It’s an event, at this point, that’s trending toward being defined by questionable calls by ineffectual, even incompetent, officials. The background noise, at rare moments, accompanies a joyous fluidity. Most of the time, though, the unbreakable hum is an aggravating distraction, welcome simply as a quaint local soundtrack, from the arrhythmic melodrama playing out on these biggest of stages. The outcome is still in doubt; the potential for a familiar result is there, but we’re just as likely to see something, rare, again, if you will, but for the first time in a long time. Could be great, could be nauseating.

2010 FIFA World Cup South Africa has all that and more, including reprehensible meltdowns and violations of propriety by French players, coaches and referees. You could say many of the same things here in the days leading up to the June 26-27 G-20 Summit in Toronto, though President Nikolas Sarkozy has not yet distinguished himself, for ill or good, from his peers. In fact, he is among a group advocating a certain austerity that stands in stark contrast to the colorful though histrionic excesses his countrymen have perpetrated during the World Cup.

Canada isn’t participating in the quadrennial global soccer tournament. The Great White North is, however, the ground where jousting leaders from the world’s most prominent developed economies will stare each other down in a couple days.

The Group of 20 was established in 1999 in response to the Asian financial crisis of 1997-98. At first its annual meetings included only finance ministers and central bank governors from Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Republic of Korea, Russia, Saudi Arabia, South Africa, Turkey, the UK, the US and the EU.

The most recent meltdown, a global as opposed to a regional one, has ushered in a new era. The G-20 is now the primary vehicle through which global economic cooperation will be executed, if at all, replacing the Group of Seven/Eight. During meetings in 2008 and 2009 in Washington, DC, London, and Pittsburgh, which for the first time included the leaders of participating countries, the G-20 established a framework for coordinated monetary and fiscal stimulus measures.

According to the Canadian government’s official G-20 Toronto Summit website, “These interventions have been effective in mitigating the impact of the crisis, while encouraging a quicker transition to recovery than could otherwise have been expected.”

The Keynesians argue that more government spending in the short term will prevent further deterioration over the longer-term; maintaining stimulus will provide the growth necessary to reduce unemployment–more workers theoretically translate into higher tax receipts. In short, you gotta spend money to make money.

Letting things sort themselves out is to risk putting millions of more people onto unemployment rolls. It’s a political decision, of course, to extend assistance to those who can’t cover their own nut. But there are real consequences for not doing so, such as a deflationary spiral. Deflation, as many economists and strategists with no specific theoretical or political ax to grind conclude, is the primary short- to medium-term threat to the global economy.

The tragedy here is that governments, save Canada’s, shot all their bullets before the gun fight even started, rolling up huge public debt burdens in quest of dubious goals. The threat of a deflation-driven double-dip recession, still relatively remote, has risen in recent months, and the cries for “Austerity Now!” if heeded on a broad scale will boost the risk of such an outcome even more.

Meanwhile, proponents of austerity measures point to long-term budget imbalances and the atrocious condition of public balance sheets as the primary cause of the economic crisis.

But should the G-20 and the world’s major economies continue with their coordinated efforts? How “like” are the problems from country to country? Is the global economy now so intertwined and interdependent that a unified front is required?

Take the issue of financial regulatory reform. The issues Canada confronts, for example, are wildly different from problems with the US system. Primarily, Canada lacks a single federal regulator, a la the US Securities and Exchange Commission (SEC). Each province has its own body; a national effort would require significant concessions from provincial governments. The US, for its part, might simply rouse an agency that’s laid down for the better part of three decades.

Though we’ve seen competing messages from US President Barack Obama and German Chancellor Angela Merkel, and Canadian Prime Minister Stephen Harper has weighed in with a “split-the-difference” message, there is general agreement on broad principles. The devil is in the details, and public positions will be determined by domestic political demands as opposed to the wants of an exclusive extra-governmental entity.

In a letter to his G-20 peers dated June 16 President Barack Obama stressed the importance of maintaining the extraordinary stimulus measures the group collectively put in place during a series of meetings in 2008. Mr. Obama acknowledges that each government must take account of circumstances within its borders but that “it is critical that the timing and pace of consolidation in each economy suit the needs of the global economy.”

In her own message to G-20 leaders German Chancellor Angela Merkel advocated strict adherence to measures that will reduce public debt and bring government budgets back into balance. The German case is best summed up by Finance Minister Wolfgang Schaeuble, who asserted last week, “Nobody can seriously dispute that excessive public debts, not only in Europe, are one of the main causes of this crisis.” He added, “It’s urgently necessary for monetary stability that public budgets return to balance. This is something we should also tell our American friends.”

Mr. Obama’s emphasis on growth sets him on a collision course with Ms. Merkel, who prefers immediate austerity measures. Each approach is risky in its own way. More government spending could destabilize the bond market. But cuts to public spending, at a time when private demand remains sluggish, could seal the deal for a double-dip. Ms. Merkel said June 11 she expects to have a “hard time” at the summit and that she’ll respond that “there is no alternative” to cutting Germany’s fiscal deficit. Germany’s government proposed budget cuts of EUR80 billion through 2014, while Mr. Sarkozy recently raised the retirement age and increased taxes. The UK and Japan will roll out their own budget cuts in coming days. Mr. Obama, on the other hand, is pushing for a new USD55 billion jobs bill.

