Canada is facing a political crisis at home as economic threats abroad grow louder, Couche-Tard is turning up the heat in its 7-Eleven takeover bid, and we’ve spilled milk all over the place. Today, we find five takeaways from a volatile week. But first:
Today’s headlines
Human rights: Barrick Gold is asking a judge to dismiss Ontario lawsuits for alleged killings and abuses at a Tanzanian mine.
Tech talk: Google has added Inuktut to its Translate service, marking the first inclusion of a First Nations, Métis or Inuit language from Canada.
Tobacco: Companies are set to pay $32.5-billion in a landmark Canadian legal settlement.
Boats: Nope. BRP Inc. is putting the bulk of its marine business up for sale as it navigates a storm of softening consumer demand and greater competition.
Happening today
- China’s economic slowdown deepened in the last quarter.
- Earnings include Procter & Gamble and American Express (you’re welcome, American Express).
- Related: Have you seen our new Big Guide to Credit Cards?
Prime Minister Justin Trudeau appears as a witness at the Foreign Interference Commission in Ottawa on Wednesday.Justin Tang/The Canadian Press
In focus
Five stories emerging from the week
1. Canada has a problem on Parliament Hill
... at an extremely inopportune moment. Liberal MPs are calling on Prime Minister Justin Trudeau to step down, some cabinet ministers aren’t seeking re-election, and Trudeau testified that Conservative Party politicians and members “engaged in or were susceptible to” foreign interference.
That all makes for an awkward time in Ottawa. But what does it mean for the Canadian economy? Well, in an ideal world, Canada’s political leaders would be focused on the Canadian economy. The country faces significant hurdles:
- The sudden cratering of Canada-India relations has clouded Ottawa’s vision for diversifying trade in Asia, and comes at a perilous moment for Canadian trade policy more broadly. (Recommended reading: Tensions with India put Canada’s Asian trade strategy on shaky ground.)
- Canada’s relationship with China is stuck deep in the freezer after the countries exchanged tariffs and threats of tariffs this summer.
- Polls are showing Donald Trump and his tariffs (dibs on band name) could very well find himself back in the Oval Office next year. His pledged tariffs on imports seem to be growing in size and scope at every rally – a worrisome trend for Canada, which sends about 80 per cent of its exports to the U.S.
Can all of these plates be spun at once? We’ll soon find out.
Related: The world sees the U.S. as an economic wonder, and Americans see a failure. They’re both right
2. Couche-Tard is turning up the heat
The Quebec-based convenience retailer is ramping up its takeover bid for Seven & i, the Japanese owner of 7-Eleven. In an interview last night with The Globe, chief executive Alex Miller put it plainly: “We’re not going away.” He added: “We see tremendous value here and we are just going to continue to highlight that and to push … we’ll get this deal.”
Miller is in Tokyo this week on a multiday trip with Couche-Tard founder and chairman Alain Bouchard, chief financial officer Filipe Da Silva, and special adviser Brian Hannasch.
They’re meeting with Seven & i stakeholders in a bid to forge relationships and ease concerns. But the Japanese company is not backing down without a fight. It’s pushing a restructuring plan that would refocus on its core business of more than 80,000 convenience stores. So far, however, at least one key investor says the plan is too little, too late.
3. AI is getting a health check
If you follow artificial intelligence stocks closely: Why? I mean, I get it. It’s like watching Ping-Pong played vertically.
But they’re getting hard on the neck. Results this week from Netherlands-based semiconductor provider ASML, for example, torpedoed its stock and weighed on AI companies in general – before U.S. chip stocks steadied the next day. So if your upper spine can bare it, next week will kick off a potentially turbulent period:
- German-based SAP SE reports earnings on Monday. Europe’s largest software company and its rivals are racing to infuse generative AI into its services.
- On Wednesday, investors will have had almost two weeks to digest Elon Musk’s AI-powered Tesla visions (which were decidedly light on details) before weighing the electric-vehicle maker’s quarterly report.
As those companies increasingly throw their chips into AI, their results could set a fuse for fireworks as Alphabet, Microsoft, Meta and Apple report earnings over the next two weeks. Is AI the future? Most certainly a big part of it. Should we invest all of our money into it now? Investors are becoming more persnickety.
4. We need more power
And how can those companies lead an AI industrial revolution without power? More of it will need to be created. A lot more. Driven in large part by countries accelerating a “greening’ of their economies, electricity is set to take off. In a report this week, the International Energy Agency said the equivalent of Japanese demand will be added each year. Even more if countries meet national and global net-zero goals.
- “After the Age of Coal & Age of Oil, the world is moving rapidly into the Age of Electricity,” IEA executive director Fatih Birol wrote in a social-media post.
- The agency said that move will be driven by “electric mobility, cooling, and data centres and AI.”
- “The contours of a new, more electrified energy system are coming into focus as global electricity demand soars,” the report said.
Read: Global oil demand to peak by end of the decade as countries push to electrify their economies.
5. We are within our rights to cry over spilled milk. (From business class).
- A new study has found Canada’s dairy farms have dumped about 7 per cent of all milk produced since 2019. If we’re going to manage dairy supply, can we manage it butter than this? (Sorry.) But even New Zealand has beef with us now.
- Ontario’s Education Minister questioned the fiscal responsibility of a Catholic school board that spent $145,000 to send four trustees on a trip to Italy to buy art, including religious statues, for a new high school. A month before that trip, trustees were granted the ability to fly business class “or higher” if travelling outside North America and the trip is more than six hours, Caroline Alphonso reports.
- If any of those trustees were flying economy and had their flight cancelled or delayed, we learned this week they could have asked about a business-class rebooking. Edmonton’s Zachary Penner walked so we could fly (more comfortably).
Charted
Let’s hit the mall
If you’re looking for new shirts, pants or boots, you’re in luck: The apparel industry is slashing prices. In this week’s Decoder, Jason Kirby unpacks the falling price of clothing and footwear.
Morning markets
Global markets extended gains as robust U.S. economic data continued to bolster investor sentiment while a mixed picture in China kept up pressure on policymakers for more stimulus. Wall Street and TSX futures pointed higher.
Overseas, the pan-European STOXX 600 was up 0.13 per cent in morning trading. Britain’s FTSE 100 slipped 0.3 per cent, Germany’s DAX gained 0.11 per cent and France’s CAC 40 rose 0.46 per cent.
In Asia, Japan’s Nikkei closed 0.18 per cent higher, while Hong Kong’s Hang Seng rose 3.61 per cent.
The Canadian dollar traded at 72.49 U.S. cents.