CANADA STOCKS-TSX slips on U.S. trade worries; Home Capital slumps

(New throughout, updates prices and market activity, adds
portfolio manager comment, details on White House draft order on

* TSX closes down 95.65 points, or 0.61 percent, at

* Five of the TSX’s 10 main groups end higher

* Home Capital falls nearly 65 percent to C$5.99

By Fergal Smith

TORONTO, April 26 Canada’s main stock index
pulled back on Wednesday from a 2-month high the day before,
pressured by a plunge in the shares of Home Capital Group Inc
and investor worries about Canada’s trade relationship
with the United States.

The White House is considering a draft executive order to
withdraw the United States from the North American Free Trade
Agreement, a trade pact with Canada and Mexico, a senior Trump
administration official said.

“I think they’re (investors) being a little cautious about
Mr Trump and maybe what he is going to do to Canada,” said John
Kinsey, portfolio manager at Caldwell Securities.

U.S. President Donald Trump has recently ramped up criticism
of Canada, saying last week that Ottawa’s protection of its
dairy industry was “unfair.” This week he ordered 20 percent
tariffs on imports of Canadian softwood lumber.

Home Capital plunged nearly 65.0 percent to C$5.99 after the
alternative lender said it would secure a C$2 billion (credit
line to shore up its shrinking balance sheet.

The overall financials group declined 1.3 percent even as
the Trump administration proposed slashing business taxes, which
could provide a boost to some Canadian banks that have
operations in the United States.

Toronto-Dominion Bank fell 1.5 percent to C$65.77.

Other influential decliners included Burger King and Tim
Horton parent Restaurant Brands International, which
fell 2.9 percent to C$77.02 despite reporting profit and revenue
that beat expectations.

The energy group retreated 1.1 percent even as oil prices
rebounded from early losses after U.S. government data showed a
larger-than-expected falloff in crude inventories.

U.S. crude oil prices settled 6 cents higher at $49.62 a

The Toronto Stock Exchange’s S&P/TSX composite index
closed down 95.65 points, or 0.61 percent, at
15,649.54. Five of its 10 main groups ended lower.

Shares of BCE Inc advanced 1.7 percent to C$62.70
after Canada’s largest telecommunications company reported a
better-than-expected quarterly profit, driven by an increase in
net postpaid subscribers.

Teck Resources Ltd advanced 0.5 percent to
C$28.97 after it said it will double its dividend payout.

Canadian retail sales fell more than expected in February,
dragged down by lower vehicle purchases and cheaper prices for
gasoline at the pump, but the decline did not alter expectations
for strong economic growth in the first quarter.
(Additional reporting by Alastair Sharp; Editing by Nick
Zieminski and David Gregorio)

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Canada falls in press freedom ranking

Canada’s press freedoms are under threat, according to the latest World Press Freedom Index released by Reporters Without Borders.

Canada dropped four spots to number 22 on the list that ranks 180 countries based on how they treat journalists.

A number of high-profile incidents of police action against journalists in Canada have raised concerns.

Press organisations have called on the government to shore up laws protecting free speech and media sources.

The UK was ranked 40, down five spots, and the United States 43, down two spots, on the same list.

Last fall, Canadian Journalists for Free Expression slammed the “massive culture problem in our policing and surveillance agencies” after it was revealed that Quebec police spied on 10 journalists. Their criticism came shortly after journalist Justin Brake was arrested for covering a protest in Newfoundland.

  • Journalists call on Canada to shore up press freedom
  • Montreal police hacked journalist’s phone

In March, the federal Court of Appeal ruled that Vice News journalist Ben Makuch had to turn over all his communication with accused terrorist Farah Shirdon, including texts, to Canadian police.

His lawyer argued the ruling will have a “chilling effect” on the media, by turning journalists into police sources.

“This has all happened in the last year, so it doesn’t surprise me that we went down” on the list, Mr Makuch told the BBC.

