canadian parliament

2017 CANADIAN BUDGET PREVIEW: Liberals Move to Eliminate Harper-Era Boutique Tax Breaks

The Trudeau government has already started removing a series of relatively minor tax credits introduced by the Harper government, including fitness and arts credits for children. In last year’s budget, the Liberals instead introduced an all encompassing Canada Child Benefit plan, applied to all children rather than just those in specific programs.

Other so-called “boutique” tax breaks that could be on the chopping block include the public-transit tax credit, the tradesperson’s tool deduction and a tax credit for volunteer firefighters and search-and-rescue workers.

In next week’s budget, the Liberals may also consider broadening access to the RRSP Home Buyer’s Plan, expanding the program (which allows you to withdraw up to $25,000 from your RSP with no tax repercussions to buy a home. The funds must be paid back within 15 years) to help Canadians facing a job relocation, the death of a spouse, marital breakdown or who need to accommodate an elderly relative.

The feds may also provide details on its proposal to legalize recreational marijuana use. Any mention of marijuana will likely have a major impact on marijuana stocks, which have been extremely volatile since the government raised the possibility of legalization during the election campaign.

Finally, in a decision that is sure to interest the country’s junior mining sector, Ottawa will likely extend the 15% Mineral Exploration Tax Credit, scheduled to expire at the end of March. Last year, Ottawa estimated the credit would cost $20 million over two fiscal years.

MT Newswires will be providing extensive coverage of Budget 2017, with Ottawa correspondent Doug Watt providing stories from the lockup and filing those stories as soon as the budget embargo is lifted at around 4 pm ET on Mar. 22.

Washington, DC

2017 CANADIAN BUDGET PREVIEW: Trump Turmoil Unlikely to Affect Federal Budget

Since Donald Trump became U.S. president, there’s been a steady stream of Canadian politicians heading south to meet with the new president. However, that doesn’t mean the Trump influence will be felt in the upcoming federal budget, due Mar. 22.

Off the record, Canadian officials told MT that Trump’s campaign pledges on issues like border taxes and reducing corporate and personal income taxes may never come to pass, or could be years down the road.

That’s why Finance Minister Bill Morneau will likely not be influenced by Trump’s proposals, and proceed with the budget plan created before Trump was inaugurated.

“Our budget will be about Canada,” Morneau said recently. “It’ll be about Canadians, and I’m confident that we’ll help Canadians get the skills they need in a challenging economic environment.”

Morneau has already met with his U.S. counterpart, Treasury Secretary Steve Mnuchin, as well as senior White House economic advisers Gary Cohn, Kenneth Juster and Dina Powell, as well as Orrin Hatch, chair of the Senate Finance Committee.

Morneau has apparently concluded that Ottawa will likely have time to assess the situation because it’s still too early to know the fate of many U.S. proposals.

For example, Commerce Secretary Wilbur Ross said that NAFTA negotiations, which are likely to last about a year, probably won’t start before late 2017.

Still, sources say Ottawa plans to remain engaged with Washington to avoid surprises and will closely monitor any signals of change. Just don’t expect any direct influence from Washington in this year’s budget.

MT Newswires will be providing extensive coverage of Budget 2017, with Ottawa correspondent Doug Watt providing stories from the lockup and filing those stories as soon as the budget embargo is lifted at around 4 pm ET on Mar. 22.

NYSE

Stocks Head Lower in US as Health Care, Energy Sector Lag

12:44 PM, Mar 16, 2017 — The main US markets were declining on Thursday afternoon with health care leading the losses on the Standard & Poor’s 500 and energy weaker amid lower oil prices.

Stocks were unable to maintain the rally they posted a day earlier after the Federal Open Market Committee raised interest rates as expected, while signalling that members see a total of three hikes this year, unchanged from the outlook given in December.

Investors were looking at the Donald Trump budget proposals released on Thursday, which includes $5.8 billion in spending cuts to the National Institutes of Health. The health care sector on the S&P 500 fell 1.1% in the steepest decline among the 11 groups, while Merck (MRK) and Pfizer (PFE) retreated 0.7% each to be among two-thirds of the Dow Jones Industrial Average blue chips that weakened.

Energy lost 0.6% on the S&P 500 as West Texas Intermediate, the main US oil variety, fell 0.6% to $48.57 a barrel. Chevron (CVX) fell about 1% and Transocean (RIG) shed 2.6%.

In company news, Oracle (ORCL) advanced 7.5% after fiscal third quarter earnings beat estimates and the company guided fourth quarter earnings in line to above the Wall Street view. Nucor (NUE) gained 2.9% after the steelmaker said it expects first quarter earnings to improve sequentially to a range that is well above Street expectations.

