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Noah Zivitz

Managing Editor, BNN Bloomberg

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“If logic prevails, even if a ban was to occur, we think it would be on 5G only and Canadian carriers would not have to rip and replace 3G/4G equipment.”

That’s what Jeff Fan, who covers Canada’s telecom companies at Scotiabank, wrote in a report to clients on Dec. 10, 2018. Based on that view, logic has not prevailed in Ottawa after Industry Minister François-Philippe Champagne announced the government’s intention to not only ban Huawei and ZTE from Canada’s 5G network, but also ordered the telecom industry to rip our (or terminate use of) those Chinese companies’ equipment from 4G networks by Dec. 31, 2027. We’re seeking reaction from Rogers, Telus, and BCE (which owns BNN Bloomberg through its Bell Media division) and chasing insight on the potential costs involved — which Champagne stated will not be reimbursed by the feds.

MARKET WATCH

Who knows how long this will last, but as of 6:30 a.m., there was a whole lot of green across the Bloomberg terminal’s WEI screen. It’s impossible to pin the action on any single reason, but let’s point out the People’s Bank of China slashed its five-year loan prime rate to 4.45 per cent from 4.6 per cent.

BANK EARNINGS AHEAD

By this time next week, we’ll have seen the fiscal-second quarter results from each of the Big Six banks, and so the influx of analyst primers continues. The latest is Joo Ho Kim at Credit Suisse, who initiated coverage this morning (with outperform recommendations on BMO, CIBC, National, and Royal) and said he estimates the group will deliver mid-single-digit core profit growth this fiscal year. Scott Chan at Canaccord put out his preview yesterday, which includes downward tweaks to his second-quarter profit estimates across the board. Lastly, Nigel D’Souza at Veritas yesterday upgraded Scotia and RBC to reduce from his previous sell recommendations.

G7 TACKLES INFLATION, RUSSIA

Lots of talk about the inflationary threat facing the world in comments from the meeting of G7 finance ministers and central bankers in Bonn, Germany (sidebar: Philip Cross has a humdinger of an opinion piece about the Bank of Canada’s stance on inflation in the Financial Post). Ukraine-Russia is the other hot topic. On that front, U.S. Treasury Secretary Janet Yellen said another wave of sanctions is being considered. Separately, Moscow is apparently about to shut off the flow of natural gas to Finland, according to a filing cited by Bloomberg News.

OTHER NOTABLE STORIES

  • NFI Group, which has been in the news more than it probably would have liked lately because of pain caused by supply chains, is back on our radar today after the Winnipeg-based bus maker announced after markets closed that it’s going to close a plant in Pembina, North Dakota, later this year as part of a new round of cost-saving measures.
  • Imperial Metals could be a stock to watch today after the Vancouver-based company announced it’s looking to raise up to $53.7 million in a rights offering for almost 17.7 million shares priced at $3.04 apiece. Imperial closed at $3.67 on the Toronto Stock Exchange yesterday.
  • Another U.S. retailer’s stock is getting pulverized this morning. Ross Stores has been down more than 25 per cent in pre-market trading. The discount department store operator’s sales and profit fell in the fiscal first quarter for all the reasons we’ve become familiar with this week. Ross Stores also slashed its full-year profit forecast and warned sales at stores open for at least a year will fall in the current quarter and full year.
  • Linamar is branching out into medical equipment. The Guelph, Ont.-based company best known for its auto parts business announced last night it’s launching a business division focused on medical device and precision medical component markets.

NOTABLE RELEASES/EVENTS

  • Notable earnings: Deere & Co.
  • 845: Deputy Prime Minister and Finance Minister Chrystia Freeland holds media teleconference from Munich, Germany after G7 meeting of finance ministers and central bankers
  • 1130: Prime Minister Justin Trudeau visits aluminum plant in Sept-Îles, Quebec