CANADA ECONOMICS

LABOR

StatCan. 2017-06-15. Wages by occupation, 2016

The average hourly wage paid to full-time payroll employees in 2016 was $27.70, excluding overtime pay, tips, and incentive and performance pay. Wages varied notably across occupations and geographic regions.

The data are drawn from the new wage component of the Job Vacancy and Wage Survey (JVWS), which provides wage information by both detailed occupation and economic region on an annual basis. All wage data provided are for full-time employment and exclude overtime pay, tips, and incentive and performance pay, such as commissions and bonuses. See the note to readers for information about this new component of the JVWS and how it was conducted.

Management occupations have the highest average full-time hourly wage
Chart 1   Chart 1: Average full-time hourly wage by broad occupational group, 2016
Average full-time hourly wage by broad occupational group, 2016



The JVWS provides information on wages by occupation paid to full-time employees using the 2016 National Occupational Classification (NOC). At the highest level of the NOC hierarchy, there are 10 broad occupational groups (one-digit NOC code), each comprising 24 to 80 detailed occupations (four-digit NOC code) at the lowest level of the NOC hierarchy.

Management was the broad occupational group with the highest average full-time hourly wage in 2016, at $40.25. Engineering managers ($58.30) were among the highest paid within management occupations. On the other hand, restaurant and food service managers were the lowest paid, at $18.10 per hour. According to the Labour Force Survey (LFS), the average hourly wage of full-time employees in management occupations increased 5.7% from 2015 to 2016, the largest increase among all broad occupational groups.

Full-time employees in natural and applied sciences occupations had an average hourly wage of $33.45 in 2016, compared with $33.20 for occupations in education, law and social, community and government services. Natural and applied sciences (94.0%) had the largest share of full-time employment among all broad occupational groups.

Within natural and applied sciences occupations, petroleum engineers ($62.75) had the highest hourly wages. Conversely, landscape and horticulture technicians and specialists ($19.90) had the lowest wage. Within occupations in education, law and social, community and government services, university professors and lecturers ($58.10), and home support workers and housekeepers ($16.80) were among the highest and lowest hourly wages, respectively.

Health occupations had an average full-time hourly wage of $31.80 in 2016. Within health occupations, specialist physicians ($86.75) earned the highest wage, which was also the highest wage of all occupations. One of the lowest hourly wages within health occupations was for nurse aides, orderlies and patient service associates ($18.95). Of the 36 detailed occupations within health occupations, nurse aides, orderlies and patient service associates accounted for 15.8% of full-time employment.

Chart 2   Chart 2: Full-time and part-time payroll employment by broad occupational group, 2016
Full-time and part-time payroll employment by broad occupational group, 2016



Occupations in art, culture, recreation and sport had an average full-time hourly wage of $27.35 in 2016, almost on par with the national average for all occupations. Among the 33 occupations in this broad occupational group, librarians had a relatively high hourly wage, at $43.30. On the other hand, patternmakers for textile, leather and fur products ($14.80) and painters, sculptors and other visual artists ($18.00) earned among the lowest hourly wages. According to the LFS, average hourly wages in this broad occupational group decreased 3.7% in 2016 compared with 2015, the largest decline among all broad occupational groups.

The average hourly wage of full-time employees in business, finance and administration occupations was $26.00 in 2016. Business, finance and administration occupations had the highest full-time employment, representing 24.8% of all full-time employment in Canada. Financial and investment analysts ($41.00) earned one of the highest hourly wages within this broad occupational group, while couriers, messengers and door-to-door distributors ($17.20) earned among the lowest.

Trades, transport and equipment operators had an average hourly wage of $25.85 in 2016. Power system electricians ($39.80) earned among the highest wages within trades, transport and equipment operators. In contrast, taxi and limousine drivers and chauffeurs ($14.40) and air transport ramp attendants ($17.45) earned the lowest.

Among the broad occupational groups, the lowest average full-time hourly wages in 2016 were in natural resources, agriculture and related production occupations ($22.15); occupations in manufacturing and utilities ($21.90); and sales and service occupations ($18.85). Certain occupations within these groups, however, were among the 10% of occupations with the highest hourly wages, such as oil and gas well drilling workers and services operators ($44.35). Within sales and service occupations, technical sales specialists in wholesale trade ($32.10) and bartenders ($11.50) had among the highest and the lowest hourly wages, respectively.

The highest hourly wages in Canada are found in most of Alberta's economic regions
There are 76 economic regions in Canada, each enclosed within a province or territory. However, seven pairs of economic regions were combined for this survey.

In 2016, six of the seven economic regions in Alberta were part of the nation's top 10 for the highest average hourly wage. Wood Buffalo–Cold Lake, Alberta ($36.50), followed by Nunavut ($35.95), the Northwest Territories ($34.20) and Calgary, Alberta ($32.60) were the economic regions with the highest hourly wages. Among all provinces, Alberta had a relatively high average hourly wage in every broad occupational group except in art, culture, recreation and sport occupations, and in sales and service occupations.

In contrast, the 10 economic regions with the lowest average hourly wage were located in the Maritimes and Quebec. Edmundston–Woodstock, New Brunswick ($19.40) had the lowest average hourly wage in 2016, followed by Campbellton–Miramichi, New Brunswick ($21.30); Prince Edward Island ($21.30); and Gaspésie–Îles-de-la-Madeleine, Quebec ($21.70). When ranking economic regions within each broad occupational group, average hourly wage in Edmundston–Woodstock ranked in the bottom 10% in 6 out of 10 broad occupational groups.

The highest wage for half of the broad occupational groups is in mining, quarrying, and oil and gas extraction
The highest average hourly wage for management occupations was in mining, quarrying, and oil and gas extraction ($64.45). Of all full-time employees in management occupations employed in this sector, 64.7% were in Alberta. In contrast, full-time employees in management occupations in accommodation and food services earned $21.45 per hour. That is one-third of the average wage for management occupations in mining, quarrying, and oil and gas extraction.

Sales and service was the broad occupational group with the lowest average full-time hourly wage in 2016 ($18.85). However, full-time employees in sales and service occupations working in professional, scientific and technical services earned $29.45 per hour on average. In contrast, full-time employees in this broad occupational group earned, on average, $13.70 in accommodation and food services. Of all full-time employees in sales and service occupations, 23.7% worked in the accommodation and food services sector.

In the most prevalent broad occupational group in terms of full-time employment (namely business, finance and administration), the average hourly wage was among the highest in mining, quarrying, and oil and gas extraction ($38.95). In contrast, the lowest average hourly wage for this broad occupational group was in accommodation and food services ($20.00).

FULL DOCUMENT: http://www.statcan.gc.ca/daily-quotidien/170615/dq170615a-eng.pdf

INDUSTRY

Minister of Innovation, Science and Economic Development; Atlantic Canada Opportunities Agency. June 15, 2017. Government of Canada to Make Innovation Funding Announcement

Mount Pearl, NL –  Seamus O’Regan, Member of Parliament for St. John’s South-Mount Pearl, on behalf of the Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development and Minister responsible for the Atlantic Canada Opportunities Agency, will announce major investments in innovation under the Atlantic Innovation Fund.  MP O’Regan will be joined by the Honourable Cathy Bennett, provincial Minister of Finance, on behalf of the Honourable Christopher Mitchelmore, provincial Minister of Tourism, Culture, Industry and Innovation and Minister Responsible for the Research & Development Corporation.

StatCan. 2017-06-15. Monthly Survey of Manufacturing, April 2017

Manufacturing sales
$54.4 billion, April 2017
1.1% increase (monthly change)

Inventories
$73.4 billion, April 2017
0.9% increase (monthly change)

Inventory-to-sales ratio
1.35, April 2017
0.00 pts (monthly change)

Unfilled orders
$90.2 billion, April 2017
1.0% increase (monthly change)

Source(s): CANSIM table 304-0014.

Manufacturing sales rose 1.1% to a record high $54.4 billion in April, mainly due to higher sales in the petroleum and coal product, and primary metal industries.

Sales were up in 13 of the 21 industries, representing 62% of Canadian manufacturing sales.

