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Cdn business this week

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

Home sales

The Canadian Real Estate Association is expected to release its sales results for June on Monday. It was a sluggish spring real estate season compared with the red hot markets of recent years. Higher mortgage rates and stricter lending rules have been blamed for the change.

Pot colossus

Aurora Cannabis Inc. and MedReleaf Corp. will both hold special shareholder meetings regarding Aurora's all-stock acquisition of MedReleaf on Wednesday. The deal valued at $3.2 billion is the largest-ever in Canada's burgeoning cannabis industry, and will create what MedReleaf’s CEO described as the "undisputed world leader in cannabis."

CP earnings

CP Rail releases second-quarter results on Wednesday. In response to federal government changes encouraging railways to avert service disruptions, the railway recently placed an initial order for 1,000 new high-capacity grain hopper cars, 500 of which are expected to be in service before the end of 2018.

Need for speed

Rogers Communications Inc. discusses second-quarter results on Thursday. Rogers and rival BCE Inc. recently slashed prices for their ultra-high speed internet products in select markets in what analysts described as an effort to get customers used to the product in the hopes they'll pay full price once the promotion ends.

Inflation

Statistics Canada will release its June reading on inflation and retail sales results for May on Friday. The consumer price index in May was up 2.2 per cent compared with a year earlier, matching the increase in April. The Bank of Canada, which looks to keep inflation under control, has said it expects the rate to rise to as high as 2.5 per cent due to temporary factors before settling back down to two per cent in the second half of 2019.



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Trump, Putin needing beer?

A small Finnish craft brewery is paying a humorous tribute to the Helsinki summit.

RPS Brewing has issued a limited-edition lager depicting cartoon U.S. and Russian presidents on its label, with text for Donald Trump and Vladimir Putin saying "Let's Settle This Like Adults" and "Making Lager Great Again."

The beer has been in high demand since it hit the shelves nationwide a few days ago and the whole 10,000-bottle lot had been sold out ahead of Monday's summit. Samples have also been delivered to the U.S. and Russian embassies in Helsinki.

CEO Samuli Huuhtanen told The Associated Press on Saturday that "a couple of good beers can help any negotiations," especially if followed by a visit to a Finnish sauna.



Beheading beginning of end

The minister for Saskatchewan's Crown Investments Corp. says a beheading on a Greyhound bus in Manitoba 10 years ago was the beginning of a steep decline in bus ridership in his province.

Saskatchewan shut down the government-owned Saskatchewan Transportation Co., or STC, in last year's austerity budget due to what the province said was a consistent drop in people taking the bus.

"(It) would be a number of years ago when there was that murder on the bus in Manitoba," Joe Hargrave said Friday. "It seemed to be the tipping point of ridership to really drop like a rock after that."

Vince Li, who now goes by the name Will Baker, beheaded and cannibalized a fellow passenger, 22-year-old Tim McLean, on a Greyhound bus that was bound for Winnipeg on July 30, 2008.

Li was charged with second-degree murder, but was found not criminally responsible for his actions. Li is a schizophrenic, but had not been taking his medication.

He has since received a full discharge from the mental hospital in Selkirk, Man., where he was being held.

A 2009 first-quarter report for STC said the Crown company lost 8.5 per cent of its ridership after the Greyhound beheading. STC offered a deal to seniors later that year that it said spiked ridership in that age group.

On Friday, the STC released its final annual report which showed the company carried 267,385 riders in 2005. That figure grew a total of almost 1,000 riders in the next five years.

In 2011, STC said ridership grew by almost 20,000. The CEO at that time said the increase was attributable to seat sales for seniors and to improved amenities such as Wi-Fi on coaches.

Passenger numbers slipped each following year after that.

Greyhound announced earlier this week that it is ending the majority of its passenger service in Western Canada by the end of October.

In a statement, Greyhound Canada senior vice-president Stuart Kendrick said declining ridership in rural communities was one of several factors in the decision.

"The decline in ridership that led to the difficult decision that Greyhound Canada took this week regarding its routes in Western Canada was not due to any single incident," the statement said.

Hargrave said another reason for the cancellation was that people have more options.

"The costs of flights are so much cheaper these days than they were 15 years ago," he said. "You can catch a flight to wherever for a couple hundred bucks now."



