May 29, 2018
The Daily Chase: Feds prepare to buy Trans Mountain; one-on-one with Justin Trudeau
By Noah Zivitz
The federal government is reportedly preparing to nationalize the full Trans Mountain project, at least temporarily. Our Bloomberg partners are reporting it’s “increasingly likely” the feds will purchase the existing pipeline and the controversial $7.4-billion expansion, and hold onto it until an operator steps forward. The clock is ticking after Kinder Morgan stunned the nation last month by freezing work on the expansion and set a May 31 deadline for clarity on the path forward after facing political roadblocks in British Columbia. The Liberals were reportedly locked in intense negotiations with the company last night, and it’s expected Morneau could announce the news as early as today after an early-morning cabinet meeting in Ottawa.
Tons of angles we’ll be ready to explore if and when the bombshell materializes. Among them:
-How would the Liberals sell Canadians on the potentially temporary nationalization?
-How would this go over in British Columbia?
-Who might step forward as a long-term operator, and how soon?
-Would a new owner require a new process with the National Energy Board?
-What message does this send to the world?
-What message does this send to Kinder Morgan’s peers who’ve also been stymied? (Hello, TransCanada and Energy East)
IN CONVERSATION WITH THE PRIME MINISTER
Justin Trudeau is in Toronto this afternoon for a conversation with our Bloomberg partners. He’ll sit down with Stephanie Flanders, Bloomberg’s Senior Executive Editor for Economics, to discuss economic growth and gender equality. Watch for exclusive live access on BNN Bloomberg at 3:30 p.m. ET.
SCOTIA BEATS
Bank of Nova Scotia kept the Big Five momentum going this morning, with second-quarter profit narrowly topping expectations at $1.71 per share on an adjusted basis. Core Canadian banking net income rose five per cent to $1.02 billion, international banking jumped 14 per cent and capital markets was the lagging unit, with profit falling 14 per cent from the previous year. The average Canadian mortgage balance during the quarter was $203.8 billion, compared to $202.4 billion in Scotia’s first quarter.
SAXBERG OUT
Crescent Point Energy has a new chief executive officer. Craig Bryksa is taking over an interim basis after Scott Saxberg’s abrupt exit as a director and CEO. Not much of an explanation in the release, with the board saying in boilerplate language it “would like to express its gratitude to Mr. Saxberg.” Bryksa was most recently VP of Engineering West at the company. Crescent Point recently survived a clash with an activist. Its stock has tumbled 18.6 per cent over the last year.
BMO, SIMPLII DAMAGE CONTROL
No new news, per se, after CIBC’s Simplii and BMO warned clients they may have fallen victim to a data breach, but both banks’ twitter accounts look like damage control central. BMO, even in the wee hours of this morning, has been telling frustrated clients it has a “multilayered approach to security”. Simplii, meanwhile, has been attempting to defend its communication strategy. We’ll continue to discuss how the banks have handled the cyber scare and evaluate the risk of clients taking their accounts elsewhere.
OIL TAKES DOWN TSX & LOONIE
The 11-session winning streak feels like ancient history, with the TSX now on the brink of falling below 16,000 points after five straight losing sessions. Energy stocks have been pulling the index lower amid oil’s turn south of US$66 per barrel. And the Canadian dollar is into a sixth straight day of losses, last seen trading around 76.8 cents US.
IN CONVERSATION WITH EDWARD ROGERS
If you missed it live, check out Andrew Bell's conversation with Rogers Communications Chairman Edward Rogers on BNNBloomberg.ca. They go around the world of condo development and telecom, with Rogers weighing in on Joe Natale’s leadership style, the partnership with Comcast, age-old speculation about taking a run at Cogeco and Shaw, and why he’s bullish on content.
OTHER NOTABLE STORIES
-BNN Bloomberg has obtained the latest missive in the battle between Tim Hortons franchisees. The Great White North Franchisee Association sent a letter to the official franchisee advisory board yesterday, decrying its stance in the case of Mark Kuziora, who was recently thrust into the spotlight after his franchise license wasn’t renewed.
-Today’s the day Starbucks is shutting 8,000 stores across the U.S. for part of the day to conduct training sessions against racial bias. Starbucks will conduct similar sessions in Canada on June 11.
NOTABLE RELEASES/EVENTS
-Notable earnings: Bank of Nova Scotia
-Notable data: S&P Case-Shiller U.S. home price index, U.S. consumer confidence
-7:30 a.m. ET: Cabinet meeting in Ottawa
-8:30 a.m. ET: Pembina Pipeline holds investor day in Toronto
-9:00 a.m. ET: Husky Energy holds investor day in Toronto
-9:30 a.m. ET: Independent Senators Group holds news conference in Ottawa on clause-by-clause consideration of Bill C-45 (Cannabis Act)
-10:00 a.m. ET: Ministers scrum in House Foyer after cabinet meeting
-10:00 a.m. ET: Auditor General releases Spring reports
-1:00 p.m. ET: CMHC releases first-quarter financial report
-2:00 p.m. ET: Background briefing in Ottawa on G7 finance ministers and central bankers’ meeting in Whistler
-3:30 p.m. ET: Prime Minister Justin Trudeau in conversation with Bloomberg's Stephanie Flanders in Toronto
-5:30 p.m. ET: Trudeau delivers remarks at Canadian Transformational Infrastructure Summit and CanInfra Challenge in Toronto
-6:15 p.m. ET: Trudeau and Morneau meet with business leaders in Toronto
-Foreign Affairs Minister Chrystia Freeland begins two-day visit to Washington, D.C.
-Starbucks closing 8,000 U.S. stores for the afternoon to conduct "racial bias education"
Every morning BNN'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.
