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Canada should look overseas for growth amid falling oil prices: CPPIB CEO

TORONTO - The head of the Canada Pension Plan Investment Board says oil's sharp decline has highlighted the need for investing internationally.

Still, CPPIB CEO Mark Wiseman says the board, which invests on behalf of the Canada Pension plan, is not looking to reduce its exposure to Canada's oilpatch.

Wiseman said in an interview that as a long-term investor, CPPIB may even find some good acquisition opportunities in Canada's energy sector amid falling energy prices.

The price of oil has fallen to less than half of its highs of last year and is currently trading near US$45 barrel.

Meanwhile, Wiseman said in a speech prepared for Monday's annual dinner of the Toronto Region Board of Trade that Canadian organizations should be looking overseas for growth.

He noted that the CPPIB already invests 70 per cent of its capital outside of Canada, with a particular focus on China, India and Brazil.

"Most of you are familiar with Wayne Gretzky's style of playing hockey — he staked to where the puck was going to be, not to where it was," Wiseman said in his speech to the business audience.

"To put it bluntly, Canada needs to follow Gretzky's practice."

Wiseman says Canada should leverage its strong reputation overseas and its large population of immigrants, who possess a wealth of global experience that can help Canadian companies expand abroad.

"Having international skills and knowledge is a key asset — and it's one that won't rise and fall in value along with global commodity prices," Wiseman said.

CPPIB invests money not currently needed by the Canada Pension Plan to pay benefits. It currently manages more than $235 billion of assets on behalf the CPP, which has some 18 million Canadian contributors and beneficiaries.

The Canadian Press


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CBO: Growing economy to help budget deficit shrink to lowest level since Obama took office

WASHINGTON - Solid economic growth will help the federal budget deficit shrink this year to its lowest level since President Barack Obama took office, according to congressional estimates released Monday.

The Congressional Budget Office also projects a 14 per cent drop in the number of U.S. residents without health insurance, largely because of Obama's health law.

In a report released Monday, CBO says the deficit will be $468 billion for the budget year that ends in September. That's slightly less than last year's $483 billion deficit.

The official scorekeeper of Congress projects solid economic growth for the next few years, with unemployment dropping slightly.

"In CBO's estimation, increases in consumer spending, business investment and residential investment will drive the economic expansion this year and over the next few years," the report said.

CBO also cited wage increases, rising wealth and the recent decline in oil prices.

For future years however, CBO issued a warning: Beyond 2018, deficits will start rising again as more baby boomers retire and enrol in Social Security and Medicare. By 2025, annual budget deficits could once again top $1 trillion, unless Congress acts.

At that point, Social Security benefits would account for one-quarter of all federal spending, said CBO Director Douglas Elmendorf.

"The underlying point is that we have a handful of very large federal programs that provide benefits to older Americans," Elmendorf said. "And with the rising number of older Americans and a rising cost of health care, those programs get much more expensive."

CBO says the number of U.S. residents without health insurance will drop from 42 million last year to 36 million this year, largely because of Obama's health law. These numbers don't include people who are in the U.S. illegally, who are ineligible for subsidies under the health law.

The report says 19 million people will have health insurance because of the law, which could make it harder for congressional Republicans to make good on promises to repeal it.

Obama inherited an economy in recession when he took office. The annual deficit topped $1 trillion for each of his first four years in office, including a record $1.4 trillion in 2009.

As a share of the economy, CBO says this year's deficit will be slightly below the historical average of the past 50 years.

The federal budget deficit became a big issue during Obama's early years in office. In 2011, Obama and congressional Republicans struck a deal that resulted in significant spending cuts at many government agencies. At the start of 2013, Obama persuaded Congress to further address the deficit by raising taxes on top earners.

The White House said Monday that Congress still has more to do. "CBO's longer-term budget and economic projections confirm the need for Congress to act to strengthen our economy for the middle class while putting our debt and deficits on a sustainable trajectory, including by making the investments that will accelerate economic growth and generate good new jobs for our workers to fill," Deputy Press Secretary Eric Schultz said in a statement.

Declining budget deficits, however, could reduce pressure on Congress to continue addressing the government's finances.

"Over the last few years as deficits have fallen, so too has the effectiveness of Republican rhetoric about a 'big government' boogeyman," said Sen. Charles E. Schumer, D-N.Y. "Now is the time for Republicans to join with Democrats to invest in constructive programs that help middle-class Americans climb the ladder and achieve the American dream."

Republicans, however, signalled that they aren't done cutting spending.

"Thanks to Republicans' efforts to cut spending this year's deficit is projected to be smaller, but in order to balance the budget we must address the true drivers of our debt," said Cory Fritz, a spokesman for House Speaker John Boehner, R-Ohio. "Real, robust economic growth won't occur until we solve our government's spending problem."

