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Macklem says bond-buying program about lowering rates, not financing feds – BNN

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OTTAWA – Canada’s top central banker gave MPs a detailed defence of the Bank of Canada’s buying spree of government debt Thursday, saying it is aimed at lowering borrowing costs across the country.

The Bank of Canada has launched an unprecedented bond-buying program that effectively lowers borrowing costs for the federal government as its racks up a historic deficit.

It now holds just under one-third of federal debt, with the bank believing it can scale up those purchases before throwing a wrench into credit markets.

But the purchases have put Bank of Canada governor Tiff Macklem in a political hot seat, with Conservatives on Parliament Hill warning the central bank about appearing too cosy with the governing Liberals.

During an appearance at the House of Commons finance committee Thursday, Macklem said the bank isn’t financing the federal government, but is reducing the cost to borrow for households and businesses.

He said the central bank will stop buying government bonds once the recovery is well underway, which is likely to happen before inflation gets back to the Bank of Canada’s two per cent comfort zone.

“Our actions by lowering interest rates and by buying government bonds are lowering the cost of financing the government. In fact, they’re lowering the cost of borrowing for everybody,” Macklem said.

“We’re not financing the government.”

The bond-buying program is the central bank’s first foray into what’s known as quantitative easing, which is a way for central banks to pump more money into the economy.

The central bank started the program as it dropped its trendsetting policy rate to 0.25 per cent to drive down interest rates. The purchasing program was designed to drive down rates even more on things like mortgages.

What the bank has done is buy up government bonds to spur demand and time lower interest rates, particularly for borrowers using terms of between three and 10 years like homeowners, homebuyers and businesses.

The bank’s balance sheet has swelled since March and now holds about $344 billion in government debt, or roughly 30 per cent of federal debt, after purchasing about $163 billion in bonds.

Macklem said central banks generally can hold between 50 and 70 per cent of debt before it begins to impair credit markets.

The bank has taken its foot off the gas recently for its purchasing program as the market conditions have improved, allowing it to reduce its total minimum weekly purchases to $4 billion.

Conservative finance critic Pierre Poilievre argued the purchases were inflating financial assets, and enriching the mostly affluent people who own them to push up inflation.

“Inflationary costs are borne disproportionately by the poor and the disadvantaged,” Poilievre said. “So you’re effectively transferring an enormous sum of wealth to those who have financial assets, while diluting the wages of working-class people.”

Pressed by Conservatives on the committee for a date when the buying will come to end, Macklem said the uncertain path of the pandemic prevents him from being able to circle a day on the calendar.

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Ontario's first major COVID-19 vaccination site will pause after just 5 days due to supply shortage – CTV Toronto

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TORONTO —
Toronto Fire Chief Matthew Pegg says a pilot COVID-19 vaccination clinic that just opened today at the Metro Toronto Convention Centre will have to pause vaccinations on Friday because of a shortage of vaccine supply in the province.

The proof-of-concept clinic opened Monday and is meant to help develop a blueprint for how shots should be administered in non-medical settings as soon as this spring. So far, COVID-19 vaccines have only been administered at long-term care homes and at 19 hospital sites across Ontario.

Pegg said last week the facility would be “scale-able” and capable of increasing output with little notice, with an initial target of 250 doses per day.

But at the city’s media briefing on Monday, he said the province has now asked the city to pause vaccinations at the new clinic by the end of Friday.  

“We were all disappointed to learn that the delivery of Pfizer vaccine to Canada is expected to be delayed as a result of manufacturing delays in Europe. As a result, we have now been advised by the province that we will only be able to operate this proof of concept clinic for an initial five days due to the lack of availability of COVID-19 vaccine,” Pegg said.

He said anyone with an appointment at the clinic from Jan. 23 on should expect that their appointment will be cancelled.

Peg said those who receive their first dose at the clinic this week will still be able to get their second dose within the proper timeframe.

The clinic will resume vaccinations once it gets word from the province that it may do so. In the meantime, Pegg said the city is continuing to plan for a quick rollout of the vaccine when more doses become available.

“We are continuing to explore all options to accelerate our ability to administer vaccines to Toronto residents once larger quantities of vaccine are available,” he said. “This will include planning for extended hours of clinic operations, expanded clinic capacity targets and implementing innovative delivery methods that meet the needs of our city, including mobile vaccine clinics, priority neighborhood response, hospital-led clinic operations and widespread public access via pharmacies and primary care physicians.”

The site had been expected to run for at least six weeks in order to gather data about how best to host vaccination drives in larger settings.

Ontario Premier Doug Ford and Tory toured the site at MTCC’s North Building just on Sunday.

While the clinic was meant to use the Moderna vaccine, the Pfizer delays mean that some of that supply will now be redistributed to other parts of the province.

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Couche-Tard to pursue other deals after Carrefour failure – BNN

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Executives at Alimentation Couche-Tard Inc. defended a failed bid for Carrefour SA and said they would still like to buy the French grocer some day, but will turn their focus to other potential deals.

The Canadian convenience store operator made a US$20 billion offer that was shot down by French Finance Minister Bruno Le Maire on Friday. The bid caught investors off guard because Couche-Tard does not operate supermarkets.

The shares tumbled nearly 11 per cent last week. On Monday, they were up 2.4 per cent to $38.90 as of 9:36 a.m. in Toronto.