The day’s economic data had the Job Openings and Labor Turnover surveys report showing openings rose 87,000 to 5.63 million in January after declining 92,000 to 5.54 million in December. Housing starts rebounded 3% to 1.288 million in February after sliding to 1.251 million in January. Single family starts rose 6.5%, though multifamily starts were down 3.7%. Permits declined 6.2%.

In afternoon trading, the Dow and the S&P 500 were both about 0.1% lower while the Nasdaq was little changed.

Globally, the Hang Seng jumped 2.1%, the FTSE 100 added 0.6%, the Nikkei 225 rose 0.1% and the Shanghai Composite advanced 0.8%.

US markets

Stocks Fall as Fed Meeting Starts With Oil Slide Hitting Energy Shares

12:57 PM, Mar 14, 2017 — US markets were in the red on Tuesday afternoon at the start of the two-day Federal Open Market Committee meeting, which is expected to end with an interest-rate increase, while a retreat in oil futures weighed on the energy sector.

The energy group shed 1.2% to lead losses on the Standard & Poor’s 500. West Texas Intermediate, the main US oil variety, dropped 1.8% to $47.52 a barrel and Brent, the international standard, shed 1.3% to $50.70. That’s after the Organization of Petroleum Exporting Countries reported a rise in global crude stocks and an increase in production from Saudi Arabia, according to Reuters.

On the Dow Jones Industrial Average, Chevron (CVX) fell 1.6% in the steepest loss amid the declines in its group. Wal-Mart Stores (WMT) rose 1.6% in the best gain among the blue chips, although fewer than a third of the components advanced.

The FOMC meeting will end with its rate decision announcement, economic projections and a press conference with Chair Janet Yellen. While the probability of a hike stands at 93% on the CME Group’s FedWatch tool, investors will be looking closely at the accompanying statements for indications on the pace of more hikes in 2017. In economic data, the producer price index rose 0.3% in February, higher than the expected 0.1% increase.

In company news, Ruby Tuesday (RT) jumped 17% after saying late Monday it will explore strategic alternatives in order to maximize shareholder value and position the business for long-term success.

Lifetime Brands (LCUT) gained 9.3% after shareholder Mill Road Capital made an offer to buy all the shares it doesn’t own for $20 per share, or a 5.8% premium to the closing price Monday. Valeant Pharmaceuticals (VRX) plunged 11% after hedge fund manager Bill Ackman reportedly sold his position in the company.

In afternoon trading, the Nasdaq and the S&P 500 were both down about 0.5%, while the Dow fell 0.3%.

Globally, the FTSE 100 slipped 0.1%, the Nikkei 225 was also down 0.1%, the Hang Seng was little changed and the Shanghai Composite rose 0.1%.

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Adidas Boosts Sales, Profit Targets Through 2020 After Record Financial Results

7:34 AM, Mar 8, 2017 — Athletic apparel retailer adidas (ADS.DE) has raised its sales and profit targets through 2020 after posting record results for the full year 2016 which were buoyed by strong performance in the brand’s Sport Performance unit.

Revenues increased 18% on a currency-neutral basis to 19.3 billion euros ($20.37 billion) while net income from continuing operations increased 41% to 1.02 billion euros, the company reported on Wednesday. Currency-neutral revenues for the company’s adidas brand increased 22%, supported by double-digit sales increases in the company’s Sport Performance unit as well as at the adidas Originals and adidas neo units.

At the Reebok brand, currency-neutral sales were up 6% versus the prior year, reflecting double-digit sales increases in Classics as well as mid-single-digit growth in the company’s training and running categories, according to the results.

Adidas said that it expects revenue adjusted for currency fluctuation to increase between 10% and 12% on average per year through 2020, rather than increasing it at a high-single-digit rate which was the previous goal. Kasper Rorsted, the chief executive who took over in October, sees net income from continuing operations growing between 20% and 22% on average per year through 2020. The previous target called for an increase by around 15% on average.

“Following an exceptionally successful 2016 financial year, adidas is significantly increasing its long-term guidance,” the company said. “The company intends to strongly accelerate sales and earnings growth until 2020 as part of its long-term strategic business plan.”

The company estimates that e-commerce revenues from its adidas.com and reebok.com websites will increase to 4 billion euros ($4.22 billion) by 2020 from 1 billion euros in 2016. The previous plan called for an increase to 2 billion euros by 2020.

Management seeks to reach the new targets by “harmonizing and simplifying business processes”, including reducing the number of articles offered and overhauling marketing activities, Adidas said. The company plans to step up investment into its US business, to strengthen its position in the world’s largest sportswear market.

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WPP

WPP Presents Cautious Outlook Despite Record Revenue, Profit in 2016

8:23 AM, Mar 3, 2017 — Advertising and public relations company WPP (WPP.L, WPP) has projected single-digit like-for-like growth in revenue and net sales this year against a backdrop of what it described as ‘tepid’ economic expansion despite posting its sixth consecutive year of record results for 2016 which were helped by an increase in billings.