CBO projects that the economy will grow at an annual rate of 3 per cent in both 2015 and 2016. In later years, however, CBO projects slower economic growth as more baby boomers retire and the labour force grows more slowly than it did in the 1980s and 1990s.

CBO projects the unemployment rate will gradually decrease to 5.3 per cent in 2017. It is now 5.6 per cent.

"CBO's report is important, but it only tells us part of the story," said Sen. Bernie Sanders, a Vermont independent and the ranking minority member of the Senate Budget Committee. "What we must never forget is that tens of millions of Americans today are struggling to keep their heads above water economically while the disparity between the rich and everyone else is growing wider every day."

The budget agency bases its budget projections on current law, assuming that temporary provisions will be allowed to expire. However, many temporary laws are routinely extended, including dozens of temporary tax breaks and a provision that prevents steep cuts in Medicare payments to doctors.

Future budget deficits would be higher if those provisions are continued. For example, if dozens of temporary tax breaks are extended, they would add $1 trillion to the deficit over the next decade.

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Follow Stephen Ohlemacher on Twitter: http://twitter.com/stephenatap

The Canadian Press


A huge Northeastern snowstorm shuts down some businesses but pumps up sales at others

Businesses large and small are feeling the effects of a huge snowstorm sweeping into the Northeast Monday. For some, wintry weather is derailing activity: Airlines cancelled thousands of flights. Car dealers expect to lose a couple sales days. Others are enjoying sales bumps, as shoppers stock up on shovels and other winter gear — and snow day snacks.

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AIRLINES HUNKERING DOWN

Airline travellers are going nowhere fast. More than 6,500 flights in and out of the Northeast were cancelled Monday and Tuesday.

Most major U.S. carriers said they would allow passengers ticketed to, from or through the Northeast on Monday or Tuesday to change their plans without getting hit by a reservation-change fee, typically $200.

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RETAILERS CLEAN UP

Home Depot said it's seeing high demand for shovels, salt, snow throwers and other suppliers throughout the mid-Atlantic up through New England. Stephen Holmes, a Home Depot spokesman, said the company's supply chain and merchandising teams are working closely to replenish any stores that run out of items. Around 2:30 p.m., Holmes said it was too early to tell if the storm would have any impact on store hours.

At Fairway supermarket in New York, Geeta Bhegat cut her shopping short "because everybody is fighting," she said. "But it's not the end of the world; everybody is going to get their food."

When she finally reached the meat section and lined up again for the butcher, "they pushed me, pushed me, pushed me!" she said.

Jon Hurst, president of the Retailers Association of Massachusetts, said the storm was hitting at a relatively slow time for the retail sector and he did not expect stores to experience huge losses.

"We have certainly had past storms during the holiday season or right around Valentine's Day which had more lost sales than will be likely seen this week," Hurst said.

Some retailers, particularly food and hardware stores, will benefit in the run-up to the storm, he added.

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AUTO SALES FREEZE

The storm is hitting at an inopportune time for car dealers in the Northeast as they try to close out January with strong sales numbers. But Dwight McGuirk, president of Smith Cairns Subaru in Yonkers, New York, says he's not worried.

He expects to lose a couple of days of sales on Tuesday and maybe Wednesday, but says customers will return as soon as the weather breaks. "If they don't buy it tomorrow, they'll buy it next week," he said Monday.

Because the storm affects such a highly populated area, it's likely to cut into U.S. sales in January a bit, said Jeff Schuster, senior vice-president forecasting for LMC Automotive, an industry consulting firm. But unlike last year, when much of the country was in a prolonged deep freeze, Schuster said the impact should be temporary.

"Assuming that this isn't just one of many to come, this particular blizzard, the impact should be minimal," he said.

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PREPARE TO SHELL OUT FOR A RIDE

Want a ride home from car service Uber during the major snowstorm descending on the Northeast on Monday? Expect to pay more than the usual fare.

Still, after taking heat for raising prices during past storms, Uber has capped how much prices can rise in U.S. cities during disasters or emergencies.

In New York City, surge pricing will be capped at 2.8 times — nearly triple — the normal fare. The San Francisco company is also planning to donate proceeds to the American Red Cross. That's part of its nationwide policy during disasters and emergencies after criticism when prices surged during Superstorm Sandy in 2012.

At smaller rival Lyft, prices never go higher than three times the regular rate.

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BANKS CLOSED

Banks in the path of the storm closed early, and many planned to keep doors shut on Tuesday.

