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Volatile time expected on markets: traders look to U.K. referendum, Fed meeting

Stock markets are in for a volatile time this week as traders look to the U.S. Federal Reserve for hints about whether the central bank will hike interest rates before the middle of next year and a referendum that will decide whether Scotland leaves the United Kingdom.

"A lot of volatility, I think, this week," said Andrew Pyle, senior wealth adviser and portfolio manager at ScotiaMcLeod in Peterborough, Ont.

"Flip a coin — do I watch what the Scots are doing or do I try to figure out what the Fed is doing?"

Markets have generally come around to the view that the Fed will up rates sometime next year, likely in mid-2015. Rates have been near zero since the financial collapse of 2008.

But the economy has improved to a point where it is thought the U.S. central bank can finally act and now traders are wondering if the Fed could move even earlier.

Specifically, they will be looking at the statement released by the Fed at the end of its planned one-day meeting on Wednesday to see if there has been a change in key language.

For some time, the Fed has reassured markets that "it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends."

That quantitative easing program is widely expected to end at the end of October when the Fed finally ends its monthly bond purchases.

Pyle said at some point the Fed will adopt a more hawkish tone on interest rates and remove that language.

"However, it's not clear that that meeting is next week's meeting," he said.

Meanwhile, after largely ignoring the Scottish independence referendum campaign, markets were jolted to attention last week in the wake of a poll that showed the race is now too close to call.

And that has created much uncertainty about how trading desks will react the morning after.

"No one seems to know what's going to happen here. Do they take their own currency?" asked Pyle.

"I don't think it's going to be earth shattering. Essentially, global capital markets — do they really care a bunch of Scots want to leave the union versus what is going on in Ukraine and whether the Fed hints at a rate hike in January? Those are the bigger issues right now."

Uncertainty about the Fed and the referendum made for tepid stock markets last week, where the TSX shed 0.24 per cent per cent while the Dow industrials lost 0.87 per cent.

But the Canadian dollar had a dreadful week, losing 1.76 U.S. cents to a five-month low of 90.14 cents US as the greenback appreciated on Fed rate speculation and uncertainty about the future of the U.K.

At the same time, lower oil prices are also having an impact on the commodity-sensitive loonie.

"One thing that has happened is that oil prices have slipped from over $100 pretty consistently through the summer. We're at the low 90s now and that's an under-appreciated fact for Canada that we have become more and more a bit of a one trick pony on energy," said Mark Chandler, head of Canadian FIC strategy at RBC Dominion Securities.

On the economic front, markets will look to the August reading on Canadian inflation.

Statistics Canada is expected to report Friday that the index was flat last month following a 0.2 per cent dip in July, leaving the annualized rate at 2.1 per cent.

Manufacturing shipments data for July will be released on Tuesday. CIBC said in a commentary that it expects shipments to rise by a solid 1.4 per cent, boosted by a strong auto sector.

In the U.S., investors will consider CPI data for August on Wednesday.

A flat CPI showing is also expected in the U.S. following a 0.1 per cent increase in July. This would leave the American inflation rate at an annualized rate of 1.9 per cent.

The August reading on housing starts will be released on Thursday and CIBC said it is looking for starts to ease to an annualized pace of 1.045 million following a strong gain in July.

The Canadian Press


What next? If Scotland votes for independence, prepare for intense talks and a messy divorce

LONDON - How do you divorce after a 300-year union? It's complicated, and there is a deadline.

If Scots vote yes to separation on Thursday, a clock starts ticking down to March 24, 2016 — the independence day declared by the Scottish government.

The British and Scottish administrations have agreed that they will recognize the outcome of the referendum and appoint negotiators to work out the details of separation "in the best interests of the people of Scotland and of the rest of the United Kingdom."

But there is disagreement on many issues, and only 18 months to redraft laws, establish international agreements and work out relationships with international organizations.

Robert Hazell, head of the Constitution Unit at University College London, says that is an "impossible timetable," and estimates it could take up to three years to hammer out the details.

Some of the key issues:



The Yes and No campaigns have very different assessments of Scotland's financial picture, including its share of Britain's national debt and North Sea oil reserves.

The pro-independence Scottish government says Scotland would be entitled to 90 per cent of Britain's oil wealth — based on divvying up the two countries' waters — but only liable for about 8 per cent of its 1.3 trillion pound ($2.1 trillion) national debt, based on its share of the U.K. population.

The British government disputes this, pointing out that Scotland has higher per capita public-sector spending than England and so is more indebted.

Scottish independence leader Alex Salmond has signalled he could play hardball.



Salmond says that Scotland wants to remain in the United Nations, the European Union and NATO, and he anticipates little difficulty in keeping those seats.

Opponents say re-admission cannot be guaranteed. NATO, in particular, may be perturbed by Salmond's promise to remove nuclear weapons from Scottish territory.

That's not so much a problem for Scotland — nuclear weapons are not a membership requirement — as for Britain, whose entire nuclear arsenal is based aboard submarines at the Faslane naval base in western Scotland.

Adm. Mark Stanhope, a former head of the Royal Navy, has said that moving the weapons "would add a dangerous period of destabilization in our nuclear defence posture at a time when the international picture is clearly deteriorating."

The Royal United Services Institute, a military think-tank, estimates that moving the weapons could cost several billion pounds (dollars) and take until 2028. In the shorter term, Salmond may seek to use the base as a bargaining chip in negotiations with Britain.

