The escalating trade war of words with the United States takes centre stage on BNN today.
The U.S. Department of Commerce has made its preliminary decision on duties that will be slapped on Canadian softwood lumber exports, setting the level at a weighted average of 20 per cent. The ruling isn’t as harsh as pessimists had feared, Scotia says. “Although this determination should be a pleasant surprise for some who had espoused draconian scenarios of 30-50 per cent, it is pretty much in line with the 20 per cent duty we were assuming.”
Meanwhile, the U.S. President Donald Trump’s administration continues to criticize Canada on the trade front and disparage the North American Free Trade Agreement.
Commerce Secretary Wilbur Ross says the current dispute over U.S. ultra-filtered milk exports is a case of Canada "already retaliating" against the United States ahead of the lumber duties.
Kind of like the practice among soccer players of getting one’s retaliation in first.
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LUMBER COSTS
At 11:05 a.m. ET, we’ll hear from Jerry Howard, CEO of the U.S. National Association of Home Builders – which supports Canada on lumber. The trade group estimates that had a 15 per cent duty on softwood lumber from Canada applied in 2014, it would have increased a builder’s cost on a single-family home by US$647, cutting investment by US$500-million and costing 4,666 U.S. jobs.
At 2:15 p.m. ET, Raymond James analyst Daryl Swetlishoff will tell us why he’s upgrading lumber producer Canfor (CFP.TO) to a strong buy from outperform. He reckons that producers’ shares are set to rise now that uncertainty over the preliminary duty is gone. And he argues that the cost will largely be passed through to U.S. consumers in the form of higher prices.
CROSS-CANADA PERSONAL FINANCE UPDATE
CRUDE STRUGGLES
And with crude struggling to stay above US$49, we’re talking energy at 11:20 a.m. ET with Eric Nuttall, manager of the $174 million Sprott Energy Fund. The fund has dropped 30 per cent this year, underperforming TSX energy stocks as whole, which are down 11 per cent.
The fund soared 68 per cent last year, however, which was almost twice the return from the oil and gas benchmark.
CENOVUS-CONOCOPHILLIPS LATEST
And at 2:45 p.m. ET, BNN is planning to interview money manager Len Racioppo, who is asking the Ontario Securities Commission to force Cenovus Energy (CVE.TO) to get shareholder approval for its $17-billion-plus deal to buy Canadian assets from ConocoPhillips (COP.N).
“It is pretty outrageous that they would do a deal that would dilute shareholders by 47 per cent and not bring it to a vote,” Racioppo, managing director of Coerente Capital Management, told the Financial Post.
Cenovus stock has slid 16 per cent in the past month, while the energy index is flat, amid concerns that the deal was overpriced.
The company's CEO, Brian Ferguson, defended the transaction on BNN last week.
Every morning Commodities host Andrew Bell writes a ‘chase note’ to BNN's editorial staff listing the stories and events that will be in the spotlight that day. Have it delivered to your inbox before the trading day begins by heading to www.bnn.ca/subscribe.
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