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Noah Zivitz

Managing Editor, BNN

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We thought it was going to be all about the earnings today. Instead, we’ve also got a big deal: Bank of Nova Scotia is offering to buy Banco Bilbao Vizcaya Argentaria's majority stake in a Chilean retail bank for $2.9 billion in a move that would double Scotia's presence in the South American country. Under the terms of the agreement (which shouldn't come as a surprise since the banks disclosed talks in the summer), Scotia would pick up BBVA's 68.19 per cent stake, provided the minority shareholder Said family doesn't claim its right of first refusal. If the Said family also tenders its 31.62 per cent stake, the total hit to Scotia's Tier 1 capital ratio would be 135 basis points. BBVA Chile has $29 billion in assets and 4,000 employees as of September. This morning we'll find out if BBVA Chile is the right prize for Scotia.

On earnings, Scotia delivered an essentially in-line quarter, with $1.65 in adjusted profit per share, versus the average estimate of $1.66. Core Canadian banking profit rose 12 per cent, thanks largely to an asset sale. International banking profit rose 11 per cent year-over-year. Weak spot was capital markets, where profit fell 15 per cent. Plenty of analysis on the results coming up throughout the day on BNN. 

OECD WARNS ON CANADIAN HOUSEHOLD DEBT

The Organisation for Economic Co-operation and Development is nudging up its global growth forecast by one-tenth of a percentage point while sounding the alarm on high debt levels. Case in point: Canada -- where the OECD says household indebtedness and high home prices "remain a substantial financial vulnerability." We'll likely be hearing a lot of that today. The OECD also took down its GDP estimates for Canada this year and next, and said it sees growth slowing to 1.9 per cent in 2019.

HOME CAPITAL VERSUS THE SHORTS

Home Capital Group said today West Face Capital has presented a draft statement of claim from West Face alleging misrepresentation with damages potentially tallying $70 million. Home Capital says it will "fully defend its conduct" if West Face proceeds with the claim. Furthermore, Home Cap says it will "investigate the conduct of the various short sellers and the propriety of their actions whether acting alone or in concert with others."

HEALTH CHECK ON CANADA’S FINANCIAL SYSTEM

The Bank of Canada will release its semi-annual Financial System Review later this morning. Recall that last time around, the bank made the unusual move of singling out a institution by acknowledging Home Capital's woes. The June FSR also flagged household debt levels and housing market imbalances as key vulnerabilities. Today we look forward to what the bank will say, if anything, about OSFI's B-20 clampdown on lending standards.

PROGRAMMING NOTE: We’ll have special coverage on this starting at 11:00 a.m. ET, including Stephen Poloz’s news conference live from Ottawa. Go to www.BNN.ca/commodities for all your commodities needs.

TIM HORTONS DISPUTE WITH FRANCHISEES SPREADS

St. Louis-based Show Me Hospitality is shutting down two Tim Hortons in the Gateway City and suing the company as friction with franchisees intensifies. Show Me claims Tims’ owner threatened to sever ties if it didn’t agree to develop a 200-restaurant network. This comes after months of tension between Tims’ parent company RBI and franchisees in Canada. We’re seeking Restaurant Brands International’s side of the story and interviews with principals. Tim Hortons told us via email it “strongly denies” Show Me’s claims.

POWELL IN THE HOT SEAT

Donald Trump's nominee for the Fed chairmanship will be put to the test today. In prepared remarks ahead of testimony, Jerome Powell said he'll "do everything in [his] power" to fulfill the Fed's dual-mandate of maximum employment and price stability, consider "appropriate ways to ease regulatory burdens" for banks, and noted he expects interest rates will rise "somewhat further". He also argued for the Fed to retain its independence. We'll see how that plays out when the Senate Banking Committee's members get a chance to test Powell this morning.

OTHER NOTABLE STORIES:

-TSX record high watch: 16,131.79 is the all-time high set on Nov. 7.

-RioCan is selling seven properties to CT REIT for $200 million. Canadian Tire is a tenant in all of the properties. CT REIT is a Canadian Tire spinoff.

-TransCanada is reaffirming its plan to raise its dividend as much as 10 per cent per year through 2020, and extending that view to 2021. We await more details on the pipeline company's outlook later this morning at its investor day session in Toronto. And there's more for the TransCanada file: its Keystone pipeline will go back into service today at reduced pressure.

-Bitcoin climbed as high as US$9,904.85 this morning

-Royal Dutch Shell is raising its free cash flow forecast and vowing capital discipline – saying it’s aiming for $5 billion in asset sales on average until 2020 and warning capex will be at the low end of its target range with oil at current levels. The big question for our purposes is when Shell will start cashing in on the 97.6 million Canadian Natural shares it picked up in May.

NOTABLE RELEASES/EVENTS

-Notable earnings: Bank of Nova Scotia (8:00 a.m. ET conference call), Alimentation Couche-Tard

-Notable data: Canadian industrial product and raw materials price indices, S&P/Case-Shiller U.S. home price index, U.S. consumer confidence

-8:00 a.m. ET: TransCanada holds investor day meeting in Toronto

-9:45 a.m. ET: U.S. Senate Banking Committee holds nomination hearing for Jerome Powell

-10:30 a.m. ET: Bank of Canada releases Financial System Review (plus news conference at 11:30 a.m. ET)

-12:00 p.m. ET: Federal ministers scrum in House Foyer after cabinet meeting

-2:30 p.m. ET: Alberta Finance Minister Joe Ceci delivers second-quarter fiscal update 

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