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Stock indexes hit new highs

North American stock indexes have made further advances into record high territory today.

The Toronto Stock Exchange's S&P/TSX composite index was at 15,920.52 points after 90 minutes of trading, up 81.89 points from the previous close and above the previous all-time intraday high of 15,865.51.

In New York, the Dow Jones industrial average was at 20,733.81 points, a gain of 109.76 points.

The S&P 500 was up 12.49 points at 2,363.65 and the Nasdaq composite added 21.78 points at 5,860.36, both above their previous all-time highs.

The Canadian dollar was at 76.11 cents US, down 0.13 of a U.S. cent from Friday's close before the holiday weekend.

The April crude contract was at US$54.56, up 78 cents per barrel, and April natural gas contracts were at US$2.76 per mmBTU, down 19 cents.

April gold was down $4.10 at US$1,234.90 an ounce and March copper contracts were up five cents at US$2.75 a pound.





King to gobble Popeyes

Restaurant Brands International says it'll pay $1.8 billion for Popeyes, bringing the fried chicken chain under the same corporate umbrella as Burger King and Tim Hortons.

The move fits Restaurant Brands' strategy of taking over well-known fast-food chains that it believes have the potential for wider expansion. The deal gives Popeyes shareholders $79 per share, a 19 per cent premium from its closing price on Friday.

Restaurant Brands was created after Burger King, controlled by Brazilian investment firm 3G Capital, bought Tim Hortons in 2014. The corporate name it took signalled the company's aim of expanding its stable of fast-food chains. In the meantime, Restaurant Brands has been striking deals with local operators to open additional Burger Kings around the world.

However, Cowen analyst Andrew Charles said last week that the company has not yet accomplished its goal of expanding Tim Hortons internationally. Although Tim Hortons has signed three master franchise development agreements in the Philippines, the United Kingdom and Mexico, Charles noted no stores have yet opened under those deals.

Stephen Anderson, a Maxim Group analyst, noted last week that Popeyes has had stronger sales performance worldwide in the past two years compared to Burger King and Tim Hortons.

Restaurant Brands has also been improving its financial results by cutting costs, the same stragtegy 3G has employed with another of its investments, Kraft Heinz.

Josh Kobza, chief financial officer of Restaurant Brands, said Tuesday said the company plans to accelerate Popeyes' expansion, as it has done with Burger King.

Restaurant Brands International Inc., based in suburban Toronto, has more than 20,000 locations globally, and Popeyes would give it about another 2,600. The company makes money from fees it charges franchisees who operate Burger King and Tim Hortons restaurants. By comparison, McDonald's Corp. had more than 36,800 locations around the world at the end of 2016. Yum Brands, which owns KFC, Pizza Hut and Taco Bell, has more than 43,600.



Yahoo salvages Verizon deal

Yahoo is taking a $350 million hit on its previously announced $4.8 billion sale to Verizon in a concession for security lapses that exposed personal information stored in more than 1 billion Yahoo user accounts.

The revised agreement announced Tuesday eases investor worries that Verizon Communications Inc. would demand a discount of at least $1 billion or cancel the deal entirely.

The hacking bombshells, disclosed after the two companies agreed on a sale, represent the two biggest security breaches in internet history.

Under the amended deal, Yahoo will be responsible for 50 per cent of any cash liabilities incurred following the closing related to government investigations and lawsuits related to the breaches. Liabilities arising from shareholder lawsuits and SEC investigations will continue to be the responsibility of Yahoo.

"The amended terms of the agreement provide a fair and favourable outcome for shareholders," said Marni Walden, Verizon executive vice-president and president of product innovation and new businesses. "It provides protections for both sides and delivers a clear path to close the transaction in the second quarter."

The security breaches raised concerns that people might decrease their usage of Yahoo email and other digital services that Verizon is buying. A smaller audience makes Yahoo's services less valuable because it reduces the opportunities to show ads — the main reason that Verizon struck the deal seven months ago.

Yahoo has maintained that its users have remained loyal, despite any mistrust that might have been caused by its lax security and the lengthy delay in discovering and disclosing the hacks. The separate attacks occurred in 2013 and 2014; Yahoo disclosed them this past September and December.

Avoiding an even larger reduction in the deal value represents a small victory for Yahoo CEO Marissa Mayer, who had already been under fire on Wall Street for her inability to turn around the company and then for the humiliating security lapses that came under her watch.



