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The Chase

Marty Cej

Managing Editor

In a surprising reaction to a fellow economist's opinion on the Chinese currency, Morgan Stanley Asia chairman and economist Stephen Roach says he would like to "take out the baseball bat on Paul Krugman." Princeton University professor, Nobel Laureate and Jimmy Buffett fan Krugman argues that the U.S. should pressure China into letting the yuan appreciate, which has enraged Roach beyond all reason. Now, you never want to see anyone threaten violence, but at least in this case the threat comes from an economist. Krugman, for his part, responded by telling his dad, who sighed and muttered something about the consequences of "over-mothering your damn kids."

- Core Canadian consumer price inflation rose faster than expected last month, driving the loonie higher, but not quite to parity. In the absence of any U.S. data today, we may have to wait with bated breath until at least next week before popping the champagne. But what's the big deal anyway? Does a one-to-one ratio really matter? That's the question we have to be careful to answer in all of our coverage of the currency market. Parity with the U.S. dollar does not represent any sort of a significant resistance or support level in technical terms, nor does a swing from 99.98 U.S. cents to $1 mean much fundamentally to the Canadian economy or corporate bottom lines. What matters, then, is what a dollar at parity tells us about how the world's financial markets perceive our economic policies as well as the policies of the countries our currency trades against. The context in which our dollar trades at parity with the U.S. currency is what matters. The number is the hook, the context is the story.

- Canadian retail sales are just coming across the wire now too. Higher than expected. Fly, loonie, you lovely aquatic bird with the mournful cry, fly.

- Still with CPI, how much pressure is the Bank of Canada feeling right now? Inflation has accelerated faster than the bank forecast… does that mean rates will rise faster than the market forecasts? We'll get a view from the bond market with Joey Mack, director of fixed income at Scotiamcleod.

- I like the African Barrick story. Barrick raised almost a billion dollars by selling shares of its African unit to the public in London in one of the biggest British IPOs in a while. The stock was sold in the middle of the range and values the offshoot at almost $5 billion US. There are a few stories here, I think. First of all, the IPO itself… can we get the principles on the air today? Also, why not Toronto? Are two Barricks too many for Toronto?

- Teva agreed yesterday to buy Germany's Ratiopharm in a multi-billion-dollar deal. This morning, we'll speak to Bill Marth, North American President and CEO of Teva.

- I'm running very late. More from Noah on the way.

 

Every morning Managing Editor Marty Cej writes a "chase note" to BNN's editorial staff listing the stories and events that will be in the spotlight that day. Never miss an edition of The Chase...follow http://twitter.com/martycej

Morning Headlines

        

Core inflation heats up

Home renovators boost January retail sales

China tries to cool yuan dispute with U.S.

Tax officials find offshore bonanza: Globe

                                                                                                                                                                                                                                                                               

                                                                                                                                                                                                                                                                               

Two to watch