Mr. Harper, mirroring his country’s rather neutral–never too hot, never too cold–condition during the build-up to, during, and in the aftermath of the recent crisis, stressed the need to “stay the course” with stimulus plans but at the same time being mindful of the rising pressure on public finances. The Canadian Prime Minister, in his own letter to his G-20 peers, advocated setting a target of reducing their deficits by half by 2013 and to stabilize or begin reducing their ratios of debt-to-GDP by 2016. Mr. Harper’s stance seems to have more favor in Europe, where his outline could form the foundation of minimum standards.

The Roundup

We’re in the final days of the second quarter, which means another earnings reporting season is around the corner. There’s also exciting news in the offing, as Conservative Holding Atlantic Power Corp (TSX: ATP, OTC: ATLIF) has filed its first 10-Q with the US Securities and Exchange Commission, a necessary step ahead of completion of its listing on the New York Stock Exchange.

Atlantic Power Corp, about to boost its profile among institutional investors and its access to capital, is a buy up to USD12.

Aggressive Holdings

Chemtrade Logistics Income Fund (TSX: CHE-U, OTC: CGIFF) expects its Beaumont, Texas, plant, damaged during a May 15 fire, to be back online before the end of October. Chemtrade has made arrangements to supply existing customers with sulfuric acid and spent acid regeneration services during the plant’s downtime, and it expects to recover “substantially all of its costs and profits” associated with the fire.

Management expects no impact on the monthly distribution, currently a healthy USD0.10 per month. Chemtrade Logistics Income Fund, which will maintain its current structure and dividend past Jan. 1, 2011, is a buy up to USD12.

• Ag Growth International (TSX: AFN, OTC: AGGZF)–August 12
• ARC Energy Trust (TSX: AET-U, OTC: AETUF)–August 4 (confirmed)
• Chemtrade Logistics Income Fund (TSX: CHE-U, OTC: CGIFF)–July 28
• Daylight Energy (TSX: DAY, OTC: DAYYF)–August 5
• Enerplus Resources Fund (TSX: ERF-U, NYSE: ERF)–August 10
• Newalta Income Fund (TSX: NAL, OTC: NWLTF)–August 6
• Paramount Energy Trust (TSX: PMT-U, OTC: PMGYF)–August 6
• Penn West Energy Trust (TSX: PWT-U, NYSE: PWE)–August 12
• Peyto Energy Trust (TSX: PEY-U, OTC: PEYUF)–August 12
• Provident Energy Trust (TSX: PVE-U, NYSE: PVX)–August 13
• Trinidad Drilling (TSX: TDG, OTC: TDGCF)–May 6
• Vermilion Energy Trust (TSX: VET-U, OTC: VETMF)–August 6

Conservative Holdings

Artis REIT (TSX: AX-U, OTC: ARESF) is buying the Grande Prairie Power Centre in Alberta for CAD43.7 million and the DSI Building in Minnesota for USD17.9 million. The REIT has closed the CAD64 million purchase of Production Court in metro Vancouver, British Columbia. The REIT also confirmed, in the press release announcing the preceding developments, another CAD100 million of commercial real estate currently under conditional agreement.

Artis will finance the Grande Prairie purchase price with cash and from the proceeds of a new CAD26.3 million seven-year, 4.8 percent mortgage. The 139,942 square foot shopping center is 93.5 percent occupied.

The 115,667 square foot DSI Building is 100 percent occupied by tenants using the facility for offices, laboratories and “clean room” space; the facility is located in a section of town known as “medical alley.” Artis will finance the purchase with cash and a USD12.3 million three-year mortgage at a rate expected to be less than 4.5 percent. Artis will continue to focus on western Canada; the move into Minnesota is an effort to manage risk through geographic diversification, and existing management has experience working in the market.

Management also announced a bought-deal issuance of 6.375 million units at CAD11 per; after normal deductions from gross proceeds of CAD70.125 million Artis will use the cash to fund further acquisitions and for working capital. Artis REIT is a buy up to USD12.

Cineplex Galaxy Income Fund (TSX: CGX-U, OTC: CPXGF) is taking another step to separate itself from other movie theater operators as far as technology is concerned, rolling out what it describes as the “next evolution of the audio visual entertainment experience in Canada,” Cineplex UltraAVX. Cineplex UltraAVX, or “Ultra Audio Video Experience,” features bigger screens and digital surround sound systems incorporating the latest in Dolby digital sound technology. Movies will be displayed through Christie Solaria 2230 DLP Cinema projectors. Cineplex will sell seats–extra-wide, high-back rockers, in fact–on a reserved basis for showings in theater equipped with the new technology. It’s another way for Cineplex to maximize revenue per theater-goer, as it will allow for higher ticket prices.

Management also announced the CAD3.5 million acquisition of DDC Group International, which creates digital signs. Still finding more ways to generate more revenue and support its commitment to sustaining its trust-level monthly payout, Cineplex Galaxy Income Fund is a buy up to USD20.