“We really need to start taking this more seriously.”

He believes that law enforcement has been “pressing their powers” in an age where the secret to solving many cases is getting access to digital information. At the same time, the RCMP has complained about current roadblocks to obtaining digital information, such as the widespread use of encryption.

Mr Makuch and other journalists have pushed for the government to pass a “shield law”, which would protect journalists from being forced to reveal their sources. A similar law exists in most states in the US.

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Diversity good for Canadian businesses, says new CIGI report

Diversity is good for the bottom line of Canadian companies, according to a new report from the Centre for International Governance Innovation in Waterloo, Ont.

For every 1 per cent increase in ethnocultural diversity, on average companies saw a 2.4 per cent bump in revenue and a 0.5 per cent increase in productivity, said Bessma Momani and Jillian Stirk, the authors of Diversity Dividend: Canada’s Global Advantage, published on Monday.

“We really wanted to sort of go beyond the normative argument, and there is a lot of positive rhetoric about that it’s a good thing for society, which we agree with 100 per cent, but we wanted to see if there was a business case,” said Momani in an interview with CBC Kitchener-Waterloo’s The Morning Edition host Craig Norris on Tuesday. 

They found the strongest relationship between diversity and performance in cultural industries, communications, business and legal services. 

‘The report doesn’t try to sugarcoat this, there is a lot of work to be done. There’s a great deal of discrimination in this country.’
Bessma Momani, co-author of Diversity Dividend


The pair spoke to about 100 business leaders across the country,in a series of roundtables in seven different cities.

They did statistical data modelling based on the workplace employee survey by Statistics Canada, which covers more than 7,900 workplaces in 14 sectors, from 1991 to 2005.

“Simply, you just get a conversation going amongst people who are different. You don’t think the same, you have very different views on things, we know that sometimes it means access to markets abroad. If you have somebody in your company who is fluent in Mandarin, you’re more likely to go out and seek Chinese markets,” said Momani, when asked why she thought increased diversity led to revenue increases.

“We know that if you have an ethnoculturally diverse workforce, that maybe marketing to a certain ethnic group at this certain time of year because it’s a celebratory time for this community, could be a huge bump in revenue,” she said.

Discrimination still exists

“We started this project about two years ago and there’s been a great deal written about diversity and its benefits,” Momani added.

“But that all said, and I think it’s important, because the report doesn’t try to sugarcoat this: there is a lot of work to be done. There’s a great deal of discrimination in this country, people who are a visible minority, certain ethnic sounding names, I mean there’s a lot of discrimination going on in hiring practices, and we recommend a lot of things that could remove that.”

Among the recommendations for fixing hiring practices, the pair suggest using blind recruitment, getting rid of referral programs and using technology to find the best candidates for a position.

They also suggest eliminating the need for Canadian experience, which makes it easier for highly-skilled immigrants to get into the workforce.

Canada making business for American dairy farmers ‘very difficult’: Trump

[India], April 26 (ANI): U.S. President Donald Trump on Tuesday accused Canada of making business for American dairy farmers in Wisconsin and other border states very difficult.

“Canada has made business for our dairy farmers in Wisconsin and other border states very difficult. We will not stand for this. Watch!” Trump tweeted.

Trump’s tweet comes a day after his administration said that it would impose a roughly 20 percent tariff on softwood lumber imported from the country.

Trump had last week in Wisconsin, promised to stand up for the state’s dairy farmers, and singled out Canada for doing “some very unfair things.” (ANI)

Canada’s options limited as it faces prospect of U.S. trade war

By David Ljunggren and Rod Nickel

OTTAWA/WINNIPEG (Reuters) – From cherries to wine and oil, Canada has a range of tools to retaliate against any Trump administration trade attacks but they are either too limited or too painful to invoke.

Ottawa is keen to avoid a costly trade war with the United States as NAFTA renegotiations loom, given the U.S. economy is ten times larger than Canada’s.

