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Noah Zivitz

Managing Editor, BNN Bloomberg

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Royal Bank of Canada Economist Robert Hogue has gone where few dare to venture. In a report to clients, he said policymakers need to “put everything on the table” to cool runaway home prices, including “sacred cows like the principal residence exemption from capital gains tax.” That’s eliciting quite a response online and on our network (in the words of BNN Bloomberg Markets Commentator Andrew McCreath: “don’t you dare,” at least not without a long lead time). Hogue will join Greg Bonnell on The Close this afternoon to explain his rationale and whether there’s any chance a political party would stick its neck out like that.

 

CARBON TAX UPHELD

The Supreme Court of Canada has settled the debate, at least for now, ruling in a 6-3 judgment that the federal carbon-pricing program is constitutional. While it might not be the final chapter in this battle, it does have the potential to - as former Harper government advisor Sean Speer put it on BNN Bloomberg - "lower the temperature" on climate policy in this country. At stake was the hotly contested tax that's set to climb all the way to $170 per tonne in 2030, and which has stoked governmental outrage in Alberta, Saskatchewan and Ontario, in particular.

We'll focus on the implications for consumers, industry, investors and capital flows. As CIBC’s strategy team put it in a report to clients yesterday: "If the Federal Government is successful ... it could provide the roadmap for Canadian businesses and investors in adjusting to a transitioning economy. This would be a significant step in attracting and directing capital towards this challenge."

ONTARIO PLANS TO GROW ITS WAY OUT OF HISTORIC DEFICIT

That was the message from Finance Minister Peter Bethlenfalvy in tabling a budget that's largely about fighting the health and economic impacts of COVID-19. The deficit is expected to gradually fall from $38.5 billion in this fiscal year before the books eventually flip into surplus territory in 2029-30. Of particular interest in these parts: the government announced a second round of payments under the Ontario Small Business Support Grant program. The Conservatives also said they’re "continuing to review" the Capital Markets Modernization Taskforce's recommendations on overhauling the way Bay Street operates. However, the province is going ahead with a plan to expand the Ontario Securities Commission's mandate. We'll dig into all of this with the finance minister during The Open.

ASTRA UPDATES VACCINE EFFICACY

After a U.S. regulatory body raised concerns about the quality of data released by AstraZeneca on Monday, the company is out with updated analysis this morning showing its vaccine is 76 per cent effective against COVID-19, down three percentage points from the data reported at the start of the week. A senior Astra official said in a release that work continues on filing for emergency use authorization in the U.S.

OTHER NOTABLE STORIES

  • The Suez Canal remains blocked at this hour by the Ever Given container ship. Our Bloomberg partners have a great piece up on the special forces being called in to clear the backlog. “The struggle to dislodge the ship is now falling to SMIT Salvage BV, a legendary Dutch firm whose employees parachute themselves from one ship wreckage to the next, saving vessels often during violent storms,” Bloomberg reports.
  • BRP announced a $300-million investment this morning to develop electric models for all of its products by the end of 2026.
  • The parent company of Sobeys is sending a signal it wants to play nice with suppliers. Empire Company has unveiled a proposed “Grocery Supply Code of Practice for Canada” in tandem with Food, Health & Consumer Products of Canada. According to the release, it’s an attempt to “stabilize relations between retailers and suppliers by calling for fair and efficient handling of all negotiations and commercial agreements.” Empire has invited its rivals to join the code.

NOTABLE RELEASES/EVENTS

  • Notable data: U.S. initial jobless claims, U.S. GDP (Q4)
  • Notable earnings: BRP, Alcanna, Aimia, Pieridae Energy
  • 9:45 a.m. ET: Supreme Court of Canada delivers judgments in provinces' constitutional challenges of the federal carbon tax
  • 10 a.m.: Canada Mortgage and Housing Corporation releases quarterly Housing Market Assessment
  • 11:40 a.m.: Environment and Climate Change Minister Jonathan Wilkinson addresses Chamber of Commerce Executive Summit
  • 11:45 a.m.: Deputy Prime Minister and Finance Minister Chrystia Freeland makes virtual announcement alongside Intergovernmental Affairs Minister Dominic LeBlanc and Infrastructure Minister Catherine McKenna (plus avail)
  • 12 p.m.: CEOs of Facebook, Alphabet, and Twitter address U.S. House committee hearing on digital misinformation
  • 1:15 p.m.: U.S. President Joe Biden holds first formal news conference since taking office
  • 2 p.m.: Auditor General Karen Hogan releases reports on COVID-19 and the Investing in Canada Plan
  • 3:30 p.m.: Transport Minister Omar Alghabra addresses House Transport, Infrastructure and Communities Committee
  • Quebec government releases budget