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Good morning! Here’s what’s on our radar at the moment:
Bombardier’s fight is just beginning
When the United States Department of Commerce announced it would be imposing a 219% tax on jets built by Canadian aerospace giant Bombardier on Tuesday night, the outcry was swift. While imposing some sort of duty wasn’t a complete surprise; its size, however, was. U.S. plane manufacturer Boeing, which had initially complained that Bombardier was benefitting from unfair subsidies by the Canadian government, had only asked for an 80% levy.
Yesterday Foreign Minister Chrystia Freeland encouraged everyone to take a deep breath. The spat is serious, for sure—coming in the midst of the sensitive NAFTA renegotiations isn’t great timing—but, she continued, it’s not unprecedented:
“Look, I do want to remind Canadians that aggressive actions and aggressive decisions by Commerce are nothing new. They are certainly familiar to us from the softwood lumber dispute, and anyone who doubts that Commerce can be aggressive when it comes to the aerospace industry should give Airbus a call. This is familiar and accustomed behaviour. And, when it comes to Bombardier… this is just the first step in a much longer process.”
Link: Maclean’s
Why Metro wants Jean Coutu
Four years after grocer Loblaw Cos. bought drugstore Shoppers Drug Mart, rival Metro is following suit, making a bid for the Quebec-based pharmacy chain Jean Coutu. The proposed $4.5 billion merger is trying to achieve similar economies of scale and supply-chain efficiencies, but of course looming over all of it is the spectre of Amazon:
The potential deal sent both stocks soaring as it would tie up two giants from Quebec and give Metro an expanded foothold in the drug business, mirroring Loblaw Cos.’ purchase of Shoppers Drug Mart four years ago. Jean Coutu’s earnings had been under pressure due to new provincial regulation on generic drugs, though a compromise was recently found with the government. Canadian grocers, which were locked in a price war and are just coming out of a prolonged bout of food deflation, now have to get ready for Amazon, which in June agreed to buy Whole Foods Market Inc. The U.S. behemoth is also reported to have plans to roll out its Prime Now delivery service for groceries and other items in Canada this year.
Link: Bloomberg
HGTV threatens the global economy
HGTV, the popular channel where you can watch other people bumble their way through the house-hunting process, is great TV. There’s some inherent drama to buying a house: big sums of money, high emotional stakes, tense negotiations, simply tragic interior decor. But perhaps turning the housing market into a non-stop source of light entertainment could have unintended consequences:
We are supposed to be in rehab from our housing binge of ten years ago, the one that nearly bankrupted the country. We are supposed to be in a state of contrition. But our national love of HGTV suggests that the dream won’t die. The longing it addresses is impervious to market corrections, or personal financial realities, and as economists continue to explore the true causes of the 2008 financial crisis, they are beginning to suspect that some speculative Americans acting on that longing got us into that mess as much as — or more than — unscrupulous bankers or Wall Street. In fact, the network may now be tempting its millions of fans to dip their toes back into the most dangerous waters of the past crisis: flipping.
Link: Vulture
WATCH: Drive a crane in VR
Setting up and running a construction crane is a big, expensive undertaking. The safety stakes are high and the margin for error is low. So how does a crane operator work on new skills, or brush up on existing ones? Such training scenarios are one place where virtual reality might actually be living up to its hype. A company called Industrial Training International recently unveiled a new VR rig that allows workers to operate realistic crane controls in an immersive VR simulation. There’s even a travel version that can be clamped to the edge of your desk. The whole point is to allow operators to get all their mistakes out of the way in the virtual world, so they can be safer in the real one.
Link: YouTube
Earnings reports today
Canadian publicly traded companies of note scheduled to report quarterly earnings today:
BlackBerry (BB), Boyuan Construction Group (BOY), DHX Media (DHX.B), The Intertain Group (ITX), Khan Resources (KRI), Synex International (SXI)
Thanks for reading! Have a truly excellent day.
