The Big Three: Alberta tables tough budget; CannTrust announces layoffs; Amazon tumbles
Alberta’s United Conservative government has mapped out its plan to balance the books in three years, based in part on hopes for brighter days in the energy sector. Spending cuts will chip away at this year’s $8.7-billion deficit before swinging to surplus in 2022-23, when royalty revenue from the oil patch is seen hitting $6.1 billion (compared to $4.7 billion this year). But there’s plenty of risk in that outlook. To wit: the government has mapped out a “no market access” scenario that would see Keystone XL, Enbridge’s Line 3, and the Trans Mountain expansion project scrapped, resulting in a $5-billion revenue hit. We’ll dig into the province’s fiscal plan with Finance Minister Travis Toews this morning on The Open.
MORE CANNTRUST LAYOFFS
The beleaguered cannabis producer is once again cutting headcount, with up to 140 temporary layoffs anticipated before the end of this year. CannTrust says the cuts are “prudent” due to the simple fact there’s less work to go around since its licences were suspended last month. And, on that front, the company also confirmed late yesterday that it has submitted a full remediation plan to Health Canada.
PRIME COSTS HIT AMAZON
Fast delivery doesn’t come cheap. Amazon.com’s global shipping costs soared 46 per cent year-over-year in the third quarter to US$9.6 billion, taking a bite out of profit as quarterly earnings fell short of estimates. “Customers love the transition of Prime from two days to one day,” said CEO Jeff Bezos in a release. “It’s a big investment, and it’s the right long-term decision for customers.” But for now, the big picture (including a disappointing revenue forecast) isn’t sitting well with investors as Amazon shares slip in pre-market trading.
WATCH THE LOONIE
The Canadian dollar has reached its highest level since July, peaking at 76.61 cents US yesterday. We’ll keep this in mind as anticipation builds for the Bank of Canada’s rate decision and monetary policy report next week.
OTHER NOTABLE STORIES
-Plenty of blame to go around in Indonesia’s report on last year’s fatal Lion Air crash: inadequate certification, design problems, pilot error all flagged as playing a role in the tragedy.
-The Province of Ontario is poised to ban promotion of vaping products in gas stations and convenience stores, according to our sister network CP24. A formal announcement is expected this morning.
-We’ll keep an eye on Shaw Communications after its adjusted fiscal fourth-quarter profit fell a bit short of estimates, while its 2020 free cash flow outlook is significantly ahead of the average estimate. The company also says its Freedom Mobile unit signed up a record 90,700 subscribers in Q4.
-TD Bank says it intends to launch a new buyback program for the cancellation of up to 30 million shares.
-Our Bloomberg partners are reporting SoftBank is planning to take a US$5-billion writedown on its Vision Fund as a result of struggles at two of its key holdings: Uber and WeWork.
-Notable earnings: Shaw Communications, Verizon
-Alberta Finance Minister Travis Toews addresses Calgary Chamber of Commerce (2:00 p.m. ET)
Every morning BNN Bloomberg's Managing Editor Noah Zivitz writes a ‘chase note’ to BNN Bloomberg'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.bnnbloomberg.ca/subscribe.