Canadian dollar down

Canadian Dollar Drops On Falling Oil Prices

8:01 AM, Mar 27, 2017 — The Canadian dollar drifted lower against its major counterparts in the European session on Monday, as oil prices fell on indications of increased drilling activity in the US and as the OPEC put off a decision to extend historic production cuts to balance oil market.

Crude for May delivery declined USD0.38 to USD47.59 per barrel.

Data from Baker Hughes showed that the oil rig count rose by 21 to 652 in the week ended March 17, which was its highest level since September 2015. Signs of growing shale output undermines the attempts by the OPEC to eliminate the supply glut.

The meeting of OPEC and non-OPEC oil producing nations over the weekend agreed to review the oil market conditions and meet again in April regarding an extension of the output deal. This was an abrupt change from earlier draft of the statement which reported a “high level of conformity and recommends six-month extension.”

Further weighing on the currency on the currency was risk aversion, as President Donald Trump’s failure on healthcare reform triggered concerns about the prospects for his plans to use fiscal stimulus to boost growth.

The loonie showed mixed performance in the Asian session. While the loonie rose against the aussie and the greenback, it held steady against the euro. Against the yen, it declined.

The loonie slipped to 1.4504 against euro, a level unseen since November 2016. The loonie is likely to find support around the 1.46 mark.

Survey data from Ifo institute showed that German business sentiment improved in March.

The business confidence index rose to 112.3 in March from 111.1 in February. Economists had forecast the indicator to fall to 110.8.

The loonie eased to 1.0190 against the aussie and 1.3350 against the greenback, from its early near 2-week high of 1.0155 and a 4-day high of 1.3321, respectively. On the downside, the loonie may locate support around 1.03 against the aussie and 1.345 against the greenback.

The loonie remained lower against the yen with the pair trading at 82.66, after falling to more than a 4-month low of 82.56 early in the session. The next possible support for the loonie-yen pair is seen around the 81.00 level.

The summary of opinions from the monetary policy meeting showed that Bank of Japan board members viewed that the bank should not rush to action and it should pursue monetary easing under the current framework with patience.

To achieve the price stability target, it is important to bring the economy onto a self-sustaining growth path, members said at the meeting held on March 15 and 16.

Looking ahead, Federal Reserve Bank of Chicago President Charles Evans and European Central Bank Chief Economist Peter Praet are expected to speak about the current economic conditions and monetary policy at the Global Interdependence Center in Madrid at 1:15 pm ET.

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Royal Dutch Shell Divests Gabon Onshore Oil Interests for $590 Million

7:20 AM, Mar 24, 2017 — Oil and gas production major Royal Dutch Shell (RDS.A, RDS.B) has sold its Gabon onshore interests to a portfolio company of asset management company The Carlyle Group (CG) for $587 million in the latest transaction in its multi-billion dollar divestment program.

The deal, which Shell is undertaking through its affiliates, sees it divesting all of its onshore oil and gas operations and related infrastructure in Gabon to Assala Energy Holdings, a portfolio company owned by Carlyle International Energy Partners and Carlyle Sub-Sahara Africa Partners, which are both funds managed by The Carlyle Group.

It follows recent divestments by Shell in the UK, Gulf of Mexico and Canada, which form part of the company’s previously stated $30 billion divestment program that aims to simplify Shell’s upstream portfolio following its acquisition of BG in February 2016.

As a result of the sale, 430 local Shell employees will become part of Assala Energy at completion. Shell also said that the purchaser would assume debt of $285 million as part of the transaction, which is expected to close in the middle of the year, and would make additional payments of up to a maximum of $150 million.

The company said that the transaction would result in an impairment charge of $53 million post tax which would be taken in the first quarter of 2017. Shell onshore in Gabon produced approximately 41,000 barrels of oil equivalent per day in 2016 and Shell Trading (STASCO) will continue to have lifting rights from the assets for the coming five years, the company said.

“The decision to divest was not taken lightly, but it is consistent with Shell’s strategy to concentrate our Upstream footprint where we can be most competitive,” Andy Brown, Shell’s Upstream Director, said. “Shell will continue to pursue opportunities in Sub Saharan Africa.”