Once the effects of price changes are taken into consideration, manufacturing sales volumes rose 0.5% in April.

Chart 1   Chart 1: Manufacturing sales rise
Manufacturing sales rise



The petroleum and coal products and the primary metal industries post the largest gains
Sales in the petroleum and coal products industry rose 8.9% to $5.4 billion in April, following two months of declines. The increase reflected higher volumes and prices for petroleum and coal products. After removing the effect of price changes, sales in volume terms increased 7.8% in April.

Sales in the primary metal industry rose 3.8% to $4.2 billion, the third increase in four months. The increase in April partly reflected higher volumes and prices of primary metal products. In constant dollars, sales in the primary industry were up 2.5%, indicating higher volumes of products were sold.

Sales also increased in the paper (+3.5%), food (+0.5%) and machinery (+1.5%) industries. These gains were widespread and reflected higher volumes in these industries.

In contrast, sales in the transportation equipment industry decreased 1.3% to $11.0 billion. The decline was mainly attributable to the motor vehicle (-3.7%) and motor vehicle parts (-2.1%) industries, which both posted increases the previous month. Once the effects of price changes are taken into consideration, sales volumes declined by 4.7% in the motor vehicle industry and 2.9% in the motor vehicle parts industry in April.

Sales up in eight provinces
Sales were up in eight provinces in April, with Quebec and Alberta largely responsible for the total national gain, while sales were down in Saskatchewan and Manitoba.

In Quebec, sales rose 2.6% to a record high $13.0 billion in April, mainly attributable to a 10.9% gain in the transportation equipment industry. Sales also rose in the petroleum and coal products, computer and electronic product and primary metal industries.

Sales in Alberta rose for the third consecutive month, up 3.0% to $6.0 billion in April. Sales were up in 11 of 21 industries, largely driven by a 7.5% increase in the petroleum and coal products industry. Sales were also up in the machinery, food and wood product industries.

The largest monthly decrease was in Saskatchewan, where sales fell 6.0% to $1.3 billion in April. This was the third consecutive decline and was largely attributable to lower sales of non-durable goods.

Inventory levels increase
Inventory levels rose for the fifth consecutive month, up 0.9% to $73.4 billion in April. Inventories were up in 14 of 21 industries, led by the transportation equipment (+1.9%) and primary metal (+2.4%) industries. These gains were partially offset by a 2.2% decline in petroleum and coal product inventories.

Chart 2   Chart 2: Inventories rise
Inventories rise



The inventory-to-sales ratio was unchanged at 1.35 in April. The inventory-to-sales ratio measures the time, in months, that would be required to exhaust inventories if sales were to remain at their current level.

Chart 3   Chart 3: The inventory-to-sales ratio is unchanged
The inventory-to-sales ratio is unchanged



Unfilled orders increase
Unfilled orders rose for the third consecutive month, up 1.0% to $90.2 billion in April, reflecting a 1.7% gain in the aerospace product and parts industry to $49.8 billion. Unfilled orders in this industry represented more than half of total orders.

Unfilled orders were also up in the machinery, fabricated metal product and computer and electronic product industries.

Chart 4   Chart 4: Unfilled orders increase
Unfilled orders increase



New orders rose 0.4% to $55.3 billion, the fifth consecutive monthly gain. The increase, which was mainly attributable to more new orders in the petroleum and coal products and aerospace product and parts industries, was partially offset by fewer new orders in the motor vehicle industry.

FULL DOCUMENT: http://www.statcan.gc.ca/daily-quotidien/170615/dq170615b-eng.pdf

REUTERS. Jun 15, 2017. Canadian factory sales rise to record in April on petroleum, coal

OTTAWA (Reuters) - Canadian manufacturing sales rose more than expected to a record level in April as sales of petroleum and coal products rebounded after two months of declines, data from Statistics Canada showed on Thursday.

Sales grew 1.1 percent to C$54.43 billion ($41.01 billion), topping economists' forecast for a gain of 0.7 percent. March was revised downward to show an increase of 0.8 percent from an initially reported 1 percent.

Sales were up in 13 of the 21 sectors surveyed, accounting for 62 percent of overall manufacturing. Stripping out the effects of price changes, sales volumes were up 0.5 percent.

The petroleum and coal products sector led the way with an 8.9 percent surge on both higher volumes and prices.

Among other sectors that saw higher sales in April, the primary metal industry was up 3.8 percent, while the paper sector gained 3.5 percent.

Sales of transportation equipment fell 1.3 percent, mostly due to lower sales of motor vehicles and parts. Excluding autos, total manufacturing sales were up 1.9 percent.

(Reporting by Leah Schnurr; Editing by Bernadette Baum)

POPULATION

StatCan. 2017-06-15. Canada's population estimates, first quarter 2017

Quarterly population estimate — Canada
36,591,241, April 1, 2017
0.2% increase (quarterly change)
Source(s): CANSIM table 051-0005.

Demographic estimates for Canada, the provinces and the territories are now available for the first quarter 2017

FULL DOCUMENT: http://www.statcan.gc.ca/daily-quotidien/170615/dq170615c-eng.pdf

ENVIRONMENT

Global Affairs Canada. June 14, 2017. Foreign Affairs Minister to participate in EU Arctic meetings

Ottawa, Ontario - Canada is committed to the Arctic and its people. This includes working with international partners to address the region’s unique challenges, including climate change, and to create opportunities and sustainable development for Canada’s Arctic communities.

The Honourable Chrystia Freeland, Minister of Foreign Affairs, today announced that on June 15, 2017, in Oulu, Finland, she will participate in an EU high-level event focused on Arctic environmental challenges and how the international community can support sustainable development. Okalik Eegeesiak, Chair of the Inuit Circumpolar Council, will be at the meeting, where she will represent the international interests of Inuit in Canada, Greenland, Chukotka (Russia) and Alaska.

Co-hosted by the EU and Finland’s Ministry for Foreign Affairs, the event will bring together governments, industry, researchers, and Indigenous and local community representatives.

The Minister will also meet with key interlocutors to discuss bilateral relations and the mutual benefits of the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), among other issues.

Quotes

“Canada and the EU have shared values and a commitment to people in the Arctic region. There are excellent opportunities to advance our common priorities, including action on climate change and support for Indigenous peoples, science, technology and innovation. Our partnership will grow with CETA, which will have significant benefits for citizens of both Canada and the EU.”

- Hon. Chrystia Freeland, P.C., M.P., Minister of Foreign Affairs

Quick facts

• In April 2016, the EU released a new Arctic policy, An Integrated European Union Policy for the Arctic, which emphasizes research, science and innovation.
• The eight Arctic States met in Fairbanks, Alaska, on May 11, 2017, for the Arctic Council Ministerial Meeting, where the chairmanship transferred from the U.S. to Finland. 
• The Canada-EU relationship dates back to 1959, the EU’s oldest formal relationship (since its original formation as the European Economic Community) with any industrialized country.

CANADA - EU

EDC. Weekly Commentary. JUNE 15, 2017. Europe: Improved risk trajectory but threats remain
By Peter G Hall, Vice President and Chief Economist

Country risks in Europe have been top of mind for some time. In fact, three of our top ten global risks in the Spring CRQ involved European scenarios, namely: Eurozone collapse, European sovereign debt crisis, and Italian banking sector crisis. Radical and anti-establishment sentiment in Europe has been fueled by protracted crisis legacies amid sluggish growth and a refugee crisis amid security and terrorism threats. Following last year’s electoral surprises in the UK (Brexit) and the US, the big question earlier this year was: will the political centre hold? Halfway through 2017: so far, so good. So what has changed over the past few months to render us more optimistic on Europe?

On the political front, the Euro-skepticism that was so pronounced in 2016 did not fare well in elections thus far in 2017. Elections in the Netherlands and in France yielded resounding victories for pro-EU parties against far-right Euro-skeptic parties. Additionally, the far-right threat in Germany’s upcoming election has virtually disappeared. The risk of a Eurozone collapse owing to, what had been, growing support for populist (and often radical) political parties has not disappeared entirely but has become ever more unlikely given how these key elections have unfolded.

