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Canada’s agri-food sector is growing, but supply-managed sectors are lagging behind

Glen Hodgson

Which Canadian sectors will lead economic growth in 2017? It is tempting to identify advanced technologies or high-end services as leaders, but some traditional sectors are among the strongest economic sectors. In general, the agri-food sector is positioned to be a solid Canadian economic performer in the years ahead.

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First federal budget of the Trump era will play a waiting game

IAN McGUGAN

Federal Finance Minister Bill Morneau insists his budget on Wednesday will focus on skills and innovation, but it will really be about that loud man in the White House.

Canada’s first budget of the Donald Trump era is an exercise in marking time until the murky clouds around U.S. policy begin to clear.

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The taxman won’t be spared the effects of globalization

BRIAN LEE CROWLEY

Brian Lee Crowley is the managing director of the Macdonald-Laurier Institute, an independent non-partisan public policy think tank in Ottawa: www.macdonaldlaurier.ca.

Listen to political debate in Canada and you’ll come away convinced that carbon taxes are the acme of cutting-edge tax policy. If, however, you want to get insight into the challenges the 21st century really poses to national tax systems, you need to look at Washington and Westminster, not our vapid political class.

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Why the U.S.-China clash trumps Canada’s trade concerns

ANDREW JACKSON

While Canadians are understandably focused on what the election of President Donald Trump means for our bilateral trading relationship and the future of NAFTA, a much bigger issue for the global economy is the pending clash between the United States and China.

Focusing on China’s huge trade surplus with the United States, Mr. Trump and his economic team are talking about a wide range of trade and currency measures aimed at curbing Chinese exports and increasing the domestic share of the huge U.S. market. It is hard to believe that this would not result in a trade war between the world’s two largest economies, which would put a serious dent in growth and job creation for countries such as Canada that export to both.

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Banks spot evidence of a housing bubble. What took so long?

IAN McGUGAN

So all of us can finally agree: Toronto’s home prices constitute a ticking time bomb. The question is, how do you defuse that high explosive?

Over the past couple of weeks, economists for major banks have lined up to offer their ideas. Their flurry of suggestions provides a stirring display of public-spirited ingenuity – although observers might be tempted to ask where all that mental acuity has been lurking.

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The runway is clear, but will Ottawa go for an airport sale?

Andrew Willis

The federal Liberals have a credibility problem when it comes to their promise to renew Canada’s infrastructure: Much talk, no action.

Finance Minister Bill Morneau has a chance to fix that perception and put as much as $16-billion into government coffers in the budget he is scheduled to table on Wednesday, if he moves forward aggressively with the sale of the country’s eight largest airports. The runway is clear. The government is sitting on a privatization plan filed last year by investment bank Credit Suisse. Pension plans and other deep-pocketed investors are lining up to buy these assets.

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Canada’s strong lumber case could falter in a ‘Buy American, Hire American’ world

BARRIE McKENNA

These should be happy days for the U.S. lumber industry. Prices are up, mills are operating near full tilt and housing starts are on a tear.

Builders broke ground on new homes at an annual rate of nearly 1.3 million units in February – the second-highest monthly tally of the past decade. All that construction points to growing demand for lumber.

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Reguly: How Merkel can convince Trump to stay in the Paris Agreement

Eric Reguly

German Chancellor Angela Merkel must feel as if she’s Sisyphus, forever doomed to roll an immense boulder up a hill. She is being punished not because she is a deceitful braggart, as Sisyphus was, but because boulders are in plentiful supply in Europe and no one else seems readily available to do the pushing.

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Fuel-economy targets pose Trump test for Trudeau

KONRAD YAKABUSKI

U.S. President Donald Trump and his carbon-loving environmental chief Scott Pruitt are easy to criticize for their gassy prevarication on climate change and fossilized thinking about coal. But when it comes to fuel-efficiency standards, they aren’t the ones in denial.

The 2025 fuel-economy targets first set in 2010 by former president Barack Obama’s administration, and seconded by Canada’s then Conservative government, always seemed about as realistic as a hyperloop between Montreal and Toronto. Once oil prices tanked a few years later, they became just another example of fantasy climate regulation, a favourite game of self-proclaimed progressive politicians.

