Good morning. Leaders from around the world are convening in Azerbaijan this week to figure out the financials of fighting climate change, a U.S. economic report is putting the market’s outlook to the test, and Britain is taking a page from Canada on pension reform. More on what’s in store this week below, but first:
In the news
Paladin Energy’s pursuit of Fission is in limbo as Ottawa weighs the deal on national-security grounds.
Kingsdale Advisors’ former president is suing the proxy advisory firm for wrongful dismissal.
Ottawa’s emissions cap could have an impact on oil production costs, energy analysts and executives say.
The U.N. climate conference in Baku runs through Nov. 22.Sean Gallup/Getty Images
In Focus
The week ahead: A temperature check on climate change and consumer confidence
Monday » Finding the energy
Hundreds of policymakers from around the world begin meeting today at the UN climate summit in Azerbaijan, where fossil fuels account for more than 90 per cent of its export revenues.
In the capital Baku, where the smell of oil hangs in the air from nearby refineries, Donald Trump’s energy policies will also loom large.
Trump’s mantra is “drill, baby, drill,” which would suggest boom times ahead for the U.S. oil industry. But as Democratic candidate Kamala Harris highlighted in her campaign, she and President Joe Biden oversaw the largest rise in oil production in the country’s history. Support from Pennsylvania Avenue is welcome, I’m sure, but oil companies are more likely to be influenced by market forces and Wall Street.
His views on clean energy, which stem from his conviction that climate change is a hoax, might be of wider consequence. When he lands back in the White House in January, he has pledged to roll back as much as he can from the 2022 Biden-Harris administration Inflation Reduction Act, which included hundreds of billions in spending on trying to make the U.S. a world leader in clean energy.
In states like Georgia, which built a major part of its economic future on the promise of a clean-energy boom, the emergent industry can hope Trump won’t stop the programs and spending already in place – especially if they’re creating jobs. (It’s fair to wonder why the state swung in Trump’s favour in that light, but that might underscore how hard of a sell green energy remains among voters.)
For countries around the world, which responded to the U.S. incentives with plans of their own, there might be less pressure to keep up. That includes Canada, which introduced a subsidy package worth somewhere in the range of $80-billion to $100-billion in its 2023 budget. There is little chance that Prime Minister Justin Trudeau backtracks on those existing measures, but that assumes the Liberal Party remains the governing party beyond the next federal election.
Conservative Party Leader Pierre Poilievre has been vocal in his pledge to repeal the federal carbon tax, but he hasn’t said what his party would do – if anything – as an alternative to Trudeau’s measures.
Canadian companies showed this year that climate change is hitting their profits – and leaders say they lack the resources and time to prioritize cutting carbon emissions. Canada is among the countries pressing this week for a multi-billion-dollar climate fund for developing nations, but its own political outlook is adding a dose of domestic uncertainty.
- You can read more about Canada’s goals in Baku here.
Wednesday » Price check
The U.S. Consumer Price Index report on Wednesday will be the first market test for bets on how the U.S. Federal Reserve moves next after Trump’s re-election. After cutting the bank’s lending rate last week, Chair Jerome Powell gave little guidance on how quickly rates will now fall given that the president-elect’s proposed tariffs are expected to raise prices. With economists already forecasting core CPI to have edged up, it’s possible markets will lean toward Powell keeping rates restrictive for longer.
RBC economists wrote that they expect that U.S. headline consumer price index growth ticked up to 2.6 per cent year-over-year from 2.4 per cent in September. They noted that sticky core inflation of basket items excluding shelter continues to drive the bulk of price growth.
In Canada, money markets are putting significantly higher odds on the Bank of Canada delivering another large 50-basis-point rate cut in December after Powell’s cut and a weaker-than-expected jobs report in Canada on Friday.
But as The Globe’s Darcy Keith notes, Canada will have another jobs report to analyze before making its decision on Dec. 11, not to mention inflation and other data, so probabilities are bound to change.
Thursday » Big in Britain
Chancellor of the Exchequer Rachel Reeves is expected to share plans to shake up Britain’s sluggish capital markets with new pension-plan reforms in her first Mansion House speech.
Reeves is expected to take aim at Britain’s constellation of local government funds, which have been slow to merge in recent years, in a bid to reduce redundancies and costs. While she has ruled out a “super fund” in the model of the Canada Pension Plan, her meeting with the “Maple 8″ – Canada’s largest public pension funds – while visiting Toronto in August apparently made an impression.
“I want British schemes to learn lessons from the Canadian model and fire up the U.K. economy, which would deliver better returns for savers and unlock billions of pounds of investment,” she said during her visit.
While she isn’t expected to mandate funds to allocate specific percentages of their investment into British assets or infrastructure, industry watchers expect her to share plans to encourage those funds to spend more of their money on the country.
In Canada, a similar debate is taking place between investment industry professionals, who are pressing for mandated domestic investment, and pension managers, who argue that their independence is crucial to safeguarding pensioners’ best interests.
Also on Thursday » Taylor comes to town. (Swift, not James.) The mega star performs the first of six concerts in Toronto, injecting a sizeable boost to the city’s economy as well as a widespread bout of “happyflation,” reporter Erin Anderssen writes.
Charted
Household stock-market exposure near record levels
Canadian households currently have nearly half of their financial assets tied up in equity investments, which is just about as high a proportion as it has ever been, according to Statistics Canada data.
The problem with portfolios that are heavily concentrated in stocks, Tim Shufelt writes, is that they are vulnerable to selloffs. “And you don’t need any high-minded market predictions to know that one is coming.”
*Tugs nervously at collar.
The outlook
On our radar and reading list
In luxury: What’s behind the luxury fashion slowdown? Canadian fashion insiders weigh in.
In literature: India’s ban of The Satanic Verses is in doubt because of what amounts to missing paperwork.
Interpretation: Of “unlimited miles.” Hertz is apologizing for charging a customer $10,000 after he drove 25,000 miles in one month. That’s a lot of miles in one month, but somewhere south of unlimited.
Morning markets
Global markets were climbing as investors assessed the impact of last week’s decisive U.S. presidential win by Donald Trump and ahead of a data-packed week that includes inflation figures in the United States and Germany. Wall Street futures and TSX futures rode sentiment higher.
Overseas, the pan-European STOXX 600 was up 1.18 per cent in morning trading. Britain’s FTSE 100 rose 0.77 per cent, Germany’s DAX advanced 1.31 per cent and France’s CAC 40 gained 1.17 per cent.
In Asia, Japan’s Nikkei closed 0.08 per cent higher, while Hong Kong’s Hang Seng fell 1.45 per cent.
The Canadian dollar traded at 71.78 U.S. cents.