From an economic perspective, while not stellar by historical norms, economic momentum has turned decisively stronger of late, with many leading indicators reaching cyclical highs and pointing to increasingly solid growth. What’s more, growth has remained resilient enough to propel upbeat private sector sentiment and real activity even through key high-risk elections.

Whereas unmitigated economic malaise can transfer into the political scene, strong economic growth can cure political ailments. The EZ is testing this hypothesis with dramatic flair. Receding political risks combined with solid growth and the urgency to quell any resurgence of opposition to the EU/EZ could provide fertile ground to rekindle reform. The EU’s reform agenda, which had been sidelined somewhat over events in 2016 and into 2017, is key to addressing the structural impediments to achieve faster, broadly-based, sustainable long-term growth, which is required to address societal grievances across many member countries. Additionally, although the UK’s vote to exit the EU exposed pockets of dissent within the bloc, Brexit has also provided a catalyst for broader debate about reforming and strengthening the bloc’s architecture.

Despite the improving political and economic backdrop, there are some lingering risks on the European horizon that cannot be ignored. These include challenges to longstanding relations with both the US and the UK, protracted financial vulnerabilities in Greece and Italy, the continued security threat posed by terrorism, and pockets of nationalism among current and prospective EU members.

Why is this important? The future direction of the EU/EZ carries important implications for the region, for Canada and for the world. In Central and Eastern Europe, the EU/EZ has long served as a powerful magnet to propel political and economic reforms in a bid to gain membership. A weakened EU would not have the same drawing power or offer the same incentive to reform. Central and Eastern Europe, a region that includes countries dealing with entrenched corruption and nationalist undercurrents, is also being pulled by several forces with the EU, Russia and China looking to exert influence  or strengthen partnerships in the region, for example through China’s Silk Road strategy. Recent history demonstrates that this competition for influence can sometimes lead to heightened country risks and/or a more challenging landscape for Canadian exporters and investors.

In terms of impact on Canada, from a trade perspective, Europe as a bloc remains a major trading partner of Canada’s and one whose importance will continue to grow with the implementation of the Canada-EU Comprehensive Economic and Trade Agreement (CETA). The centrist victory in the French election all but guarantees CETA’s implementation in what may be seen as the first salvo in the battle against protectionism.

The bottom line? The lessening of country risks in Europe of late is noteworthy and promising, yet still nascent at best; Europe continues to face some key challenges. But after what was an eventful 2016, reasons for optimism are emerging.

EDC. June 15, 2017. Country Risk Quarterly Summer 2017
Peter G. Hall, Vice-President and Chief Economist

The Country Risk Quarterly is an electronic publication aimed at Canadian companies looking to explore high potential markets. It provides valuable information on over 100 countries, helping to inform trade and investment decisions. A mix of text and visual graphics present the reader with the risks and opportunities of doing business in Europe, Asia, Africa, the Middle East and the Americas, including key insights on payment experience and risk rating drivers.

SUMMARY

Europe: Improved Risk Trajectory but Threats Remain

Country risks in Europe have been top of mind for some time. In fact, three of our top ten global risks in the Spring CRQ involved European scenarios, namely: Eurozone collapse, European sovereign debt crisis, and Italian banking sector crisis. Radical and anti-establishment sentiment in Europe has been fueled by protracted crisis legacies amid sluggish growth and a refugee crisis amid security and terrorism threats. Following last year’s electoral surprises in the UK (Brexit) and the US, the big question earlier this year was: will the political centre hold? Halfway through 2017: so far, so good. So what has changed over the past few months to render us more optimistic on Europe?

On the political front, the Euro-skepticism that was so pronounced in 2016 did not fare well in elections thus far in 2017. Elections in the Netherlands and in France yielded resounding victories for pro-EU parties against far-right Euro-skeptic parties. Additionally, the far-right threat in Germany’s upcoming election has virtually disappeared. The risk of a Eurozone collapse owing to, what had been, growing support for populist (and often radical) political parties has not disappeared entirely but has become ever more unlikely given how these key elections have unfolded.

From an economic perspective, while not stellar by historical norms, economic momentum has turned decisively stronger of late, with many leading indicators reaching cyclical highs and pointing to increasingly solid growth. What’s more, growth has remained resilient enough to propel upbeat private sector sentiment and real activity even through key high-risk elections.

Whereas unmitigated economic malaise can transfer into the political scene, strong economic growth can cure political ailments. The EZ is testing this hypothesis with dramatic flair. Receding political risks combined with solid growth and the urgency to quell any resurgence of opposition to the EU/EZ could provide fertile ground to rekindle reform. The EU’s reform agenda, which had been sidelined somewhat over events in 2016 and into 2017, is key to addressing the structural impediments to achieve faster, broadly-based, sustainable long-term growth, which is required to address societal grievances across many member countries. Additionally, although the UK’s vote to exit the EU exposed pockets of dissent within the bloc, Brexit has also provided a catalyst for broader debate about reforming and strengthening the bloc’s architecture.

Despite the improving political and economic backdrop, there are some lingering risks on the European horizon that cannot be ignored. These include challenges to longstanding relations with both the US and the UK, protracted financial vulnerabilities in Greece and Italy, the continued security threat posed by terrorism, and pockets of nationalism among current and prospective EU members.

Why is this important? The future direction of the EU/EZ carries important implications for the region, for Canada and for the world. In Central and Eastern Europe, the EU/EZ has long served as a powerful magnet to propel political and economic reforms in a bid to gain membership. A weakened EU would not have the same drawing power or offer the same incentive to reform. Central and Eastern Europe, a region that includes countries dealing with entrenched corruption and nationalist undercurrents, is also being pulled by several forces with the EU, Russia and China looking to exert influence or strengthen partnerships in the region, for example through China’s Silk Road strategy. Recent history demonstrates that this competition for influence can sometimes lead to heightened country risks and/or a more challenging landscape for Canadian exporters and investors.

In terms of impact on Canada, from a trade perspective, Europe as a bloc remains a major trading partner of Canada’s and one whose importance will continue to grow with the implementation of the Canada-EU Comprehensive Economic and Trade Agreement (CETA). The centrist victory in the French election all but guarantees CETA’s implementation in what may be seen as the first salvo in the battle against protectionism.

The bottom line? The lessening of country risks in Europe of late is noteworthy and promising, yet still nascent at best; Europe continues to face some key challenges. But after what was an eventful 2016, reasons for optimism are emerging.

FULL DOCUMENT: https://edc.trade/wp-content/uploads/2017/06/170615-CRQ-Exec-Summary-EN.pdf

CANADA - US

The Globe and Mail. 15 Jun 2017. Trump names U.S. ambassador to Canada
ADRIAN MORROW



Kelly Knight Craft, a prodigious Republican fundraiser, has been formally nominated for the position
TERESA REVLETT/KENTUCKY PRESS ASSOCIATION. Kelly Knight Craft speaks at the inauguration of Kentucky Governor Matt Bevin, right, in December, 2015.

