Financial Update For Jan. 15, 2010

• TSX -49.18 hurt by weakening oil prices and after the U.S. futures regulator said it would review possible position limits on gold and silver
• DOW +29.78 as Intel Corp., the world's biggest chip maker by volume, surpassed analyst estimates of 30cs a share. Earnings came in at 40c a share, a big improvement from 4c a share a year ago. Investors see the chip maker's earnings as a sign of business and consumer demand in the overall economy
• Dollar +.68c to 97.71cUS
• Oil -$.26 to $79.39US per barrel. as weak U.S. economic signals and high inventories spurred fears of a sluggish rebound in demand in the world's largest energy consumer. Also hurting prices was a proposal by the U.S. regulator to limit how many energy contracts hedge funds, investment banks and other speculators can control.
• Gold +$6.20 to $1,142.60USD per ounce

Ontario's battered economy picked up in 3rd quarter, 1st gain since recession
THE CANADIAN PRESS, 2010
TORONTO - Ontario's battered economy picked up in the third quarter of 2009, the first gain since it sputtered into recession.
The province's real gross domestic product increased 0.5 per cent from July to August, largely due to improvements in the auto sector, Ontario's Ministry of Finance reported Thursday.
That surpassed Canada's real GDP, which rose 0.1 per cent in the same period. The U.S. economy rose 0.6 per cent in the third quarter.
Ontario's growth follows four consecutive quarters of declines, including a drop of 1.0 per cent from April to June.
It's a good start, but Ontario isn't out of the woods yet, said TD economist Derek Burleton.
"Until many of the industries begin to make up a significant amount of the ground lost, it's hard to claim victory," he said.
Job numbers haven't turned around either, he noted.
According to Statistics Canada, Ontario lost an estimated 16,600 jobs in December. It gained 2,000 full-time jobs but lost 18,600 part-time positions. However, the unemployment rate was unchanged at 9.3 per cent.
The job numbers show that unemployment remains at a high level, said Alicia Johnston, a spokeswoman for Ontario Finance Minister Dwight Duncan, who was unavailable for comment.
"While this modest growth in Ontario's economy is encouraging news, our families and businesses are still feeling the effects of the global downturn," she said.
The ministry said Ontario's third-quarter growth reflected gains in all major spending areas, including consumer, business investment and government expenditures.
Consumer spending rose one per cent in the third quarter, as more people purchased vehicles, furniture and appliances, clothing and footwear and natural gas, it said.
Spending on motor vehicles and parts increased 5.7 per cent during the three-month period.
Auto production is still almost 50 per cent below levels posted at the beginning of 2007, the ministry said.
However, auto industry output grew 16.8 per cent in the third quarter, as several assembly lines resumed production following a big market downturn in the second half of 2008.
Business investment on plant and equipment rose 7.6 per cent. Exports also increased 4.2 per cent and imports rose 6.5 per cent following three consecutive quarters of declines.
Residential construction investment spending rose 0.6 per cent, following a 0.8 per cent gain in the second quarter. Spending on new housing construction slipped 11.2 per cent - the seventh consecutive quarterly decline - while renovation activity surged 5.8 per cent.
Obama: Tax banks to recover remaining cost of public’s big bailout; ‘We want our money back’
BY JIM KUHNHENN
WASHINGTON — U.S. President Barack Obama told banks Thursday they should pay a new tax to recoup the cost of bailing out foundering firms at the height of the financial crisis. “We want our money back,” he said.
In a brief appearance with advisers at the White House, Obama branded the latest round of bank bonuses as “obscene.” But he said his goal was to prevent such excesses in the future, not to punish banks for past behaviour.
The tax, which would require congressional approval, would last at least 10 years and generate about $90 billion US over the decade, according to administration estimates. “If these companies are in good enough shape to afford massive bonuses, they are surely in good enough shape to afford paying back every penny to taxpayers,” Obama said.
Advisers believe the administration can make an argument that banks should tap their bonus pools for the fee instead of passing the cost on to consumers.
The president’s tone was emphatic and populist, capitalizing on public antipathy toward Wall Street. With the sharp words, he also tried to deflect some of the growing skepticism aimed at his own economic policies as unemployment stubbornly hovers around 10 per cent.
The proposed 0.15 per cent tax on the liabilities of large financial institutions would apply only to those companies with assets of more than $50 billion — a group estimated at about 50. Administration officials estimate that 60 per cent of the revenue would come from the 10 biggest ones.
They would have to pay up even though many did not accept any taxpayer assistance and most that did have repaid the infusions.
Obama said big banks had acted irresponsibility, taken reckless risk for short-term profits and plunged into a crisis of their own making. He cast the struggle ahead as one between the finance industry and average people.
“We are already hearing a hue and cry from Wall Street, suggesting that this proposed fee is not only unwelcome but unfair, that by some twisted logic, it is more appropriate for the American people to bear the cost of the bailout rather than the industry that benefited from it, even though these executives are out there giving themselves huge bonuses,” Obama said.
He renewed his call for a regulatory overhaul of the industry and scolded bankers for opposing the tighter oversight in legislation moving through Congress.
“What I’d say to these executives is this: Instead of setting a phalanx of lobbyists to fight this proposal or employing an army of lawyers and accountants to help evade the fee, I’d suggest you might want to consider simply meeting your responsibility,” Obama said.
At issue is the net cost of the fund initiated by the Bush administration to help financial institutions get rid of soured assets. The $700 billion Troubled Asset Relief Program (TARP) has expanded to help auto companies and homeowners.
Insurer American International Group, the largest beneficiary at nearly $70 billion, would have to pay the tax. But General Motors Co. and Chrysler Group LLC, whose $66 billion in government loans are not expected to be repaid fully, would not.
Administration officials said financial institutions were both a significant cause of the crisis and chief beneficiaries of the rescue efforts, should bear the brunt of the cost.
Bankers did not hide their objections.
“Politics have overtaken the economics,” said Scott Talbott, the chief lobbyist for the Financial Services Roundtable, a group representing large Wall Street institutions. “This is a punitive tax on companies that repaid TARP in full or never took TARP.”
Even before details came out, Jamie Dimon, chief executive of JPMorgan Chase & Co., said: “Using tax policy to punish people is a bad idea.”
Obama is trying to accelerate terms that require the president to seek a way to recoup unrecovered money in 2013, five years after the law was enacted.
So far, the Treasury has given $247 billion to more than 700 banks. Of that, $162 billion has been repaid and banks have paid an additional $11 billion in interest and dividends.
In Congress, Democrats embraced Obama’s proposal while Republicans rejected it.
“I think it is entirely reasonable to say that the industry that, A, caused these problems more than any other and, B, benefited from the activity, should be contributing,” said Democratic Rep. Barney Frank of Massachusetts, chair of the House Financial Services Committee.
But Republican Rep. Scott Garrett of New Jersey, who’s on Frank’s committee, called it a “job-killing initiative that will further cripple the economy by increasing fees passed on to consumers and small businesses, while reducing consumer credit.”
The Associated Press