The arrest of Huawei CFO Meng Wanzhou in Vancouver is sparking fear of an international incident that could derail fragile progress in U.S.-China trade relations. News surfaced late yesterday that Meng was taken into custody on Saturday and faces extradition to the U.S. amid an investigation into possible violations of sanctions against Iran. Huawei said in a statement via Twitter it abides by “all applicable laws” and isn’t “aware of any wrongdoings” by its CFO. Safe to say this is one of the factors driving down global stocks and U.S. futures this morning.
Tons of angles to explore, including:
-Implications for China-U.S. tariff standstill
-Implications for Canada’s relations with China and the outlook for a trade deal (check out ex-Ambassador David Mulroney’s comment to the National Post about Canada needing to brace for China’s “sustained fury”)
-Huawei’s reputation at a time when the U.S. is already pressuring allies to boycott the telecom equipment maker
See China embassy statement here.
APHRIA VS SHORTS
If you haven’t already seen it, check out David George-Cosh's reporting at BNNBloomberg.ca, including fresh comments direct from Aphria CEO Vic Neufeld, who vows to soon provide a more detailed rebuttal to the short-sellers’ report that levelled his company’s stock this week. Notably, Neufeld admitted he won’t be surprised if other pot companies opportunistically circle Aphria. And after speaking with Quintessential Capital Management’s founder yesterday, today BNN Bloomberg's Amanda Lang will speak with SOL Global’s CEO, whose company is a major factor in the short thesis.
HYDRO ONE-AVISTA DEAL BLOCKED
The hyper-politicized Toronto-based utility's $6.7-billion takeover of Avista Corporation is in jeopardy after a Washington State regulator blocked the deal, with a nod to Ontario Premier Doug Ford. "Provincial government interference in Hydro One’s affairs, the risk of which has been shown by events to be significant, could result in direct or indirect harm to Avista if it were acquired by Hydro One, as proposed," the Utilities and Transportation Commission said in its ruling. Hydro One and Avista say they're "extremely disappointed" and will decide what to do after a detailed review of the decision.
WTI and Brent crude are both trading ~four per cent lower as OPEC meets in Vienna before a broader meeting of the so-called OPEC+ group. At issue is how deep they’ll cut production amid geopolitical tension (like U.S. President Donald Trump urging the cartel via tweet to “keep oil flowing as is, not restricted”). Saudi Energy Minister Khalid Al-Falih said this morning he doesn’t want to “shock the market”, and that a 1M bpd cut seems appropriate. Meanwhile, Bloomberg is reporting Russia’s energy minister is heading to St. Petersburg to consult with Vladimir Putin on what role his country should play in the cuts.
OTHER NOTABLE STORIES
-Dollarama's third-quarter revenue and adjusted profit narrowly missed estimates, and its gross margin deteriorated in the quarter. Not great for a company that's already been targeted by a short-seller. Dollarama's same-store sales inched up 3.1 per cent in Q3, with the company pointing to a decision to "strategically limit price increases".
-Canopy Growth is buying Germany-based vaporizer maker Storz & Bickel for 145-million euros
-Bombardier CEO Alain Bellemare said in a statement this morning he sees “tremendous opportunities beyond 2020”, while re-affirming financial forecasts for the next two years. With Class B shares down 59.6 per cent since early July, Bombardier will attempt to sell investors on its optimism at an event today in New York.
-Notable earnings: Dollarama, Lululemon, Canadian Western Bank
-Notable data: Canadian trade balance, U.S. trade balance, U.S. factory orders, U.S. durable goods orders
-7:00 a.m. ET: Montreal real estate board releases monthly sales
-8:50 a.m. ET: Bank of Canada Governor Stephen Poloz delivers speech in Toronto (remarks on bank's site at 8:35 a.m. ET, plus news conference)
-10:00 a.m. ET: Canadian Cyber Centre releases first Cyber Threat Assessment Report
-12:00 p.m. ET: Environment and Climate Change Minister Catherine McKenna addresses Empire Club in Toronto (plus media avail at 2:00 p.m. ET)
-1:00 p.m. ET: Alberta Premier Rachel Notley holds avail in Edmonton
-1:10 p.m. ET: Prime Minister Justin Trudeau makes announcement in Montreal alongside Navdeep Bains re. “jobs, AI and digital government” (plus avail)
-2:00 p.m. ET: Bombardier holds investor day in New York
-3:50 p.m. ET: Trudeau meets with Ontario Premier Doug Ford in Montreal
-OPEC meeting in Vienna (news conference scheduled for 7:00 a.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.