These are stories Report on Business is following Tuesday, July 31, 2012.

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Toronto condo market losing ground

The stock of unsold condos in Toronto is growing as the market for new units loses some steam.

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Urbanation, which tracks the Toronto market, reported today that the number of unsold new units hit a record at the end of the second quarter, at more than 18,100 units or about 20 per cent.

At the same time, sales of new units sank to their lowest since about mid-2010, down more than 20 per cent from the first quarter and a whopping 50 per cent from a year earlier, although last year's numbers were particularly strong. And over the course of the first six months of the year, sales are at their second-highest level ever.

Notably, the so-called absorption rate declined to the lowest since late 2008, the depths of the financial crisis.

That's because investors are dropping out, said Derek Holt and Dov Zigler of Bank of Nova Scotia.

"The not-for-occupancy investor that has been driving 45 per cent to 60 per cent of Toronto condo sales in recent years disappeared as the monthly net cash flow to financing and paying condo fees and then renting it out remains negative while rental rates and prices flatten out," they said.

"This hard data confirms the anecdotes of pulled project openings and construction delays this year," the economists added in a research note.

"The macro implication of key relevance here is that this will put downward pressure upon housing starts over [the second half of the year] as builders respond to the inventory overhang and given the big role that multiples in cities like Toronto and Vancouver have played in driving the headline construction figures."

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Urbanation also noted the record 52,695 condo units under construction at the end of the last quarter, 88 per cent of them sold.

Draghi promises ... again

The European Central Bank is still making promises. It's just not doing anything yet.

The ECB held its benchmark rate steady at 0.75 per cent cent today, but what investors really wanted to hear was whether it would launch a program to buy Spanish and Italian bonds to help drive down their bond yields.

That followed ECB chief Mario Draghi's promises last week to do whatever is necessary to save the euro. But, apparently, whatever is necessary includes bringing Germany's Bundesbank on board.

Mr. Draghi had set the bar high, and set the stage for a fizzle in the markets if he failed to deliver.

The top central banker suggested the ECB could buy bonds in co-operation with European governments, but told reporters the Bundesbank has some reservations so the whole thing hasn't been worked out yet.

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"The governing council within its mandate to maintain price stability over medium term and in observance of its independence in determining monetary policy, will undertake outright open market operations of a size adequate to reach its objective," Mr. Draghi said.

But first, they have to talk about it, and then vote on it.

The failure to act sent European and North American stocks down, and the yields on some bonds of the stress governments up, which was no real surprise given the hype surrounding today's decision.

As my colleague Scott Barlow put it today: "Enter the Draghi."

Mr. Draghi appeared to suggest that a government would first have to ask for money from the euro zone's bailout funds, the EFSE and ESM, which would come with strings attached.

"He also conceded that the Bundesbank isn't really on board yet, and that all they have done is provide some 'guidance' to both governments (who control the EFSF/ESM) and the committees of the ECB that will take a look at possible further measures," said chief economist Avery Shenfeld of CIBC World Markets.

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"Only after that process is done will the ECB actually take a vote and have those votes counted. Our confidence that this will be ready by September is waning on these further details."

Mr. Draghi sought to soften the blow to the ECB's credibility by expressing his surprise over the market rally he sparked last week.

Here's how chief economist Carl Weinberg of High Frequency Economics put it: "'I'm really surprised at the amount of attention my remarks last week received in the press,' Draghi said. Translation: I cannot deliver the promises I implied in my London speech last week ... You must have misunderstood me."

There was always the risk that the "anticipated big bazooka" would disappoint investors, said senior analyst Michael Hewson of CMC Markets.

What today suggests, he added, is that the ECB wants to intervene but hasn't yet figured out how to do it and keep the Bundesbank happy at the same time.

Perhaps most important, what does all this say about attempts to ease the troubles that have plagued the 17-member euro zone for more than two years now?

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"To cut a long story short, today's press conference suggests we remain a long way from a credible solution to the long-running crisis," Mr. Hewson said.

All in all, central banks have let down investors this week.

Mr. Draghi's inaction followed similar nothingness from the U.S. central bank yesterday, when Ben Bernanke and his colleagues on the Fed's policy-setting panel, the Federal Open Market Committee, painted a bleaker picture of the U.S. economy but failed to announce any new measures to deal with it. It hinted strongly, though, that it will act in time.

"If the tone for August is going to be set by data and policy meetings in the second half of this week, 'quiet' is how it is going so far," said Kit Juckes, the chief of foreign exchange at Société Générale.

"The FOMC statement was dovish but barely changed, recognizing slow growth but not making any policy adjustments. The impression is of a central bank in Cape Cod until Labour Day."

The Bank of England was first out of the gate today, and it didn't do anything either.

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Kinross changes CEOs

There may be gold in them thar hills, but not necessarily in the markets.

Lagging share prices are dogging big gold mining companies, leading to changes at the helm.

Barrick Gold Corp., the world's largest, replaced its chief executive officer about two months. Kinross Gold Corp.. followed suit late yesterday, replacing CEO Tye Burt with its former vice-president of corporate development.

Kinross noted Mr. Burt's achievements, but said in a statement that it needed a change.

"While the board recognizes that these achievements have contributed to the transformation of Kinross, the board has determined that in view of current market and industry fundamentals, stakeholder interests will best be served by an executive management team focusing on the implementation and oversight of the comprehensive capital and project optimization process that was announced by the company on January 16, 2012," Canada's third-largest gold miner said.

"The objective of this process is to improve capital efficiency and investment returns while optimizing the company's major projects at Tasiast, Lobo Marte and Fruta Del Norte. The board has also determined that a change in CEO is required to guide Kinross through this capital and project optimization process."

As The Globe and Mail's Pav Jordan reports, shareholders and analysts want a focus on returns, rather than getting more gold out of the ground, and the stock price targets of analysts are at stubbornly low levels.

ING studies Canadian business

ING Groep NV is considering what to do with its ING Direct online operations in Canada and Britain.

The Dutch bank said today it is reviewing its options for the two businesses, and, while there could be no deal at the end of the day, it is "committed to conduct these processes with the utmost diligence in the interests of its stakeholders, including customers, employees and shareholders."

According to Streetwise columnist Tim Kiladze, Canada's big banks are interested and are already circling.

The Canadian operations, which ING described as "the leading direct bank in Canada," was launched in mid-1`997, and now has more than 1,100 employees and 1.8 million clients.

And one awfully annoying guy in its TV ads.

Knight looks to bolster capital

Knight Capital Group Inc. says it's "actively pursuing" ways to bolster its capital base as it disclosed a $440-million (U.S.) hit from yesterday's glitch on the New York Stock Exchange.

As its stock plunged today, it sought to reassure investors, saying its broker-dealer units are in "full compliance" with capital requirements.

Knight is the focus of a glitch that sent out erroneous orders on stocks, and the software has now been removed.

"Clients were not negatively affected by the erroneous orders, and the software issue was limited to the routing of certain listed stocks to NYSE," it said.

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