Wells Fargo, Citi and J.P.Morgan Chase closed all of their branches in New York and Connecticut at 3 p.m. or 4 p.m., an hour or more earlier than normal. Most in New Jersey were closed, too. The banks have more than 1,500 branches in the three states.

Wells Fargo and Chase plan to keep all branches in the three states closed Tuesday. As of 4:15 p.m., Citi planned to open all its branches in those states on Tuesday, but a spokesman noted that could change.

The banks said ATMs and websites were working.

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ORDERING IN SNOW DAY SNACKS

FreshDirect, a grocery delivery service in the Northeast, is making "every effort" to ensure customers get their orders on Monday, including trying to reschedule deliveries earlier in the day, said Fresh Direct spokeswoman Amanda Vogel. But all Tuesday orders were cancelled. The last time Fresh Direct cancelled all orders for a day was during a snowstorm in February of last year, she said.

In the days leading up the storm, Vogel said the company saw in uptick in items indicating people were preparing for "movie day," such as microwavable popcorn and chocolate chip cookies.

Amazon.com's Prime Now app, which promises one-hour delivery for members of the loyalty program in New York, has a winter preparedness section that includes batteries, chamomile tea and canned soup. The app warned of delays Monday afternoon and then said all delivery slots for Monday and Tuesday were full.

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A BOON FOR SALT SELLERS

Bulldog Cleaning Services of Jenkintown, Pennsylvania, is hoping to sell some road salt.

Bulldog does steady year-round business in janitorial work and cleaning offices, carpets and upholstery, so the owner, Zachary Konell, said he considers the winter salt and snow removal business as a bonus.

Konell buys two or three tons of salt at the start of each winter at about $120 per ton so he can avoid paying higher prices during an emergency.

There hasn't been much snow in his area this winter. That could change in the next couple of days.

"I'm grateful for the snow this time of year and I'm looking forward to getting rid of a lot of this salt," said Konell. But he isn't expecting the full force of the storm nearby. And he doesn't anticipate raising prices this week.

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SHOW STOPPER

Broadway theatres are shuttering as a blizzard blasts Times Square.

The Broadway League said all 27 plays and musicals will be closed on Monday, a traditionally quiet night with only a few shows available. No firm decision about Tuesday has been made.

The last time Broadway took a big hit from the weather it was Superstorm Sandy in 2012. That storm darkened Broadway for four days and cost more than $8.5 million in lost revenue.

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POWER PUSH

PowerSecure International Inc. provides large backup power systems to businesses that have a critical need for it, like hospitals, grocery stores or data centres. Big storms can work as a catalyst to push an executive who was thinking about buying a backup system into making the purchase.

"(Storms) are positive for our business, but they tend to be positive 12 to 24 months forward," said PowerSecure spokesman John Bluth, noting that the company saw a gain from Superstorm Sandy.

PowerSecure has utility crews standing by to help restore power if needed. Its workers also have been checking in with customers to top off fuel in their backup systems and make sure they are ready if needed.

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STOCK EXCHANGES: OPEN FOR BUSINESS

But the major stock exchanges expect to remain open for trading, with normal hours, Monday and Tuesday.

With most trading handled electronically instead of between barking traders, it's rare for the exchanges to pause for weather. The New York Stock Exchange suspended trading for two days after Superstorm Sandy hit in October 2012.

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FEELING THE BUDWEISER BLUES

Anheuser-Busch, the parent of Budweiser beer, says it's shutting its brewery in Newark, New Jersey and will close on Tuesday its Merrimack, New Hampshire brewery. A third brewery, in Baldwinsville, New York, is being monitored for a potential shutdown.

Pete Kraemer, vice-president of supply at Anheuser-Busch, says the company will resume operations when conditions allow.

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With reporting by Associated Press reporters Bob Salsberg in Framingham, Mass.; Tom Murphy in Indianapolis; Tom Krisher in Detroit; Dave Koenig in Dallas; Barbara Ortutay, Marley Seaman, Joseph Pisani, Matthew Craft, Candice Choi, Bernard Condon, Verena Dobnik and Mark Kennedy in New York

The Canadian Press


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Unstable mineral markets blamed for shutdown of underground Yukon mine

WHITEHORSE - The shutdown of an underground Yukon mine and layoff of workers is being blamed by its owner on unstable mineral markets.

The Yukon Zinc Corp. (TSXV:YZC) has operated an underground mine producing zinc, silver-copper, lead, and gold about 282 kilometres northeast of Whitehorse.

Company spokesman Alex Wu says operations at the Wolverine Mine were terminated on Thursday because of instability in the mineral markets, particularly the price of silver.

Wu says he can't confirm exactly how many employees were affected and calls the shutdown only temporary.

Yukon Zinc announced there were 365 people employed by the company and its contractors in April 2013, but by June announced it was laying off 30 per cent of its employees because of economic conditions, although it recalled some of the workers.