Cutting off energy exports is an option so fraught with risks – Canada is the largest supplier of energy to the United States – that Ottawa has never discussed it seriously. Meanwhile, hitting back on U.S. imports of goods like cherries and office chairs may have too little impact, leaving Canada with limited leverage.

U.S. President Donald Trump’s administration has suddenly ramped up its attacks on Canada, imposing tariffs on softwood lumber and vowing to take action against what it calls unfair practices by Canadian dairy farmers.

Trump last week also said Canadian energy was another example of a bad trade deal for the United States, but gave no specifics or evidence.

Canadian officials played down the tariffs as disappointing, just one part of an otherwise successful trade relationship, even though Canadian government ministers have fanned across the United States selling the virtues of bilateral trade.

“There are no victors in a trade war,” Scott Brison, a senior Canadian cabinet member, said by phone from Detroit.

A senior Canadian political source said Ottawa would not for now be changing its approach despite Trump’s harsher tone.

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British Columbia opposition widens lead on ruling Liberals

Most of the change came from the Lower Mainland region around Vancouver, the province’s biggest city, where the left-leaning NDP has been campaigning heavily, said David Valentin, executive vice president at Ottawa-based Mainstreet.

“I think we may see further shifts as a result of the softwood lumber decision,” Valentin said referring to the United States’ decision on Monday to impose tariffs on lumber from Canada.

British Columbia is Canada’s largest provincial producer and exporter of softwood lumber, accounting for 50 percent of Canada’s exports to the United States.

“Voters may start asking themselves who would be the better negotiator with Donald Trump and it is sure to feature heavily in tomorrow’s debate,” Valentin said.

Party leaders face off in a second debate on Wednesday evening.

They were quick to present themselves as best placed to protect forestry sector jobs.

Premier and Liberal Party leader Christy Clark said that since 2011 under her government the province has added nearly 10,000 forestry jobs, which she said was more than any other Canadian province.

B.C. NDP leader John Horgan accused Clark of having failed to make getting a lumber deal a priority and said he would travel to Washington within 30 days if elected premier to make sure the province is properly represented in the dispute.

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Softwood lumber dispute fires up trade fight between Canada, U.S.

By David Ljunggren

OTTAWA (Reuters) – The United States and Canada faced off on Tuesday in a renewed battle over softwood lumber that threatened to spill over into multiple other sectors, though President Donald Trump said he did not fear a trade war.

Canada vowed to resist Washington’s move on Monday to impose tariffs on lumber that mostly feeds U.S. homebuilding, noting trade authorities have consistently sided with Ottawa in the long-standing dispute.

Prime Minister Justin Trudeau called Trump on Tuesday to reject “the baseless allegations” against Canada’s industry and the “unfair decision” to impose tariffs, said a statement from Trudeau’s office.

“The Prime Minister stressed the government of Canada will vigorously defend the interests of the Canadian softwood lumber industry,” said the statement, which nevertheless added both men agreed that a negotiated settlement was important.

A White House statement said the two leaders had a “very amicable call” about lumber imports and the U.S.-Canada dairy trade.

The heated rhetoric came amid fresh attacks from the U.S. president against Canada’s dairy industry, and just two months after the two leaders held a warm meeting where Trump said the bilateral trade relationship only needed “tweaking.”

“People don’t realize Canada’s been very rough on the United States … They’ve outsmarted our politicians for years,” Trump said during a meeting with agricultural leaders.

“We don’t want to be taken advantage of by other countries, and that’s stopping and that’s stopping fast,” he added.

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Has the US started a lumber trade war with Canada?

The United States is slapping hefty new tariffs on the import of Canadian softwood lumber.

The US Commerce Department says that Canada is improperly subsidising its exports of the forestry product.

This is just the latest volley in the long-running lumber trade dispute between the two countries.

It also comes during a sensitive time in US-Canada trade relations, with North American Free Trade Agreement (Nafta) talks on the horizon.