U.S. President Donald Trump has named a top donor and fundraiser as ambassador to Canada.
Mr. Trump picked Kelly Knight Craft for the post in February and had the State Department vet her, but did not formally nominate her until Wednesday. Ms. Craft must now be confirmed by the Senate.
The Lexington, Ky.-based Ms. Craft runs a business-consulting firm, but she is best known in Republican circles as a prodigious fundraiser and generous contributor.
She and her husband, billionaire Joe Craft, president of coal company Alliance Resource Partners, together gave $1.3-million (U.S.) to Republican candidates and SuperPACs last year, including a $265,400 contribution from Ms. Craft to Trump Victory.
In a 2007 interview with her hometown newspaper, the Daily Times in Glasgow, Ky., Ms. Craft said she first got into fundraising helping non-profit organizations. Starting with former president George W. Bush’s 2004 re-election bid, Ms. Craft became involved in political organizing and raising money for candidates.
Mr. Bush appointed her to the United States’ United Nations delegation in 2007.
Ms. Craft’s political donations over the past 13 years have been wide-ranging, including both federal and state campaigns, and such heavy-hitters as Senate Majority Leader Mitch McConnell and Senator Marco Rubio. Mr. Craft, for his part, has shown a particular fondness for American Crossroads, the SuperPAC founded by Bush strategist Karl Rove. Mr. Craft gave the organization $1.25-million in 2012; his company contributed a further $2-million.
Ms. Craft and her husband have also made significant donations to her alma mater, the University of Kentucky. Ms. Craft sits on its board of trustees.
Her appointment comes at a pivotal time in U.S.-Canada relations. The two countries are gearing up to renegotiate the North American free-trade agreement, the pact that regulates the vast majority of Ottawa’s foreign trade. Mr. Trump has fired rhetorical shots at Canada in the run-up to the talks, accusing Canadians of “taking advantage” of the United States under the deal.
Ms. Craft’s coal connection could be awkward, however. The Trudeau government has made phasing out coal-fired electricity a cornerstone of its plan to slash greenhouse gas emissions, even as Mr. Trump is boosting the hydrocarbon and decided to pull the United States out of the Paris Agreement to fight climate change.
When Ms. Craft will be installed in Ottawa is unclear. She must first have her nomination reviewed by a Senate committee before coming before a vote in the full chamber. Procedural battles in the chamber have held up appointments in the past.
The United States has been without an ambassador to Canada since January, when Mr. Trump asked all of former president Barack Obama’s envoys, including then-ambassador Bruce Heyman, to step down before Mr. Trump took office.

The Globe and Mail. Jun. 15, 2017. Trump's ambassador pick sends GOP power couple to Ottawa
BILL CURRY

OTTAWA — Taking a break from March Madness, America’s annual obsession with college basketball, Kelly and Joe Craft flew into Dallas to see the NBA’s Toronto Raptors play a Monday night game against the Mavericks.

Ms. Craft has known Raptors coach Dwane Casey since they were both students at the University of Kentucky in the 1970s and Mr. Craft’s grandson was eager to meet the Raptors’ star shooting guard, DeMar DeRozan. The special trip was organized to mark his13th birthday.

“Their grandson is a huge DeMar Derozan fan,” said Mr. Casey in an interview with The Globe and Mail. “I took him in the locker room and introduced [Mr. Craft and his grandson] to the players and said that his grandmother was going to be the ambassador – she has to go through confirmation and all that – but she was going to be the ambassador for the U.S. in Canada.”

Related: Trump nominates key donor Kelly Knight Craft as U.S. ambassador to Canada

A Republican fundraising power couple whose lives revolve around hoops, education and Republican politics is preparing to represent the United States in Canada’s capital. The Globe and Mail first reported in February that Ms. Craft was under serious consideration by U.S. President Donald Trump. But it was not until Wednesday evening that the White House made it official.

The appointment must still be approved by Congress through a confirmation process, meaning it is not entirely clear how much longer the U.S. Embassy in Ottawa will continue to operate without a permanent ambassador. Former ambassador Bruce Heyman, a Democratic fundraiser, stepped down in January.

The ambassador position will be an important link between the two governments as they embark on a renegotiation of the North American free-trade agreement, which is expected to begin this summer. Prime Minister Justin Trudeau’s senior staff and Canada’s Ambassador to Washington, David MacNaughton, have already established direct links with Mr. Trump’s senior advisers in the White House. Cabinet ministers and provincial officials have also been making frequent trips south in the hope of preventing radical policy changes that would hurt the Canadian economy.

Ms. Craft has close and long-standing relationships with Vice-President Mike Pence and senior Republican members of Congress, people who will also play a key role in any policy changes that affect cross-border trade.

The Crafts are known as well-connected fundraisers who have raised millions for Republican politicians and the University of Kentucky. Ms. Craft also has a long history of organizing and fundraising for numerous charities.

In 2015, they donated $4-million (U.S.) to Kentucky’s Moorhead University to launch the Craft Academy for Excellence in Science and Mathematics, a two-year program that offers free tuition and housing for gifted students in their final two years of high school to study at the university.

They are passionate fans of the Kentucky men’s basketball program, a perennially star-studded team that practises in a state-of-the art athletic facility named after Joe Craft.

“Both of them are very beautiful people, giving people, down to earth. There’s no pretense about either one of them,” said the Raptors’ Mr. Casey, who supports the appointment even though he has been a vocal critic of Mr. Trump and his policies.

Ms. Craft grew up in the small town of Glasgow, Ky. – population 14,339 – and ran a marketing and consulting company in Lexington, Ky., where she raised two children from a previous marriage. She was appointed in 2007 by then-president George W. Bush as an alternate delegate to the United Nations general assembly, a short-term assignment that included speaking at the assembly about American support for Africa.

In a 2007 interview with the Glasgow Daily Times, she said she hoped to focus on children’s issues and “social, humanitarian and cultural issues” while at the UN.

Zalmay Khalilzad, who was the U.S. ambassador to the UN when Ms. Craft was there, describes her as smart, politically connected and a quick study. Mr. Khalilzad notes that in an era where communication is easy and travel is cheap, officials can be in regular contact with their counterparts in other countries. As a result, ambassadors are not the key link between countries that they once were.

“The role of the ambassador is important, but different. Not as decisive as in the past,” he said. “This is an issue that all ambassadors, especially in Western countries, representing the United States have … She will have an important role nevertheless, but there will be this complexity.”

Ms. Craft has made few public comments over the years but she took on a higher profile in politics after entering into a relationship with Joe Craft, to whom she is now married. Mr. Craft is the billionaire president of Alliance Resource Partners, the second-largest coal producer in the eastern United States.

Mr. Trump campaigned on a pledge to bring back jobs in the American coal sector. That puts the United States at odds with the priorities of Canada’s Liberal government, which is encouraging provinces to phase out the use of coal as part of a national climate-change plan.

The couple served as the Kentucky state finance chairs for Republican Mitt Romney’s unsuccessful presidential campaign in 2012. They have supported other prominent Republicans over the years, including Vice-President Pence, Senate Majority Leader Mitch McConnell – who is from Kentucky – and House Speaker Paul Ryan. During last year’s presidential campaign, the couple announced they would be supporting the Trump campaign after receiving assurances that he would not aim to replace Mr. McConnell or Mr. Ryan.

The Globe and Mail. 15 Jun 2017. Trudeau mum on what U.S. said about Chinese technology deal
ROBERT FIFE
STEVEN CHASE