Mayor Richard Durocher of nearby Watson Lake says he believes about 100 employees worked at the mine on any given day, as the mine was on a shift schedule of two weeks in and two weeks out.

"We will see what the situation is in the next couple of months and make a decision to see if there is an opportunity to start up or keep it closed for a bit longer," says Wu.

"We were trying to keep it going longer, but it is down to the point where it is pretty difficult to keep things going."

(Whitehorse Star)

The Canadian Press


Most actively traded companies on the TSX

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

Toronto Stock Exchange (14,797.83, up 18.48 points):

Yamana Gold Inc. (TSX:YRI). Miner. Up 16 cents, or 3.14 per cent, to $5.26 on 6.4 million shares.

Pinetree Capital Ltd. (TSX:PNP). Investment banker. Down 2.5 cents, or 22.73 per cent, to 8.5 cents on 6.2 million shares.

Torex Gold Resources Inc. (TSX:TXG). Miner. Down two cents, or 1.36 per cent, to $1.45 on 6 million shares.

Canadian Oil Sands Ltd. (TSX:COS). Oil and gas. Up 17 cents, or 2.14 per cent, to $8.10 on 6 million shares.

Long Run Exploration Ltd. (TSX:LRE). Oil and gas. Down 22 cents, or 17.46 per cent, to $1.04 on 5.5 million shares.

B2Gold Corp. (TSX:BTO). Miner. Unchanged at $2.52 on 5 million shares.

Companies reporting major news:

Canadian National Railway (TSX:CNR). Transportation. Up 96 cents, or 1.14 per cent, to $85.44 on one million shares. Canada's largest railway reports its earnings on Tuesday.

Rogers Communications (TSX:RCI.B). Telecom. Down $1.98, or 4.21 per cent, to $45 on 1.5 million shares. Canaccord Genuity Group Inc. (TSX:CF) cut its rating on the stock to hold from buy, adding it expects Rogers to report a "sluggish" quarter when posting earnings Thursday.

The Canadian Press


Key issues on Keystone pipeline as Senate vote nears on the Canadian project

WASHINGTON - The United States Senate is closing in on a vote to authorize the Keystone XL oil pipeline this week.

But the fate of the $8 billion Canadian project depends not only on what happens in Congress, but also in the courts, at the White House and with Calgary-based TransCanada Corp., the pipeline's developer. TransCanada has been waiting more than six years for approval of the pipeline.

The odds of building seem to change almost daily.

A lawsuit is tossed out, then some others filed. The Republican-controlled Congress is poised to approve a bill authorizing construction, despite a White House promise of a veto. The State Department, after stalling its review because of a Nebraska court case, gives federal agencies a new deadline to weigh in.

The US $8-billion pipeline would carry an estimated 830,000 barrels of oilsands bitumen from Canada into the United States, connecting with existing pipelines leading to Gulf Coast refineries.

For environmentalists, approval would prove catastrophic for the global climate and erode efforts by President Barack Obama to rein in heat-trapping emissions.

For Republicans, who have made it their first order of business in the new Congress they control, the pipeline is critical to supplying the country with jobs and with oil from a friendly neighbour, rather than the Middle East.

A look at the major players and where they stand:

U.S. CONGRESS

The House of Representatives this month passed legislation approving, for the 10th time, the pipeline's construction. Identical legislation cleared an initial hurdle in the Senate, where a 63-32 vote was three more than the 60 required, but not enough to override a veto.

The Senate is expected to vote to wrap up debate, after weighing in on more than a dozen amendments. Republicans and Democrats have so far only agreed to a few additions to the bill, including a 98-1 vote backing a measure saying climate change is not a hoax and real. But Republicans failed to back two other measures saying human beings played a role in global warming, even though the scientific consensus is that the burning fossil fuels is to blame. Late last week, the Senate backed a non-binding measure saying that oil sands should be subjected to a tax used to pay for oil spill cleanups.

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THE WHITE HOUSE

The White House explained the veto threat by saying it had to wait for the outcome of a Nebraska court case and the State Department review to play out.

Obama's remarks about the pipeline have gotten increasingly negative in recent months, emboldening environmental groups who have called on him to reject the pipeline outright. In his State of the Union address Tuesday night, Obama urged Congress to "set our sights higher than a single oil pipeline."

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THE COURTS

Opponents in Nebraska reignited the legal fight last week, filing two new suits over its proposed route.

They came from seven landowners in Holt and York counties who have received written warnings that TransCanada plans to file eminent domain papers to gain access to their land.

