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WHAT YOU NEED TO KNOW
What the Trans Mountain deal means for Trudeau and Kinder Morgan
When the federal government announced yesterday that it had reached an agreement with Kinder Morgan to buy the Trans Mountain pipeline expansion project, it sent shockwaves through the oil patch, financial markets and Canada’s political system. The $4.5-billion purchase is the largest federal government intervention since 2009. The total cost for the project will rise once construction and labour costs are included, but it is unclear what the final price tag will be to Canadians. But for Prime Minister Justin Trudeau, the decision will likely define his tenure. Mr. Trudeau was once seen as an ally for environmental groups and Indigenous peoples but that view is beginning to change following the decision.
Kinder Morgan walks away from the deal richer, with one bank calculating that the company will make $1.2-billion on the sale with all things taken into consideration. It also rids itself of the considerable risks that came with the project, given the stringent opposition by the B.C. government, environmentalists and Indigenous groups. The Texas-based company will help the government find a new buyer for the pipeline, given that Ottawa has said it doesn’t want to own the pipeline indefinitely. The search for a buyer may hit roadblocks, however, as the federal government has “limited options” among the potential field of new owners. (for subscribers)
If and when the pipeline expansion is built, it will increase oil tanker traffic off of the B.C. coast. What will it look like? Our in-depth visual explainer takes you from Burnaby, B.C., into the open ocean.
Gary Mason writes in a column that this is the Prime Minister’s Faustian bargain: “In a move reminiscent of the kind of bold, audacious gambit his father, Pierre Elliott, was once known for, Prime Minister Justin Trudeau just nationalized a pipeline. It represents the biggest gamble of his political life.”
Elmira Aliakbari and Ashley Stedman write that Ottawa has no one but itself to blame for this situation: “Clearly, the federal government has failed to address the real issues facing Canada’s energy sector. To make matters worse, it’s now nationalized the Trans Mountain project, setting a troubling precedent. For these major energy missteps by Ottawa, Canadians will ultimately pay.”
Bank of Canada clears way for July rate hike, warns of need to act to temper inflation
The Bank of Canada kept its key interest rate unchanged at its policy announcement earlier today, opting instead to look forward at July for a potential increase. Citing the impacts of uncertainty on the trade front, a housing market slowdown and “stress” in emerging markets, Canada’s central bank decided to leave its policy rate at 1.25 per cent. The Bank did, however, warn that it will need to act soon in order to temper inflation from rising past its target of 2 per cent. The interest rate has been increased three times in the past year, as the central bank goes about its tightening of monetary policy after a recession. Many analysts are expecting the Bank to raise its interest rate by 25 basis points to 1.5 per cent when it releases its next decision on July 11.
CP Rail strike ends as company reaches deal with union
Canadian Pacific Railway, Canada’s second-largest railway, has reached an agreement with its largest union to end a strike that begin last night after 10 p.m. ET. Three thousand locomotive engineers and conductors walked off the job last night after several months of negotiations failed to result in an agreement. Negotiators kept working, however, and reached a tentative four-year agreement earlier today. Teamsters Canada Rail Conference, the union, says that freight will resume by Thursday morning. CP saw its shares increase on the Toronto Stock Exchange after news of the deal broke. Details are being withheld at this time because it still needs to be ratified. Ottawa was under pressure to intervene to get the crews back to work, but the federal Liberals were hesitant to do so. (for subscribers)
Russian journalist Babchenko alive; Ukraine says death was faked to foil murder plot
In a story that reads like a plot straight out of a movie, a Russian journalist who had reportedly been assassinated yesterday walked into a news conference to the gasps, whoops and applause of stunned colleagues, very much alive. Arkady Babchenko is a war reporter who fled Russia because his work was critical of the Kremlin. He deceived his family and colleagues by participating in a sting operation with Ukrainian authorities to foil a plot on his life by Russian security services. Officials detained the suspected organizer of the alleged plot to kill Mr. Babchenko, who was flushed out after believing that the journalist was dead.