In response to criticism of the deal, Couche-Tard executive chairman Alain Bouchard said previous large deals — including the 2003 acquisition of Circle K — also surprised the market, but they worked out.

“Over the last decades while growing our business we have made many bold moves, some of which were not always obvious to our stakeholders,” Bouchard said on a conference call with investors Monday.

“Was I hoping our bold approach to Carrefour would have turned out differently? Of course. Yet I’m tremendously proud that Couche-Tard had the financial strength and acumen to make such an offer.”

The companies announced the end of negotiations on Saturday, four days after Bloomberg first reported the talks, and said they’ll work instead on a looser alliance in areas including fuel purchasing and product distribution.

Couche-Tard executives gave few details on that alliance Monday, calling the talks exploratory. Chief Executive Officer Brian Hannasch said there is a “robust” set of other acquisitions to examine as it pursues a five-year goal of doubling profit by 2023.

Hannasch said the door is open to a future Carrefour merger if the political climate in France changes.

“I’m old enough to believe there’s no such thing as permanently,” he said. “We’d love to do the transaction, so if we got signals that the environment could change or would change from the French government or the key stakeholders, we’d love the opportunity to re-engage — under the right conditions and assuming we haven’t found another way to create more value for our shareholders.”

The Laval, Quebec-based company has been making headway on its growth plans even without a major acquisition in recent years. Analysts expect adjusted earnings per share to be 16 per cent higher for the fiscal year that ends in April, according to data compiled by Bloomberg. Even so, its valuation has dipped.

The chain has been improving its coffee and adding fresh food offerings, which come with higher margins. It’s digging into analytics to improve pricing and promotions, and planning to roll out electric vehicle charging stations in North America after learning from its experience in Norway.

Couche-Tard strengthened its foothold in Asia by buying about 370 stores in Hong Kong and Macau that previously were Circle K brand licensees. But a large takeover has remained elusive since it signed a US$4 billion purchase of Texas-based CST Brands Inc. in 2016.

In April, the company walked away from a US$5.6 billion proposal for gas station chain Caltex Australia Ltd. (now known as Ampol Ltd.), citing pandemic uncertainty. And it missed out on Marathon Petroleum Corp.’s Speedway gas stations, which were scooped up in August by Japan’s Seven & i Holdings Co., the world’s largest convenience store operator, for US$21 billion.

Balance Sheet

Couche-Tard executives have scoffed at the valuation of Speedway. Addressing shareholders at the company’s annual meeting in September, Bouchard cited it as an example of the company’s discipline around acquisitions.

The balance sheet leaves it in a good place to hunt for deals. The company had about US$5.5 billion in net debt at the end of its October quarter, according to data compiled by Bloomberg. It’s earned US$3.5 billion in operating profit in the last four quarters.

Chief Financial Officer Claude Tessier told analysts in November that the current debt ratio is at half of Couche-Tard’s comfort level.

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Hacked emails allegedly detail how EU drug regulator was pressured to approve Pfizer jab despite ‘problems’ with the vaccine – RT

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An alleged cache of email exchanges between EU officials and the European Medicines Agency show that the drug regulator was uncomfortable about fast-tracking approval for the Pfizer and Moderna Covid jabs, Le Monde has reported.

The EMA has claimed that the contents of the messages, which were obtained by hackers and published on the dark web, were tampered with in order to undermine confidence in the drugs, without providing further details. However, the agency acknowledged to the French newspaper that the correspondences reflect “issues and discussions” that took place in the lead-up to the decision to grant approval to the vaccines. The agency said it can’t specify which documents are genuine. 

Some of the “discussions” appear to have been less than congenial. For example, in a document dated November 19, a senior EMA official described a “rather tense, sometimes even a little unpleasant” conference call with the European Commission regarding the review process for the drugs. The official said he felt there was a clear “expectation” that the vaccines would be approved. A day later, the same individual had an exchange with the Danish Medicines Agency in which he expressed surprise that Ursula von der Leyen, the president of the European Commission, had announced that the Moderna and Pfizer jabs could receive the green light before the end of the year. 

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“There are still problems with both,” the unnamed EMA official noted in the leaked correspondence. 

According to Le Monde, the hacked documents primarily detail issues that the EMA had with the Pfizer/BioNTech drug. The regulator apparently had three “major issues” with the vaccine: certain manufacturing sites used for its production had not yet been inspected, data on batches produced for commercial use were still missing, and, most importantly, available data revealed qualitative differences between the commercial batches and those used during clinical trials. 

The EMA expressed particular concern about the last point, noting that mass production had decreased the purity of the RNA contained in the vaccine. The Pfizer jab uses a mRNA strand, a sequence of molecules that tell cells what to ‘build’ in order to produce a disease-specific antigen.   

The EU drug regulator signaled that it was worried that less rigorous manufacturing methods would make the vaccine less effective and safe. However, Pfizer appears to have agreed to make necessary adjustments in order to meet the EMA’s standards. 

Despite its hesitancy, it appears the EMA understood that it was under a clear deadline. In an email exchange between colleagues at the agency, one employee said the EMA needs to “accelerate the process to align [with other agencies],” and risks facing “questions and criticisms” from Brussels, the media and the general public if it did not fast-track approval. 

The Pfizer jab was granted approval by the EU on December 21, while the Moderna variant was given the go-ahead earlier this month. Since then, numerous reports have emerged of both drugs being linked to adverse effects in countries around the world, prompting investigations by health authorities. 

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