The landowners' lawyer, Dave Domina, said TransCanada's written warnings give the plaintiffs a clear legal basis to challenge the project. That's a key issue, because the Nebraska Supreme Court tossed an earlier, similar suit, with three judges saying those plaintiffs failed to meet the threshold. The judges' decision removed an obstacle to the project and was a major reason the White House threatened a veto.

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THE U.S. STATE DEPARTMENT

The department has given federal agencies until Feb. 2 to weigh in on whether the pipeline serves the national interest, a determination required for all border-crossing pipelines. That gives agencies specializing in the environment, commerce and other matters just weeks to file their opinions.

The department didn't set a timeline for when it would make its long-awaited judgment on whether the pipeline was in the U.S. national interest.

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TRANSCANADA

With the state court removing a legal barrier, Calgary-based TransCanada has filed paperwork in nine counties to acquire access to the remaining land that's needed to construct, operate and maintain the pipeline.

By law, TransCanada can use the courts to force landowners to sell access to their land. Company officials say they still need to acquire 12 per cent of the total land easements from landowners who have not yet reached a deal. Some holdouts have said they won't negotiate.

The route still faces legal challenges in Nebraska, where two new suits have been filed.

The Canadian Press


TSX advances, traders look to Fed rate announcement, Canadian/U.S. growth data

TORONTO - The Toronto stock market closed slightly higher Monday as traders played it cautious ahead of a busy week for economic data and earnings news, including the U.S. Federal Reserve's latest word on interest rates.

The S&P/TSX composite index gained 18.48 points to 14,797.83. The Canadian dollar moved down 0.26 of a cent to 80.23 cents US.

New York's Dow Jones industrials gained 6.1 points to 17,678.7, the Nasdaq was up 13.88 points to 4,771.76 and the S&P 500 index climbed 5.27 points to 2,057.09.

Markets were unaffected by the election victory of Greece's anti-austerity Syriza party over the weekend. Syriza wants the eurozone to ease the spending cuts and tax increases required under Greece's financial bailout program and even forgive some of the country's rescue loan debt.

"But so what? At the end of the day, they (Syriza) won but the negotiating room that they will have as a party is pretty much zero," said John Stephenson, president and CEO of Stephenson & Co.

The U.S. Federal Reserve is holding its interest rate meeting on Wednesday. The Fed is expected to start moving rates away from near zero around the middle of this year and traders will be looking for any signs the central bank might move earlier.

But Stephenson thinks they will go later than generally thought.

"Because of all this uncertainty out there, they will be on hold longer than most people think. Consensus is they move in June but I don’t think they move that soon. They'll move later."

Other major data points include the latest economic growth figures for Canada and the United States, both out Friday.

Economists believe Canadian gross domestic product grew 0.1 per cent in November. TD Bank (TSX:TD) said Monday that it now expects the economy to grow by just two per cent this year, compared with its December estimate of 2.3 per cent, because of falling oil prices.

TD also said that is expects oil will average US$47 this year. Oil prices have fallen more than 40 per cent since the end of November when Saudi Arabia rejected calls to cut production in order to support prices.

In the U.S., fourth-quarter GDP is expected to come in at an annualized rate of 3.1 per cent, down from a five per cent pace in the third quarter.

On the TSX, lift came from the industrials sector, up one per cent with Canadian National Railway (TSX:CNR) rising 96 cents to $85.44 ahead of earnings coming out Tuesday.

The gold sector ran up 1.75 per cent per cent, while February bullion faded $13.20 to US$1,279.40 an ounce. However, the sector has surged 36 per cent this month while gold prices have steadily advanced.

The base metals sector was ahead 0.8 per cent as March copper rose four cents to US$2.54 a pound.

The energy sector advanced, up 0.3 per cent, with oil in New York closing down 44 cents at US$45.15 a barrel.

Telcos led decliners, down 1.85 per cent with Rogers Communications (TSX:RCI.B) down $1.98 or 4.2 per cent to $45 after Canaccord Genuity (TSX:CF) cut its rating on the stock to hold from buy. It added it expects Rogers to report a "sluggish" quarter when it posts earnings Thursday.

The Canadian Press


Canadian dollar declines as TD cuts forecast, traders look to Fed rate meeting

TORONTO - The Canadian dollar closed lower Monday as TD Bank lowered its expectations for economic growth and traders weighted the chances of the Bank of Canada cutting rates further.

The loonie shed 0.26 of a cent to 80.23 cents US.

Traders also looked ahead to Wednesday's interest rate announcement by the U.S. Federal Reserve.

The Fed has been widely expected to start moving rates away from near zero around the middle of this year and traders will be looking for any sign that the U.S. central bank might move earlier.

Other major data points this week include the latest economic growth figures for Canada and the United States.