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PC Plus passwords reset

Loblaw has reset passwords for all its PC Plus rewards collectors' online accounts after points were stolen from some members' accounts.

The company posted a warning on its website saying it requires all members to create new passwords — regardless of whether or not they changed them following the recent security breach.

Earlier this month, Loblaw urged members to create unique, secure passwords after some people noticed their points were missing.

The company said at the time that the breach stemmed from people using favourite or weak username and password combinations across multiple sites. Those were stolen from other sites and used to access PC Plus accounts.

The company said it's reimbursing members whose points were stolen.



Always buckle up: TSB

The Transportation Safety Board warned air travellers of the importance of wearing seatbelts as it released a report Monday that found a failure to buckle up left 21 people injured when a Toronto-bound flight hit severe turbulence in December 2015.

The incident took place on an Air Canada flight travelling from Shanghai to Toronto when the Boeing 777 hit severe turbulence over Alaska.

"Most of the passengers who were physically injured were aware that they were required to wear their seatbelts, but chose not to," the TSB said. "The injuries resulted from passengers coming into contact with aircraft furnishings, the ceiling, and the floor of the interior."

The flight carrying 332 passengers and 19 crew members was expected to take 13 hours and 40 minutes to complete its journey.

During the flight, a bulletin sent from Air Canada's dispatch service warned of a forecasted area of severe turbulence along the route, northeast of Anchorage, Alaska. About 35 minutes before the plane entered the area, the first officer directed cabin crew to stop service and secure the cabin.

Flight attendants secured all service carts, made announcements in multiple languages asking passengers to fasten their seatbelts and walked the cabin to check that seatbelts were fastened, the TSB said. The lighting in the cabin at the time was in "sleep mode" — a dim setting, the TSB said.

Just before the flight entered the area of turbulence, a passenger in business class got up to use the washroom, despite being told to return to their seat. When the first batch of turbulence occurred, the passenger was thrown up to the ceiling and onto the floor, the TSB said.

A second phase of turbulence took place that was "light to moderate," followed by a third phase that was "moderate to severe" during which the majority of the injuries occurred, the TSB said.

Most of the injuries sustained were sprains, strains, bruising and scrapes, but one passenger was seriously injured and required an extended stay in hospital, the TSB said. Three of the injured were children, it said.

"This incident is a reminder of why it is important to keep seatbelts fastened during a flight, and to follow the crew’s instructions when requested to buckle up," said Air Canada spokesman Peter Fitzpatrick. "The crew’s decision to secure the cabin and reduce speed contributed to preventing significant numbers of injuries and potential damage to the aircraft."

The flight diverted to Calgary after the incident where the injured passengers were treated. People on board at the time called the terrifying roller-coaster ride a "flight from hell."



Big banks ease up on energy

Credit has started to flow more freely to Canada's battered oil and gas sector, though some executives say lenders are favouring larger and more financially secure producers.

Many Canadian energy companies had their credit lines cut in recent years as crude prices crashed, with benchmark West Texas Intermediate oil prices hitting a 12-year low of US$26.05 per barrel last February.

Oil prices have doubled since then as OPEC producers scale back output.

"The bank lending industry is a little more comfortable with some stability in oil prices, and that gives them the courage to lend a little more," said John Rooney, chief executive of Calgary-based Northern Blizzard Resources (TSX:NBZ), a mid-sized heavy oil company that had its borrowing base cut twice by lenders last year.

"There is a stratification, in that the banks appear to be pretty comfortable with mid-market and up but are still being pretty tight with smaller companies."

Improved credit availability partly explains why only $220 million has been placed from a $750-million Export Development Canada fund set aside in February 2017 to back small- and medium-sized energy companies hit by low oil prices, according to Mark Senn, Western Canada vice-president for the government-owned credit agency.

"There's been a lot less blood than I anticipated," he said.

Senn said he had expected to place about $300 million in loans in the first year. The Crown corporation's loans are often used to supplement or replace credit lines from private banks. He now expects EDC will place another $100 million by this fall if current price and market conditions persist.

Canadian oilfield activity is rising this year but the industry is still "a long way away from healthy," said Bruce Edgelow, vice-president of strategic initiatives with ATB Financial, a lender owned by the Alberta government with heavy exposure to energy companies.

