Still interested

Northern BC MP wants better protection for air passengers

Passenger protection sought

Photo: Prince George Airport Authority

A Northern B.C. MP has brought a private member’s bill to the House of Commons to protect air passengers from  travel chaos.

NDP transport critic Taylor Bachrach, the MP for Skeena-Bulkley Valley, is proposing changes to Canada's air passenger protections that would close loopholes, shift the burden of proof, increase fines and make compensation automatic for travelers whose flights are delayed or cancelled.

“Canadians have weathered two busy travel seasons marred by chronic flight delays and cancellations, while Canada's weak passenger protections have largely let airlines off the hook,” said Bachrach in a reelase. “When Canadians' flights are delayed, their compensation shouldn't be. But people are having to wait more than 18 months for the government to hear their complaints, let alone deliver compensation. Clearly, the Liberals' approach isn’t protecting people -- it’s protecting the big airlines.”

Bachrach says the Canadian Transportation Act -- the law on which the Liberals’ Air Passenger Protection Regulations are built -- has a loophole that causes confusion and allows airlines to avoid paying people. As a result, the Canadian Transportation Agency has a growing backlog of over 42,000 passenger complaints, which the agency has said will take over 18 months to clear.

“My bill aims to protect passengers, not airlines. It would bring Canada's passenger protections up to the standard set in Europe over a decade ago. New Democrats want to see passengers treated fairly, and we're going to keep pushing until that's a reality.”

Bachrach's bill is supported by the consumer advocacy organizations Air Passenger Rights, Public Interest Advocacy Centre and Option Consommateurs.

Amazon cuts 9,000 more jobs, bringing 2023 total to 27,000

Amazon cuts 9,000 more

Photo: The Canadian Press

Amazon plans to eliminate 9,000 more jobs in the next few weeks, CEO Andy Jassy said in a memo to staff on Monday.

The job cuts would mark the second largest round of layoffs in the company's history, adding to the 18,000 employees the tech giant said it would lay off in January. The company's workforce doubled during the pandemic, however, in the midst of a hiring surge across almost the entire tech sector.

Tech companies have announced tens of thousands of job cuts this year.

In the memo, Jassy said the second phase of the company's annual planning process completed this month led to the additional job cuts. He said Amazon will still hire in some strategic areas.

“Some may ask why we didn’t announce these role reductions with the ones we announced a couple months ago. The short answer is that not all of the teams were done with their analyses in the late fall; and rather than rush through these assessments without the appropriate diligence, we chose to share these decisions as we’ve made them so people had the information as soon as possible,” Jassy said.

The job cuts announced Monday will hit profitable areas for the company including its cloud computing unit AWS and its burgeoning advertising business. Twitch, the gaming platform Amazon owns, will also see some layoffs as well as Amazon's PXT organizations, which handle human resources and other functions.

Prior layoffs had also hit PXT, the company's stores division, which encompasses its e-commerce business as well as company’s brick-and-mortar stores such as Amazon Fresh and Amazon Go, and other departments such as the one that runs the virtual assistant Alexa.

Earlier this month, the company said it would pause construction on its headquarters building in northern Virginia, though the first phase of that project will open this June with 8,000 employees.

Like other tech companies, including Facebook parent Meta and Google parent Alphabet, Amazon ramped up hiring during the pandemic to meet the demand from homebound Americans that were increasingly buying stuff online to keep themselves safe from the virus.

Amazon's workforce, in warehouses and offices, doubled to more than 1.6 million people in about two years. But demand slowed as the worst of the pandemic eased. The company began pausing or cancelling its warehouse expansion plans last year.

Amid growing anxiety over the potential for a recession, Amazon in the past few months shut down a subsidiary that’s been selling fabrics for nearly 30 years and shuttered its hybrid virtual, in-home care service Amazon Care among other cost-cutting moves.

Jassy said Monday given the uncertain economy and the “uncertainty that exists in the near future," the company has chosen to be more streamlined.

He said the teams that will be impacted by the latest round of layoffs are not done making final decisions on which roles will be eliminated. The company plans to finalize those decisions by mid to late April and notify those who will be laid off.

S&P/TSX composite up more than 100 points, U.S. stock markets also rise

TSX up 100+ points

Photo: The Canadian Press

Canada's main stock index was up more than 100 points in late-morning trading, helped higher by strength in the base metal stocks as well as the energy and telecommunication sectors, while U.S. stock markets also climbed higher.