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Don’t punish the gig workers in search of more tax revenue

CARL MORTISHED

So punishing were taxes for the young, self-employed and successful in 1966 that George Harrison wrote Taxman, the Beatles’ protest against the supertax imposed by Harold Wilson’s Labour government. Harrison later explained that it became the lead song on the album Revolver “when I first realized that even though we had started making money, we were giving most of it away in taxes.”

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Investors cheer Dutch election result. But not so fast

ERIC REGULY

The fashionable European Union and euro zone breakup scenario just became a little less credible. In what was trumpeted as a victory for the anti-populist, pro-European forces, the ruling VVD party of Prime Minister Mark Rutte emerged on top in the Dutch elections and investors took cheer.

There is little doubt that political risk in the euro zone and the wider European Union has now diminished somewhat. The rising prices of Dutch and French sovereign bonds, the strengthening euro and the FTSE-100’s climb to a record high on Thursday said as much.

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The Fed has set itself on a collision course with Trump

IAN McGUGAN

The Federal Reserve has set itself on a collision course with Donald Trump.

The brewing conflict rests on two radically different views of U.S. prosperity. In its cautious, technocratic way, the Fed reiterated on Wednesday that the country’s economic machine is ticking along nicely and nearing its productive potential.

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Serial disappointment in business spending baffles Bank of Canada

BARRIE McKENNA

Stephen Poloz has taken a lot of heat for being overly optimistic about the export recovery.

There has been a lot less focus on the Bank of Canada Governor’s chronic forecasting misses on business investment.

These two vital components of the economy are, of course, linked. In a trade-dependent country such as Canada, exports help drive investment. As companies grow their foreign sales, they gain confidence and eventually expand their operations to meet growing demand.

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High anxiety in European politics, and yawns in U.K. markets

ERIC REGULY

Investors this week face a barrage of European economic and political events that should leave them rattled. But on Monday, as they were allegedly staring into the great unknown, they were as complacent as cattle grazing on a mountain pasture. How to explain that?

Their reaction seemed so counterintuitive. The week started with the news that Nicola Sturgeon, Scotland’s First Minister, will seek a second Scottish independence vote some time between the autumn of 2018 and the spring of 2019. As early as Tuesday, though more likely at the end of the month, Britain will trigger Article 50 of the European treaty, signalling the start of formal negotiations for Britain’s exit from the European Union – Brexit. Never mind that “Britain” might not even exist then, if Scotland bolts before the two-year Brexit process is finished.

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Saskatchewan is not outperforming Alberta, when it comes to jobs

Todd Hirsch

Call it sibling rivalry.

For more than a century, Canada’s twin sisters of Confederation – Alberta and Saskatchewan – have always loved to compare themselves. The two became provinces on the same day in 1905, and for the first half of their lives Saskatchewan was the over-achiever. In the 1920s and 1930s, it boasted more than twice as many people as Alberta and was the preferred destination of waves of European immigrants.

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Dairy sector likely to be hit hard by NAFTA renegotiations

BARRIE McKENNA

There is a lot of angst in Canada about the looming renegotiation of the North American free-trade agreement.

Perhaps no sector has more to fear than the dairy industry.

It’s highly protected. It has been a frequent target of U.S. trade complaints, even before U.S. President Donald Trump. And unlike other vulnerable Canadian sectors, it has few natural allies in the United States and a long list of enemies from big dairy-producing states, including House speaker Paul Ryan of Wisconsin and Senate Democratic leader Charles Schumer of New York.

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If U.S. had helped Main St. rather than Wall St., Trump might not have happened

IAN McGUGAN

If you’re looking to explain how a man like Donald Trump came to occupy the most important job in the world, you have to also consider the bull market of the past eight years.

Both Mr. Trump and the S&P 500 owe their ascent to decisions made during the depths of the financial crisis. That was when policy makers decided to put helping Wall Street ahead of helping Main Street.

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Statscan website failures causing uneven playing field for traders, investors

DAVID PARKINSON

There were some curious and intriguing details behind the headlines of Statistics Canada’s monthly employment report, as there always are. It’s a serious shame – and a serious problem – that almost no one could see them.

Again.

The national statistical agency’s website was out of commission since early Friday morning, before the 8:30 a.m. ET release of the February labour force survey. As of late afternoon, Statscan’s website remained dark; the details of one of the most important economic indicators of its monthly calendar were invisible to the Canadian public all day.