"It looks like there are some green shoots, some of the traditional lenders are coming back into the space," he said. "But it's been spotty."

Canadian banks were burned by the unexpected oil price plunge, which started in 2014 as Saudi Arabia sought to protect market share and discourage higher-cost rivals.

Barclays Capital calculated that over the five quarters ended on Oct. 31, 2016, Canada's Big Six banks — CIBC, Royal Bank, Scotiabank, TD Bank, BMO and National Bank — took $1.3 billion in energy industry loan loss provisions.

Barclays banking analyst John Aiken noted the banks did most of their oil and gas industry loan loss writedowns in the first half of 2016 and provisions for losses have since tailed off.

"It's not surprising that the traditional banks are definitely more open to lending," Aiken said.

"Part of it is the recovery in WTI. But we've had very significant resiliency in terms of the energy companies operating in Canada."

Both debt and equity financing options are much more available to the Canadian energy sector now than a year ago, said Victor Vallance, senior vice-president of energy, global corporates, for credit rating agency DBRS.

"Most companies can live now in a US$50 to $60 oil world," he said. "They're not growing but they can survive, they can manage."



Drive-through pot shop

The western Colorado town of Parachute is getting a drive-through marijuana shop, believed to be the first in the state.

The Parachute Board of Trustees approved a business license for Tumbleweed Express last week, the Glenwood Springs Post Independent reported Saturday.

"As far as I can tell, we are not aware of this business model ever coming up before," said Robert Goulding, spokesman for the state Marijuana Enforcement Division.

The business is expected to open in March in a former car wash.

Tumbleweed Express also had to get approval from the Marijuana Enforcement Division, which said the store cannot allow anyone younger than 21 on the premises, even in the back seat of a car.

The business must also have security and surveillance, and marijuana may not be visible from outside the dispensary.

The car wash building will allow the goods to be screened from outside view.

"We think the drive-through is a very creative and innovative idea," Parachute Town Manager Stuart McArthur said.

Marijuana accounted for nearly 30 per cent of the community's 2016 sales tax revenue of just over $1 million, McArthur said. "The really good news is that other businesses are benefiting from it," he said.

Travellers stopping to buy marijuana in Parachute are more likely to stop at restaurants and other shops, he said, helping an economy that was hit hard by a downturn in natural gas production.

Parachute Mayor Roy McClung said the town's economy would have been in serious trouble without legalized recreational marijuana.

Statewide, marijuana sales brought in close to $200 million in taxes and fees last year, the Colorado Department of Revenue said.



Wholesale trade rises 0.7%

Canadian wholesale trade grew 0.7 per cent to $57.3 billion in December, registering its third consecutive monthly gain.

Statistics Canada says sales in categories such as machinery, equipment and supplies, as well as building material and supplies were the biggest contributors to the increase.

In 2016, wholesale trade was up 3.1 per cent compared with 2015, marking a seventh straight annual increase.

The report says wholesale sales in December rose in six provinces — Quebec, Alberta, Saskatchewan, British Columbia, Nova Scotia and Prince Edward Island.

Sales edged down 0.2 per cent in Ontario.

The agency also says wholesale inventories rose by 1.1 per cent in December for a fifth consecutive monthly increase.



Similar pension challenges

China sees Canada as a valuable source of expertise as both countries grapple with the needs of an aging population that's increasingly retired, according to the head of the Canada Pension Plan Investment Board.

"China faces very similar demographic issues and pension challenges that Canada has faced and continues to face. When you put the demographics side-by-side, there are some striking similarities," Mark Machin said in a phone interview Monday from Beijing.

He said the most important similarity is that each country will have only about 2-1/2 working-age people per retired person by 2046.

"That's the crux of the challenge for pension systems."

As recently as September, the Chief Actuary of Canada's latest three-year projection said the Canada Pension Plan will remain sustainable at current contribution rates if the CPP Fund managed by Machin's organization can produce inflation-adjusted rates of return averaging 3.9 per cent over 75 years.

As of Dec. 31, the CPP Funds inflation-adjusted rate of return over the past 10 years was 4.8 per cent and about $300 billion of assets around the world — with more than half in North America.

While CPP Investment Board has had an office in Hong Kong that looks for suitable deals in China and the surrounding region, Machin said that its new collaboration with Chinese officials has a more general purpose.

"I think part of this is making sure that, when we're investing in markets, we're not just looking for things that we can get but offering a little bit back — offering a little bit of advice and insights."

