto stock market was also sharply higher at the open and the loonie jumped almost a full US cent in the wake of reassurances from Bernanke that stimulus measures aren’t going away any time soon.
Related: Fed looks to more robust job gains before stimulus retreat — Reuters
Bernanke has remained at Fed ‘longer than he wanted to,’ Obama says — Bloomberg
Apple e-books case could impact Canadian book industry
It’s a ruling that could have implications for Canada’s book-publishing industry. A U.S. federal judge ruled on Wednesday that Apple Inc. “played a central role” in a conspiracy with five American publishers to fix the prices of electronic books and will face a trial to set damages, reports the Financial Post‘s Matthew Braga. Under what has been referred to as the “agency model,” publishers – and not retailers such as Amazon – were allowed to sell book prices for a higher price through Apple’s e-book store, in exchange for a guarantee that no other store could undercut Apple’s price. The decision, made by U.S. District Judge Denise Cote, could have implications for a similar class-action suit in Canada. Lawyers from British Columbia, Ontario and Quebec are putting their combined weight behind a statement of claim filed in Ontario last March, accusing Canadian publishers of similar anti-competitive dealings. The claim, which won’t be heard before the Ontario Superior Court of Justice until late January, 2014, names Apple, Hachette Book Group Canada Ltd., HarperCollins Canada Ltd., Macmillan Publishers, Inc., Penguin Group (Canada), and Simon & Schuster Canada, Inc., as defendants.
Related: Apple and Amazon among firms targeted for tax avoidance — Reuters
How Deutsche Bank made their loans disappear
Deutsche Bank made billions of dollars of loans to banks worldwide since 2008 and accounted for them in a way that obscured their continuing risk to investors. Bloomberg’s Vernon Silver reports on the accounting the bank used and the legality of their practice.
Mobilicity actively seeking suitors
Financially strapped mobile provider Mobilicity said Wednesday it is in talks with “multiple parties” in hopes of a sale, reports the Financial Post‘s Christine Dobby. The Vaughan, Ont.-based carrier, formally known as Data & Audio-Visual Enterprises Holdings Inc. (DAVE Wireless), said it adjourned a meeting of its debtholders planned for Wednesday to continue pursuing strategic alternatives. Mobilicity’s bondholders were set to convene to consider plans to recapitalize the heavily indebted company after the federal government blocked an earlier bid by Telus Corp. to acquire it for $380-million. “We are working diligently to reach an acquisition agreement and thank our customers, dealers, employees and partners for their continued support as we see this process through to its completion,” president and chief operating officer Stewart Lyons said in a statement. The company has already postponed the meeting to recapitalize its more than $500-million debt twice, but Wednesday was the first time it publicly said it was in talks that could lead to an acquisition offer.
Related: Mobilicity bondholder looking to get in on action if Verizon comes to Canada — Financial Post
Oil-via-rail deliveries skyrocket
The debate has intensified, but the delivery method for oil – rail – hasn’t slowed, at least not yet. Oil deliveries by rail in the United States shot up 48% in the first half of the year compared to the same period last year, but it may be tough to repeat such blistering growth in the future, writes the Financial Post‘s Yadullah Hussain. U.S. oil producers shipped 1.37 million barrels per day of oil and related products via rail in the first half compared to 972,000 bpd during the first six months of 2012, according to the U.S. Energy Department’s statistical arm, the Energy Information Administration. Of these, 700,000 bpd was crude oil alone, the EIA estimates. Statistics Canada data shows an estimated 175,000 bpd of Canadian oil was transported through railroads in April alone. Combined U.S. and Canadian production of 11.26 million bpd, suggests just under 8% of North American oil production was transported by railroads during the first half. The trend of rail shipments of oil has come under intense scrutiny after a tragic accident involving oil-laden trains in Lac-Mégantic, Que., but beyond tougher safety regulations, analysts don’t expect companies to stay away from rail. “I don’t think it will lead to a slowdown in the willingness of producers to use crude-by-rail,” said Chris Cox, analyst at AltaCorp Capital. “The only real impact is the general debate over pipelines.”
Related: One accident not enough to condemn oil transport by rail – Financial Post
Bottom line at Lululemon
Reports on Lululemon Athletica Inc. these days are looking less like a yoga position than they are a yo-yo. Just days after an industry analyst endorsed the Vancouver-based company for getting back on track after a widespread March recall of its women’s athletic pants, another leveled stiff criticism on Wednesday suggesting the retailer is still battling the product quality woes that led to the recall in the first place, writes the Financial Post‘s Hollie Shaw. A recent analysis of some 600 product reviews on the retailer’s website suggests many consumers are still displeased with the quality of the garments, said retailing analyst Liz Dunn of New York-based Macquarie Research. “We believe the quality, post restocking, is still not up to brand standards, and the customer reviews online support our view,” Ms. Dunn said after compiling comments on the pants in the month of June, when Lululemon began bringing back the popular black Luon garments at the heart of the recall to its stores and online.
Related: Why now could be a good time to buy Lululemon – Financial Post
‘Tapering’ not imminent after all?
So maybe the markets overreacted just a wee bit after all. Even as consensus built within the Federal Reserve in June about the likely need to begin pulling back on economic stimulus measures soon, many officials wanted more reassurance the employment recovery was on solid ground before a policy retreat. Financial markets have largely converged on September as the probable start of a reduction in the pace of the U.S. central bank’s US$85-billion in monthly bond purchases, but minutes of the Fed’s June meeting released on Wednesday suggested that might not be a sure bet. “Several members judged that a reduction in asset purchases would likely soon be warranted,” the minutes said. But they added that “many members indicated that further improvement in the outlook for the labour market would be required before it would be appropriate to slow the pace of asset purchases.” Wall Street welcomed the Fed’s reticence about the end of asset buys, with stock prices briefly moving into positive territory after the minutes were released. U.S. Treasury bond prices also moved higher.
Related: Eurozone facing its own Japan-style ‘lost decade’ – Reuters
Hedge Funds: They’re toasted
The twitterverse has already lit up with all kinds of quips on how hedge funds might advertise, very few of them flattering. Yet advertise U.S.-based hedge funds will be allowed to do, thanks to a rule adopted Wednesday by U.S. federal regulators. The U.S. Securities and Exchange Commission voted 4-1 to lift a decades-old ban that prevents hedge funds, private equity firms and other private investment managers from marketing their products to a wide audience. Hedge funds are still allowed to sell securities only to an exclusive group of investors: those with a net worth of at least US$1 million excluding their primary residence, or annual income of more than US$200,000 in each of the two most recent years. About 7.4% of U.S. households have a net worth of US$1 million or more. The change, which takes effect in about 60 days, was mandated by legislation enacted last year. The ban on general advertising has been in effect since 1933, during the Great Depression.
Related: Hedge funds leveraged up to buy stocks, Fed survey shows – Financial Post
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