Economists believe that Canadian gross domestic product grew a slight 0.1 per cent in November, reflecting disappointing reports for manufacturing and wholesale sales. Oil prices started to collapse at the end of that month and analysts note that future GDP reports will detail how that decline is affecting the economy.

Meanwhile, the collapse in oil prices has led TD to downgrade its economic forecast. The bank now expects the Canadian economy to grow by just two per cent this year compared with its expectation in December for 2.3 per cent growth. TD said it also expects the Bank of Canada to cut its overnight rate by another quarter of a percentage point in March.

The Bank of Canada chopped its key overnight rate a quarter point last week to 0.75 per cent to deal with damage caused to the economy by falling oil prices. Some analysts are forecasting the bank could weigh in with another similar-sized cut in late spring.

Oil prices have fallen more than 40 per cent since the end of November when Saudi Arabia rejected calls to cut production in order to support prices. Overall, prices are down about 55 per cent from the highs of last summer as the marketplace works through a huge imbalance in supply and demand.

On Monday, the March crude oil contract in New York fell 44 cents to US$45.15 a barrel.

In the U.S., fourth-quarter GDP is expected to come in at an annualized rate of 3.1 per cent, down from a five per cent pace in the third quarter.

Elsewhere on commodity markets, February gold bullion faded $13.20 to US$1,279.40 an ounce while the March copper contract added four cents to US$2.54 a pound.

Markets also considered the future of the eurozone after Greece's anti-austerity opposition party won a big victory in national elections over the weekend.

Syriza party leader Alexis Tsipras has promised to renegotiate Greece's massive bailout agreements, but has vowed not to take any unilateral action against lenders from other eurozone countries.

The Canadian Press


Russia's credit ratings downgraded to 'junk' level by Standard & Poor's agency amid crisis

LONDON - Standard & Poor's rating agency on Monday downgraded Russia's credit grade by one notch to junk status, citing a weakened economic outlook.

The agency dropped the rating to BB+ from BBB- as it sees the country's financial buffers at risk amid a slide in the country's currency and weakening revenue from oil exports.

"In our view, the Russian Federation's monetary policy flexibility has weakened, as have its economic growth prospects," it said.

Russia's economy has been hit hard by the double impact of weaker prices for its energy exports as well as Western sanctions.

The Russian currency tumbled on the downgrade, dropping some 7 per cent to about 68.5 rubles to the dollar.

Standard & Poor's said that Russia's financial system is weakening, limiting room for manoeuvr for Russia's Central Bank. It said the bank "faces increasingly difficult monetary policy decisions," while also trying to preserve incentives for growth.

The Russian economy is expected to contract by 4 to 5 per cent this year for the first time since President Vladimir Putin took the helm in 2000.

Capital outflows, which averaged $57 billion annually during 2009 to 2013, soared to $152 billion last year. "Stresses could mount for Russian corporations and banks that have foreign currency debt service requirements without a concomitant foreign currency revenue stream," the rating agency said.

Russia's Finance Minister Anton Siluanov sought to play down the anticipated move, saying it reflected the rating agency's "excessive pessimism." He emphasized the Russian economy's strong fundamentals, such as high level of hard currency reserves, trade surplus and low level of state debt.

"These undoubtedly are Russia's advantages in the current macroeconomic conditions," Siluanov said in comments carried by Russian news agencies. "There is no reason to overdramatize the situation."

Prior to the announcement, Putin had a meeting with Cabinet members on anti-crisis measures. He said the government should focus on cutting spending, keeping inflation under control and making sure that the country doesn't waste its hard currency reserves.

The Canadian Press


Big banks to pay $32.5 million to settle Sino-Forest lawsuit by investors

TORONTO - Several Canadian banks and other large financial institutions that helped Sino-Forest Corp. raise millions in the financial markets have agreed to pay $32.5 million to settle a lawsuit by investors who lost money when the Chinese forestry company collapsed amid allegations of fraud.

The case alleged directors, officers, auditors and underwriters at the timber company misled investors with its accounting.

The allegations have not been proven in court.

The agreement, which does not include any admission of wrongdoing, includes Credit Suisse Securities (Canada) Inc., TD Securities Inc. (TSX:TD), Dundee Securities Corp., RBC Dominion Securities Inc. (TSX:RY), Scotia Capital Inc. (TSX:BNS), CIBC World Markets Inc. (TSX:CM), Merrill Lynch Canada Inc., Canaccord Financial Ltd. (TSX:CF) and Maison Placements Canada Inc.

The once Toronto-listed company, which held timber assets in China, saw its stock climb to a peak market capitalization of more than $6 billion.

However, the stock plunged after it was accused of being a Ponzi scheme by Muddy Waters Research, prompting investigations by the Ontario regulator and the RCMP.