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MARKET WATCH
U.S. stocks ended higher on Wednesday, with the S&P 500 and Dow registering their biggest daily percentage gains since May 4, as signs emerged of an easing of political turmoil in Italy and a surge in oil prices boosted energy stocks. The Dow Jones Industrial Average rose 1.26 per cent to end at 24,667.92, the S&P 500 gained 1.27 per cent to finish at 2,724.02 and the Nasdaq Composite added 0.89 per cent to close at 7,462.45. Meanwhile, Canada’s main stock index also rose on Wednesday as energy shares gained from a rise in oil prices. The Toronto Stock Exchange’s S&P/TSX composite index rose 0.79 per cent to end at 16,048.66.
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WHAT’S TRENDING ON SOCIAL
Yesterday, actress Rosanne Barr blamed “Ambien tweeting” for her racist remarks against Valerie Jarrett, a former Obama aide, which led to the cancellation of the hit TV show Roseanne. Today, Sanofi, the drug company which manufactures Ambien, a sleeping pill, tweeted that “racism is not a known side effect” of their medication.
TALKING POINTS
Colangelo’s Twitter debacle raises a larger question about social media in sports
“You do get the sense of a reckoning coming, especially as it applies to entertainment businesses such as sports. The peril of social media has always been real, but now it’s regular. Every week, someone famous self-immolates. Most come back from it, but a few don’t. The two sides are similar only in that they stitched themselves into the bind for no better reason than they were bored, garrulous and couldn’t think of anything nice to say. Eventually, teams will begin to think of Instagram the way they think of off-season racquetball – an unnecessary pastime that can destroy a multimillion-dollar human investment. But first, there must be many cautionary tales. It’s one thing when the executives who will ultimately make those decisions see young, dumb kids having to unscrew themselves from their missteps. But when it’s one of their own sneaking into the social-media bear pit and coming out in pieces? That sort of danger may concentrate a few minds.” – Cathal Kelly
George Bush Sr., John McCain, the GOP and the good old days of traditional conservatism
“It’s not only on policy where the hard-right Republican turn has taken place but additionally in respect to tactics – tactics that border on repressive. We’ve seen this with Mr. Trump’s attempted manhandling of the Justice Department and intelligence agencies. We saw it in his appointment of a short-lived commission to investigate electoral fraud. He did this even though he won the election. In the event of a loss, there’s no telling how far he would go and how far his tribal supporters would enthusiastically allow him to go. The degree to which the norms have shifted from the conservatism of Mr. Bush and Mr. McCain is remarkable. It would be welcoming to know there is an end in sight. There isn’t.” – Lawrence Martin
What the NHL shows us about the labour market
“Just as millennials have changed the game of hockey, they are also changing the game in the larger work force, albeit more slowly. Although millennials are now the largest generation in the Canadian work force, they are not the only generation in it, and they tend to report to Gen Xers and boomers. As well, the first wave of millennials hit the worst of the recession when they entered the work force, dulling their potential influence. Now, the wave of millennials in their 20s is working at a time when baby-boomer retirements are happening in droves (the youngest boomers are now in their mid-50s) and the unemployment rate is at its lowest level in decades. Unlike the earlier wave of millennials that were not able to make much of an impact on work-force values, this group is in a better place to do so.” – Linda Nazareth
LIVING BETTER
This summer you may find yourself on a beach near an ocean or on a deck near a lake. If you plan to swim in the open water, there’s a few things you should know before venturing out. Start by swimming parallel to shore about 10 or 20 feet out at first to get comfortable to swimming outside of the confines of a pool. When you’re ready to take the next step and venture out farther, focus on a fixed object to maintain your orientation and stability.
LONG READS FOR A LONG COMMUTE
Apathy Valley: Why this Ottawa-area riding is dreading election day
Renfrew-Nipissing-Pembroke is as safe a bastion for the Ontario Progressive Conservatives as they get, but residents are uneasy about playing their part in bringing about the tenure of Doug Ford as premier – and distrustful of everybody else. What’s a voter to do but stay home or go fishing? We take you inside Apathy Valley.
Evening Update is written by Mayaz Alam and Kristene Quan. If you’d like to receive this newsletter by e-mail every weekday evening, go here to sign up. If you have any feedback, send us a note.