Canada’s top envoy to Washington says he doesn’t personally know whether the United States objected to a Chinese investor’s takeover of a Vancouver company that sells sensitive satellite technology to the American military.
Ambassador David MacNaughton told a Senate committee in Ottawa on Wednesday that he thought the Americans “were consulted and they did not ask us to conduct a full review.”
But he later backtracked under questioning from Conservative Senator Leo Housakos, who asked directly if the United States had expressed any national security concerns.
“They have not to me. They wouldn’t necessarily have raised that issue with me,” he said.
The ambassador deferred to the Prime Minister, telling senators all he knows about the issue is what Justin Trudeau has told the House of Commons.
On Wednesday, Mr. Trudeau dodged opposition demands to divulge whether Washington raised security concerns about the deal.
The Liberal government has come under fire in recent days for green-lighting the sale of Norsat International Inc. to Hytera, a Chinese telecom giant, without conducting a formal, comprehensive national security review of the deal.
Hytera is facing a lawsuit from U.S. rival Motorola, which accuses the Shenzhen-based firm of massive intellectual property theft.
A key member of a U.S. congressional watchdog agency has already warned the Norsat deal jeopardizes American national security and two former directors of the Canadian Security Intelligence Service have weighed in, saying the transaction should have been subjected to a fullscale security review.
Reading from a prepared script, Mr. Trudeau said the government had merely accepted the advice of federal security experts.
“We take the advice and feedback from our national security agencies very seriously, and based on that advice we proceeded with this transaction,” he told MPs. “In this particular case, our security agencies did consult with key allies, including the United States.”
The controversial takeover dominated Question Period for the second day in a row as the opposition parties pressed repeatedly for details of consultations with the United States.
“If the Prime Minister did consult the United States as he claimed, can he tell us if any objections were raised and exactly who he consulted with?” Conservative Leader Andrew Scheer asked.
Mr. Trudeau would not answer repeated questions on whom the government talked to in the Trump administration, and whether they approved the deal. The U.S. embassy in Ottawa has refused to comment on whether Washington was consulted and whether it had any national security concerns.
“Take away the speaking notes, I would encourage the Prime Minister, and just answer the question in the House: Who did they consult with?” Conservative MP Tony Clement, evidently frustrated by the lack of answers, said in the Commons.
At one point during heated exchanges, Mr. Trudeau suggested the United States and other allies had signalled their approval of the takeover, but quickly reverted back to saying national security agencies had not recommended a comprehensive security review of the Norsat deal after consultations.
The Prime Minister also offered a new defence of the decision to green-light the Norsat transaction, accusing the opposition of undermining civil servants in charge of national security.
Conservative MP Lisa Raitt shot back that Mr. Trudeau was “hiding behind the skirts” of anonymous national security experts and failing to do his job to protect a Canadian military technology from slipping onto the hands of China.
“This is not a question about trust in our national security agencies. This is about the competence and negligence within the cabinet of the Government of Canada,” Ms. Raitt said. “Did any single cabinet minister on the other side give a heads-up to their counterpart in the United States and say, ‘Is this a good idea, because I want to do a gut check?’ ”
The Investment Canada Act requires all foreign takeovers to undergo a security screening analysis. A far more comprehensive national security review requires federal cabinet approval and would analyze the potential impact on Canada’s defence capabilities and interests and investigate how the transfer of this proprietary technology outside Canada as well as the possibility the transaction could enable foreign espionage or injure Canada’s international interests, including foreign relationships. It would also consider the potential of the investment to hinder intelligence or law enforcement operations.
“It was the Liberal cabinet alone that chose to forgo a national security review. That is a fact,” said Mr. Clement, who as a former industry minister was once in charge of the Investment Canada Act governing foreign takeovers.
Michael Wessel, a member of the U.S.-China Economic and Security Review Commission, which reports to Congress, told The Globe and Mail that “the sale of Norsat to a Chinese entity raises significant national-security concerns for the United States as the company is a supplier to our military.”
He said the Liberals appear to be willing to sacrifice nationalsecurity interests of Canada’s most important ally in exchange for obtaining a bilateral freetrade deal with China. He also urged the Pentagon to “immediately review” its dealings with Norsat.
The Liberals have made closer ties to China – including a potential free-trade deal – a cornerstone of its foreign policy. China has publicly deplored Canada’s national-security reviews as protectionism and demanded it be part of the free-trade talks.
Since the Liberals came to power, they have been more open to investment from China in a number of key sectors of the economy.
In February, Ottawa approved the sale of one of British Columbia’s biggest retirement-home chains to a Beijing-based insurance titan with a murky ownership structure in a deal that gave China a foothold in Canada’s health-care sector.
In March, the government approved a Chinese takeover of a Montreal high-tech firm, ITF Technologies – the very same transaction that had previously been blocked by the former Conservative government after it became convinced the deal would undermine a technological edge Western militaries have over China.

HOUSING BUBBLE

The Globe and Mail. 15 Jun 2017. Home prices driving up mortgage debt
RACHELLE YOUNGLAI

While total borrowing for real estate rises, Canadians are paying more against principal than in interest for first time since 1990



Canadians amassed more mortgage debt in the first quarter, despite Ottawa’s attempts to cool the country’s hottest housing markets and ensure homeowners could handle their loans.
Total mortgage debt rose to $1.34-trillion in the first three months of the year from $1.33trillion in the previous quarter, according to Statistics Canada’s national balance-sheet report released on Wednesday.
The increased borrowing comes after the federal government enacted laws in October that made it harder for potential home buyers to qualify for an insured mortgage.
But soaring residential real estate prices in Toronto and surrounding regions have prompted home buyers to increase borrowing.
The average selling price of a residential property (including condos, townhouses and detached houses) was nearly $900,000 in the first quarter in the Greater Toronto Area. That was a third higher than the previous year, according to the Canadian Real Estate Association, which seasonally adjusted the numbers.
“For those who are just getting into the market, the amount of mortgage they need is bigger relative to what they would have needed a year ago or even last quarter,” said Diana Petramala, an economist with Toronto-Dominion Bank.
The average size of a mortgage in Toronto was $401,728 in the fourth quarter of last year, almost a $50,000 increase over the previous year, according to the most recently available data from Canada Mortgage and Housing Corp. That is higher than the average mortgage size of $310,184 in Ontario, $366,685 in British Columbia and $271,895 across the country.
The data show mortgage accumulation before Ontario tried to tamp down overheated housing markets in Toronto and surrounding regions. In April, Ontario introduced a 15-per-cent foreign-buyers tax, which appears to have contributed to slower sales activity in the Toronto area, although not a drop in real estate prices. It is unclear whether Ontario’s new housing rules will slow mortgage growth.
Ontario’s tax policy copied British Columbia, where foreign buyers have been blamed for driving up real estate prices. After the tax went into effect last summer, sales activity and residential real estate prices eased in B.C. and the Greater Vancouver Regional District, according to the quarterly numbers from the Canadian real estate association, although prices are picking up again.
“We haven’t seen the full impact in Ontario,” said Ms. Petramala, referring to the impact from Ottawa’s stricter mortgage rules.
The national balance-sheet report showed that household debt remained near record levels. The ratio of debt to disposable income eased to 166.9 per cent in the first quarter from a revised 167.2 per cent in the fourth quarter. Statscan said that meant Canadians owed $1.67 for every dollar of disposable income at the end of March.
Royal Bank of Canada, however, said the debt-to-income ratio was 167.8 per cent, a new record high, when adjusted for seasonal factors.
Household debt and Canada’s overheated real estate markets are among the Bank of Canada’s top threats to the financial system. In its semi-annual financial-system review, the central bank said these two “vulnerabilities” have “moved higher over the past six months.” It said a good portion of the increased debt consists of mortgages and home equity lines of credit in greater Toronto and Vancouver.
Low interest rates, however, have made it easier for Canadians to chip away at their mortgages. The portion that households spent on mortgage principal payments topped what was spent on mortgage interest payments for the first time since 1990, Statscan said.
But rock-bottom rates are not expected to last. A surge in hiring and stronger economic output have combined to fuel expectations that the Bank of Canada will hike rates later this year, which would make it more expensive for Canadians to take out mortgages.
“Households’ sensitivity to rate hikes is likely greater now than it has been in previous tightening periods,” when the central bank made it more expensive to borrow by raising interest rates, RBC said in a note to clients.

The Globe and Mail. 15 Jun 2017. Canadian housing prices post record rise in May
JANET McFARLAND

House prices rose by a record 2.2 per cent across Canada last month compared with April, led by a 3.6-per-cent price increase in Toronto even as total sales fell during the month, Teranet reported Wednesday.



