Canada's GDP shrinks 1.6%

"It wasn't pretty," CIBC Capital Markets said within minutes of Statistics Canada reporting GDP shrank 1.6 per cent in the second quarter, "but it wasn't expected to be."  Of course, the Fort McMurray wildfire weighed mightily on this country's economy in May. Exports plummeted 16.7 per cent in the quarter -- crude and refined products factored into that, but there was also a sharp drop in shipments of cars and other consumer goods. If there's a bright spot in this morning's data, it's the strong handoff to the third quarter as GDP bounced back 0.6 per cent in June (with the real estate sector again among the top contributors to the economy). 

Weighing the economic merits of Energy East 

We'll apply an economic lens to the National Energy Board's decision to temporarily pull the plug on its Energy East panel sessions. TransCanada says its $15.7-billion proposed pipeline project would result in approximately 14,000 direct and indirect jobs during the development and construction process. Not a bad equation for a country craving private investment and employment growth.  But for now the exhaustive review process is being shelved due to security concerns and calls for the removal of two panelists involved in the NEB sessions. 

Waiting on Potash-Agrium

As merger talks continue, we’ll continue gathering reaction to the possibility of the two companies joining forces. Which rivals could be waiting in the wings to pick up any assets that Agrium and PotashCorp are forced to hive off to satisfy competition authorities? Saskatchewan Premier Brad Wall said yesterday he’d also want to see Saskatchewan’s interests “furthered” if the deal goes through.  What levers are at his disposal? And how will Alberta react if Wall’s strategy involves pulling some head office work into his province? 

Canada applies to join infrastructure bank, averts canola shutdown 

Lots of important developments overnight during Prime Minister Justin Trudeau’s official visit to China. Canada will apply to join the Asian Infrastructure Investment Bank, a move that Finance Minister Bill Morneau says will “help Canadian companies to explore new commercial opportunities.” Anyone who saw our interview with ex-Goldman Sachs Asia Vice-Chair Ken Courtis last Friday would know that this was a distinct possibility.

Separately, with a deadline looming tomorrow that threatened to essentially wipe out Canadian canola exports to China, the two countries have agreed to keep the canola shipments flowing as they work toward a solution to the dispute. 

Tim Hortons destined for the U.K. 

Restaurant Brands International is living up to its vow that it would make Tim Hortons a major international brand. RBI announced this morning it’s teaming up with a partner to establish Tim Hortons in England, Scotland and Wales. 

Canada Post, union reach agreements

The Canadian Union of Postal Workers and Canada Post have reached tentative agreements covering urban and rural workers, thus averting job action.  Details are sparse, other than that the pacts are for two-year terms. Judging by Canada Post’s statement, who knows how much ground is covered in the arrangements, “The issues facing the Corporation…are complex.  This [two-year contract] approach provides more time for thoughtful discussion and analysis on how best to address these issues without the ongoing threat of a work disruption.”  Workers must still ratify the agreements. Now the question is how fast customers who already enacted their alternate shipping plans return to Canada Post. 

Releases/events:

-Notable earnings: National Bank, Laurentian Bank

-Notable data: Canadian GDP (Q2 annualized est: -1.5 per cent; June est: +0.4)

-Justin Trudeau’s official visit to China continues 

Every morning Commodities host Andrew Bell writes a ‘chase note’ to BNN's editorial staff listing the stories and events that will be in the spotlight that day. Today's note was written by BNN's Managing Editor Noah Zivitz. Have it delivered to your inbox before the trading day begins by heading to www.bnn.ca/subscribe.