The S&P/TSX composite index was up 116.34 points at 19,504.06.

In New York, the Dow Jones industrial average was up 337.38 points at 32,199.36. The S&P 500 index was up 31.42 points at 3,948.06, while the Nasdaq composite was up 37.52 points at 11,668.03.

The Canadian dollar traded for 73.16 cents US compared with 72.81 cents US on Friday.

The May crude contract was down 43 cents at US$66.50 per barrel and the April natural gas contract was down five cents at US$2.29 per mmBTU.

The April gold contract was down 40 cents at US$1,973.10 an ounce and the May copper contract was up seven cents at US$3.96 a pound.

Ontario court permits Nordstrom Canada to liquidate closing stores

Nordstrom to liquidate

Photo: The Canadian Press

Bargain hunters are one step closer to seeing sales at Nordstrom’s closing Canadian locations.

At a hearing at Osgoode Hall in Toronto on Monday, the Ontario Superior Court of Justice gave the U.S. retailer's Canadian branch permission to start liquidating its merchandise.

Nordstrom required court approval because it is winding down its Canadian operations under the Companies’ Creditors Arrangement Act, which helps insolvent businesses restructure or end operations in an orderly fashion.

Nordstrom will close its six Canadian department store locations and seven Nordstrom Rack shops, which sell designer goods at discount prices, as part of the wind down.

When Nordstrom announced the move in early March, it said it expected Canadian stores to close by late June and 2,500 workers to lose their jobs.

The company initiated the exit from the market because chief executive Erik Nordstrom said, “despite our best efforts, we do not see a realistic path to profitability for the Canadian business.”

Nordstrom, an upscale department store chain that primarily sold designer apparel, shoes and accessories, first set its sights on Canada in 2012, opening its first store in Calgary at CF Chinook Centre in September 2014.

Its Canadian presence grew in the years since with massive stores that took up hundreds of thousands of square feet at CF Rideau Centre in Ottawa, CF Pacific Centre in Vancouver, Yorkdale Shopping Centre and CF Sherway Gardens in Toronto.

Then came Nordstrom Rack, which made its Canadian debut in 2018 at Vaughan Mills, a mall north of Toronto. At the time, Nordstrom said as many as 15 more Rack locations could follow.

Nordstrom promised each Rack would deliver savings of up to 70 per cent on apparel, accessories, home, beauty and travel items from 38 of the top 50 brands sold in its Canadian department stores.

Nordstrom had trouble with profitability because of its selection of products and the COVID-19 pandemic, said Tamara Szames, executive director and industry adviser of Canadian retail at the NPD Group research firm, a day after Nordstrom announced its exit.

“You would hear a lot of Canadian saying that the assortment wasn’t the same in Canada that it was in the U.S.,” she said.

She noticed Nordstrom started to shift its product mix away from some luxury brands around 2018 and saw it as a sign that the retailer was struggling to maintain its original vision and integrity.

The pandemic made matters worse because many stores were forced to temporarily close their doors to quell the virus and shoppers were less likely to need some of the items Nordstrom sells like dressy apparel because events had been cancelled.

Despite stores reopening and many sectors rebounding, Szames said the apparel business is the only industry NPD Group tracks that has yet to recover from the health crisis.

“The consumer has really been holding back in terms of spend…within that industry.”

Credit Suisse, UBS shares plunge after takeover announcement

Shares plunge on takeover

Photo: The Canadian Press

Shares of Credit Suisse plunged 63% in early trading Monday after the announcement that banking giant UBS would buy its troubled rival for almost $3.25 billion in a deal orchestrated by regulators to stave off further market-shaking turmoil in the global banking system.

UBS shares were down 14% in early trading on the Swiss stock exchange.

Swiss authorities urged UBS to take over its smaller rival after a plan for Credit Suisse to borrow up to 50 billion francs ($54 billion) failed to reassure investors and the bank’s customers. Shares of Credit Suisse and other banks plunged after the failure of two banks in the U.S. raised questions about other potentially shaky global financial institutions.

Credit Suisse is among 30 financial institutions known as globally systemically important banks, and authorities worried about the fallout if it were to fail.

The deal was “one of great breadth for the stability of international finance," Swiss President Alain Berset said as he announced it Sunday night. "An uncontrolled collapse of Credit Suisse would lead to incalculable consequences for the country and the international financial system.”

