Jun 20, 2022
The Daily Chase: Quebecor wants Freedom; Scotia puts feds in inflation hot seat
By Noah Zivitz
I expect to see some more downward revisions: J Zechner Associates’ founder
Managing Editor, BNN Bloomberg
Pierre-Karl Péladeau, the avowed Quebec separatist, has now positioned himself as the federal government's potential ticket to a legitimate fourth national wireless carrier. That's after Quebecor, Rogers, and Shaw announced late Friday night that a deal is in place for PKP's Quebecor to purchase Freedom Mobile for $2.85 billion. It’s a deal that Rogers hopes will allow it to alleviate all remaining regulatory concerns surrounding its $20-billion takeover of Shaw (which, reminder, is the current owner of Freedom). And that's the basic issue at the core of our coverage today: how will the Competition Bureau and Innovation, Science and Industry Minister François-Philippe Champagne respond to the Freedom sale? Both are being tight-lipped for now. However, we'll point out here that in a submission to the Competition Tribunal on Thursday, Competition Commissioner Matthew Boswell stated "the proposed divestiture of Freedom Mobile is not an effective remedy.”
U.S. markets are closed today, meaning the TSX will get all of our attention after last week’s miserable performance that saw the index tumble deep into correction territory. It’s a broadly mixed picture for commodity prices this morning: while crude oil futures are steady, iron ore prices have been down almost eight per cent amid persistent concern about the outlook for China’s economy. Those moves pale in comparison to what played out in the crypto market over the weekend, as Bitcoin tumbled as low as US$17,599.73 before climbing back above US$20,000. On a percentage basis, Ethereum was hit harder. FTX CEO Sam Bankman-Fried told NPR he thinks the industry has “a responsibility to seriously consider stepping in, even if it is at a loss to ourselves, to stem contagion.”
SCOTIA STIRS THE POT ON INFLATION
As far as Scotia Economics is concerned (at least based on my inference), the federal government is hanging out the Bank of Canada to dry in its fight against inflation. In a report published yesterday, Scotia Chief Economist Jean-François Perrault stated he thinks “a large part” of the reason for current runaway inflation is because of the “globally coordinated fiscal boost” that was orchestrated by governments to insulate their economies from the ravages of COVID-19. And so, he said the Bank of Canada is stuck not only dealing with the inflationary effects of Russia’s war against Ukraine and ongoing supply chain problems, but also “the lagged and ongoing impact of fiscal support measures.” Perrault added an awkward reminder (for Finance Minister Chrystia Freeland) that the renewed mandate she agreed to with the Bank of Canada included an acknowledgment that achieving the two per cent inflation target is a “joint responsibility” between the feds and the central bank. Can’t help but wonder how this might be addressed in Freeland’s meeting with U.S. Treasury Secretary Janet Yellen today.
Unvaccinated Canadians were allowed to travel by plane and train in this country as of a minute past midnight. We'll see what that does to the country's already-log jammed airports. And let's not forget that transport sector employers are no longer forced to impose vaccine mandates on staff as of today. With the nation’s attention already on airports, we’ll note here that security screening staff will be wearing street clothes on the job today to protest working conditions. And the chaos is by no means limited to Canada: thousands of flights were delayed arriving at, or departing from, U.S. airports over the weekend amid a busy weekend for travel.
OTHER NOTABLE STORIES
- Another energy-heavy realignment of the S&P/TSX Composite takes effect today, as Athabasca Oil, Precision Drilling, Spartan Delta, and Pason Systems start trading as members of the index this morning. Definity Financial is another notable addition. The full list of who's in and who's out can be found here.
- Suncor was upgraded to the equivalent of a buy this morning at RBC Capital Markets. Analyst Greg Pardy said he thinks the company has reached a “favourable inflection point.”
- Fairfax Financial is selling Pethealth (which it acquired in 2014) and Crum & Forster’s Pet Insurance Group to JAB Holding Company for $1.4 billion. In conjunction with the transaction, Fairfax announced it will invest $200 million in JAB’s new consumer investment fund.
- Seventy-two hour strike notice elapsed without a deal between Canadian National Railway and the union representing about 750 of its workers in this country. CN previously stated it had “an operational contingency plan … (to) ensure a normal level of continued safe operations as long as required” in the event of a walkout.
- Sundial Growers announced this morning that is has made a stalking horse bid to acquire certain assets held by Zenabis, which filed for protection under the Companies’ Creditors Arrangement Act last week.
- Notable data: Bloomberg Nanos Canadian confidence index
- U.S. Treasury Secretary Janet Yellen in Toronto (955 greeting ceremony with Chrystia Freeland at ROM, 1000 bilateral meeting, 1130 working lunch, 1300 armchair discussion hosted by Rotman, 1415 tour Evoco facility, 1530 media avail, 2000 working dinner)
- Four-day Collision conference begins in Toronto
- International Air Transport Association annual meeting in Doha