06.05.2019

The Tea on Kenney vs. Horgan vs. Trudeau

Almost immediately after being elected Premier of Alberta, Jason Kenney is making good on his promises to challenge the federal Bill C-69, and to up the ante by “turning off the taps” to British Columbia.First, Kenney met with PM Trudeau in Ottawa on Thursday to publicly denounce Bill C-69 as a threat to “national unity”. Bill C-69 proposes federal changes to the environmental regulations assessment process for new energy projects.

In opposing C-69, Kenney cited unnecessary complexity in the new approvals process, and his desire for provinces to determine their own infrastructure project approvals. In addition, Kenney flipped on his campaign promise to challenge provincial and Federal caps on carbon output, seeming to agree with them as of his first week in office.

Kenney’s second move was directed West: declaring a law, first put in place by former Premier Rachel Notley but never enacted, that will allow Alberta to constrict oil supply to British Columbia.

This would deliberately spike gas prices in British Columbia, in turn putting pressure on BC NDP Premier John Horgan to rethink their anti- Trans Mountain Pipeline Expansion (TMX) stance. Horgan immediately responded by declaring the law unconstitutional, and promising to take Alberta to court over the matter.

Gas prices in Vancouver are far higher than across the rest of the country (sitting at $1.69/ litre last week), in part due to 35-cents-a-litre in provincial taxes placed on gas. The high prices are currently the subject of billboards being put up by the BC Liberals, pitting blame on Horgan.

Horgan’s response? Passing the blame back to the Feds, claiming it’s their responsibility to get refined oil into the existing, federally-owned trans-mountain pipeline.

Kenney’s first week in office sets the stage both for how he’ll handle ‘diplomacy’ in his new role- as well as for the ongoing battle between provincial and federal governments regarding pipelines. In the lead up to the Federal election, this is definitely one to watch.

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DOUBLE OOF.

Trump 2020?

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Trump 2020 Strategy: Play up tax cuts, hope voters forget about the whole kids-in-cages thing.

A recent report by Goldman Sachs has the American media buzzing about the possibility of a second term for Donald Trump.

In April, Goldman Sachs’s economics team released a report predicting that Trump is likely to win a second term, based on his incumbency and a strong U.S. economy. Unemployment is at an almost 50 year low, and economic growth, hovering around 2.5%, is looking strong.

Is the strong economy a result of Trump’s policies? Depends on who you ask, and what metrics they’re looking at.

According to Alan Blinder, a Princeton economist and former Federal Reserve Vice Chairman (that’s the U.S. version of the Bank of Canada), Trump deserves some credit, but most goes to Obama for setting up a pathway to economic recovery post 2008.

On the other hand, Trump’s signature economic policy, the Tax Cuts and Jobs Act has lowered the tax burden on the American middle class – boosting retail spending across the country. The corporate tax rate is also much lower, which bodes well for American big business.

Yet the Brookings Institute, a D.C.-based thinktank, notes that while the Tax Cuts and Jobs Act may temporarily lower the middle class tax burden, it will exacerbate income inequality (think the 1%) and add to the federal deficit.

If you’re from the camp that thinks ‘a rising tide lifts all boats’, then Trump’s economic policies probably seem A-OK to you. But if you lean left, you’re less likely to believe things like corporate tax cuts will do much to improve the quality of life in the U.S.

Basically, as a recent University of Michigan study recently showed, people’s perceptions of the economy are more partisan than ever.

Like Clinton campaign strategist James Carville once said, “it’s the economy, stupid”. But how people view and consume their economic news is changing – and it’s those viewpoints, rather than actual economic policy, that will shape what voters think about their country’s economic future on election day.


Profits tank and revenue soars for Loblaws in 2019

The Q1 financials are in for Loblaws –  and they’re… okay at best. Canada’s food and pharmacy leader, and parent company to Shoppers Drug Mart and Real Canadian superstore returned yet another quarter of “sluggish” sale figures and falling profit, but a reasonable increase in revenue.

Profit was reported at $198 million (53 cents per share) – definitely a notable drop compared to their profit of $377 million (98 cents per share) just one year ago and a reflection of slowing same-store sales the company has seen over the past year.

In a note, Irene Nattel, an analyst with RBC Dominion Securities Inc., said: “For the second quarter in a row Loblaw delivered solid and slightly better-than-expected financial results for Q1, but story today is once again likely going to be sluggish same-store-sales growth as shift in general merchandise strategy continued to weigh on reported sales,”

Although profit has taken a hit, there was also an uptick in revenue, which now sits at $10,659 million. This represents a 3.1% increase compared to the first quarter of 2018.

On the heels of these so-so financial results and in a bid to keep investors satisfied, Loblaws has also announced it will be raising its quarterly common share dividend by 6.8% or 31.5 cents per share, up from 29.5 cents per share.

“We are pleased with the quarter, our continued strong operational performance, and our strategic momentum,” said Galen G. Weston, Executive Chairman, Loblaw Companies Limited.

“We are gaining traction on our key priorities and accelerating investments to deliver long-term value to customers and shareholders.”

Some other highlights of note from the Loblaw Q1 financials include:

  • An increase of $75 million (or 19.9%) in operating income to $451 million, compared to the first quarter of 2018.

  • An increase of $297 million in retail segment sales up to $10,452 million, or 2.9%, compared to the first quarter of 2018.

  • A decrease of $14 million compared to Q1 2018 in net earnings available to common shareholders of the Company from continuing operations

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