Sino-Forest filed for creditor protection in 2012 and is now controlled by its bondholders under a different entity called Emerald Plantation Holdings Ltd.

The settlement follows earlier deals with former Sino-Forest chief executive David Horsley and the firm's former auditors, Ernst and Young.

Horsley agreed to pay $5.6 million to settle the lawsuit against him, while Ernst and Young paid $117 million to settle the class action case.

The Canadian Press


Bombardier selling military training unit to CAE, including NATO pilot school

MONTREAL - Bombardier Inc. (TSX:BBD.B) is preparing to sell its Military Aviation Training unit for C$19.8 million to CAE Inc. (TSX:CAE), a Montreal-based company that specializes in training equipment and services.

Among other things, CAE will take over as prime contractor for the NATO Flying Training in Canada, or NFTC, a program that Bombardier has been operating out of Canadian Forces Base Moose Jaw in Saskatchewan and CFB Cold Lake in Alberta.

Bombardier currently has 200 employees supporting the NATO training program, which was begun in 2000.

CAE, which plans to retain all 200 of those employees, says the deal will enhance its core capabilities and provides an opportunity for growth.

The company is a global supplier of full flight simulators to train pilots for commercial and military aircraft. It also operates a network of civil aviation schools and provides military training services under contract to customers around the world.

Bombardier and CAE say their deal requires various approvals but they expect it to close this year.

The proposed transaction comes as Bombardier, the country's leading aerospace company, adjusts to weak demand for some of its products and the cost of two major aircraft programs — the CSeries passenger jet for commercial airlines and the Global 7000/8000 business jets.

RBC Capital Markets analyst Walter Spracklin says the deal shows the extent that Bombardier's management is trying to cash in on non-core assets.

"We believe there could be additional asset sales as management looks to improve liquidity levels, in particular assets that are not currently generating cash flow, but may have patent/future market value," Spracklin wrote in a commentary.

Bombardier's shares have traded around six-year lows since announcing Jan. 15 that it would suspend work on a third program, the Learjet 85 business jet, while also reducing its prior estimate of cash flow from the aerospace division in 2015 to US$800 million from between US$1.2 billion and US$1.6 billion.

The Canadian Press


Cineplex plans entertainment complex with live music, comedy, games

TORONTO - Cineplex Entertainment (TSX:CGX) is looking beyond Hollywood with a new concept that combines arcade games and live performances.

The country's biggest movie theatre chain said Monday it plans to launch The Rec Room later this year in Edmonton as part of a pilot project that will ramp up to a bigger expansion.

Each location will have space for a restaurant and bar, as well as an array of entertainment options, like an arcade and an auditorium for live music and comedians.

The company is also considering other games like bowling, billiards and ping pong.

The idea is in the vein of restaurant and arcade chains in the United States like Latitude 360 and Dave and Buster's.

"When you look at Canada we really don't have a location-based social environment where people can game, have a meal, watch (sports), all of those kinds of things that create a destination," chief executive Ellis Jacob said in an interview.

"It allows us to capitalize on our strength, from our infrastructure to the assets we've built up."

The first Rec Room will open late this year adjacent to an existing Cineplex theatre at the South Edmonton Common shopping centre.

Another 10 to 15 locations will follow in major cities across the country over the next several years, though they won't necessarily be next to a movie theatre, Jacob said.

Cineplex already operates 18 Xscape Entertainment Centres with popular arcade games and billiards. Some of the locations also have lounges with liquor licences.

What makes the Rec Room different is the broader game and food selection, and the large digital screens, Jacob said.

He hopes Cineplex can tap into the rising popularity of video game tournaments on the big screen, where audiences gather to battle each other playing Xbox 360 and PlayStation 4 games.

Cineplex also owns an advertising business and premium-priced movie theatres. The company has been focused on diversifying its business to lessen the impact of the volatile movie industry, which thrives on blockbuster hits but falters when a big movie tanks.

Last month, Cineplex backed out of screening the controversial Seth Rogen movie "The Interview" when hackers threatened terrorist attacks at theatres showing the comedy.

While Cineplex said it only planned to postpone screenings, the company decided against showing it at all when Sony Pictures made "The Interview" available to rent and buy online.

Follow @dj_friend on Twitter.

The Canadian Press


TD slashes economic outlook

The squeeze of the oil slump is prompting one of Canada's biggest banks to slash its 2015 forecast for the country's economy and warn that another interest-rate cut could be on the way.

TD Bank said Monday it now expects the Canadian economy to grow by just two per cent this year, down from its December projection of 2.3 per cent. It foresees Canadian growth creeping back up to 2.2 per cent in 2016, said a TD report to clients.