Switzerland's executive branch, a seven-member governing body that includes Berset, passed an emergency ordinance allowing the merger to go through without shareholder approval.

Markets remain jittery despite the best efforts of regulators to restore calm. Global stock markets sank Monday, with Hong Kong’s main index sliding more than 3%. Market benchmarks in Frankfurt and Paris opened down more than 1%. Shanghai, Tokyo and Sydney also declined. Wall Street futures were off 1%. Oil prices plunged more than $2 per barrel.

Credit Suisse Chairman Axel Lehmann called the sale to UBS “a clear turning point.”

“It is a historic, sad and very challenging day for Credit Suisse, for Switzerland and for the global financial markets,” Lehmann said, adding that the focus is now on the future and on Credit Suisse's 50,000 employees, 17,000 in Switzerland.

Following news of the Swiss deal, the world’s central banks announced coordinated moves to stabilize banks, including access to a lending facility for banks to borrow U.S. dollars if they need them, a practice widely used during the 2008 crisis. Three months after Lehman Brothers collapsed in September of 2008, such swap lines had been tapped for $580 billion. Swap lines also were rolled out during market turmoil in the early stages of the COVID-19 pandemic.

“Today is one of the most significant days in European banking since 2008, with far-reaching repercussions for the industry," said Max Georgiou, an analyst at Third Bridge. “These events could alter the course of not only European banking but also the wealth management industry more generally.”

Colm Kelleher, the UBS chairman, hailed “enormous opportunities” from the takeover and highlighted his bank’s “conservative risk culture” — a subtle swipe at Credit Suisse's reputation for more swashbuckling gambles in search of bigger returns. He said the combined group would create a wealth manager with over $5 trillion in total invested assets.

UBS officials said they plan to sell off parts of Credit Suisse or reduce the bank’s size.

Swiss Finance Minister Karin Keller-Sutter said the council "regrets that the bank, which was once a model institution in Switzerland and part of our strong location, was able to get into this situation at all.”

The combination of the two biggest and best-known Swiss banks, each with storied histories dating to the mid-19th century, amounts to a thunderclap for Switzerland’s reputation as a global financial center — putting it on the cusp of having a single national banking champion.

The deal follows the collapse of two large U.S. banks last week that spurred a frantic, broad response from the U.S. government to prevent further panic.

European Central Bank President Christine Lagarde lauded the “swift action” by Swiss officials, saying they were “instrumental for restoring orderly market conditions and ensuring financial stability.”

She reiterated that the European banking sector is resilient, with strong financial reserves and plenty of ready cash. The banks “are in a completely different position from 2008” during the financial crisis, partly because of stricter government regulation, she said.

The Swiss government is providing more than 100 billion francs to support the takeover.

As part of the deal, approximately 16 billion francs ($17.3 billion) in Credit Suisse bonds will be wiped out. European bank regulators use a special type of bond designed to provide a capital cushion to banks in times of distress. The bonds are designed to be wiped out if a bank’s capital falls below a certain level, and that was triggered by the government-brokered deal.

That has triggered concern the market for those bonds and for other banks that hold them.

Berset said the Federal Council had been discussing Credit Suisse's troubles since early this year and held urgent meetings last week.

Investors and banking industry analysts were still digesting the deal, but at least one analyst suggested the deal might tarnish Switzerland’s global banking image.

“A country-wide reputation with prudent financial management, sound regulatory oversight, and, frankly, for being somewhat dour and boring regarding investments, has been wiped away,” said Octavio Marenzi, CEO of consulting firm Opimas LLC, in an email.

The Financial Stability Board, an international body that monitors the global financial system, designated Credit Suisse as one of the world’s important banks, meaning that regulators feared a collapse could ripple throughout the financial system like that of Lehman Brothers 15 years ago.

The Credit Suisse parent bank is not part of European Union supervision, but it has entities in several European countries that are.

Credit Suisse’s troubles resurfaced after it reported managers had identified “material weaknesses” in its internal controls on financial reporting. That fanned fears it would be the next domino to fall. Many of its problems are unique and unlike the weaknesses that brought down Silicon Valley Bank and Signature Bank. Their failures led to significant rescue efforts by the Federal Deposit Insurance Corp. and the Federal Reserve to prevent a crisis similar to what occurred in 2008.

