Noah Zivitz

Managing Editor, BNN Bloomberg

Archive

HURDLES AHEAD FOR KINDER MORGAN EXPANSION PROJECT  

Canada’s oil patch is one step closer to sending its product to tidewater. The federal government’s decision to approve Kinder Morgan’s Trans Mountain expansion proposal opens the door to weaning this country off its reliance on the U.S. as an export market.  But the project is by no means a sure thing.  First, Kinder Morgan’s board has to sign off on the pipeline.  And then there’s the risk of protests and legal roadblocks.  “One of the great things about Canada is people are more than free to express their opinions, to express their disappointment with government in peaceful ways; and we expect them and encourage them to. That is our right as Canadians,” Prime Minister Justin Trudeau told reporters yesterday.  “But at the same time, we know that this decision is the right one for Canadians.”

Here are the questions BNN will aim to answer today:

• Will Kinder Morgan be able to overcome opposition to the pipeline?
• How important is that project for Alberta’s economy? 
• Trudeau repeatedly spoke yesterday about Canada being in the midst of a transition away from fossil fuels.  So what do his decisions -- including the Line 3 approval, Northern Gateway rejection, and oil tanker moratorium in northern B.C. – signal about the prospects of TransCanada’s Energy East pipeline project ever seeing the light of day?

Lots of analysis to come on this fat file today, including a conversation with Natural Resources Minister Jim Carr around 10:45 a.m. ET. 

PIPELINES BY THE NUMBERS

Enbridge’s Line 3 replacement:

Total estimated cost: $8.4 billion* ($4.9B for Canadian portion; US$2.6B for U.S. portion)

Distance: 1,659 km

Planned in-service date: 2019

Estimated capacity: 760,000 barrels per day

Conditions: 37

Trans Mountain Expansion:

Estimated cost: $6.8 billion

Target for starting construction: September 2017

Jobs created:15,000**

Capacity: 895,000 bpd

Distance: 980 km

Conditions: 157

*based on current exchange rate

**source: Canadian government

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RBC PROFIT DIPS

Royal Bank of Canada’s fourth-quarter earnings slipped 2 per cent to $2.5B, with cash EPS missing estimates, as some deterioration in the loan book took the shine off stable profit in its core retail banking unit and double-digit growth in wealth management.  Provisions for credit losses rose to $358 million from $318M in Q3 and $275M a year earlier.  Some other notable credit metrics:

• Energy credit loss provisions:  $69M vs $30M in Q3, vs $23M in Q4 ‘15
• Residential mortgage loss provisions: $28M vs $11M in Q3, vs $11M in Q4 ‘15
• Residential mortgage gross impaired loans: $709M vs $672M in Q3, vs $646M in Q4 ‘15
• Oil & gas gross impaired loans: $1.26B vs $1.14B in Q3, vs $156M in Q4 ‘15

OIL SURGES AS OPEC MEETS

Put up or shut up time for OPEC as the group meets today in an attempt to finalize an agreement on who shoulders the burden of cutting production to 32.5-33 million barrels per day. Oil futures are trading around 7 per cent higher this morning amid encouraging commentary from some of the oil ministers.  We’ll wait and see what the end result is. Closing news conference is scheduled for 10:00 a.m. ET. 

CMHC ON KEY HOUSING DRIVERS 

CMHC CEO Evan Siddall is in Vancouver, naturally, for a speech today on key housing drivers “including economic fundamentals and foreign investment activity.”  The housing watchdog will also release a report today with updated data on foreign investment. BNN will have full analysis in our afternoon shows.  We’ll also circle back to the fallout from Ottawa’s new mortgage rules as new insurance requirements for low loan-to-value mortgages take effect today. This is the measure that’s expected to hit the non-bank lenders. 

RELEASES/EVENTS: 

-Notable data: Canadian GDP (8:30 a.m. ET), Canadian industrial product prices and raw materials price indices (8:30  a.m. ET), U.S. personal income and spending (8:30  a.m. ET)

-4:00 a.m. ET: OPEC meeting in Vienna begins

-8:00 a.m. ET: Dallas Fed President Robert Kaplan delivers speech in New York

-9:00 a.m. ET: Innovation Minister Navdeep Bains and Immigration Minister John McCallum announcement in Mississauga on recruiting global talent 

-9:15 a.m. ET: Fed Governor Jerome Powell delivers remarks in D.C.

-10:00 a.m. ET: OPEC news conference scheduled to start 

-11:00 a.m. ET: Alberta Premier Rachel Notley discusses pipeline decisions via teleconference

-12:30 p.m. ET: Kinder Morgan Canada President Ian Anderson takes questions from media via teleconference

-12:35 p.m. ET: Cleveland Fed President Loretta Mester delivers speech in Pittsburgh

-1:30  p.m. ET: CMHC releases report on foreign investment

-2:00  p.m. ET: Fed releases Beige Book

-2:20  p.m. ET: Natural Resources Minister Jim Carr speech in Calgary

-3:45 p.m. ET: CMHC CEO Evan Siddall delivers speech in Vancouver

-Bank of England to release financial stability report and bank stress test results.

-CRTC hearing on English-language TV licence renewals continues. Agenda here

WATCHING:

-Today’s the deadline for government’s task force on legalizing marijuana to hand off its report to key ministers. Public release date is TBD.  BNN will tee it up with Canopy Growth CEO Bruce Linton during the noon hour and the CEO of private equity firm Privateer Holdings on Commodities. 

-Also expecting formal announcements about Steven Mnuchin and BNN regular Wilbur Ross being nominated to U.S. President-elect Donald Trump’s cabinet as treasury and commerce secretary, respectively. 

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