The Teranet-National Bank National Composite House Price Index recorded the largest May gain in its 19-year history, reaching another record high for the 16th consecutive month. Prices were up in May over April in all 11 major markets included in the index, led by a record 3.6-per-cent increase in Toronto, a 3.1-per-cent gain in Hamilton and a 2.5-percent increase in Victoria.
National prices were up 13.9 per cent over May last year, coming close to the record annual price gain of 14.1 per cent recorded in September, 2006. Prices were up a record 28.7 per cent in Toronto compared with May, 2016.
The strong price increases paint a different picture of the Greater Toronto Area market than data released last week by the Toronto Real Estate Board, which said average prices fell 6 per cent in May compared with April in the GTA as new listings surged and the number of homes fell sharply.
National Bank economist Marc Pinsonneault said the Toronto Real Estate Board’s sales price averages cannot be compared to the index data. Price averages are skewed by changes in the composition of sales in any month, and Mr. Pinsonneault said there were probably proportionately fewer high-end homes sold in May than in April.
The Teranet-National Bank index measures changes in public land-registry prices of single-family homes that have been sold at least twice on record. It is not subject to bias based on different types of housing sold in a period, Mr. Pinsonneault said.
TREB also reported on the value of its MLS Home Price Index in May, showing benchmark prices in the GTA increased 1.2 per cent in May compared with April.
Mr. Pinsonneault said the Teranet data suggest new housing measures introduced by the Ontario government in April may have dampened sales and boosted new listings, but the impact on housing prices “remains to be seen.”
Although Vancouver housing prices rose 1.5 per cent in May over April, he said detached and attached house prices have fallen since the B.C. government introduced a foreign-buyers tax last August, but condominium prices were up 18 per cent in May compared with the same month last year. He said condo affordability in Vancouver “could soon become as bad as it was at the beginning of 2008.”
“The dichotomy of the Canadian residential market is more obvious than ever,” he said in a research report.
The strength of the Canadian market is clearly driven by Victoria, the GTA, Hamilton and other regions in Ontario in the Golden Horseshoe area surrounding the GTA, he said, which all have double-digit year-over-year price gains.
Montreal and Quebec City also posted significant price gains in May, according to the index, with Montreal prices rising 1.07 per cent over April while Quebec City saw prices climb 1.9 per cent in May.
For the first time this month, Teranet also surveyed 15 additional markets not included in the national composite index total, including 12 located in Ontario. The data showed Sudbury was the only Ontario market not recording a gain in May, with prices falling 1.9 per cent over April.

The Globe and Mail. Reuters. Jun. 15, 2017. Canadian home resales drop sharply in May, prices rise: CREA
ANDREA HOPKINS

OTTAWA — Resales of Canadian homes dropped 6.2 per cent in May from April, with Toronto sales plunging 25.3 per cent, as new housing policy changes side-swiped demand and new listings rose again, the Canadian Real Estate Association said on Thursday.

The industry group said actual sales, not seasonally adjusted, were down 1.6 per cent from May 2016, while home prices were up 17.9 per cent from a year earlier, according to the group’s home price index.

It was the first full month of housing resale data since the province of Ontario introduced a 16-point plan to rein in the hot housing market in Toronto, Canada’s largest city, amid fears of a bubble.

The changes included a 15-per cent foreign buyers tax similar to one imposed in Vancouver in 2016.

“(The results) provide clear evidence that the changes have resulted in more balanced housing markets throughout the Greater Golden Horseshoe region (around Toronto),” said Gregory Klump, CREA’s chief economist.

“For housing markets in the region, May sales activity was down most in the GTA (Greater Toronto Area) and Oakville. This suggests the changes have squelched speculative home purchases,” Klump added.

The industry group said the drop in sales pushed the sales-to-new listings ratio out of sellers’ territory and back into balance for the first time since late 2015.

The ratio fell to 56.3 per cent in May, down from 60.2 per cent in April and about 10 percentage points below the first three months of the year. A ratio between 40 and 60 per cent is consistent with a balanced housing market.

CREA also upgraded its forecast for sales and prices, saying it expects less of a slowdown in 2017 than it predicted three months ago given the strong first quarter.

Home sales were forecast to fall 1.5 per cent to 527,400 units this year and dip 0.8 per cent in 2018. In March, CREA had forecast a 3 per cent drop in sales in 2017 and a 1 per cent decline in 2018.

The national average price was forecast to rise 7.4 per cent to $526,000 in 2017 and climb 1.8 per cent in 2018, CREA said. That’s up from a March forecast for a 4.8 per cent price increase in 2017, but the 2018 forecast was trimmed from a previous 5 per cent expected increase.

CREA said some buyers may find themselves priced out of the market entirely in Toronto and Vancouver, where single family homes are in short supply.



The Globe and Mail. 15 Jun 2017. Home Capital: Company admits OSC ‘not to blame’ over recent liquidity issue

“The Company also acknowledges that the Commission is not to blame for the events of recent months involving its liquidity position,” Ms. Eprile’s statement said.
The settlements are conditional and still need approval from the Ontario Securities Commission and provincial courts. But if finalized at a hearing in August, the arrangement would resolve a regulatory threat that has weighed on the beleaguered mortgage lender for weeks.
The move to clean up the OSC case comes as Home Capital fields offers for some of its smaller lines of business and tries to negotiate new credit lines with a number of potential lenders, in an attempt to restore a sense of financial stability.
Home Capital experienced a run on the bank in April that almost led to the company’s collapse, and announced it was considering asset sales and working on replacing a $2-billion line of credit with onerous interest rates that it obtained during that funding crisis.
Toronto-based Home Capital recently turned down offers from rival financial companies for its consumer retail lending division, according to sources familiar with the process, because the board and financial advisers believed the bids were opportunistic and did not reflect the value of a profitable, although small, business. The division has about $394-million extended to homeowners to finance purchases of water heaters and other big-ticket home improvement items.
Analysts say the company could pull in up to $2-billion from asset sales by parting with units that include its credit card division, which has $384-million of assets, and its $2.2-billion commercial mortgage portfolio.
In April, Home Capital secured a line of credit from the Healthcare of Ontario Pension Plan (HOOPP) and a group of global banks that came with a $100million upfront fee and 10 per cent annual interest rates.
Home Capital has borrowed $1.65-billion on the HOOPP line and is in talks with a number of potential lenders, including the six largest Canadian banks, about a new credit line and other forms of financing that could replace the HOOPP loan.
Home Capital is targeting a new financial backstop with a lower interest rate and a longer term than the two-year line of credit that rival mortgage lender Equitable Group Inc. obtained in May, according to sources familiar with the process. The Equitable credit facility, backed by all six major Canadian banks, carries an interest rate that is 1.25 percentage points above the banks’ cost of funds, which is relatively inexpensive financing for an alternative mortgage lender.
The main business at Home Capital is a $18-billion portfolio of mortgages to home buyers who cannot borrow from the major banks, including immigrants, the self-employed and those with a poor credit history.
The home loans are backed by deposits in Home Capital high interest rate savings accounts and GICs, and the unexpected withdrawals from the savings accounts in April triggered the funding problem for the company. Clients pulled their money after the Ontario Securities Commission alleged that Home Capital failed to disclose problems in its mortgage business in 2015.
In recent weeks, deposits have stabilized, and Home Capital announced on Wednesday that deposits in high-interest savings accounts and at subsidiary Oaken Financial are nearly $250million, virtually unchanged since late May. Home Capital (HCG) Close: $12.13, up 83¢.

The Globe and Mail. Jun. 15, 2017. Home Capital settlements a ‘first step’ toward stability: analysts
JAMES BRADSHAW, ANDREW WILLIS AND NIALL MCGEE

By agreeing to settle a regulatory action with securities regulators and a class-action lawsuit, Home Capital Group Inc. has relieved a major headache, but investors are still looking for more tangible signs of a turnaround.

The pair of settlements announced late Wednesday will see Home Capital and three former senior executives pay a total of $12-million in penalties to the Ontario Securities Commission (OSC). The company will also take responsibility for misleading disclosures about fraudulent mortgage underwriting practices uncovered more than two years ago.

Most of those funds will go toward a $29.5-million payment to settle a class-action suit filed against the Toronto-based alternative mortgage lender in February.

Home Capital shares were up $1.56 or 12.8 per cent in mid-morning trading in Toronto.

Analysts hailed the settlement as a step in the right direction. The OSC’s enforcement has dogged Home Capital for months, and the regulator’s allegations, unveiled in detail on April 19, appeared to be one of several triggers that began a run on Home Capital deposits, pushing the lender to the brink. Yet investors are still waiting for signs that the company can stabilize its leadership after its CEO departed, as well as its funding sources as it tries to build a long-term plan to return to stability.

“We view these settlements as a modest positive from the perspective that they both remove uncertainty regarding the materiality of financial sanctions and limit further negative headlines from updates related to evidence presented at potentially long, drawn-out trials,” said Brenna Phelan, an analyst at Raymond James Ltd., in a research note.

Home Capital’s investors are keen to see the company replace a costly line of credit at more reasonable terms. The company has been kept afloat by a $2-billion credit line secured with onerous terms – including a 10-per-cent annual interest rate – from the Healthcare of Ontario Pension Plan (HOOPP). Finding a better deal could be “the next meaningful positive catalyst,” Ms. Phelan said.