Credit Suisse's shares plunged Wednesday to a record low after its largest investor, the Saudi National Bank, said it wouldn't invest any more money in the bank to avoid tripping regulations that would kick in if its stake rose about 10%.

On Friday, its shares dropped 8% to close at 1.86 francs ($2) on the Swiss exchange. The stock has seen a long downward slide: It traded at more than 80 francs in 2007.

UBS is bigger but Credit Suisse still wields considerable influence, with $1.4 trillion assets under management. It has significant trading desks around the world, caters to the rich through its wealth management business, and is a major mergers and acquisitions advisor. The bank did weather the 2008 financial crisis without assistance, unlike UBS.

Credit Suisse is seeking to raise money from investors and roll out a new strategy to overcome an array of troubles, including bad bets on hedge funds, repeated shake-ups of its top management and a spying scandal involving UBS.

Air passenger complaints triple in one year; pass 42,000 as backlog grows

Passenger complaints triple

Photo: The Canadian Press

The number of air passenger complaints to Canada's transport regulator is soaring, more than tripling to 42,000 over the past year.

The growing backlog means each case now needs more than a year and a half to handle, spurring advocates and politicians to question the entire process.

NDP transport critic Taylor Bachrach plans to table a private member's bill today that aims to close loopholes, increase fines and make compensation automatic for travellers whose flights are delayed or cancelled.

Bachrach and John Lawford, who heads the Public Interest Advocacy Centre, say the passenger rights overhaul promised by the federal government for this spring needs to make compensation automatic in the event of significant delays or short-notice cancellations.

Last week, Transport Minister Omar Alghabra pledged $76 million over three years to chip away at the backlog by hiring 200 more employees,

He also vowed to end a loophole that lets airlines reject compensation claims by citing safety as the reason for a flight disruption.

The complaint backlog shot up after travel chaos erupted over the summer and again during the winter holidays as flight demand surged and weather refused to co-operate.

Five things to watch for in the Canadian business world in the coming week

This week in business

Photo: The Canadian Press

Five things to watch for in the Canadian business world in the coming week:

Nordstrom sales

A court hearing is expected to be held on Monday for Nordstrom Canada to seek approval of a liquidation sale as it prepares to shutter its 13 locations by late June. The company says customers can expect to find discounted items on its racks the day after approval is received.

Inflation data

Statistics Canada will release the February consumer price index report on Tuesday, giving Canadians its latest reading for inflation. Desjardins and RBC both forecast a drop in the inflation rate to 5.4 per cent last month, down from 5.9 per cent in January. 

Bank of Canada summary

The Bank of Canada will publish its second summary of deliberations on Wednesday outlining what the governing council discussed during meetings about its most recent rate decision. On March 8, the central bank held its key interest rate steady at 4.5 per cent, pausing its yearlong campaign of aggressive rate hikes.

Bombardier investor day

Bombardier is holding its annual investor day on Thursday where it will provide an update on strategic pillars such as Bombardier Defense and aftermarket expansion, as well as the company's environmental, social and governance objectives. Bombardier forecasts $7.6 billion in revenues for 2023, up from $6.9 billion last year, and expects to deliver 138 aircraft, an increase of 15 from 2022.

Retail sales

Statistics Canada is set to release retail sales figures for January on Friday. Retail sales in December rose 0.5 per cent to $62.1 billion, led by higher sales at motor vehicle and parts dealers and general merchandise stores.

New York Community Bank to buy failed Signature Bank

Purchase of failed bank

Photo: The Canadian Press

FILE - A branch of Signature Bank is photographed, late Sunday, March 12, 2023, in New York. New York Community Bank has agreed to buy a significant chunk of the failed Signature Bank in a $2.7 billion deal, the Federal Deposit Insurance Corp., said late Sunday, March 19, 2023. (AP Photo/Bobby Caina Calvan, File)

New York Community Bank has agreed to buy a significant chunk of the failed Signature Bank in a $2.7 billion deal, the Federal Deposit Insurance Corp. said late Sunday.

The 40 branches of Signature Bank will become Flagstar Bank, starting Monday. Flagstar is one of New York Community Bank's subsidiaries. The deal will include the purchase of $38.4 billion in Signature Bank's assets, a little more than a third of Signature's total when the bank failed a week ago.

