By Angela Harmantas
Earnings week, BMO’s dollar prediction and a potential new trade agreement with massive implications for Canada – here are three things we’re watching today:
It’s earnings week in the Canadian market, as the country’s biggest companies release their Q2 results. Encanagot a head start last Friday and unsurprisingly, the numbers were grim: the company posted a net loss of US$1.6 billion (CAD$2.1 billion), and has shed 200 jobs in the past month alone. It seems inevitable that Encana will have to sell some more of its non-core assets but if that’s the case, who’s buying? Other companies releasing results this week: Imperial Oil, TransCanada, Maple Leaf Foods, Torstar, Goldcorp, Agnico-Eagle, WestJet and Bombardier, just to name a few.
Last week I said the Canadian dollar would get worse before it gets better, and it looks like Bank of Montreal agrees: on Friday, BMO released a report that outlined a 75-cent loonie scenario throughout the rest of the summer. The sustained pressure on the loonie is thanks to three factors outlined in the report: the precipitous drop in oil and other commodity prices, the strong US dollar and the Bank of Canada’s interest rate cuts (with another likely in the near future). I’m glad I took that overseas vacation in April because it looks like our spending power outside of Canada will take a long-term hit.
I have to admit – I had little idea that one of the biggest international trade agreements in recent history is potentially being finalized this week. Trade ministers from 12 countries including Canada will gather in Hawaii to hammer out details of the Trans-Pacific Partnership, a watershed agreement that aims to lower trade barriers and enforce best practices such as labour and environmental laws. What’s interesting to note is that Canada’s playing hardball, especially when it comes to our dairy industry – it’s a sticking point that is best explained in this CBC.ca article, and it could mean Canada’s exclusion from the partnership. (I’d also recommend taking a look at this Economist article and this one from the Wall Street Journal for a big picture analysis.) Let us know whether you think the TPP could benefit the Canadian economy, and I’ll be bringing you updates as the talks continue throughout the week.
