Dec 1, 2017
Morneau didn’t take down markets on Dec. 7, 2015 — OPEC did
The federal Conservatives are laying the blame for the TSX’s sell-off on Dec. 7, 2015 squarely at Finance Minister Bill Morneau’s feet.
In the House of Commons, opposition MPs said they believe Morneau knew his move to increase taxes on Canada’s top income bracket would be a market-moving event, and questioned whether the announcement played into the timing Bill Morneau Sr.’s sale of $1.5 million worth of Morneau Shepell shares to avoid the hit.
“The minister's own department provided a report earlier this year showing that wealthy Canadians moved income into the 2015 tax year in order to avoid paying this new higher rate,” Poilievre said in the House of Commons on Monday. “One of the ways we know they did it was by selling their shares after the finance minister tabled his tax measures on the floor of this House of Commons. It caused the markets to drop.”
The only problem is that the finance minister didn’t take the TSX to the mat on Monday, Dec. 7. OPEC did.
The cartel’s decision to abandon production targets late the preceding Friday sent crude prices six per cent lower on the date in question.
“Americans don’t have any ceiling. Russians don’t have any ceiling,” said Iraqi Oil Minister Adel Abdul-Mahdi at the time. “Why should OPEC have a ceiling?”
That relative nonchalance left the resource-heavy TSX Composite stuck picking up the pieces when trading resumed early Monday morning, as the energy group sank more than five per cent. There was no place for traders to hide on the benchmark composite, with 220 of its 242 constituents ending the session in negative territory.
While Paramount Resources was the lead laggard on the day, its relatively modest size didn’t move the needle nearly as much as some of the key heavyweights on Bay Street.
Enbridge, Canadian Natural Resources, Suncor, RBC and Scotiabank took 81 points off the table all by themselves, accounting for the better part of a third of the drop. While the energy names stood to take a direct hit given their direct exposure, concerns over rising loan loss provisions stemming from the energy patch weighed on the banks.
Though the Conservatives have pinned the blame for the declines on Morneau, the argument is further weakened by one single fact: the tax changes weren’t unveiled until the Finance Minister began his address at 4:10 pm eastern, 10 minutes after markets closed for the day.