Opponents of independence also say the loss of Scotland would sharply reduce Britain's clout on the world stage. It could endanger its place in the G-7 group of wealthy industrialized nations and its seat on the United Nations Security Council, although Salmond says Scotland would support Britain in efforts to keep the security council seat.



The day after an independence vote, the pound sterling will remain Scotland's official currency. The Scottish government wants to keep it in the long term as well — as a key prop of stability amid the uncertainty independence would bring.

British officials and bankers say it's not that simple. Bank of England governor Mark Carney has said that "a currency union is incompatible with sovereignty."

Salmond thinks the British government is bluffing. He says "a common-sense agreement on a common currency" is in everyone's best interest.

Another unknown is whether businesses will pull out of Scotland. Financial institutions including the Royal Bank of Scotland and insurance giant Standard Life have announced plans to transfer some operations south of the border to ensure they remain part of British tax and currency systems.

Salmond says these are administrative measures and that the firms will keep most of their thousands of jobs in Scotland — but only time will tell.



At the moment only a blue-and-white billboard informs motorists and train passengers that they have passed from England into Scotland, and border checks will not be set up the day after an independence vote.

Salmond said there is "no danger" of such border formalities, saying Scotland would become part of the passport-free Common Travel Area Britain operates with the Channel Islands and the Republic of Ireland.

He says Scotland, like Britain, will be a member of the EU. But opponents say membership cannot be guaranteed; countries such as Spain, that face strong secessionist movements, may be uneasy about quick recognition.

If Scotland remains outside the EU — or if Britain leaves, as some London politicians wish — there may be no alternative to border checks. Britain could also take umbrage if Scotland adopts much more liberal immigration policies.

Scots will be getting different passports if they opt for independence, even if they don't need them to cross the border. The Scottish government says all British citizens living in Scotland will automatically be considered Scottish citizens, as will Scotland-born Britons who live elsewhere. They will be able to apply for Scottish passports from independence day in 2016, and would be allowed to retain dual Scottish and British nationality.



One thing both sides agree on — Queen Elizabeth II will continue to be the Scottish monarch after independence.

Scotland and England shared a monarch for a century before they united politically in 1707, and the queen remains head of state in Canada, Australia and several other former British colonies.

The queen will keep her Balmoral estate in Scotland, the royal family's traditional summer-vacation destination.

Many other symbols of state are up for grabs. Scotland will likely adopt the Saltire, a blue-and-white flag that already flies alongside the Union Jack over government buildings in Edinburgh.

The red, white and blue British flag combines the emblems of its member regions, including England's red-and-white Cross of St. George and Scotland's blue. A redesign of the iconic banner may be in order.


Follow Jill Lawless at

The Canadian Press

Netflix gains new ground in Europe - but faces competition, regulation in film-proud France

PARIS - Netflix is tapping into six new markets Monday hoping to gain a big subscriber base around Europe, but is facing a frosty welcome in France. Well-established French competitors are trying to head off a Netflix wave, the government wants oversight and the cinema industry wants Netflix to invest heavily in French productions.

The video-streaming giant, which has more than 50 million subscribers in 40 countries, this year earmarked $400 million to expand further internationally. It's launching now in Germany, Austria, Switzerland, France, Belgium and Luxembourg, after setting up in Britain, Ireland, Denmark, Finland, Norway, Sweden and the Netherlands in recent years.

The presence of Netflix, which has headquarters in Los Gatos, California, is welcome in most European countries, but less so in France, where Netflix hopes to reach a third of French homes in the next five to 10 years. Netflix declined to comment on its challenges in France before the official launch Monday.

The company was a pioneer in the field in the U.S., and enjoyed new success by creating original content such as the series "House of Cards." But video-on-demand services are now already well-established in many European markets.

Canal+, France's main pay-TV operator, has half a million subscribers for its CanalPlay, started in 2011, and moved Wednesday to head off a competitive blow from Netflix. Canal+, which already owns French rights to "House of Cards," launched a new partnership with HBO as well as the possibility to pre-download series and movies to watch later without an internet connection. It also announced it will create French and American-produced TV series.

"What is impressive with Netflix is its technological and marketing abilities," said Frederic Goldsmith, from a French-based group of movie producers, "but its service isn't new."

Patrick Holzman, CanalPlay's director, is banking on their "French touch" and proximity with customers. "Our strategy is the same, with or without Netflix," said Holzman.

Bruno Delecour, head of FilmoTV, one of France's first video-on-demand companies, said the buzz around Netflix is positive for the French market, because it incites new households to try video-on-demand services. But Delecour remains vigilant. The entrepreneur decided to focus on developing a specialized offer in movies rather than competing with a generalized content provider like Netflix.

"We've been preparing for competitors for years. We made the choice to occupy one segment of the market and invested heavily accordingly."

In Germany, experts have said little impact is expected by Netflix's arrival, as the country already offers a considerable amount of free and pay-TV.

Another challenge in France is a requirement that 40 per cent of content on French radio, TV and movies in theatres must be of French origin.

Because Netflix's European headquarters are in Amsterdam, the company does not have to comply with the rule, which is designed to protect domestic creativity.

But French movie and television industry experts rally around the idea of the "French Exception." ''Offering only American series will not work," said Pascal Rogard, director of France's Society of Dramatic Authors and Composers.

Aware of this, Netflix has already planned to produce an eight-episode television drama series called "Marseille," written by French award-winning writer Dan Frank and set to start in late 2015.

But for some contributors to French cinema, this investment effort falls short.

"We welcome the competition," said Rogard, "but only if they're playing with the same rules."