The big bank's economists also predicted the Bank of Canada will trim its trend-setting interest rate in March by another quarter of a percentage point, to 0.50 per cent. From there, it expects the key rate to remain on hold until the second half of 2016.

Last week, the central bank stunned financial markets and observers when it lowered its overnight-rate target by a quarter of a percentage point to 0.75 per cent. Economists had expected the Bank of Canada to hold the rate at one per cent, where it had been since September 2010.

But in defending his decision, governor Stephen Poloz pointed a finger at the threat of low oil prices, which he called "unambiguously negative" for the Canadian economy.

Poloz indicated the goal of the central bank's rate drop was to provide "insurance" against the risks cheaper oil poses to Canada's inflation and financial stability.

"Those who hoped to return to greater market calm after the holidays have been sorely disappointed," said the TD report.

"The drop in the prices of oil has gone further and been more protracted than anyone predicted only a few short months ago."

The price of oil, which has been trading in the neighbourhood of US$45 per barrel, is less than half of where it was last summer, a change blamed on oversupply and a slowdown in the global economy.

TD expects the U.S. benchmark price — West Texas Intermediate — will average US$47 this year before climbing back up to US$65 in 2016. Only a month ago, the bank forecast WTI to average US$68 in 2015 and US$80 next year.

The weaker outlook for oil prices has also "dimmed" the bank's prediction for the Canadian dollar, trading Monday at just over 80 cents US.

TD now expects the loonie to continue its fall into 2016, hitting a low of 75 cents US early in the year before starting to move back up.

The report also underlined other impacts of low oil prices, which it says will save the average Canadian household nearly $900 at the gas pumps this year.

Additional consequences include job losses in the country's oil-producing regions, where housing markets are also expected to suffer a blow.

On top of that, TD predicted government revenues in these energy-rich provinces — Alberta, Saskatchewan and Newfoundland and Labrador — to feel the pain of lower crude.

TD projected Alberta's 2015 real gross domestic product to grow by 0.5 per cent compared with its December forecast of 2.3 per cent, while Saskatchewan is expected to grow by 1.3 per cent compared with an earlier forecast of 1.7 per cent. Newfoundland's economy is forecast to shrink by 1.2 per cent compared with growth of 0.3 per cent.

In the span of a month, the bank dropped Alberta from its third-place ranking, in terms of expected growth among the provinces, to ninth.

On the other hand, the bank increased its projections for non-oil-producing regions. For example, Ontario's 2015 outlook rose from 2.6 per cent to 2.8.

At the federal level, Ottawa has also been bracing itself for lower revenues as a result of lower oil prices.

The Harper government recently made the unusual decision of postponing the federal budget until at least April, a move it hoped would buy enough time for a clearer picture to emerge on the impact of falling crude prices.

Ottawa typically releases the federal budget in February or March, before the end of the fiscal year.

The Canadian Press


Japanese fashion retailer Uniqlo to open first two Canadian locations in Toronto

TORONTO - Japanese clothing retailer Uniqlo will open its first two Canadian stores in Toronto next year.

Uniqlo is owned by Fast Retailing Co., which designs, manufactures and sells clothing under several brands around the world.

Uniqlo currently has more than 1,500 stores in 16 markets, including 39 in the United States.

The company will open two flagship-level stores in Toronto: a 28,000 square-foot location at the Eaton Centre downtown, and a 24,000 square-foot location at Yorkdale Shopping Centre.

The stores will open in the fall of 2016.

The Eaton Centre is owned by Cadillac Fairview, an arm of the Ontario Teachers Pension Plan, while Yorkdale is co-owned by Oxford Properties — part of the OMERS pension system — and Alberta Investment Management Corp. (AIMCo).

"We just felt that the opportunities, the locations in both Yorkdale and Eaton Centre at this particular time were very attractive to open," Uniqlo USA and Canada CEO Larry Meyer said in a phone interview from Hong Kong.

Meyer said Uniqlo looks forward to opening in Western Canada but that the company needs to find the right location. He said it was too soon to assess whether Target's soon-to-be-shuttered Canadian locations could be potential future homes for Uniqlo stores. Meyer also said the company is working on establishing e-commerce in Canada.

The casual clothing retailer offers moderately priced apparel and accessories for men, women, children and babies including button-down shirts and blouses, sweaters, T-shirts, sweats, jeans, loungewear, hats, bags and belts. The company also offers unique and proprietary collections such as its Ultra Light Down outerwear and functional HEATTECH and AIRism apparel.

Uniqlo has prominent pro athletes serving as brand ambassadors including tennis stars Novak Djokovic and Kei Nishikori and golfer Adam Scott.

The Canadian Press




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