The company, which employs more than 198,000 people in 113 countries, said that it generated 14.39 billion pounds ($17.60 billion) in revenue last year, 17.6% more than one year earlier, according to results published on Friday. Pre-tax profit rose by 26.7% to 1.89 billion pounds while profit after tax was 20.6% higher at 1.50 billion pounds over the same time frame. The company’s billings were 16% higher at 55.25 billion pounds and up by 3.3% on a like-for-like basis.

The highest proportion of WPP’s revenue came from North America, with 5.28 billion pounds, followed by the region encompassing Asia Pacific, Latin America, Africa and the Middle East and Central and Eastern Europe, with 4.30 billion pounds. West Continental Europe generated 2.94 billion pounds and the UK accounted for 1.87 billion pounds.

Referring to ‘tepid economic growth’, the company described competition within the industry as “fierce”, saying that there had been several examples of “major groups” being prepared to offer clients up-front discounts as an inducement to renew contracts and heavily reduced creative and media fees and cash or pricing guarantees for media purchasing commitments recently.

Going forward, the company said that its budgets for 2017 had been prepared “on a cautious basis” projecting like-for-like revenue and net sales growth of “around 2%” and a headline operating margin target improvement on net sales of 0.3 margin points, in constant currency.

“In 2017, our prime focus will remain on growing revenue and net sales faster than the industry average, driven by our leading position in horizontality, faster growing geographic markets and digital, premier parent company creative and effectiveness position, new business and strategically targeted acquisitions,” the company’s statement said.

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market data

European Stocks Mixed in Morning Trade as Oil Prices, Financials Advance

6:17 AM, Feb 27, 2017 — European equity markets were mixed on Monday morning as financials gained, oil prices rose and traders sought to digest fresh developments on several major mergers.

West Texas Intermediate crude oil, the main US oil benchmark, was 0.6% higher at $54.32 per barrel while Brent crude, the main international gauge, was up by 0.8% at $56.76 per barrel at the time of writing. The movements come despite government data showing last week that US inventories of crude oil rose for a seventh consecutive week in the prior week period.

In equities, Deutsche Boerse declined 5% and shares in the London Stock Exchange (LSE) fell 3.2% after the operator of the London bourse said it was “highly unlikely” it would be able to meet additional antitrust conditions set by European antitrust regulators. Its European rival, Euronext, fell 3.5%. The LSE last month said it agreed to sell the French arm of the clearing house LCH to Euronext in order to gain regulatory approval for the planned tie-up with the German exchange operator.

Intesa Sanpaolo, Italy’s biggest lender, gained more than 5% after it abandoned plans for a merger with insurer Generali, saying the combination would not create value for its shareholders, according to news reports. Generali fell 4.3%. UK homebuilder Persimmon fell 0.7% even after saying underlying profit before tax increased 23% in 2016 to 782.8 million pounds ($973 million.)

Associated British Foods, which owns the network of Primark fashion stores, fell 0.8% in London even after the company said in a trading update that in the half year ending on March 4 it expects “excellent progress” in adjusted operating profit and adjusted earnings per share for the group.

German sportswear maker Adidas gained 3.5% and Vonovia, Germany’s largest housing association, dropped 1% in Frankfurt. French lenders Credit Agricole and Sociate Generale advanced 1.4% and 1% in Paris, respectively.

The pan-European STOXX 600 index fell 0.2% and the euro-region blue-chip STOXX 50 index was flat. The DAX in Frankfurt rose 0.1% and the FTSE 100 in London increased 0.2%. The CAC 40 in Paris was little moved.

Oil Rigs

European Equity Gauges Head South Amid Mixed Earnings, Falling Oil Prices

5:00 AM, Feb 24, 2017 — European equity gauges were lower on Friday morning as financials and auto-makers edged south against a backdrop of mixed earnings reports and a slide in oil prices.

In economic news, Spain posted its highest annual rate of change in industrial prices in more than five years as surging energy prices pushed its index higher. The nation’s annual industrial price index rose by 4.6 points to 7.5 in January, according to the national statistics agency INE. The index reading was 1.9% higher when compared to the previous months.

In Germany, economic data was more rosy; a 0.5% increase was registered in price-adjusted new orders in the nation’s construction industry in December when compared to the previous month, according to German federal statistics office, Destatis.

Oil prices were edging lower in recent trade after data published on Thursday showed that US stockpiles of crude oil rose for a seventh consecutive week last week. West Texas Intermediate (WTI) crude oil, the main US oil benchmark, was 0.6% lower at $54.13 per barrel while Brent crude, the main international oil gauge, was 0.7% lower at $56.21 per barrel.