Netflix will have to comply with some French and European regulations. Notably, they will be barred from streaming films under three years old. From January 2015 onwards, Netflix will also have to pay a two per cent tax if their annual earnings are more than 10 million euros, following a recent decision by the French Culture Ministry to tax operators based abroad.

In France many close to the film industry fear Netflix will drag subscribers away from Canal+, which is currently the main financier of French-made films.

"There is a particularity in France in that television channels finance domestic productions. Their level of investment is calculated according to the number of subscribers," Florence Gastaud, head of a union of French producers and authors, explained. "Therefore if the number of subscribers goes down (as some move to a Netflix subscription), the investment in domestic production goes down."

In another possible hurdle, France's Council of State, a body that advises the government on legal issues, on Tuesday recommended government oversight over the algorithm that Netflix uses to present series and movies, to make sure French and European content is well positioned.

Developing domestic production is not such a major concern in other markets.

In the Netherlands, where Netflix launched last year, on-demand media services aren't required to adhere to a quota of 50 per cent European content for public and commercial television channels, just expected to generally promote the representation and access to European content, according to the Ministry of Education and Culture.

Netflix offers catalogue Dutch films but does not offer popular Dutch TV shows. The two largest Dutch-language programming, SBS and RTL, teamed up to offer a Netflix competitor called NLZiet in July. In its latest report, the new company claims 10,000 customers — a number considerably smaller than the hundreds of thousands of Dutch Netflix subscribers.


Toby Sterling contributed from Amsterdam and Kirsten Grieshaber contributed from Berlin.

The Canadian Press


CBC/Radio-Canada bosses say Canadians ready to pay to get broadcaster

GATINEAU, Que. - The heads of CBC/Radio-Canada say Canadians are ready to pay to get the broadcaster's content even if many consider it an acquired right.

Steven Guiton, one of the leaders of the publicy owned broadcaster, told hearings at the federal broadcast regulator on Friday that "95 per cent of Canadians have come to realize that you pay for TV."

"Canadians are there," said Guiton, the Crown corporation's vice-president of technology and chief regulatory officer.

"There is a group, and it's not a criticism of them, who still believe there should be something in this free. It's not free. It costs money."

The CBC/Radio-Canada executives hammered the traditional television business models and told the Canadian Radio-television and Telecommunications Commission hearings they are in favour of revamping it.

They said the current system has become less profitable, pointing out that conventional television content providers do not get any cut of cable TV bills paid by consumers.

"Something's not working," CBC/Radio-Canada president Hubert Lacroix later told reporters.

The corporation also cited the multiplication of platforms and new players in the market, saying providers of online video services such as Netflix should contribute financially to the Canadian system as much as other industry players.

Heritage Minister Shelly Glover said Monday the government has no intention of regulating or taxing the Internet content providers, a proposal the New Democratic Party described as "indecent."

Lacroix pointed to Glover's position and told reporters there are still outstanding questions to be addressed.

CBC/Radio-Canada also suggested in its testimony that a fund be established to pay for the production of local news, another service they said Canadians support.

However, the CBC/Radio-Canada executives would not say how much consumers would have to pay for the broadcaster's service despite questions from journalists and CRTC commissioners.

"I don't know what that will be," Guiton told the hearing. "Is it going to be two cents, is it going to be a buck? I don't know. None of us in this room know."

Guiton said he didn't think this was the time to have that discussion anyway.

Lacroix insisted new sources of funding are vital for CBC/Radio-Canada to ensure its survival or else the quality of its programming will decline.

Jean-Pierre Blais, chairman of the CRTC, suggested the broadcaster's funding model is possibly a greater challenge than any regulations it may face.

CBC/Radio-Canada has already undertaken deep cuts to its workforce to balance its books, aiming to reach $130 million in savings by the end of the year — the equivalent of 657 full-time jobs.

Lacroix preferred to avoid the issue in testimony, saying the debate at the CRTC is about the business environment facing those in the Canadian broadcasting and telecommunications industry.

"Government appropriation is something completely different from the conversations we're having today and the suggestions we're putting forward," he said. "This is about the system."

The CRTC hearings will continue until Sept. 19. They are aimed at developing new rules to govern the television industry in the wake of changes brought about by new technology and services.

The Canadian Press

OSC tells Alboini to pay $560,000 for breaking investment industry rules

TORONTO - Toronto businessman Victor Alboini has been ordered to pay nearly $560,000 and stripped of various professional credentials for up to two years — although Alboini says he plans to appeal the ruling and hopes to have all of the allegations and sanctions dismissed by an Ontario court.

The sanctions, announced Friday by the Ontario Securities Commission, were substantially less than what had been requested by the OSC's enforcement branch and an investment industry disciplinary body known as IIROC.

A OSC panel headed by OSC vice-chairman James Turner ordered Alboini to pay a $250,000 fine to the Investment Industry Regulatory Organization of Canada, give back $244,985 in commissions that he received for his work at Northern Securities and pay $62,500 for costs incurred by IIROC.

The OSC panel also suspended all of Alboini's investment industry registrations for one year and his higher-level UDP designation for two years.

The OSC panel had been asked to impose a permanent removal of Alboini's designation as an ultimate designated person, which allows him to head a registered securities brokerage, as well as a two-year ban on all of his other industry registrations and a total of more than $718,000 from him, including a $500,000 fine to IIROC.

IIROC is a national self-regulating organization for investment dealers that sell stocks, bonds and other securities to clients. It shares responsibility for policing activities by member companies and their employees with other organizations, including provincial commissions such as the OSC.