US President Donald Trump has been sending Canada mixed messages on trade, initially offering assurances that Nafta will only need “tweaks” but recently singling out Canada’s softwood lumber and dairy industries for criticism.

As US Commerce Secretary Wilbur Ross said in a statement: “It has been a bad week for US-Canada trade relations.”

Canada is “generally a good neighbour but that doesn’t mean they don’t have to play by the rules,” he later said.

Canadian Prime Minister Justin Trudeau says his job is to stick up for Canada’s interests.

Here are five things to know about the Canada-US softwood lumber spat.

What are the most recent developments?

The US has claimed for decades that Canada is unfairly subsidising its lumber industry by charging minimal fees to log public lands.

On Monday, the US Commerce Department imposed an overall 20% tariff on Canadian softwood lumber.

In this “preliminary determination”, five exporters each face specific countervailing duties, which are meant to level the playing field between domestic producers and government-subsidised foreign producers of a product, ranging from 3.2% to 24.12%.

The US Commerce Department valued softwood lumber imports from Canada at US$5.6bn (C$7.6bn/£4.3bn) in 2016.

  • Trump’s trade agenda: Just what are his priorities?

The duties will amount to about US$1bn, according to Secretary Ross.

This comes after no breakthrough was reached in recent talks in the decades-long dispute.

A safe fight to pick – John Mervin, BBC Business, New York

President Trump is finding it difficult to turn campaign rhetoric into government action in in many arenas, but particularly so in overseas trade.

He won the presidency, in part, with a strong and simple message of “winning” trade deals and being “tough” with the US’s biggest trading partners. In the real world, that turns out to be a risky approach.

The president has notably declined to follow up on any of his harsh rhetoric about China, for example. Nevertheless he needs some way of showing how he can be tough. A dust up with Canada about lumber is probably a safe fight to pick. The lumber business is worth a fraction of the overall trade with Canada and set against so much shared history and thousands of miles of border, it’s hardly likely to undermine US-Canadian relations on its own.

However it doesn’t auger well for a smooth renegotiation of the North America Free Trade Agreement if that’s really what President Trump wants.

What is the response?

Mr Trudeau spoke on Tuesday evening with Mr Trump and said afterwards that Canada would “vigorously defend” its softwood lumber industry.

Natural Resources Minister Jim Carr and Foreign Affairs Minister Chrystia Freeland said in a joint statement that Canada “disagrees strongly” with what they called “an unfair and punitive duty”.

Mr Trudeau said on Tuesday that “you cannot thicken this border without hurting people on both sides of it”.

Susan Yurkovich, president of the British Columbia Lumber Trade Council, said in a statement that “these duties are unwarranted, and this determination is completely without merit”.

  • Trump promises ‘aggressive’ action on trade to protect US

The province is the the largest Canadian exporter of softwood lumber to the US.

But the decision was cheered by the US Lumber Coalition, an alliance of American lumber producers formed in 1985 to fight what it calls the “devastating effect of Canada’s lumber subsidies” on their industry.

Meanwhile, the US National Association of Home Builders denounced the decision as “short-sighted” and warned it would increase the cost of housing in the US. Secretary Ross said it will only have a small impact.

Softwood lumber products, like pine, fir and spruce, are mainly used in the construction of single family houses.

What is the backstory?

Minister Jim Carr quipped on Tuesday that lumber disputes have been “the most significant trade irritant between the US and Canada since Confederation” 150 years ago.

This specific dispute, however, dates back over 30 years to the early 1980s, when a group of US lumber producers first called for countervailing duties on Canadian softwood.

As a result of a series of disputes in the intervening years, the first US-Canada Softwood Lumber Agreement – a five year deal – was signed in 1996.

  • Trump’s weapon in trade war

Soon after that deal expired, the US lumber industry petitioned Washington to impose duties on softwood lumber imports.

In 2002, the US imposed those tariffs.