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Bay drops Ivanka line

Ivanka Trump's clothing line will no longer be sold at Hudson's Bay department stores, the Hudson's Bay Company said Friday, and the retailer has already dropped the brand from its website.

It will phase out the brand at its stores throughout the fall based on its performance, the company said in a statement.

"As part of our regular course of business, we review our merchandise offerings and make appropriate changes," said HBC.

Ivanka Trump's company was informed of the decision last fall.

Nearly two years ago, the Grab Your Wallet campaign formed and called on consumers to stop shopping at any retailers that carry Trump family-related products. The movement arose after a tape surfaced where Ivanka's father, now U.S. President and then Republican nominee Donald Trump, could be heard making lewd comments about women. The two women who started the campaign realized they could not support stores that carried products from Trump-related businesses.

A separate campaign, Baycott, urged consumers to boycott the Bay specifically.

Since the start of those two campaigns, multiple retailers stopped stocking Trump-related products, including Ivanka's clothing line.

Shoes.com, Zulily, and Nordstrom, for example, stopped carrying Ivanka Trump brand products, according to the Grab Your Wallet website.

HBC did not say whether an ongoing boycott against stores carrying the brand factored into its decision.

Six Ivanka Trump label products still appear on Saks Off 5th website, which is also owned by the Hudson's Bay Company — though all are clearance items up to 80 per cent off.

Ivanka Trump has stepped back from management of her brand and placed its assets in a family-run trust, but she continues to profit from the business.



Pipeline price millions less

Kinder Morgan Canada Ltd. says the actual price the federal government will pay for its Trans Mountain pipeline system and expansion project will be hundreds of millions of dollars less than the $4.5 billion it announced in May.

In a regulatory filing with the U.S. Securities and Exchange Commission, the company says it estimates it will have to pay at least $325 million in capital gains taxes to the Canadian government when the deal is concluded.

It says that reduces the "net price" to $4.175 billion.

The filing is designed to advise Kinder Morgan Canada shareholders in advance of their vote on the transaction in August. Houston-based parent company Kinder Morgan, Inc. owns about two-thirds of the shares.

The document also recounts the negotiations that led to the deal, including an initial offer by the company to give the government a five per cent equity stake in return for financial guarantees and Ottawa's counter suggestion it could buy 51 per cent of the pipeline assets.

The filing notes that once they decided on a 100 per cent sale, Kinder Morgan offered to sell for $6.5 billion and the government came back with a counter offer of $3.85 billion.

An attached report from adviser TD Securities concludes that the deal as negotiated is fair for shareholders.



Bye bye Papa John's founder

Papa John's plans to pull founder John Schnatter's image from marketing materials following reports he used a racial slur.

The decision was made by top executives but details of the change have not been worked out, according to a person inside the company with knowledge of the decision who wasn't authorized to speak publicly.

The person was not aware of any plans to change the pizza chain's name.

Schnatter has long been the face of the brand, appearing in TV ads for Papa John's, and the company has noted in regulatory filings its business could be harmed if Schnatter's reputation was damaged. Papa John's got a taste of that last year, when Schnatter stepped down as CEO after blaming disappointing pizza sales on the outcry surrounding football players kneeling during the national anthem.

This week, Papa John's was already trying to further publicly distance itself from Schnatter after Forbes reported he used the N-word during a media training session in May. Schnatter apologized and said he would resign as chairman, prompting the company's stock to recover some of the losses it suffered after the report.

Schnatter remains on the board and is still the company's largest shareholder.

It's not yet clear how quickly the company will be able to remove Schnatter from marketing materials, the person with knowledge of the decision said. In addition to TV ads, Schnatter's image is on packaging and at the centre of a logo that is all over the company's website.

Papa John's began operations in 1984 and had more than 5,200 locations globally. For the first three months of this year, the chain said a key sales figure fell 5.3 per cent in North America.



DavidsTea director resigns

DavidsTea Inc. says Roland Walton has resigned as a director.

Walton was elected to the company's board of directors last month as part of a group of dissident nominees that replaced the existing board.

He is a former president of Tim Hortons Canada.

DavidsTea co-founder Herschel Segal led the shareholder revolt to replace the board at the company's annual meeting in June.

The fight also resulted in the resignation of chief executive Joel Silver and saw Segal become executive chairman and interim CEO.