The OSC previously found, among other things, that Alboini was in a conflict of interest as chief executive officer of Northern Securities Inc. and as a shareholder and CEO of Jaguar Financial Corp. (TSXV:JFC).

Alboini said Friday that he has already filed an appeal to Ontario divisional court against an OSC decision on the allegations against him issued in December 2013. He said that appeal will be amended to include reasons for appealing the sanctions announced Friday.

"We are going to be requesting that all of the proceedings be dismissed," Alboini said in a telephone interview.

He said there are a number of grounds for the appeal, most importantly that the $16 million of client money at the heart of the allegations "was always there."

"That has been ignored, all the way up so far," Alboini said.

"The second item was the incredible bias displayed by the IIROC panel," he said. "The most important bias was that they refused to give us reasons for their judgment (on the merits) and we walked into an IIROC sanctions hearing without their reasons. That is so incredibly inappropriate that that should be fatal to the IIROC proceedings."

"In other words, they should be dismissed. That will be our position."

The OSC also imposed lesser sanctions on two men and Northern Securities, which has suspended operations as a securities dealer and now operates as an investment bank and advisory firm called Added Capital, headed by Alboini.

Northern Securities was ordered to pay a $50,000 fine to IIROC and $10,000 towards its costs. It suspended Frederick Vance, Northern's chief compliance officer, from working as a supervisor for three months. It ordered that Douglas Chornoboy, Northern's former chief financial officer, be reprimanded but overturned all other penalties against him.

Most of OSC's sanctions against the three men and the company were less than what was imposed by IIROC. It originally imposed $450,000 of financial penalties against Northern Securities, $100,000 against Vance and $40,000 against Chornoboy.

The IIROC's ruling was appealed to the OSC, which in a merits decision issued in December 2013 upheld many of the IIROC panel's decisions but concluded that the IIROC panel's conduct was procedurally unfair to Alboini when it determined costs and sanctions.

Alboini has been a long-time activist investor who, in the past, was an outspoken advocate for restructuring Research In Motion, now called BlackBerry (TSX:BB).

He also was the driving force at Lakeside Steel of Welland, Ont. — a pipe and tubing company that was later purchased by a Chicago company — when the IIROC investigation of his activities at Northern Financial was announced in August 2011.

— Follow @DavidPaddon on Twitter.

The Canadian Press

Canada ratifies investment deal with China despite opposition warnings

OTTAWA - Canada has finally ratified the contentious Foreign Investment Protection Agreement with China amid a series of recent tensions between the two countries that had placed Prime Minister Stephen Harper's scheduled Chinese visit this fall on tenterhooks.

International Trade Minister Ed Fast announced Friday that the pact, known as FIPA, had been signed by Canada two years after its terms were first negotiated by the two countries.

"Investment agreements provide the protection and the confidence Canadian investors need to expand, grow and succeed abroad," Fast said in a news release.

"We remain committed to opening new markets around the world for Canadian companies, including in the fast-growing Asia-Pacific region. This FIPA will create jobs and economic opportunities for Canadians in every region of the country."

China is Canada's No. 2 trading partner, and Harper is scheduled to visit Beijing in November for the annual APEC summit.

The deal, however, has been met with suspicion and alarm not just by the government's usual critics, but by senior Conservative cabinet ministers too.

Employment Minister Jason Kenney, for example, expressed misgivings about forging closer ties with China as recently as this spring.

The government had failed to ratify FIPA amid a series of recent tensions in Canada-China relations. Earlier this summer, Harper accused the Chinese of a cyberattack on the National Research Council, while the Chinese claimed a Canadian couple living in China were spies.

Late last month, a Chinese delegation led by assistant foreign minister Zheng Zeguang visited Ottawa to discuss the relationship with high-level Foreign Affairs personnel and Ray Novak, Harper's chief of staff.

The failure to ratify FIPA was creating additional tensions between the two nations.

Wenran Jiang, a China expert from the University of Alberta and director of the Canada-China Energy and Environment Forum, said the ratification will help thaw the icy relationship.

"This is a major step by the Canadian government — and to be more specific, by Harper himself and the cabinet — to mend the fence prior to his November China trip," he said.

Jiang added it will also help the prime minister plan a successful bilateral visit with his Chinese hosts during APEC, the prospects of which were dim until Friday.

"The Canadian effort of approving FIPA at this exact moment is not accidental," he said.

Canada has similar investment agreements with several other nations, including Russia, but has separate rules for investing for each country.

Proponents of the FIPA model, enshrined in the North American Free Trade Agreement, say it sets standards of non-discrimination for foreign investment and guarantees the rule of law in the event of disputes.

But opponents decry the agreements as part of a broader global corporate agenda that allows foreign companies to use binding arbitration to override Canadian laws in a range of areas — including the environment and energy — on the basis that they nullify the protections guaranteed in the deals.

Green Party leader Elizabeth May accused Harper of selling out to China by ratifying FIPA.

"I am certain no Canadian company will ever benefit from this agreement," she said.

The NDP was equally scornful.

"Instead of admitting their mistake and getting a deal that actually benefits Canadian companies, the Conservatives have locked Canada into a badly one-sided agreement for the next three decades," said trade critic Don Davies.

"In effect, it will give China access to, and control over, some of Canada's natural resources for the next 31 years and subject Canadian taxpayers to enormous liabilities through investor lawsuits."

Despite the ratification of FIPA, other Canada-Chinese initiatives remain in limbo, including the so-called economic complementarities study that was announced during Harper's 2010 visit to China. It was meant to spur wide-ranging trade negotiations and improve economic ties between Canada and China.

