Canadian household debt is at record levels, and near the top of the pack among developed nations, but as far as Bank of Canada Governor Stephen Poloz is concerned, “it will be okay.” He wasn’t buying into the doom and gloom when pressed on the issue by Amanda Lang in a BNN exclusive interview after the central bank raised rates yesterday to the highest level since 2009. As he framed it, so long as consumers think about - and prepare for - rates rising 100-150 basis points, everything will be just fine. The question is whether the highly indebted among us are willing to face the unpleasant reality of what that scenario would mean for their finances. We’ll pursue that angle this morning.  

 

NAFTA, U.S. TAXES CLOUD BUSINESS INVESTMENT OUTLOOK

The Bank of Canada has looked through those clouds in an attempt to quantify the impact of those two factors. The central bank reckons trade uncertainty threatens to cut business investment by two per cent over the next two years, while U.S. tax changes are seen subtracting half a percentage point from investment levels by the end of 2019. This brings us back to a long-standing narrative: how can Canada compete while Donald Trump rolls out the welcome back for businesses? Watch for Greg Bonnell's analysis on BNN.ca today.

BMO ON BOARD WITH WEED

In December, Canopy Growth CEO Bruce Linton told us the only business impediment for Canada’s cannabis industry was banks “acting weird,” and predicted we’d see them “push into the sector” in the new year. He was right. Late yesterday, Canopy announced a $175-million bought deal financing with BMO Capital Markets leading the way alongside GMP. McCreath is trying to get a handle on how this will be perceived in the U.S., particularly in light of Attorney General Jeff Sessions’ recent directive.

TRANS MOUNTAIN WAITING GAME

Kinder Morgan Canada is warning the Trans Mountain expansion project’s in-service date could be pushed back a full year to the end of 2020. And that’s presuming the pipeline actually gets built, which is no sure thing. To wit: the company is reiterating “it may become untenable for Trans Mountain’s shareholders … to proceed” with the project if the company continues to be faced with regulatory uncertainty.

HUSKY’S 'ICEBERG MANAGEMENT INCIDENT'

Just when you think you’ve seen everything from the corporate jargon playbook, we get “iceberg management incident”. That’s how Husky Energy is describing a perilously close call in March 2017 that resulted in a regulator ordering the suspension of the company’s offshore SeaRose operations. The order affects 27,000 barrels of oil per day in production, and CEO Rob Peabody is vowing to “learn from this incident.”

OTHER NOTABLE STORIES:

-Donald Trump circled back to his oft-repeated NAFTA threat in an exclusive interview with Reuters. "We're renegotiating NAFTA now," he said. "We'll see what happens. I may terminate NAFTA." Reminder that the sixth round of negotiations gets started in Montreal next Tuesday.

-TransCanada announced today it has sufficient commercial support for the Keystone XL pipeline and that “primary” construction is expected to start next year. 

-Front Four is taking aim at Obsidian’s “entrenched” directors and says it’s “currently considering all available options, including seeking changes to the composition of the board” at the company’s next annual meeting. Obsidian Energy responded in kind late yesterday, saying the two sides had agreed to add one of FrontFour’s candidates to the company’s board, but claims the hedge fund ultimately balked at the terms of the agreement.

-China’s economy will be a market driver today after fourth-quarter GDP and December industrial output rose more than economists anticipated.

NOTABLE RELEASES/EVENTS

Notable earnings: Canadian Pacific Railway, Morgan Stanley, IBM, American Express

Notable data: StatsCan EI report, U.S. housing starts, China GDP, China retail sales, China industrial production

12:00 p.m. ET: Foreign Affairs Minister Chrystia Freeland meets with NAFTA council members in Toronto (photo op)

12:00 p.m. ET: Innovation Minister Navdeep Bains speaks at Montreal Chamber of Commerce event

1:45 p.m. ET: Finance Minister Bill Morneau holds news conference in Toronto with Mexican Finance Secretary Jose Antonio Gonzalez Anaya

2:45 p.m. ET: Bains delivers "major announcement" about clean tech alongside Environment and Climate Change Minister Catherine McKenna

6:00 p.m. ET: Morneau holds final pre-budget consultation in Toronto

7:00 p.m. ET: Ontario Premier Kathleen Wynne hosts town hall in Ottawa

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