IBI Income Fund (TSX: IBG-U, OTC: IBIBF), as detailed in Monday’s Flash Alert, will convert to a corporation “on or about Jan. 1, 2011.” Income fund holders will at that time swap their units for common shares of IBI Group Inc on a one-for-one basis.

The big question with every conversion is what will happen to the distribution. IBI plans to continue paying at the current rate until conversion and to remain “a relatively high distributor of cash earned” thereafter. Quoting from the press release announcing the move, “The Management Partnership is motivated by the achievement of this income based on performance, which will ensure that the interests of management are aligned with the interests of shareholders.”

As recent results have shown, IBI’s business is somewhat cyclical, despite management’s success in diversifying its client list, expertise and geographic reach. And the volatile Canadian dollar has also impacted profits, though the fund has moved aggressively to curtail it. But at its current price and with management affirming its big dividend focus will extend well past 2011, IBI Income Fund is a solid buy as long as it remains below my value-based target of USD17.

• AltaGas Income Trust (TSX: ALA-U, OTC: ATGFF)–July 29 (confirmed)
• Artis REIT (TSX: AX-U, OTC: ARESF)–August 12
• Atlantic Power Corp (TSX: ATP, OTC: ATLIF)–August 11
• Bell Aliant Regional Communications Income Fund (TSX: BA-U, OTC: BLIAF)–July 30
• Bird Construction Income Fund (TSX: BDT-U, OTC: BIRDF)–August 11
• Brookfield Renewable Power Fund (TSX: BRC-U, OTC: BRPFF)–July 28
• Canadian Apartment Properties REIT (TSX: CAR-U, OTC: CDPYF)–August 11
• Cineplex Galaxy Income Fund (TSX: CGX-U, OTC: CPXGF)–August 13
• CML Healthcare Income Fund (TSX: CLC-U, OTC: CMHIF)–August 12
• Colabor Group (TSX: GCL, OTC: COLFF)–July 14
• Davis + Henderson Income Fund (TSX: DHF-U, OTC: DHIFF)–July 28
• IBI Income Fund (TSX: IBG-U, OTC: IBIBF)–August 5
• Innergex Renewable Energy (TSX: INE, OTC: INGXF)–August 13
• Just Energy Income Fund (TSX: JE-U, OTC: JUSTF)–August 6
• Keyera Facilities Income Fund (TSX: KEY-U, OTC: KEYUF)–August 4 (confirmed)
• Macquarie Power & Infrastructure Income Fund (TSX: MPT-U, OTC: MCQPF)–August 5
• Northern Property REIT (TSX: NPR-U, OTC: NPRUF)–August 6
• Pembina Pipeline Income Fund (TSX: PIF-U, OTC: PMBIF)–July 29
• RioCan REIT (TSX: REI-U, OTC: RIOCF)–July 27
• TransForce (TSX: TFI, OTC: TFIFF)–July 29 (confirmed)
• Yellow Pages Income Fund (TSX: YLO-U, OTC: YLWPF)–August 6

Oil and Gas

Equal Energy (TSX: EQU, NYSE: EQU) has an agreement with a group of underwriters on a bought-deal offering of 5.2 million shares at CAD6.75 per, which will generate CAD35.1 million to fund the company’s capital spending plans. Equal Energy is a hold.

Suncor Energy (TSX: SU, NYSE: SU) has received approval for a new plan to manage so-called tailings created by oil sands production from the Energy Resources Conservation Board (ERCB). Suncor will invest more than CAD1 billion to implement the proposed “TRO” method, in development since 2003, at all its existing oil sands operations.

TRO mixes mature fine tailings–or MFT, the settled version of the mixture of fine clay, sands, water and residual bitumen left by the oil sands extraction process–with a polymer flocculent then spread over sand beaches with shallow slopes. It’s a reclaimed product suitable for use among native vegetation. Suncor has produced a video explaining the process, available at www.suncor.com/tailings. Suncor Energy is a hold.

Electric Power

Emera (TSX: EMA, NYSE: EMA) subsidiary Nova Scotia Power is raising CAD300 million worth of 30-year bonds. The bonds, which mature June 15, 2040, yield 5.616, 178 basis points above the relevant Canadian government benchmark. Emera is a buy up to USD24.

Energy Infrastructure

Enbridge Income Fund (TSX: ENF-U, OTC: EBGUF) has raised CAD100 million from an offering of seven-year bonds that were priced 199.3 basis points over the relevant benchmark. The bonds carry a 5 percent coupon. Enbridge Income Fund is a buy up to USD13.

Transports

Jazz Air Income Fund (TSX: JAZ-U, OTC: JAARF) may be saved from the potential deleterious impact of an Air Line Pilots Association strike, as the Canadian Labour Minister Lisa Raitt said last week that the government implement back-to-work legislation in the event the union walks out.

“Although no formal strike or lockout notice has been given, our government is taking action to prevent travelers from being stranded, so yesterday I gave notice of intent to (present) legislation in the House,” said Raitt. The House of Commons, on summer break, would have to be recalled for a vote on the legislation. Jazz Air Income Fund is a hold.