"After the complementarities study was announced, China immediately made an offer to negotiate a free-trade agreement, but Canada has so far not agreed to that," said Sarah Kutulakos, president of the Canada-China Business Council.

"China has been in a position where it's saying: 'Hey, Canada, we've been really putting forward our best efforts to do business with you, and you don't seem very interested.' The question is how long will China keep trying."

Kutulakos praised Canada's ratification of FIPA, saying it will help ease tensions in the relationship and provide a level playing field for both Canadian investors in China and Chinese investors in Canada.

— With files from Stephanie Levitz and Mike Blanchfield

Follow Lee-Anne Goodman on Twitter at @leeanne25

The Canadian Press

Most actively traded companies on the TSX

Some of the most active companies traded Friday on the Toronto Stock Exchange:

Toronto Stock Exchange (15,531.58, down 2.74 points):

B2Gold Corp. (TSX:BTO). Miner. Down two cents, or 0.85 per cent, to $2.34 on 7.6 million shares.

Energizer Resources Inc. (TSX:EGZ). Miner. Up 7.5 cents, or 44.12 per cent, to 24.5 cents on 6.4 million shares.

Manulife Financial Corp. (TSX:MFC). Insurance. Up 24 cents, or 1.09 per cent, to $22.24 on 5.9 million shares.

Orbite Aluminae Inc. (TSX:ORT). Up three cents, or 6.74 per cent, to 47.5 cents on 3.1 million shares.

Yamana Gold Inc. (TSX:YRI). Miner. Down six cents, or 0.74 per cent, to $8.09 on three million shares.

Eldorado Gold Corp. (TSX:ELD). Miner. Up 12 cents, or 1.44 per cent, to $8.48 on 2.9 million shares.

Companies reporting major news:

Hudson's Bay Company (TSX:HBC). Retail. Up 20 cents, or 1.13 per cent, to $17.87 on 1.3 million shares. Canada's oldest retailer cut its second-quarter loss to $36 million or 23 cents per diluted share from continuing operations. That compared with a loss of $66 million or 55 cents per diluted share a year ago. Retail sales were $1.76 billion, an increase of $821 million or 86.6 per cent from $948 million for the previous year, primarily due to the inclusion of U.S. luxury retailer Saks Inc.

Bombardier Inc. (TSX:BBD.B). Aerospace. Up one cent, or 0.27 per cent, to $3.70 on 1.8 million shares. Hundreds of striking workers at the Bombardier light rail plant in Thunder Bay, Ont., are expected back on the job soon after ratifying a new three-year collective agreement. The Thunder Bay plant builds subway cars and streetcars for the Toronto Transit Commission, as well as cars for the GO train regional commuter train service.

The Canadian Press

Ski-Doo maker BRP says new products will help drive stronger second-half results

MONTREAL - BRP Inc. says it expects a string of new product launches will drive the recreational products company to a stronger second half following a money-losing second quarter.

"Our first half of the year is more difficult than originally planned but our second half will be stronger than planned," BRP CEO Jose Boisjoli said during a conference call with analysts Friday.

The Quebec-based maker of Ski-Doo snowmobiles and Sea-Doo personal watercraft said new products that will only begin shipping in the third and fourth quarter include new model snowmobiles, new all-terrain vehicles like the Outlander and new outboard engines.

It also unveiled a new Can-Am off-road four-wheeled vehicle Friday and said it would launch a new Spyder Roadster highway three-wheeler on Sept. 23.

BRP had a $3.6-million net loss or three cents per diluted share in the three months ended July 31. That compared with a net loss of $7.9 million or seven cents per diluted share in the year-earlier period.

Excluding one-time items, BRP had an adjusted loss of $8.8 million or seven cents per share in the second quarter, compared with an adjusted profit of $7.6 million or seven cents per share in the prior year. BRP had been expected to report eight cents per share in adjusted profit, according to analysts polled by Thomson Reuters.

BRP (TSX:DOO) said the $16.4-million year-over- year decline in adjusted earnings was primarily due to increased costs of sales and marketing, the ramp-up of production at a Mexican factory and an unfavourable foreign exchange variation of $10 million.

Revenues were $780 million, up from $620.9 million cent year-over-year and well above expectations of $705.5 million. The increase was mainly due to higher sales in seasonal and year-round products along with an increase in sales of related parts, accessories and clothing.

International sales increased eight per cent, despite the challenges in Russia and a soft economy in South America.

Revenues from seasonal products such as Ski-Doos and Sea-Doos increased 84.8 per cent to $259.8 million for the three-month period ended July 31.

The recovery from a soft start to the year was driven by the new entry-level Sea-Doo Spark and higher volumes of snowmobiles for the upcoming season. BRP said the Spark should generate around $125 million in revenues, up from its original forecast of $65 million to $70 million.

Revenues from year-round products, such as off-road vehicles, increased 6.9 per cent to $297.4 million in the quarter. Higher promotional rebates drove shipments of Can-Am side-by-side vehicles while sales also increased for all-terrain vehicles.

Propulsion revenues decreased 1.7 per cent to $84.4 million due mainly to lower sales of outboard engines. Revenues from parts, accessories and clothing increased 19 per cent to $138.4 million.

The company maintained its outlook for full-year adjusted earnings to grow by 10 to 17 per cent to reach $1.55 to $1.65 per share as total revenues increased by nine to 13 per cent.