Segal has pledged that the chain of tea shops will become profitable within a year and focus on its Canadian roots.

"We thank Roland Walton for his contribution, particularly in the period leading up to the recent annual meeting of shareholders, and wish him the very best," Segal said in a statement.



The last Blockbuster

Alaska's last two Blockbuster video stores are calling it quits, leaving just one store open in the rest of the nation.

Kevin Daymude, general manager of Blockbuster Alaska, says the stores in Anchorage and Fairbanks will close for rentals after Sunday night. The stores will get rid of their videos in a liquidation sale that starts Tuesday.

The closures come just two months after the host of HBO's "Last Week Tonight with John Oliver" sent a jockstrap worn by Russell Crowe in the 2005 movie "Cinderella Man" to the Anchorage store, which displayed it in an effort to ramp up business.

Daymude says the buzz from the Oliver connection brought business to the store. But it wasn't enough to counter a planned lease increase.

The closures will leave the Blockbuster in Bend, Oregon, as the sole holdout.



Michelin buying Camso

Michelin says it has reached agreement to purchase Quebec off-road tire maker Camso for about US$1.7 billion.

The French-based tire giant says the acquisition will create the world's largest off-the-road division.

Camso, a privately held company based in Magog, Que., has been in business since 1982 and is a market leader in rubber tracks for farm equipment and snowmobiles.

It also serves the construction market by providing tracks and tires for small heavy equipment.

Camso, which has US$976 million in annual sales, has grown by an average of seven per cent annually since 2012.

Michelin's new division will have 26 plants and about 12,000 employees, with 7,700 coming from Camso.

Michelin says Camso's 300 headquarters jobs, including 100 in research and development, along with production jobs in Quebec, will be maintained.

Camso has a manufacturing presence in emerging markets, particularly in Sri Lanka and Vietnam.

The company said a recent wave of consolidation in the industry reduced the number of possible acquisition targets.

"It was when we were looking for companies to buy that Michelin expressed an interest (in January)," Camso CEO Pierre Marcouiller told a news conference in Montreal.

Marcouiller said Camso wants to become the top player in the industry but that it would have been "very difficult" to achieve that without saying yes to Michelin's offer.

"Honestly, it may have taken an additional 10 years," he said.

The two companies said the partnership will generate annual sales of more than US$2 billion in a market that is valued at US$13 billion worldwide.

"I have rarely seen a transaction where the risks are so low," Michelin president Jean-Dominique Senard told the same news conference.



Digging out of debt

The Bank of Canada's latest rate increase has raised the cost of borrowing as well as the importance of paying off debts.

Credit cards often carry interest rates in the double digits, some of the most crippling in the debt world, so anyone carrying a balance on one should make it their top priority to pay off — even if the big banks' decision to raise their prime rates doesn't directly impact credit card rates, said Credit Counselling Society president Scott Hannah.

"If a person is regularly carrying a balance on their credit card, that's a problem," he said.

About 44 per cent of Canadians are $200 a month or less away from financial insolvency, according to accounting firm MNP.

Credit agency TransUnion said earlier this month that average non-mortgage debt stood at $29,312 per person, including an average credit card balance of $4,154. But about half of Canadians pay off their credit cards each month, so the burden is actually much higher for those who don't.

Tackling debt can seem daunting, and many consumers choose to ignore the problem by paying only the monthly minimum, but an honest financial self-assessment and some planning will pay dividends in the long run, said Hannah.

The first step in taking on messy finances is to draw up a workable budget, with reasonable spending cuts, that's not too restrictive, he said.

"If your morning latte is a must-have, keep it, and look for other areas in your budget to scale back on."

Long-term planning and patience is important so that you actually stick to a plan. That includes putting money aside for expenses such as car repairs so that they can be paid with cash, rather than using a credit card and restarting the debt cycle, he said.

"It's why so many people fail with their New Year's resolution to get out of debt real fast. It doesn't work."

Reducing credit card debt also requires a personal strategy regarding how they're going to be paid off, especially since the average client has four or five credit cards, but Hannah thinks it's important to pick the card with the smallest balance and pay that off first.

"Getting that win under your belt is really motivating."

Consolidation loans are an option as they will provide a single lower rate of interest, but Hannah recommends waiting until you establish a track record of sticking with a budget, which could take months or years.