Price: 52.26 Price Change: Percent Change: +0.00

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2017 CANADIAN BUDGET PREVIEW: Could Feds Provide Tax Breaks to Seniors?

Back in 2015, the Liberals pledged to enhance the Old Age Security and Guaranteed Income Supplement with a new Seniors Price Index. OAS and GIS payments already rise with inflation, but the Liberals noted that, according to a Statistics Canada study, the price of most things seniors buy tends to rise faster, so a new index would help them keep up with the cost of living.

Meanwhile, in its alternative budget, the Canadian Centre for Policy Alternatives suggested indexing OAS to the average industrial wage and salary instead of the CPI to ensure the flat retirement benefit keeps up with earned incomes. The centre also recommended increasing the incomes of the lowest income single seniors by $1,000 by boosting the GIS top-up. Changes to the Canada Pension Plan were already announced by the Feds this summer, but the centre wants to go further, increasing the CPP income replacement rate to 50% of earnings (it’s currently at 25%, scheduled to rise to 33.3% by 2023).

One other possible change to the budget involves extending the retirement age to 67 from 65. The previous Conservative brought in this change when it was in power, and intended to phase it in gradually. But when the Liberals gained power, they promptly reversed the retirement age back to 65. But with more Canadians living and working longer, the change to age 67 might make sense, and the Liberals may be considering an about-face on this controversial issue.

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.

Canadian Coins

2017 CANADIAN BUDGET PREVIEW: Will This Be a “Tax Grab” Budget or Will the Liberals Stay the “Middle Class” Course?

Officials in Ottawa have told MT that there will be no significant changes to personal income taxes in this year’s federal budget. But that hasn’t stopped some experts from speculating that Ottawa will target high income earners in an effort to boost its coffers and reduce the deficit.

One persistent rumour has Ottawa increasing Canada’s capital gains inclusion rate up to as high as 75%, compared to the 50% rate now. Such a move could impact both the TSX and the Canadian dollar, said Gluskin Sheff economist David Rosenberg in a note to clients.

“Capital gains taxes ostensibly are a key source of revenue generation for the Liberal Party — it’s a given,” said Rosenberg.

The economist noted that the government of Pierre Trudeau was the first to initiate capital gains taxes in 1972. The inclusion rate was raised to 75% in 1990, but then later dropped to 67% and then 50% under former Prime Minister Stephen Harper.

Veteran financial analyst Stephen Jarislowsky calls the rumoured plan to increase the capital gains tax another “nail in the coffin” for Canadian investors, particularly at a time when the economic outlook is already relatively weak.

In a commentary in the Financial Post, Jarislowsky noted that based on combined federal and provincial tax rates, personal taxation has already reached a maximum level of 53% of taxable incomes.

“Taxing capital gains without accounting for long-term inflation means severe injury to actual earnings,” he added. “I do not object to paying 25% of any short-term (one-year) capital gain, but when it comes to gains that include a tax on inflation that occurred over long periods of time, it means severe injury to whatever real gain has been earned. The fair thing would be to establish inflation factors to determine real rather than nominal gains, and base a real tax on a real gain.”

The Canadian Centre for Policy Alternatives notes that over 90% of the benefit of the capital gains tax break goes to the top 10% of income earners. The centre argues that capital gains should be taxed at the same rate as employment income.

Financial advisor Cynthia Kett says she’s also heard that the capital gains rate could be taxed at 67% or 75%. “When you go from 50 to 75, that’s a 50% increase, so it could be a major hit for high income earners in particular,” she told BNN-TV.

The current government has signalled in the past that it has no problem taxing higher income earners rather than middle to low income earners, she notes. “It’s low hanging fruit, honestly.”

Kett points to another persistent rumour: the elimination of the dividend tax credit. She says this would have a huge impact on all investors because low rates of return on fixed income investments have people piling into dividend paying stocks.

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.

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.


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 and 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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Advertising and public relations company 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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