By Angela Harmantas
The Feds make a decision on interest rates, Harper’s Keystone reversal and Torstar’s precarious acquisition – here are three things we’re watching today:
Two interesting developments on both sides of the 49th parallel leave us questioning the strength of the Canadian and US economy yet again. On our home turf, the Conference Board of Canada projected only a 1.6 percent growth in the country’s economy for 2015 – its worst outlook since 2009. Meanwhile south of the border, the US Federal Reserve decided against raising interest rates despite rumours to the contrary, although it’s widely expected that they will do so in the next few months. I’m curious to hear your thoughts on this question: if the Feds raise interest rates and the Canadian economy stagnates for the rest of the year, what do you think we can expect from 2016?
There’s been a significant shift in Stephen Harper’s unyielding stance on the Keystone XL pipeline. On Wednesday the Canadian Prime Minister admitted that he’s uncertain that Obama will approve Keystone while the US president remains in office. To my knowledge (and feel free to correct me if I’m wrong) Harper has never stated in public that the pipeline may not be approved and for him to take a small step back from his Keystone bravado is to me, a significant development. I’ve always thought that Keystone’s approval is a matter of when, not if, but I wonder if Harper’s humility is a sign that the “when” is becoming further and further away.
Moving on to the media world, Torstar Corporation (TSE:TS.B) bought a 56 percent stake in Toronto-based startup VerticalScope on the same day as they released their Q2 earnings. First, the acquisition: on paper, VerticalScope will diversify Torstar’s revenues and reduce the company’s dependence on the Canadian economy (most of VerticalScope’s revenue is from the US) while giving advertisers access to over 80 million unique visitors per month. But a $200 million price tag means it’s not a steal, especially since it comes soon after Torstar’s quick buy-and-sell of Harlequin publishing last year. As for the earning report, it’s pretty much as expected in the world of (mostly) print: Q2 revenue was down $11.7 million to $20.8 million, while adjusted earnings per share declined another 7 cents. I’ll give Torstar the benefit of the doubt on this purchase but they’ll have to work extra hard to convince their shareholders that this was the best possible deal for them to make.
Have a comment or suggestion? I’d love to hear from you! Contact me at angela@smallcappower.com or @aharmantas.