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Reguly: Watch out, the Fed’s not predicting recession

ERIC REGULY

If the markets are good predictors of economic downturns, we’ve got nothing to worry about as Donald Trump dips into his economic stimulus bag of tricks. But what if the markets are wrong? More than a few strategists and economists think the forces are building for a Trumpian recession, and wouldn’t that be ironic for a President who vows to “make America great again.”

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Why Canadians should be more concerned about Ottawa’s deficits

KONRAD YAKABUSKI

As Finance Minister Bill Morneau prepares to table his March 22 budget, the Liberal brain-trust is persuaded that Canadians don’t care enough about deficits to punish any government that runs them. Not even one whose fiscal projections have Ottawa seeing red through mid-century.

“You just have a hard time convincing many people in Canada right now that the government’s balance sheet is of greater concern than their own,” Liberal strategist and pollster David Herle told The Globe and Mail after a Nanos Research poll found that most Canadians see no problem with Ottawa running deficits indefinitely as long as the debt-to-GDP ratio continues to decline.

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Beyond the big numbers: What to watch for in new Canadian jobs data

DAVID PARKINSON

The hot streak in Canadian employment has gone large enough for long enough now that it cannot be dismissed as a blip. Adding nearly 240,000 jobs in six months of nearly uninterrupted growth will do that for you.

But just how strong is this labour market? With the headline job count now on decidedly stronger footing, the answer to that question has become more nuanced.

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In first budget since Brexit vote, Britain bracing for uncertainties ahead

PAUL WALDIE

The British government is cutting spending and raising taxes in an effort to build a hefty war chest to cope with the many uncertainties surrounding Brexit.

Philip Hammond, the Chancellor of the Exchequer, unveiled the government’s annual budget on Wednesday, just days before Britain is set to begin the process of leaving the European Union. It was the first budget since the country voted to leave the EU last June, and Mr. Hammond stressed that the government wants to lay a solid financial groundwork as it heads into negotiations with the EU this month.

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Peugeot boss a deft political player in Europe’s auto game

CARL MORTISHED

It’s not as bad as two drunks propping each other up, but the Peugeot takeover of GM’s European brands doesn’t set the pulse racing. But that is because you are looking at the years of losses, the unionized work forces, the weak EU economy and the car brands which look just a little bit tired. What you are missing is the glue that will stitch this deal together: it is politics and the man who is steering Peugeot’s takeover of Opel and Vauxhall has shown himself to be masterful in playing games with the nervous and worried people who govern the nations of Europe.

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B.C.’s political intrigue may be trouble for Notley on pipeline front

JEFFREY JONES

Rachel Notley could soon face a family squabble, and it has big implications on the energy front.

The Alberta Premier is already an outlier on various New Democratic Party policy positions. It’s now possible she could find herself at odds with a provincial government next door on a key economic prospect for her province – an export pipeline. That is if British Columbia is run by her NDP counterpart after the election in May.

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New hope for export sector, and one hurdle named Trump

DAVID PARKINSON

As Canada extended its trade winning streak in January, we finally may be at that elusive moment when the export sector takes over as the growth engine the economic pundits have long predicted it would be. But to cement this economic renaissance, we still need that trade growth to prompt export businesses to open their cobwebbed wallets and invest in expansion – and standing in their way is a Trump Tower of worry.

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PSA-Opel union leaves Fiat Chrysler’s Marchionne out in the cold – for now

ERIC REGULY

After a long lull, the auto industry’s merger game is back. On Monday in Paris, France’s PSA Group announced the purchase of Opel, the long-suffering European division of General Motors, for €2.2-billion ($3.2-billion). The takeover reshapes the European car market overnight, thrusting PSA, owner of the Peugeot and Citroen brands, into second spot, behind Volkswagen.

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For a progressive federal budget, Liberals must stick to their promises in the Trump era

ANDREW JACKSON

The major challenge for the federal government in the budget expected this month is to maintain its commitment to progressive social and economic policies in the context of a major shift to the political right in the United States.

In the last election and in the 2015 budget, the Trudeau government promised to champion the middle-class “and those seeking to join it” by fighting growing inequality. It increased the tax rate for very-high-income earners, delivered a modest but equalizing reform of child benefits as well as improved public pensions and promised to focus on job growth through investments in public infrastructure, innovation and skills.