Benoit Poirier of Desjardins Capital Markets described the second-quarter results as a "non-event" but said investors will remain skeptical about whether BRP can achieve that guidance.

Meanwhile, the analyst said the new turbo-charged Can-Am Maverick unveiled Friday is a direct response to the Polaris RZR XP 1000 launched in the summer of 2013.

"While weight and price specifications are not available, we believe this product will be well received by customers and dealers," he wrote in a report.

Cameron Doerksen of National Bank Financial questioned if the company is being realistic in maintaining its full-year guidance requiring a 48 per cent boost in EBITDA in the second half of the year.

"While this appears to be aggressive, we (also) think it is potentially achievable," he wrote.

The analyst sees strong growth in the powersports industry, improving consumer confidence that will drive spending and a better second half that should help BRP's stock price.

On the Toronto Stock Exchange, BRP's shares set a new 52-week low of $24.87 before closing down 94 cents or 3.64 per cent at $24.91 on Friday.

Follow @RossMarowits on Twitter

The Canadian Press

NFL: Nearly 3 in 10 ex-players to face Alzheimer's or moderate dementia, far more than public

PHILADELPHIA - The NFL estimates that nearly three in 10 former players will develop debilitating brain conditions, and that they will be stricken earlier and at least twice as often as the general population.

The disclosure Friday comes in separate actuarial data the league and players' lawyers released as part of their proposed $765 million settlement of thousands of concussion lawsuits.

Both the league and lead players' lawyers expect about 6,000 of the 19,400 retired players, or 28 per cent, to develop Alzheimer's disease or at least moderate dementia. Dozens more will be diagnosed with Lou Gehrig's or Parkinson's disease during their lives, according to the data.

The reports were prepared for Senior U.S. District Judge Anita B. Brody, who is presiding over the class-action lawsuit in Philadelphia that accuses the NFL of hiding information that linked concussions to brain injuries.

The NFL report said the ex-players' diagnosis rates would be "materially higher than those expected in the general population" and would come at "notably younger ages."

The proposed settlement includes $675 million for player awards, $75 million for baseline assessments, $10 million for research and $5 million for public notice. It wouldn't cover current players.

Both sides have insisted that $675 million would be enough to cover awards for 21,000 former players, given fund earnings estimated at 4.5 per cent annually. Brody initially had concerns the money might run out, while critics complained the NFL's offering is a pittance given its $10 billion in annual revenues.

The NFL, in its report, said its estimates were "reasonable and conservative," and erred on the side of "overstating the number of players who will develop (illnesses)" to ensure the fund would be sufficient.

The league agreed this summer to remove the cap on its contributions, saying it would pay out more than $675 million if needed, and pay more over time if needed. Brody then granted preliminary approval of the plan and scheduled a fairness hearing on the proposed settlement for Nov. 19, when critics can challenge it.

"This report paints a startling picture of how prevalent neurocognitive diseases are among retired NFL players," lead player lawyers Christopher Seeger and Sol Weiss said in a statement.

Lawyers for some players have complained that the negotiations have been cloaked in secrecy, leaving them unsure of whether their clients should participate or opt out.

With an Oct. 14 deadline looming, "we still lack 'an informed understanding of the dynamics of the settlement discussions and negotiations.' Indeed, we have zippo understanding," lawyer Thomas A. Demetrio, who represents the family of Dave Duerson, wrote in a motion Thursday. Duerson, the popular Chicago Bears safety, committed suicide in 2011.

The family of former linebacker Junior Seau, who also committed suicide, has announced plans to opt out. He and Duerson are among about 60 former players diagnosed after their deaths with the brain decay known as chronic traumatic encephalopathy. Known as CTE, it can only be diagnosed after death.

Friday's release of the actuarial data was designed to address some of the complaints.

Critics also lament that the settlement plan offers no awards to anyone diagnosed with CTE in the future, and that the Alzheimer's and dementia awards are cut by 75 per cent for players who also suffered strokes.

The plan would pay up to $5 million for players with amyotrophic lateral sclerosis, also known as Lou Gehrig's disease; $4 million for deaths involving CTE; $3.5 million for Alzheimer's disease; and $3 million for moderate dementia and other neurocognitive problems.

However, only men under 45 who spent at least five years in the league would get those maximum payouts. The awards are reduced, on a sliding scale, if they played fewer years or were diagnosed later in life.

The players' data therefore predicts the average payouts, in today's dollars, to be $2.1 million for ALS, $1.4 million for a death involving CTE, and $190,000 for Alzheimer's disease or moderate dementia. The average ex-player being diagnosed with moderate dementia is expected to be 77 with four years in the NFL.

Only 60 per cent of those eligible for awards are expected to enter the program, based on prior class-action litigation. The payouts would top $900 million, adjusted for inflation.

The 21,000 class members also include the estates of 1,700 deceased players.

The Canadian Press

TSX lacklustre ahead of Fed meeting, U.K. referendum; HBC earns provide support

TORONTO - The Toronto stock market closed little changed Friday with traders in a risk-averse mood going into the weekend ahead of next week's U.S. Federal Reserve meeting on interest rates and a referendum that will decide whether Scotland leaves the United Kingdom.

The S&P/TSX composite index slipped 2.74 points to 15,531.58.

Hudson's Bay Co. (TSX:HBC) provided some support as Canada's oldest retailer cut its second-quarter loss to $36 million or 23 cents per diluted share from continuing operations. That compared with a loss of $66 million or 55 cents per diluted share a year ago. Retail sales were $1.76 billion, an increase of $821 million or 86.6 per cent from $948 million for the previous year, primarily due to the inclusion of U.S. luxury retailer Saks Inc. HBC shares erased early declines and gained 20 cents to $17.87.