Talks are continuing with a number of potential lenders, according to sources familiar with the process, and Home Capital is seeking new financing with a lower interest rate and a longer term.

At the request of the Investment Industry Regulatory Organization of Canada (IIROC), Home Capital released a statement early Thursday saying it is “aware” of media reports about a potential refinancing, but “does not comment on speculation and rumours.”

At the same time, Home Capital is searching for a new CEO to lead the company out of the current crisis of confidence. Former chief executive Martin Reid, who was terminated in late March, is among those punished in the OSC settlement, accepting a $500,000 penalty and a two-year ban from serving as an officer or director of a public company. Bonita Then, a long-time director at Home Capital, is serving as interim CEO.

Executive search firm Caldwell Partners is leading the hunt for a new leader, as well as a new chief financial officer.

Home Capital’s deposit base, which it uses to fund its mortgages, has stabilized in recent weeks, though the company continues to bleed small amounts of funds on a daily basis. As of June 13, the company had nearly $250-million in its high-interest and Oaken Financial savings accounts, in addition to nearly $12.1-billion in guaranteed investment certificates, or GICs.

Laurentian Bank of Canada analyst Marc Charbin said the settlements Home Capital has reached “could be the first step in renewing confidence in HCG’s deposit base,” which would play a vital role in stabilizing the company.

REUTERS. Jun 15, 2017. Home Capital comments on reports on potential refinancing

(Reuters) - Canada's biggest non-bank lender Home Capital Group Inc said on Thursday it was aware of recent media reports concerning a potential refinancing transaction and that it would not comment on speculation and rumors.

The company's comment was in response to a request by the Investment Industry Regulatory Organization of Canada (IIROC), following a rise in its share price on Wednesday.

Reuters reported on Wednesday, citing people with knowledge of the matter, that Home Capital is in talks with a syndicate of banks, including some of Canada's biggest lenders, to secure a loan of about C$2 billion ($1.5 billion) to replace a costly emergency credit line it agreed in April.

Home Capital said on Thursday it would inform the market as required but does not intend to make any further comment regarding speculation.

(Reporting by Ahmed Farhatha in Bengaluru; Editing by Saumyadeb Chakrabarty)

BLOOMBERG. 2017 M06 15. Home Capital Settles With OSC Over Fraudulent Mortgages
by Katia Dmitrieva

• Canadian mortgage lender also settles class action claims
• Home Capital and executives to pay more than C$30 million

Home Capital Group Inc. and three former executives agreed to pay more than C$30 million ($23 million) to reach settlements with regulators and investors over allegations the Canadian lender misled shareholders about mortgage fraud. The stock posted its biggest gain in five weeks.

Home Capital and the executives will pay C$12 million and cover C$500,000 in costs to the Ontario Securities Commission, the Toronto-based lender said in a statement after market hours Wednesday. The firm is also making a C$29.5 million payment to settle a class-action lawsuit filed after the shares plunged, which includes C$11 million paid in the proposed OSC deal, according to the statement. Home Capital expects to fund almost all of this through available liability insurance.

As part of the settlement, founder and former Chief Executive Officer Gerald Soloway is barred from acting as a company director for four years and will pay a penalty of C$1 million. Former executives Martin Reid and Robert Morton will pay C$500,000 each to the commission and are barred from being directors for two years.

“These settlements will enable us to move forward with regaining the confidence of our depositors and shareholders and creating value for all our stakeholders," said Chair Brenda Eprile. “Home Capital will accept full responsibility for failing to meet its disclosure obligations to the marketplace and appreciates the importance of the serious concerns raised by the commission with respect to continuous and timely disclosure.”

The settlements remove a legal cloud that has hung over the embattled company for almost two months. Home Capital shares plunged in April after the OSC alleged the company misled investors over the extent of fraudulent mortgage applications brought in by outside brokers. The lender since then has been in a fight for its life as clients pulled cash from savings accounts, brokers cut ties, and analysts issued a series of downgrades and revised profit forecasts.

Home Capital surged 17 percent to C$14.14 at 9:38 a.m. in Toronto, its biggest gain since May 11. The stock has almost tripled from its lows last month, though is still down 55 percent this year.

OSC Hearing

The OSC, which issued a separate statement about 30 minutes after Home Capital, scheduled a hearing to approve the settlement on Aug. 9 in Toronto. Staff received approval to make the terms of the proposed settlement public before the hearing to prevent speculation in the market, according to OSC spokeswoman Kristen Rose. Allegations from the regulator in April included that Home Capital and its executives had failed to satisfy disclosure requirements, made “materially misleading statements” and failed to comply with other securities rules.

RBC Capital Markets analyst Geoffrey Kwan on Thursday upgraded Home Capital to sector perform from underperform and raised the target price to C$14 from C$8. The target is 18 percent above the consensus average of C$11.89.

Replacement Loan

“This removes a huge stumbling block to the company," said David Taylor, chief investment officer of Taylor Asset Management, who holds about 4 million Home Capital shares. “Banks wanted to see this go away. There were too many unknowns."

Taylor said he’s expecting the lender will receive a credit line to replace a punitive C$2 billion loan from Healthcare of Ontario Pension Plan.

The alternative mortgage lender, which primarily lends to borrowers turned away from the traditional banks, is in talks with banks for a loan to replace the credit line from HOOPP. Royal Bank of Canada and Credit Suisse Group AG are among the firms interested in lending, according to people familiar with the discussions who declined to be identified describing confidential information.

Home Capital reiterated it is "pursuing additional financing and strategic options" while declining to comment further in a statement on Thursday. The regulator declined further comment.

“This is one step forward in the right direction, but the company still has a lot of issues to address, including their long-term strategy," Marc Charbin, an analyst at Laurentian Bank Securities Inc., said by phone. They need to see inflows into guaranteed investment certificate deposits and appoint a permanent CEO, he said.

BLOOMBERG. 2017 M06 15. Canada Home Sales Drop Most in Almost 5 Years on Toronto Decline
by Greg Quinn

• Drop in Toronto May home-sales is the largest since 2008
• National prices still up 18% from year ago; 29% in Toronto

Canadian home sales fell by the most in almost five years last month, led by a plunge in Toronto after a foreign-buyer tax was introduced to curb runaway price speculation.

Transactions nationally fell 6.2 percent in May, the fastest monthly decline since August 2012 the Canadian Real Estate Association reported Thursday. Sales in Toronto fell by 25 percent, the most since October 2008.

The report shows the first full month of market conditions after the Ontario government set a 15 percent tax on foreign home buyers in April amid soaring prices, adding to measures by federal officials last year to rein in the Toronto and Vancouver markets.

The data “provide clear evidence that the changes have resulted in more balanced housing markets,” Gregory Klump, the real estate agency’s chief economist, said in the statement.

While sales are plunging, prices are holding steady. The nationwide benchmark climbed 1.3 percent from April and 18 percent from a year earlier, the CREA report showed.

Benchmark prices in Canada’s biggest city gained 1.2 percent on the month and 29 percent from a year earlier. That appeared to bring new supply, with new listings jumping 48 percent in May from a year ago.

“Recent changes to housing policy in Ontario have quickly caused sales and listings to become more balanced in the GTA,” Canadian Real Estate Association President Andrew Peck said in the report.

Global Affairs Canada. June 15, 2017. International Trade Minister visits Ohio to promote Canada-U.S. trade and investment ties

Ottawa, Ontario - The longstanding trade relationship across the secure Canada-U.S. border is an engine of growth and innovation that creates and supports millions of well-paying middle-class jobs in both countries. Deepening free and fair trade and investment ties between Canada and the U.S. will strengthen North America’s global competitiveness and is central to Canada’s open and progressive trade agenda.

The Honourable François-Philippe Champagne, Minister of International Trade, will be in Cincinnati, Ohio, on June 16, 2017, promoting Canada-U.S. ties through a series of meetings with business and community leaders, and with local and state officials.