The FDIC said $60 billion in Signature Bank's loans will remain in receivership and are expected to be sold off in time.

Signature Bank was the second bank to fail in this banking crisis, roughly 48 hours after the collapse of Silicon Valley Bank. Signature, based in New York, was a large commercial lender in the tristate area, but had in recent years gotten into cryptocurrencies as a potential growth business.

After Silicon Valley Bank failed, depositors became nervous about Signature Bank's health due to its high amount of uninsured deposits as well as its exposure to crypto and other tech-focused lending. By the time it was closed by regulators, Signature was the third largest bank failure in U.S. history.

The FDIC says it expects Signature Bank's failure to cost the deposit insurance fund $2.5 billion, but that figure may change as the regulator sells off assets. The deposit insurance fund is paid for by assessments on banks and taxpayers do not bear the direct cost when a bank fails.

Banking giant UBS acquiring Credit Suisse to rein in turmoil

UBS acquiring Credit Suisse

Photo: The Canadian Press

Illuminated windows are seen at the headquarters of Swiss bank Credit Suisse at Paradeplatz in Zurich, Switzerland, on Saturday.

Banking giant UBS is buying its smaller rival Credit Suisse in an effort to avoid further market-shaking turmoil in global banking, Swiss President Alain Berset announced on Sunday night.

Berset, who did not specify a value of the deal, called the announcement “one of great breadth for the stability of international finance. An uncontrolled collapse of Credit Suisse would lead to incalculable consequences for the country and the international financial system.”

The Swiss president said the council had agreed to guarantee a total of 150 billion francs of liquidity to the 167-year-old bank, well beyond the 50 billion (54 million Swiss francs) figure that had been announced publicly. But that didn’t appear to be enough.

“We noted that the outflows of liquidity and the volatility of the markets demonstrated that necessary confidence could no longer be restored, and a rapid solution guaranteeing stability was essential.”

Swiss Finance Minister Karin Keller-Sutter said the council "regrets that the bank, which was once a model institution in Switzerland and part of our strong location, was able to get into this situation at all.”

The combination of the two biggest and best-known Swiss banks, each with storied histories dating back to the mid-19th century, amounts to a thunderclap for Switzerland’s reputation as a global financial center — leaving it on the cusp of having a single national champion in banking. Part of the woes faced by Credit Suisse in recent years involved a spying scandal ordered by its executives to snoop on a former colleague who moved to UBS.

Berset said the Federal Council — Switzerland’s executive branch — had already been discussing a long-troubled situation at Credit Suisse since the beginning of the year, and held urgent meetings over the last four days amid spiraling concerns about its financial health that caused major swoons in its stock price and raised the specter of the 2007-2008 financial crisis.

Credit Suisse is designated by the Financial Stability Board, an international body that monitors the global financial system, as one of the world’s globally systemic important banks. This means regulators believe its uncontrolled failure would lead to ripples throughout the financial system not unlike the collapse of Lehman Brothers 15 years ago.

Sunday's news conference follows the collapse of two large U.S. banks last week that spurred a frantic, broad response from the U.S. government to prevent any further bank panics. Still, global financial markets have been on edge since Credit Suisse's share price began plummeting this week.

Many of Credit Suisse’s problems are unique and do not overlap with the weaknesses that brought down Silicon Valley Bank and Signature Bank, whose failures led to a significant rescue effort by the Federal Deposit Insurance Corporation and the Federal Reserve. As a result, their downfall does not necessarily signal the start of a financial crisis similar to what occurred in 2008.

The deal caps a highly volatile week for Credit Suisse, most notably on Wednesday when its shares plunged to a record low after its largest investor, the Saudi National Bank, said it wouldn't invest any more money into the bank to avoid tripping regulations that would kick in if its stake rose about 10%.

On Friday, shares dropped 8% to close at 1.86 francs ($2) on the Swiss exchange. The stock has seen a long downward slide: It traded at more than 80 francs in 2007.

Its current troubles began after Credit Suisse reported on Tuesday that managers had identified “material weaknesses” in the bank’s internal controls on financial reporting as of the end of last year. That fanned fears that Credit Suisse would be the next domino to fall.

While smaller than its Swiss rival UBS, Credit Suisse still wields considerable influence, with $1.4 trillion assets under management. The firm has significant trading desks around the world, caters to the rich and wealthy through its wealth management business, and is a major advisor for global companies in mergers and acquisitions. Notably, Credit Suisse did not need government assistance in 2008 during the financial crisis, while UBS did.