Too many people get a consolidated loan only to dip into credit cards before it's paid off, due to an emergency or perceived need, so the track record is important, said Hannah.

"It takes a while if you've never done it before, to use a budget. You're going to make mistakes," he added.

Establishing a proven budget and payment plan could also make it easier to get that consolidated loan once the groundwork has been laid.

Online loans from less established lenders may appear to offer a seemingly cheaper rate, but Hannah warns that consumers should carefully review the terms. Actual rates can be much higher than those advertised, and can carry hefty penalties for things like late payments, so borrowers should be extra wary of the terms.

Transferring balances to a low-interest credit card can cut interest payments, but doing so often triggers a balance transfer charge. The approach also still relies on credit cards, which Hannah says people need to give up altogether until they get out of debt.

Sticking to a budget also means checking in regularly on progress, seeing those balances clock down, and having patience with the process, said Hannah.



TSX sees triple digit rally

A broad-based rally helped Canada's main stock index post a triple-digit advance at late morning, while U.S. stock markets also pushed higher.

The Toronto Stock Exchange's S&P/TSX composite index was up 113.54 points to 16,530.86, after 90 minutes of trading.

In New York, the Dow Jones industrial average was up 167.14 points to 24,867.59. The S&P 500 index was up 15.31 points to 2,789.33 and the Nasdaq composite index was up 59.91 points to 7,776.52.

The Canadian dollar was trading at 75.94 cents US, down from an average value of 76.04 cents US on Wednesday.

The August crude contract was down 66 cents to US$69.72 per barrel and the August natural gas contract was down three cents to US$2.80 per mmBTU.

The August gold contract was up $2.60 to US$1,247.00 an ounce and the September copper contract was up three cents to US$2.77 a pound.



Hyundai's tariff warning

Hyundai Motor Co.'s labour union said Thursday that steep auto tariffs the U.S. is considering could cost tens of thousands of American jobs, echoing concerns of the global auto industry as spiraling trade conflicts between the U.S. and other major economies heat up.

The labour union at South Korea's largest auto company said in a statement that if President Donald Trump goes ahead with imposing 25 per cent auto tariffs, it will hurt Hyundai's U.S. sales and jeopardize some 20,000 jobs at a Hyundai factory in Alabama.

The labour union, which has 51,000 members in South Korea, said its contracts with Hyundai Motor mandate Hyundai to shut down overseas factories first before closing its plants in South Korea in the event that restructuring becomes inevitable.

"If South Korean car exports to the U.S. get blocked and hurt sales, the U.S. factory in Alabama that went into operation in May 2005 could be the first one to be shut down, putting some 20,000 American workers at risk of layoffs," the statement said. The union said it expects South Korea to win an exemption from auto tariffs.

The union also said that South Korean carmakers were already penalized during the renegotiations of the bilateral trade agreement. Seoul and Washington agreed to postpone the removal of tariffs on Korean pickup trucks by another 20 years, a measure that the auto industry was unhappy with but won South Korea an exemption from U.S. steel tariffs.

Hyundai Motor is the world's fifth-largest automaker along with Kia Motors.

The U.S. Department of Commerce is investigating whether auto imports pose enough national security threats to justify tariffs. While there are views that the threat of auto tariffs is a negotiating ploy, there are also concerns that the Trump administration could deliver on the threats as it has done with China.

The move has already met pushback from global automakers. The Association of Global Automakers, a coalition representing major global automakers including Toyota Motor Corp., Volkswagen AG, BMW AG and Hyundai Motor Co., warned last month that high tariffs on imported vehicles and auto components could slash hundreds of thousands of jobs in the U.S. auto sector and dramatically raise vehicle prices for consumers. Experts at U.S. auto think-tank also said car sales could fall and jobs could be lost. The European Union had earlier warned auto tariffs could lead to global retaliation.

On Tuesday, Washington threatened to impose 10 per cent tariffs on another $200 billion worth of Chinese imports, which was immediately met by Beijing's pledge to take "firm and forceful measures" to retaliate. Those moves come on the heels of Washington's imposing additional 25 per cent duties on $34 billion of Chinese goods starting Friday, to which Beijing responded by increasing its own taxes on the same amount of American imports.

___

An earlier version of this story corrects the number of jobs at Hyundai's Alabama factory.



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