The Daily Chase: budgeting for Omicron; Inflation remains hot in November

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The federal government’s budget and economic update was light on major new policy initiatives, with Finance Minister Chrystia Freeland laying the groundwork for a more robust budget next year as the focus for now remains on containment COVID-19 (which prompted the prime minister to speak with prime ministers about possible travel restrictions last night). The update includes a $ 4.5 billion provision for dealing with Omicron, as well as several billion dollars for the purchase of therapeutics and rapid tests. Overall, deficit projections throughout the forecast horizon have been revised downward as the government’s personal and corporate tax efforts increase the revenue outlook. Items clearly missing from the update and likely earmarked for the budget: the planned surtax on big banks and insurers, as well as new measures to tackle housing affordability. We’ll have analysis and feedback throughout the day, and BNNBloomberg.ca will cover highlights for individuals and business owners extensively.

INFLATION WATCH

As expected, Canada’s Consumer Price Index rose 4.7% year over year last month, matching October’s growth rate and keeping inflation at its highest. high since February 2003. Gasoline was the main driver, with prices at the pump jumping 43.6 per cent from a year earlier. Statistics Canada noted that furniture prices rose nearly nine percent due to higher shipping costs, while the cost of groceries increased at the fastest rate since January 2015.

FEDERATE DAY

The US Federal Reserve will make a policy announcement today amid the resurgence of COVID cases and (don’t call it transient) inflation which is at its highest level since 1982 in this country. We will be watching for any changes in the taper timeline; Recall that in November, the Fed began to reduce the pace of its asset purchases by US $ 15 billion per month – preparing to buy US $ 60 billion in Treasury securities and US $ 30 billion in treasury securities. Mortgage Backed Securities this month. The Fed will also release updated projections today, including the dot charts that most recently suggested central bank policymakers were also divided over whether there would be a single rate hike l ‘next year. A problem that the Fed need not worry about for now: the US debt ceiling, after lawmakers voted yesterday to raise it by $ 2.5 trillion.

CINEPLEX WINS IN THE FIGHT AGAINST A FAILED AGREEMENT

The Canadian theater operator announced last night that the Ontario Superior Court of Justice had ordered Cineworld to pay $ 1.24 billion in damages due to its failed takeover deal. Long story short: Cineworld agreed to buy Cineplex in December 2019 for $ 34 per share. Then the pandemic arrived. Cineworld canceled the deal in mid-2020, saying Cineplex had failed to meet its obligations as COVID-19 ravaged the industry. Cineplex disagreed and accused Cineworld of dragging its feet in seeking regulatory approval. Now here we are, with Cineworld saying it plans to appeal the decision and doesn’t expect to have to pay damages while this appeal unfolds. Its shares fell 40% this morning in London. Meanwhile, a Canaccord analyst wonders whether Cineplex might have to go to a UK court to seek enforcement of the ruling given “significant leverage” on Cineworld’s balance sheet.

OTHER SIGNIFICANT STORIES

  • Royal LePage predicts overall home price growth of 10.5% next year, as pent-up demand, household formation and immigration boost buying activity. The aggregate figure masks particularly hot markets like Toronto (where the aggregate price is expected to rise 11% to $ 1.26 million).
  • The Bank of Canada has a new second in command as of today. It should be Carolyn Rogers’ first day as senior vice-governor of the central bank.
  • Parkland said last night it was expanding its refinery in Burnaby, British Columbia, now that oil is flowing again through the Trans Mountain pipeline. He also warned that due to the downtime caused by the flooding, he now expects this year’s Adjusted EBITDA to be close to the midpoint of his previously announced target (i.e. say $ 1.25 billion). The Burnaby refinery supplies approximately 25 percent of Vancouver’s gasoline supply.
  • Quarterhill is on our radar after the company replaced its CEO and said it is launching a strategic review of its WiLAN patent licensing business as it focuses on intelligent transportation systems.
  • Tamarack Valley Energy announced this morning that it is buying Crestwynd Exploration for $ 184.7 million in cash and shares. According to the statement, Crestwynd is expected to produce 4,500 barrels of oil equivalent per day next year. Tamarack said the deal will increase free cash flow by 9% next year.
  • Canopy Growth sells its German cannabinoid compounds C3 business to Dermapharm for an upfront payment of 80 million euros ($ 116 million).
  • CI Financial is in the process of completing another transaction in the United States. This time he’s buying Columbia Pacific Wealth Management, which has $ 6.4 billion in assets. CI is also buying a minority stake in Columbia Pacific Advisors, which is described as an alternative asset management company with $ 3.5 billion in assets. As usual with CI’s deal announcements in the United States, terms were not disclosed.

NOTABLE OUTPUTS / EVENTS

  • Notable data: Canadian CPI, sales of existing homes, housing starts and manufacturing sales; retail sales in the United States; Retail sales, industrial production and capital investment in China
  • 9 a.m .: Ontario Energy Minister Todd Smith makes announcement regarding investment in nuclear energy sector in Cambridge
  • 12:00 p.m .: Bank of Canada Governor Tiff Macklem addresses the Empire Club of Canada (plus 1:15 p.m. available for media)
  • 2:00 p.m .: US Federal Reserve releases its interest rate decision and updated forecast (plus a press conference at 2:30 p.m.)
  • 2:00 p.m .: Ontario Premier Doug Ford leads COVID-19 vaccine recall strategy announcement
  • 2:30 p.m .: United Airlines, Southwest Airlines and American Airlines CEOs address the US Senate Commerce, Science and Transportation Committee on Airline Industry Oversight
  • 4:45 p.m .: Prime Minister Justin Trudeau leads announcement on early learning and child care


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