The Canadian dollar was at a fresh five-month low, down 0.38 of a cent to 90.14 cents US as the greenback continued to appreciate against the loonie amid economic growth worries and the timing of the next U.S. rate increase.

The Dow Jones industrials dropped 61.49 points to 16,987.51 amid data showing that August retail sales rose 0.6 per cent from July, led by a strong showing in the auto sector.

The Nasdaq shed 24.21 points to 4,567.6 and the S&P 500 index slipped 11.91 points to 1,985.54.

Also, the University of Michigan's widely-watched consumer index strengthened in September, rising to 84.6 from 82.5 in August.

Anticipation is building that the Federal Reserve is closer to winding down its economic stimulus and raising interest rates. Markets generally expect the central bank to move on interest rates sometime around the middle of next year, but analysts will be scanning the Fed announcement for indications that it could move even earlier in 2015.

Also, there has been heightened concern about the Scottish referendum slated for Sept. 18, particularly after polls released showed the results too close to call.

Traders also considered the effects of the European Union and the U.S. levying another round of sanctions on Russia for its involvement in Ukraine.

The European Union announced sanctions against Russia that will toughen financial penalties on the country’s banks, arms manufacturers and its biggest oil company, Rosneft. The United States also announced that its sanctions would be extended. Analysts point out that there will be a price for imposing sanctions, which would weigh on the European economy that's still struggling to avoid slipping back into recession.

"The new sanctions . . . are likely to see a retaliation, with media reports suggesting they could take the form of a Russian ban on European car imports," said Mark Chandler, head of Canadian FIC strategy at RBC Dominion Securities.

"As it relates to the growth narrative in Europe and, specifically for Germany, such a development may begin to hurt broader economic repair," Chandler said.

The base metals sector was the leading advancer, up almost one per cent while December copper was ahead a penny at US$3.11 a pound. But the sector has fallen 4.5 per cent over the last month because of global growth concerns.

Financials were also supportive, up 0.4 per cent.

The gold sector led decliners, down about 0.9 per cent while December bullion faded $7.50 to US$1,231.50 an ounce.

The TSX energy sector was down 0.44 per cent as oil prices declined 56 cents to US$92.27 a barrel after hitting a 16-month low in Thursday's session. Prices have been buffeted by a combination of lower demand and higher U.S. production.

Worries about global economic weakness, uncertainty about the Fed and the U.K. referendum made for tepid stock markets this week, where the TSX shed 38 points or 0.24 per cent while the Dow industrials fell 150 points or 0.87 per cent.

The Canadian Press

Economic growth concerns, timing of U.S. rate hike push loonie to five month low

TORONTO - The Canadian dollar fell to a fresh, five-month low Friday amid a generally risk-averse market as the European Union and the U.S. levied another round of sanctions on Russia for its involvement in Ukraine.

Investors are also waiting on next week's U.S. Federal Reserve meeting on interest rates and a referendum that will decide whether Scotland leaves the United Kingdom.

The loonie lost 0.38 of a cent to 90.14 cents US, leaving the loonie with a loss of 1.76 U.S. cents since last Friday's close as elevated concerns about growth also weighed on the dollar.

The Canadian dollar fell almost a full U.S. cent on Thursday alone as weaker than expected Chinese inflation suggested slowing economic growth and pressured commodity-based currencies.

The U.S. greenback has also strengthened amid anticipation that the Federal Reserve is close to winding down its economic stimulus and closer to raising interest rates. Markets generally expect the central bank to move on interest rates sometime around the middle of next year, but analysts will scan the Fed's announcement for indications that it could move earlier.

Overseas, the European Union announced it will toughen financial penalties on Russia's banks, arms manufacturers and its biggest oil company, Rosneft. The United States also announced that its sanctions would be extended. Analysts point out that there will be a price for imposing sanctions since they will weigh on the European economy.

Also, there has been heightened concern about the Scottish referendum slated for Sept. 18, particularly after polls showed the results now are too close to call.

On the economic front, the Teranet-National Bank index of Canadian home prices was up in August, rising almost 0.8 per cent from July. It was the second consecutive month for the index to rise in 10 of the 11 metropolitan markets surveyed. The strongest monthly gains were in Winnipeg, Ottawa-Gatineau and Toronto. Montreal had the only decline.

U.S. retail sales rose by 0.6 per cent in August, which was in line with expectations.

Also, the University of Michigan's consumer index strengthened n September, rising to 84.6 from 82.5 in August.

Oil prices gave up more ground with the October crude contract in New York down 56 cents to US$92.27 a barrel after hitting a 16-month low during Thursday's session. Prices have been buffeted by a combination of lower demand and higher U.S. production.

Elsewhere on the commodity markets, December copper was ahead a penny at US$3.11 a pound, while December gold faded $7.50 to US$1,231.50 an ounce.

The Canadian Press

Hudson's Bay says Ottawa and Quebec aren't major markets for luxury retail

TORONTO - Hudson's Bay says it still sees most of its future growth coming from the high-end retail market even as one of its major competitors, Holt Renfrew, recently announced it was shuttering its stores in two Canadian cities.

Hudson's Bay, which also owns Home Outfitters and Lord & Taylor, is in the midst of preparations to bring the first two Saks Fifth Avenue stores to Canada in the spring of 2016. It also plans on opening the first Canadian store in the Saks' discount chain, Saks Fith Avenue Off 5th, around the same time.