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McKenna: Hey @realDonaldTrump: Shrinking economies don’t create jobs

BARRIE McKENNA

Most countries – Canada included – see immigration as an antidote to the challenge of slow growth and the greying of the population.

Here, for example, is what Finance Minister Bill Morneau’s Advisory Council on Economic Growth concluded in a recent report: Boosting immigration will help sustain Canada’s social-safety net, create jobs, raise living standards and spur entrepreneurship and trade.

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Robust or fragile? Jobs, trade data to offer clues on Canadian economy

RACHELLE YOUNGLAI

This week’s jobs and trade data will provide clues on whether Canada’s economy has recovered from the dark days of the energy bust.

The recent surge in employment, monthly trade surpluses near $1-billion and surprisingly strong economic output suggests that Canada is on the mend.

“The question is whether this improved momentum … will continue,” Nomura economist Charles St-Arnaud said.

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Canada will pay a price for being out of step with Trump’s tax and policy approach

BARRIE McKENNA

Canadians may be tempted to keep calm and carry on amid all the chaos swirling around President Donald Trump.

No one really knows with certainty what the U.S. will do on taxes, trade, immigration, or financial and energy regulation.

Maybe the safest response for Canada is to do nothing at all.

Wrong. Complacency could prove lethal for Canada. The world changed in November. And while the policy details are still murky, it’s now apparent the United States is moving toward a world of less regulation, sharply lower taxes and greater protectionism – whether we like it or not.

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Reguly: The EU’s debt-crisis saviour could be its undoing

ERIC REGULY

In his five years as President of the European Central Bank, Mario Draghi has been Capitano Europe, battling on every front to keep the euro zone intact and inflation alive. Bloodied and exhausted, he can declare a victory, of sorts. No country has left the euro zone, although Greece threatens to do so with tedious regularity, and the deflation threat seems to have vanished.

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Is the Bank of Canada’s tame inflation outlook correct?

DAVID PARKINSON

The Bank of Canada is not worried about Canada’s surging inflation. But it felt a certain urgency to make sure you’re not worried about inflation, either – especially if you’re a currency or bond trader.

That may be the key takeaway from the central bank’s interest-rate decision Wednesday, in which it summed up its views on the Canadian economy and held its key rate unchanged at 0.5 per cent. Conspicuously, the bank’s rate announcement led with a discussion on inflation – which has been much lower down in the rate statements of the past six months. Anyone familiar with central bank communications will tell you that this is no accident.

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Brexit is the real reason the LSE-Deutsche deal fell apart

ERIC REGULY

The excuse was Italy; the real reason might have been Brexit.

The merger of the London Stock Exchange Group (LSE ) and Deutsche Boerse (DB), a €29-billion ($41-billion) combination that would have created a formidable rival to the mightiest American exchanges, is dying, if not quite dead. The LSE in effect said so Sunday night with the surprise announcement that it could not meet the European Commission’s demand that the LSE, for anti-trust reasons, sell MTS, its Italian electronic bond trading platform.

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Greece still feels the pain, with no end in sight

ERIC REGULY

In spite of Brexit, the rise of Marine Le Pen and her armies of euroskeptics and the threat of Donald Trump-inspired trade wars, the euro zone, if not on fire, is chugging along rather nicely. Well, most of the euro zone. Greece is the glaring exception.

In the euro zone as a whole, annualized growth, at 2 per cent, is stronger than that of the U.S. On Monday, we learned that the European economic sentiment indicator was at its highest level since the height of the crisis, while loan growth to households was up 2.2 per cent in January, year on year. Companies are hiring again.

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Economic optimism riding high, but Bank of Canada biding time on rates

DAVID PARKINSON

Canadians may be in for a pleasant surprise when Canada’s fourth-quarter gross domestic product report comes out this week. But the data will come one day too late to colour the Bank of Canada’s interest-rate decision.

Statistics Canada will release GDP figures for December and for the fourth quarter on Thursday morning. Optimism about the likely numbers is riding high, thanks to a generally strong string of key indicators leading up to the GDP report. The consensus among economists is that real GDP grew at an annualized rate of close to 2 per cent in the quarter, well above the Bank of Canada’s most recent estimate of 1.5 per cent, published in mid-January.

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