Despite the banking turmoil, the European Central Bank on Thursday approved a large, half-percentage point increase in interest rates to try to curb stubbornly high inflation, saying Europe’s banking sector is “resilient,” with strong finances.

ECB President Christine Lagarde said the banks “are in a completely different position from 2008” during the financial crisis, partly because of stricter government regulation.

The Swiss bank has been pushing to raise money from investors and roll out a new strategy to overcome an array of troubles, including bad bets on hedge funds, repeated shake-ups of its top management and a spying scandal involving UBS.

'I'm back!': Trump returns to Facebook after reinstatement

'I'm back!': Trump

Photo: The Canadian Press

Former President Donald Trump speaks at a campaign event Monday, March 13, 2023, in Davenport, Iowa.

Former President Donald Trump has returned to Facebook after a more than two-year ban.

“I’M BACK!” Trump posted on the site weeks after his personal account was reactivated. He also shared an old video clip in which he said: “Sorry to keep you waiting. Complicated business.”

Trump posted the same clip on YouTube, which announced Friday that it, too, was welcoming him back.

Facebook parent Meta had said in January that it would be restoring Trump ’s personal account in the coming weeks, ending the suspension it imposed in the wake of the Jan. 6 insurrection, when Trump's supporters violently stormed the U.S. Capitol in a bid to halt the peaceful transition of power.

His access was restored to Facebook and Instagram on Feb. 9, the company confirmed.

“The public should be able to hear what their politicians are saying — the good, the bad and the ugly — so that they can make informed choices at the ballot box,” Nick Clegg, Meta’s vice president of global affairs, wrote at the time.

The company also said it would be adding “new guardrails” to ensure there are no “repeat offenders” who violate its rules, even if they are political candidates or world leaders.

Facebook, the world’s largest social media site, had been both a publicly tool and a crucial source of fundraising revenue for both of Trump's previous campaigns.

YouTube, in a tweet, announced earlier Friday that, “Starting today, the Donald J. Trump channel is no longer restricted and can upload new content.”

“We carefully evaluated the continued risk of real-world violence, while balancing the chance for voters to hear equally from major national candidates in the run up to an election,” they wrote.

Twitter also reinstated Trump's account last year after Elon Musk took over the company, but the former president has thus far chosen not to tweet.

Instead, he has been posting frequently on his own Truth Social site, which he launched after the suspensions.

Lobster giant partially owned by Indigenous bands delivering higher sales and profits

Lobster giant delivers profits

Photo: The Canadian Press

A seafood giant that is half-owned by a coalition of East Coast First Nations is reporting a leap in annual sales.

A seafood giant that is half-owned by a coalition of East Coast First Nations is reporting a leap in annual sales, as 2022 revenues rose by $71.6 million compared to the year before.

George Paleologou, the chief executive of Premium Brands Holdings Inc., said during the company's fourth-quarter conference call on Thursday that Clearwater Seafood's annual earnings reached a "record-breaking" level of $130 million on $604 million in revenues in 2022.

Much of the gain for Nova Scotia-based Clearwater came in the last three months of the year, as the firm increased sales by $50 million compared to same period the year before, according to results released Thursday by Premium — which is based in Vancouver.

Premium partnered with seven Mi'kmaq communities, led by the Membertou First Nation in Cape Breton and Miawpukek First Nation in Newfoundland and Labrador, to finalize the purchase of Clearwater in January 2021, for a total investment of $1 billion.

Membertou Chief Terry Paul has said the 50 per cent share purchased by the communities was the largest ever investment by Indigenous bands in the Canadian seafood industry.

Clearwater harvests a variety of seafood, including scallops, lobster, clams and crab in Canada, Argentina and the United Kingdom, with sales in 48 countries around the world.

Premium attributed its higher revenues to strong prices for Clearwater's catch and higher sales volumes, noting they might have been even higher except for higher fleet fuel costs and wages.

A spokeswoman for Membertou Development Corporation said the band is pleased with the results.

"We've had a very positive year with Clearwater Seafoods. We're proud of the financial results, and also, the shift the company has made in its 50 per cent Indigenous ownership model," Kelsea MacNeil said in an email.