Machin was in China's capital for the launch of a Chinese translation of "Fixing the Future," a book tracing the political and financial hurdles that were overcome when the Canada Pension Plan Investment Board was created in the 1990s.

He anticipates the book — written by a former Globe and Mail reporter under a commission from CPPIB — will be used as a textbook in China to help teach about pension reform.

Machin says the translation of the 380-page book was a Chinese initiative that complements a previously announced "pooling of resources" planned by the CPP Investment Board and China's National Development and Reform Commission under a memorandum of understanding signed in September.

The memorandum was one of the agreements signed in Ottawa during an official visit by China's Premier Li Keqiang.

While the CPP Investment Board is designed to be politically independent from all levels of government, Machin said there's a common interest with the Canadian federal government's efforts to build economic and trade ties with China.

"Those two things are definitely aligned. I wouldn't say they're co-ordinated, but they're aligned."



Atlantic premiers talk trade

Atlantic Canada's premiers are meeting today in Newfoundland to discuss the Atlantic Growth Strategy and trade.

Newfoundland and Labrador Premier Dwight Ball is hosting the two-day gathering in Steady Brook, just outside Corner Brook.

New Brunswick Premier Brian Gallant and P.E.I. Premier Wade MacLauchlan are at the meeting, but Nova Scotia's Stephen McNeil decided to remain in Halifax as his government deals with legislation aimed at ending a contract impasse with the province's 9,300 teachers.

Gallant says they will look at how to strengthen trade relations between Atlantic Canada, the U.S. and the European Union.

He says they will also talk about ways to improve the regional economy by co-ordinating training opportunities, harmonizing regulations and getting more women in the workforce.

In a statement, he says the premiers are expected to discuss regulatory alignment, infrastructure development, clean growth and innovation in health care.



Driverless car test sites

Self-driving vehicles could begin tooling down a bustling Atlanta street full of cars, buses, bicyclists and college students, as the city vies with other communities nationwide to test the emerging technology.

Atlanta would become one of the largest urban areas for testing self-driving vehicles if plans come together for a demonstration as early as September.

Nationwide, 10 sites were designated last month as "proving grounds" for automated vehicles by the U.S. Department of Transportation.

Backers of driverless cars say they could be part of a broader effort to rebuild the nation's infrastructure, something President Donald Trump has pledged to do. As roads and highways are rebuilt, "we think it would be very, very wise to build modern infrastructure with 21st-century capability in mind," said Paul Brubaker, president and CEO of the Washington, D.C.-based Alliance for Transportation Innovation.

Self-driving vehicles, he said, "should be a national priority."

The 10 "proving grounds" are:

  • City of Pittsburgh and the Thomas D. Larson Pennsylvania Transportation Institute
  • Texas AV Proving Grounds Partnership
  • U.S. Army Aberdeen Test Center
  • American Center for Mobility (ACM) at Willow Run, Michigan
  • Contra Costa Transportation Authority (CCTA) & GoMentum Station
  • San Diego Association of Governments
  • Iowa City Area Development Group
  • University of Wisconsin-Madison
  • Central Florida Automated Vehicle Partners
  • North Carolina Turnpike Authority


Unilever shares slide

Shares in Unilever, the owner of brands like Hellman's, Lipton, and Knorr, are down sharply after rival Kraft Heinz withdrew a $143 billion takeover offer.

The companies said Sunday in a joint press release that Kraft Heinz has "amicably" abandoned the offer.

Shares in Unilever slumped 6.5 per cent on Monday to 41.91 euros in Amsterdam, one of the places they're listed. They'd jumped 14 per cent on Friday.

The deal would have combined Kraft Heinz products such as Oscar Mayer, Jell-O and Velveeta with Unilever's stable of brands, which include food as well as other consumer goods like Dove soap and Vaseline. The merged company would have rivaled Nestle as the world's biggest packaged food maker by sales.

Analysts say Kraft Heinz, co-headquartered in Chicago and Pittsburgh, is still in the market for acquisitions. The fact that it bid for all of Unilever and not just its food business indicates that Kraft Heinz is potentially open to acquiring other packaged consumer goods, one analyst said.

Unilever, which has a head office in London and multiple stock listings, rejected the offer on Friday, but despite that, Kraft Heinz said at the time that it was still interested in the deal.



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