In 2006, Canada and the US reached a second Softwood Lumber Agreement for a seven-year term, under which the US scrapped the duties and Canada imposed taxes and quantitative restriction on lumber exports

That was extended until 2015, and the US government and industry agreed to not undertake any new countervailing or antidumping duty investigations for a year – that deal expired last October.

In November, the US lumber industry filed antidumping and countervailing duty cases under American trade laws, launching the fifth round in the lumber row.

What is the impact?

Both countries will feel a shock, with the US comprising almost 70% of Canada’s softwood market.

There are about 600 mills across Canada producing softwood lumber and over 170 communities get 20% or more of direct income from that industry.

Minister Carr noted there were lost job and closed mills the last time the US imposed tariffs, and Ottawa is preparing for “tough times”.

In the US, the renovation and construction industries are expected to feel the impact.

One-third of lumber used in the US last year was imported and the bulk – over 95% according to the US National Association of Home Builders – was Canadian.

The group estimates the recent 22% jump in the cost of softwood lumber in the US, caused by recent uncertainty around the product, has added almost US$3,600 to the price of a new home.

What’s next?

Canada says it is interested in a “good faith resolution” in this dispute but will defend its interests including through litigation, though that was not immediately on the table.

Minister Carr noted Canada has prevailed in previous rounds of litigation “and we will do so again” but also said he believes that the trade relationship is so consequential for both countries that “we will work through this”.

Canada is also seeking to open new markets abroad, including in China.

In the US, a preliminary antidumping ruling is scheduled for 23 June, looking at whether Canadian lumber has been dumped in the US market. Dumping occurs when a company exports its product at a lower price than it charges domestically.

The US Department of Commerce is also expected to announce its final duty rates by late 2017.

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Is Canada really a true democracy?

Prime minister designate Justin Trudeau attends his first official news conference in Ottawa, Ontario, Tuesday Oct. 20, 2015. With Trudeau’s decisive victory on Monday, Canadian voters reclaimed their country’s liberal identity, giving the new prime minister a commanding majority in parliament that will allow him to govern without relying on other parties. (Adrian Wyld/The Canadian Press via AP) MANDATORY CREDIT

From a Canadian perspective, the most striking thing about the supposed anti-democratic political reforms approved by Turkish voters last week was their familiarity.

The majority of powers the Turkish president gained — the freedom to appoint cabinet ministers and senior judges without parliamentary approval, the power to unilaterally dismiss parliament, the power to decree certain sorts of laws without parliament at all — are all powers the Canadian prime minister already has. Yet no one would claim Canada is less than a full democracy, and it’s worth pondering why.

We can certainly question the Turkish government’s intentions. President Erdogan has clear authoritarian tendencies and exists in a country with an authoritarian political culture. Turkey experienced multiple military coups throughout the last century — including an attempted one last July — and governments have routinely used state power and violence to trample the liberties of their critics.

Yet the Erdogan administration’s official justification for last week’s amendments (and presumably the motive of the 51% of Turks who voted for it), that is, the need to make government more efficient and effective, is a common justification for the more authoritarian aspects of the Canadian political system as well. Any Canadian loudly worrying about the replacement of Turkish democracy “with what amounts to a dictatorship” — in the words of the Globe and Mail editorial board — should take a moment to consider how Canada’s political system would look if a third world tinpot proposed adopting it.

Canadian prime ministers come to power by winning control of the lower house of parliament, an achievement which almost never requires winning a majority of the popular vote. PMs then appoint members of the upper house directly, which means it can be taken for granted that any legislation they propose will quickly sail into law. The ruling party is run as a rigid hierarchy, and the notion of a “free vote” in parliament, where MPs can vote their conscience rather than the prime minister’s, are rare enough to require a distinctive term. Virtually every figure of importance in Ottawa, from cabinet members to judges to senior bureaucrats to committee chairs to military leaders to the head of the state broadcaster, are appointed by the prime minister with no oversight or veto by anyone.