US inventories of oil rose by 0.6 million barrels to 518.7 million barrels in the week ended February 17, according to the Energy Information Administration’s (EIA) weekly oil report. This compared to a 9.5 million barrel weekly increase registered the previous week and an 884,000 barrel weekly contraction which had been projected by the American Petroleum Institute (API) on Wednesday.

In equities, Royal Bank of Scotland was among the biggest decliners on London’s FTSE 100 Index, down by 2.2% after posting a loss of 6.96 billion pounds ($8.73 billion) in 2016, compared to a loss of 1.98 billion pounds in the prior year. The bulk of the loss included litigation and conduct costs, worth 5.87 billion pounds, as well as restructuring costs. Software company Micro Focus International was 1.8% lower, Ashtead Group, an equipment rental company, was down by 1.8% and CRH, a manufacturer of construction materials, was 1.7% lower.

On Frankfurt’s DAX, media company ProSiebenSat1Media was 3.0% lower, followed by BASF, a chemical company, down by 2.2% and Commerzbank, 1.2% lower. Kidney dialysis company Fresenius and Fresenius Medical Care were 1.0% and 0.7% lower, respectively. And, on Paris’ CAC-40, Vivendi, which is engaged in media and content businesses, was 4.3% lower, Compagnie de Saint Gobain, a producer of materials and packaging, was down by 1.5% and car-maker Peugeot was also down by the same amount.

The pan-European Stoxx 600 Index was 0.14% lower, London’s FTSE 100 Index was down by 0.09%, Frankfurt’s DAX was 0.27% lower and Paris’ CAC-40 was down by 0.26% at the time of writing.

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BAE Systems

BAE Systems Profit Jumps in 2016, Further Growth Seen on Brighter Outlook for Defense Budgets

7:32 AM, Feb 23, 2017 — British defense company BAE Systems (BA.L) has projected that its underlying earnings will increase by up to 10% in 2017 amid improved outlooks for defense budgets in several markets after posting a gain in its operating profit last year which was buoyed by higher order intakes.

The company, which employs more than 80,000 people in 40 countries, generated sales of 19 billion pounds ($23.70 billion) in 2016, up from 17.90 billion pounds in the prior year, according to preliminary results published on Thursday. Underlying earnings per share were worth 40.3 pence, 7% higher than the adjusted underlying earnings per share of 37.8 pence in 2015 and in line with the company’s guidance. Underlying earnings before interest, tax, depreciation and amortization (EBITDA) rose to 1.91 billion pounds from 1.68 billion pounds in the previous year.

Operating profit as defined by the International Financial Reporting Standards (IFRS) measure increased to 1.74 billion pounds year-on-year, up 10% on a constant currency basis. The company’s order intake rose to 22.44 billion pounds from 14.92 billion pounds in the prior year while the order backlog advanced to 42 billion pounds from 36.8 billion pounds over the same time frame.

The group said that in the US there had been signs of a return to growth in defense budgets, with it saying that the new administration is “expected to further increase defense and security spending”. The group said that it is targeting growth of 5-to-10% in its underlying earnings per share this year and said that it has recommended a final dividend of 12.7 pence per share making a total of 21.3 pence per share for the year, an increase of 2% compared to 2015.

Ian King, chief executive of BAE Systems, said: “2016 was a good year for BAE Systems. Our strategy is well defined; we have a large order backlog, long-term program positions, strong program execution and a well-balanced portfolio. With an improved outlook for defense budgets in a number of our markets, we are well placed to continue to generate attractive returns for shareholders.”

More US, Canada, Russia Heavy Crude Finds a Home In China as OPEC Cuts Hit

4:05 AM, Feb 21, 2017 — Heavy crude shipments from the U.S., Canada and Russia to China have picked up for April delivery as OPEC cartel members dial back on supplies to meet requirements to trim sales under a coordinated oil pact with non-OPEC nations led by Russia, shipping sources said on Tuesday in Asia.

Another 1 million barrels of Mars heavy crude pumped offshore of the U.S. Gulf Coast is heading to China in April, shippers said, building on supplies that started making their way in January at about 600,000 barrels as small refiners in China favor the heavy grades for lower cost and resulting higher margins on export shipments.

As well, China has deals with Venezuela for heavy supplies that have been short recently as the country struggles to maintain production during an economic crisis and Saudi Arabia has reduced its offerings as part of the oil curb back to trim nearly 1.8 million barrels per day of crude overall from global markets.

Demand has grown for heavy grades in Asia, which has seen higher refinery output as planned maintenance at several key refineries in the region gets completed ahead of increased summer demand expectations. Russia, which is part of the production pact, has seen better prices for its heavy grades on the Saudi and Venezuela reductions, making shipments possible.