CEO Richard Baker shrugged off news that Holt Renfrew has decided to close its stores in Ottawa and Quebec City in January 2015, adding that he doesn't see it as an indication of a shrinking appetite for luxury retail in the country.

"What happens in Toronto has nothing to do with Ottawa," he said in an interview Friday, following the company's latest earnings release.

"We don't plan on going to Ottawa, or Quebec City, because we don't consider those to be major luxury markets. But we certainly believe that a spectacular city like Toronto can more than handle two luxury department stores."

Baker said Hudson's Bay sees Holt Renfrew as a direct competitor to Saks Fifth Avenue, but doesn't see the upcoming arrival of U.S. retailer Nordstrom as much of a threat.

"We don't consider Nordstrom a luxury retailer, we consider Nordstrom a mid-tier retailer," he said. "We think that Saks and Holt will sit above Nordstrom."

Seattle-based Nordstrom Inc. is set to open its first store in the former Sears location at the Toronto Eaton Centre by the fall of 2016.

HBC said it will eventually bring a total of seven Saks Fifth Avenue stores and as many as 25 Saks Off 5th stores to Canada.

"I just believe that major Canadian cities have been underserved with luxury retail compared to peer cities throughout the United States and throughout the world," said Baker. "It's more typical in major markets throughout the world to have more than one or two luxury purveyors and in any given metro market."

The retailer said its sales jumped almost 87 per cent during its second quarter, helped largely by its acquisition of Saks in 2013 for $2.9 billion.

It reported that it cut its loss by nearly half to $36 million in the period, boosted by strong sales from Saks. That loss of amounted to 23 cents per diluted share from continuing operations, compared with a loss of $66 million or 55 cents per diluted share in the same quarter last year.

Retail sales were $1.76 billion, an increase of $821 million, or 86.6 per cent, from $948 million for the previous year, primarily due to Saks.

Sales growth at Saks Fifth Avenue was led by menswear, gifts and accessories, while Saks Off 5th stores saw strong sales across the majority of its product categories.

Consolidated same-store sales, which refers to stores open for at least a year and a key metric in the retail industry, increased by 1.9 per cent on a local currency basis. Same-store sales at Hudson's Bay and Lord & Taylor grew by 1.1 per cent; Saks Fifth Avenue grew by 2.2 per cent and Saks Off 5th grew by 1.49 per cent.

Online sales, an area where Hudson's Bay has been concentrating efforts, were $162 million, including $116 million from Saks.

The retailer has been working to integrate its Home Outfitters business with the home business of its department store banner. The move has been touted as a way to drive efficiency and bring down costs.

Hudson's Bay has 90 locations, one outlet store and Lord & Taylor operates 49 full-line locations primarily in the northeastern and mid-Atlantic U.S., four Lord & Taylor outlet locations and

Saks Fifth Avenue has 39 U.S. stores, five international licensed stores and Saks Off 5th sells value-priced merchandise through 78 U.S. stores and Home Outfitters is Canada's largest kitchen, bed and bath specialty superstore with 69 locations.

HBC shook off early losses and closed up 20 cents at $17.87 Friday on the Toronto Stock Exchange.

Follow @LindaNguyenTO on Twitter.

The Canadian Press

Pickets down at 2 mines in northern Saskatchewan after deal reached with Cameco

SASKATOON - A tentative deal has been reached between Cameco and its unionized workers at two uranium mines in northern Saskatchewan.

Phil Morin with United Steelworkers Local 8914, which represents workers at the Key Lake and McArthur River mines, says workers took down their picket lines Friday morning.

No details on the agreement have been released.

Cameco (TSX:CCO) says the 535 workers at the two mines are to vote on the proposed contract later this month.

Workers have been off the job since late August.

After they voted to strike, Cameco shut down operations at both sites.

"The union and the company have agreed to withdraw the strike and lockout notices issued on August 26, 2014 and preparations are under way to return workers to the sites and safely resume production while continuing to protect the environment," Cameco said in a news release.

"Unionized workers were flown off the sites on August 29, 2014 five hours before a strike deadline. The operations were maintained in a safe shutdown state by salaried Cameco employees and unionized personnel under an essential services agreement with the union."

(CKBI, The Canadian Press)

The Canadian Press

Defence association hires new president to smooth rocky relations with Ottawa

OTTAWA - The relationship between Ottawa and defence contractors may get smoother as the industry's leading association prepares to name a new president who was deeply involved in drafting the Harper government's military procurement strategy.

The Canadian Association of Defence and Security Industries will appoint Christyn Cianfarani in a public announcement expected soon.

She will replace Tim Page, who resigned last spring to take a senior job with Vancouver Shipyards.

The hiring of Cianfarani, a former employee of Montreal-based CAE, was circulated internally at the defence association this week.

She will be the first woman to lead the association.

A number of failed projects and misfired military procurements in recent years have left the defence industry increasingly frustrated with the government.

The problems include the cancellation last fall of the army's $2-billion close combat vehicle project, the cancellation and restart of the navy's supply ship program and the botched attempt to acquire the F-35 stealth fighter.

Defence industry insiders say Cianfarani's appointment signals what could be an important shift toward warmer relations.

She was a part of the team assembled by Tom Jenkins, the chief executive officer of Open Text, to help reshape the disastrous procurement file for the Conservatives.

Cianfarani, a graduate of the Royal Military College, was seen as a driving force in the development of the procurement strategy.

The Canadian Press

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