Analysis of Canadian prime ministers revolves mostly around their competence in implementing an agenda, given there’s little question the office has all the power it needs. Right-wing critics of former Tory prime minister Stephen Harper, for instance, almost exclusively criticize the last four years of his administration — in which he held a solid majority of seats in Parliament — for its lack of ambition, and such criticisms stick because unlike, say, an American president, there are no formal political checks to blame. Harper faced no legislative chamber controlled by the opposition party, nor a rebellious Freedom Caucus within his own. The Canadian Supreme Court did repeatedly overturn a number of his legislative initiatives, but by the end of his term Harper had appointed seven of the court’s nine justices, so whose fault was that?

The realities of the Canadian system are controversial, but not universally so. Many Canadians occupying elite positions in the media or politics actually spend a fair deal of time defending the status quo or arguing for things to get even more regressive. Prime Minister Trudeau, for instance, has been a longtime defender of an appointed Senate, and Michael Chong, a would-be leader of the Conservatives, successfully pushed for a new law allowing elected prime ministers to be deposed and replaced mid-term by their parliamentary caucus, similar to what is done in Australia.

The justification is always efficiency. America, with its feuds between the White House and Congress, and contentious Supreme Court nomination hearings, is often explicitly cited as an example to avoid, a system in which “nothing gets done” because there are too many competing poles of democratic authority. The central premise of the Canadian system, in which a prime minister is elected once every four years and given more or less free reign to do as he wishes, is considered basically correct, with talk of reform occurring mostly at the margins (ie: who should prepare the list of Senate nominees for the prime minister to consider?).

It would be nice if Canadians — and progressive Canada-admirers abroad — could ditch the disingenuousness when judging the constitutional shenanigans of leaders like Erdogan, Putin, or Maduro. What’s feared is not a political system, but the particular ideologue running it. What’s feared is chauvinistic strongmen, not strongmen per se.

To a certain faction, after all, subjecting a leader like Justin Trudeau to the restraints of the American Constitution — making his dreams of legalized marijuana, a perfectly gender-balanced cabinet, or a generous intake of Syrian refugees that much harder to implement — would be seen as no less a global tragedy than anything going on in Turkey.

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Kinder Morgan Canada files for IPO to raise Trans Mountain funds

By Nia Williams

CALGARY, Alberta (Reuters) – U.S. pipeline company Kinder Morgan Inc (KMI.N: Quote) said on Monday its Canadian unit filed a prospectus for an initial public offering of restricted voting shares, to help finance its C$7.4 billion ($5.48 billion) Trans Mountain expansion project.

Reuters reported in February that the company had begun talks with institutional investors to raise capital for the Trans Mountain project and was looking at either an IPO or joint venture.

“The preliminary filing represents an important step in securing the best opportunity for obtaining acceptable financing terms for the project,” Kinder Morgan said in its submission to U.S. regulators. The company did not disclose the IPO size or timeline in the submission.

The company continued to pursue the parallel paths of an IPO or joint venture and the project remained on schedule to start construction later this year, a company spokesman said.

The Trans Mountain expansion will nearly triple the size of Kinder Morgan’s existing pipeline and ship 890,000 barrels a day of crude from Edmonton, Alberta, to Barnaby, British Columbia. It was approved by the Canadian government last year despite opposition from environmental and aboriginal groups.

Kinder Morgan Canada’s business consists of the Trans Mountain pipeline, the Purge Sound system, the Jet Fuel pipeline system, the Canadian portion of the Cochin pipeline system, the Vancouver Wharves terminal and the North 40 terminal.

It also includes Kinder Morgan’s share of the Edmonton Rail Terminal, the Alberta Crude Terminal and the Base Line Terminal.

Sources, who declined to be named because they were not authorized to speak to the media, said in February that Kinder Morgan had hired Toronto-Dominion Bank (TD.TO: Quote) as an adviser.