She said the Mi'kmaq coalition's profits "will be used initially to service the debt on the acquisition of the company."

The Indigenous partners include Membertou, Sipekne'katik, We'koqma'q, Potlotek, Pictou Landing and Paqtnkek communities in Nova Scotia, and Miawpukek, formerly known as Conne River Reserve, in Newfoundland and Labrador.

Markets slump Friday as investors grapple with banking fallout, rate uncertainty

Markets slump Friday

Photo: The Canadian Press

The S&P/TSX composite index screen at the TMX Market Centre in downtown Toronto.

Financial markets have flip-flopped all week as a global crisis in confidence over the banking sector has led to a dramatic shift in expectations for central banks' fight against inflation, and has made a recession more likely.

The S&P/TSX Composite was down by less than one per cent at mid-afternoon on Friday, weighed down by weakness in energy, financial and industrial stocks. U.S. markets were similarly in the red to cap a messy week of trading. 

After the closures of Silicon Valley Bank and Signature Bank in the United States last weekend, fears over the financial system spread, sending bank stocks tanking Monday before markets recovered somewhat the next day.

On Wednesday, the flames were further fanned by European lender Credit Suisse’s latest problems, and on Thursday and Friday another bank joined in on the widening crisis, with the biggest U.S. banks coming to the rescue of First Republic Bank in an effort to prevent it from joining the ranks of SVB and Signature.  

“The biggest market story of the week was the liquidity crisis in the regional banking sector,”  said Lesley Marks, chief investment officer of equity at Mackenzie Investments.

As the week progressed, more contagion across the banking sector has led to a wider crisis in confidence, Marks said, though she noted that many of the issues causing concern at regional banks — less diversified business and lower regulation, for example — are not necessarily prevalent in the larger banks, which may even benefit in the long run from this week’s events.

Credit Suisse shares plunged Wednesday after the firm reported that managers had identified “material weaknesses” in its internal controls on financial reporting added to the crisis, said Marks. 

Despite moves by larger banks and the U.S. government to protect investors and financial companies, markets haven’t yet found their footing, said Marks. 

However, though bank stocks led major market drops on Monday, Wednesday and Friday, technology stocks told a different story throughout the week, helping lead index gains on Tuesday and Thursday.

Markets, which just over a week ago were anticipating the U.S. Federal Reserve would hike interest rates by up to half a percentage point at its next meeting, are now betting on a quarter-point hike or a hold — and some are even looking to potential cuts in the near future, though many analysts say that’s not realistic. 

"I think that really highlights the historical significance of this liquidity crisis," said Marks.

Market expectations can change on a dime, said Greg Taylor, chief investment officer at Purpose Investments, and this week they shifted dramatically.

While Taylor does think this week’s events could result in a more dovish approach by the Federal Reserve next week than previously anticipated, he thinks market expectations are probably overshooting it when it comes to rate cuts.

Marks agreed: "We still think that equity markets are not fully pricing in the increased risk to economic growth, and therefore earnings growth, for companies that exist as a result of the rapid increase in interest rates."

However, this week's events could slow inflation, said Marks, though she's not sure yet whether there's a silver lining to be had. 

"I think that the markets are still priced for perfection and they're not fully reflecting the outlook for the economy," she said. 

She said while cuts are marginally more likely after this week, the central banks are in a difficult spot as they try to focus on the inflation fight. 

"They may move more cautiously than they otherwise would," she said. 

As for the Bank of Canada, which markets have also been suddenly speculating could cut this year, Taylor said the central bank may not want to diverge too much from what its U.S. counterpart decides to do.

“If the Fed keeps hiking and the Bank of Canada starts cutting, then that will crush the Canadian dollar.” 

Taylor thinks the Fed will want to stay at their terminal rate for around six months to wait for the lagging effects of rate hikes to make themselves known.

But experts say the events of this week have made a recession more likely, after weeks of strong economic data had sparked hope that the economy could avoid a downturn altogether. 

And that could change the dynamic for the Fed’s interest-rate plans, said Taylor. 

“If you’re really looking for cuts, it’s probably meaning you’re looking for a recession,” he said.

Oil prices have also taken a hit, dropping below US$70 Wednesday over fears of a global slowdown that would curb demand. 

"That was an indication of a pretty significant breakdown in price," said Marks, adding that this week, she thinks oil prices have been a more realistic economic prophet than markets.