While in Cincinnati, the Minister will underscore the critical Canada-U.S. economic partnership and the proven value of our cross-border collaboration in creating the strongest and most competitive products in the world and the good middle class jobs that depend on them.

Minister Champagne’s agenda includes a breakfast and speaking engagement with Greater Cincinnati leaders, and a roundtable discussion with representatives of business accelerators and programs for minority and woman-led technology and tech-enabled ventures.

The Minister will also meet with Ohio State Representatives to highlight the increasingly integrated nature of the North American economy and underscore the extent to which the economic partnership is mutually reinforcing and beneficial.

Quote

“Canada and the United States are partners in trade at so many levels, relying on each other for our mutual prosperity and security. Canada’s strong commercial ties to Ohio and Greater Cincinnati are important examples of the deep history and partnership that exists between us, one that creates good jobs and contributes to our long-term prosperity.”

- François-Philippe Champagne, Minister of International Trade

Quick facts

• Canada-U.S. bilateral trade in goods and services amounted to nearly $882 billion in 2016.
• Nearly 9 million American jobs depend on trade and investment with Canada.
• Canadian companies operating in the U.S. directly employ more than 500,000 Americans.
• Nearly 400,000 people and more than $2.4 billion worth of goods and services cross the Canada-United States border every day.

Canada-Ohio bilateral trade

• Canadian merchandise exports to Ohio were valued at $16.2 billion in 2016.
• Canadian merchandise imports from Ohio were valued at $23 billion in 2016.
• Ohio sends almost 39 percent of its merchandise exports to Canada, which means it sells more to Canada than it does to its next eight largest foreign markets combined.
• Canadian-owned companies employed 22,800 workers in Ohio in 2014.

Cincinnati Metropolitan Area

• The Cincinnati metropolitan area (referred to as Greater Cincinnati) is a 15-county region located at the intersection of Ohio, Kentucky and Indiana.
• Named by KPMG as the least costly location to do business among all large U.S. cities, Greater Cincinnati is home to more than 2.1 million residents, 120,000 businesses, including 10 Fortune 500® companies and more than 450 foreign-owned firms.

ENERGY

The Globe and Mail. Bloomberg News. 15 Jun 2017. Shell optimistic on offshore-wind projects
ANNA HIRTENSTEIN

Wind turbines stand in the ocean off the coast of the Netherlands. Royal Dutch Shell sees an investment opportunity in offshore-wind farms as Europe continues to invest in renewable energy.
Offshore-wind projects are attracting billions of dollars of investment and will become “the energy backbone” for European countries from Germany to Britain, said Mark Gainsborough, Shell’s head of new energies.
Oil companies have a natural advantage in that business, since they have spent decades learning how to manage financial, political and project-development risks, he said. That gives them an edge over renewable energy developers, who prefer to pin down long-term power-purchase agreements or government support before moving forward. As the renewables industry shifts to more subsidy-free projects, it may be the established oil companies that can handle the gambles that come with competing at market prices.
“We know that we have to change and be real players in the energy transition,” Gainsborough said in London. “The potentially interesting transformation for this industry and most renewables is the transition out of the subsidy-driven world into a world where you’re taking merchant risk, which we’re very used to doing in oil and gas.”
The offshore-wind industry is preparing to take a gigantic leap, both in terms of its contribution to the power grid and shear scale of its projects.
Global installations of the technology will rise almost threefold, to 39.7 gigawatts, by 2020, according to Bloomberg New Energy Finance. At the same time, new turbine technologies increasing the size and efficiency of windmills are moving the industry toward subsidyfree competition.
“Bigger offshore-wind projects and zones offer the ticket size that oil and gas companies are looking for,” said Keegan Kruger, a wind analyst for Bloomberg New Energy Finance. “Smaller-scale renewables weren’t really seen as worth their time and effort. Also, they are able to leverage their offshore marine technical expertise.”
Shell already has taken a 50per-cent stake in a 680-megawatt offshore-wind farm in Dutch waters and is seeking to expand that footprint, according to Gainsborough. S
hell envisions farms that are more than 15 times bigger in order to increase the technology’s competitiveness and reduce costs, he said.
“The route to do this would be fewer, larger integrated projects, each one up to 10 gigawatts with an anchor who takes the biggest risk for about half the project,” he said. “What we’ve learned from oil and gas is that scale really does matter. You’ve got to have a much bigger balance sheet than many of the players that play today.” Royal Dutch Shell (RDS.B) Close: $55.67 (U.S.), down 78¢

BLOOMBERG. 2017 M06 15. Solar Power Will Kill Coal Faster Than You Think. Bloomberg New Energy Finance’s outlook shows renewables will be cheaper almost everywhere in just a few years.
by Jess Shankleman  and Hayley Warren

Solar power, once so costly it only made economic sense in spaceships, is becoming cheap enough that it will push coal and even natural-gas plants out of business faster than previously forecast.

That’s the conclusion of a Bloomberg New Energy Finance outlook for how fuel and electricity markets will evolve by 2040. The research group estimated solar already rivals the cost of new coal power plants in Germany and the U.S. and by 2021 will do so in quick-growing markets such as China and India.






The scenario suggests green energy is taking root more quickly than most experts anticipate. It would mean that global carbon dioxide pollution from fossil fuels may decline after 2026, a contrast with the International Energy Agency’s central forecast, which sees emissions rising steadily for decades to come.

“Costs of new energy technologies are falling in a way that it’s more a matter of when than if,” said Seb Henbest, a researcher at BNEF in London and lead author of the report.

The report also found that through 2040:

• China and India represent the biggest markets for new power generation, drawing $4 trillion, or about 39 percent all investment in the industry.
• The cost of offshore wind farms, until recently the most expensive mainstream renewable technology, will slide 71 percent, making turbines based at sea another competitive form of generation.
• At least $239 billion will be invested in lithium-ion batteries, making energy storage devices a practical way to keep homes and power grids supplied efficiently and spreading the use of electric cars.
• Natural gas will reap $804 billion, bringing 16 percent more generation capacity and making the fuel central to balancing a grid that’s increasingly dependent on power flowing from intermittent sources, like wind and solar.

BNEF’s conclusions about renewables and their impact on fossil fuels are most dramatic. Electricity from photovoltaic panels costs almost a quarter of what it did in 2009 and is likely to fall another 66 percent by 2040. Onshore wind, which has dropped 30 percent in price in the past eight years, will fall another 47 percent by the end of BNEF’s forecast horizon.

That means even in places like China and India, which are rapidly installing coal plants, solar will start providing cheaper electricity as soon as the early 2020s.

“These tipping points are all happening earlier and we just can’t deny that this technology is getting cheaper than we previously thought,” said Henbest.



Coal will be the biggest victim, with 369 gigawatts of projects standing to be cancelled, according to BNEF. That’s about the entire generation capacity of Germany and Brazil combined.

Capacity of coal will plunge even in the U.S., where President Donald Trump is seeking to stimulate fossil fuels. BNEF expects the nation’s coal-power capacity in 2040 will be about half of what it is now after older plants come offline and are replaced by cheaper and less-polluting sources such as gas and renewables.

In Europe, capacity will fall by 87 percent as environmental laws boost the cost of burning fossil fuels. BNEF expects the world’s hunger for coal to abate starting around 2026 as governments work to reduce emissions in step with promises under the Paris Agreement on climate change.



“Beyond the term of a president, Donald Trump can’t change the structure of the global energy sector single-handedly,” said Henbest.

All told, the growth of zero-emission energy technologies means the industry will tackle pollution faster than generally accepted. While that will slow the pace of global warming, another $5.3 trillion of investment would be needed to bring enough generation capacity to keep temperature increases by the end of the century to a manageable 2 degrees Celsius (3.6 degrees Fahrenheit), the report said.

The data suggest wind and solar are quickly becoming major sources of electricity, brushing aside perceptions that they’re too expensive to rival traditional fuels.

By 2040, wind and solar will make up almost half of the world’s installed generation capacity, up from just 12 percent now, and account for 34 percent of all the power generated, compared with 5 percent at the moment, BNEF concluded.

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LGCJ.: