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Quebec's seemingly aggressive plan to reopen the economy next week seen as a risk worth taking – Financial Post

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When thousands of Bombardier employees return to work at private jet assembly plants over the next few weeks, they will be standing six feet apart, washing their hands frequently and getting their temperatures checked daily at facilities with increased cleaning, modified shifts and extra personal protective equipment.

The Quebec transportation giant furloughed 12,400 employees due to the coronavirus pandemic that left 1.2 million Quebecers and millions of Canadians out of work. But Bombardier will send back 11,000 employees to work, 9,000 in Quebec, as its home province prepares to reopen its economy.

Such health and safety measures will become common in Quebec as nearly 500,000 people return to jobs in retail, manufacturing and construction sectors over the next two weeks. Shops with exterior entrances will open outside Montreal on May 4 and in the city a week later, with construction and manufacturing resuming May 11.

Quebec isn’t the only province preparing to jumpstart business — Saskatchewan, Manitoba and New Brunswick also plan to reopen soon — but the province’s plan is seen as aggressive given it has the highest number of COVID-19 cases and deaths in Canada.

Yet economists, business associations and unions alike view the gradual reopening as a risk worth taking given the trajectory of the disease, which is predominantly killing seniors, particularly those living in long-term care facilities.

Quebec’s reopening plan may seem aggressive, but it was also the first province to close in a more severe way than others, National Bank of Canada chief economist Stéfane Marion said in an interview. It completely shut down its construction industry on March 24, for instance, a sector Ontario didn’t limit until April 4.


Quebec shut down its construction industry on March 24.

Brent Lewin/Bloomberg files

“Every month you extend the shutdown, you lose a full year of potential growth,” Marion said. “The longer you shut down, the more permanent the destruction of capacity.”

The coronavirus has proven most deadly to seniors that aren’t part of the labour force, Marion said, noting that’s the opposite of the 1918 Spanish Flu that killed young people and children. Yet that pandemic had a lesser hit on the agricultural-heavy economy, unlike the current economy where 79 per cent of people work in the service sector.

Every month you extend the shutdown, you lose a full year of potential growth

Stéfane Marion, National Bank of Canada chief economist

“Social distancing is easier to do when 33 per cent of the population works in agriculture,” Marion said.

Industries heaviest hit by the current pandemic — transportation, arts and entertainment, retail, food and accommodation — make up 22 per cent of the labour force but only 7 per cent of the gross domestic product, Marion said. The longer the shutdown, the less likely these people will have jobs to return to, he said, adding it will have a big effect on both inequality and the labour market.

Unions are also onboard with the reopening plan, based on successful resumption of activity in the mining and residential construction industry. Fédération des travailleurs du Quebec (FTQ) president Daniel Boyer said his union, which represents 600,000 workers, has worked closely with the government and employers to create a plan to safely reopen. So far, a majority of the employers have been following safety protocols, he said.

“Some people said it’s too soon, but I think the majority agree with the plan,” Boyer said. “You know we will have to live with the virus for many months, probably a year, and we cannot stay home longer than that.”

We will have to live with the virus for many months, probably a year, and we cannot stay home longer than that

Daniel Boyer, Fédération des travailleurs du Quebec (FTQ) president

Desjardins economist Hélène Bégin said Quebec seems to have found a balance between health and safety concerns and resuming business, in part by starting to reopen in smaller communities less affected than the urban hotspot of Montreal.

“We all know it’s a big risk, but we have to take it one step at a time,” Bégin said. “The priority is health, but at the same time we have to restart gradually to contain the damage that is hurting the economy.”

Even with the gradual reopening, Desjardins doesn’t expect the economy to return to pre-crisis levels for gross domestic product and employment until 2022, Bégin said.

Retailers are anxious to get back to work although they expect traffic volumes to be 30 to 50 per cent less than usual based on other countries emerging from the pandemic, Quebec Retail Council director Stephane Drouin said. Although the start of a new season is good timing to attract consumers, retailers expect them to be tight on cash flow despite government efforts to help pay rent.


A pedestrian walks past a boarded store on Montreal’s Ste-Catherine street, on Tuesday, April 28, 2020.

Paul Chiasson/The Canadian Press

Another challenge will be convincing consumers that it’s safe to shop, Drouin said. Clothing stores will need to introduce protocols for trying on clothes, he said, which could include disinfecting items in steam and not returning product to the shelves for 24 to 48 hours.

Customer safety will be critical for retailers trying to avoid a second lockdown.

“We want to reopen for good,” Drouin said, adding many are accelerating plans to digitize shopping. “The responsibility of retailers right now is to make customers feel secure and welcome in their stores.”

The construction industry is another that will take safety protocols seriously to avoid another shutdown. The $52-billion industry employs about 265,000 people in the province, 190,000 directly on job sites, according to the Association de la construction du Quebec senior economist Jean-Philippe Cliche.

“When we look at the construction industry, Quebec is the only one that completely closed its activity to zero except for New York State,” Cliche said. “We are losing more or less a billion dollars of production a week when we have it closed.”

Quebec is at risk of an “infrastructure deficit” if it misses a construction season, particularly in Montreal where numerous road and tunnelling projects are waiting crews. That’s enough incentive to follow the rules to avoid a second closure, especially since health officials expect the disease to stick around for up to two years as scientists create a vaccine, Cliche said.

“We need to learn to slowly but surely live with this disease,” he said. “If it goes out of control again, we might have to close again. Nobody wants that so we’ll try to apply the rules as much as we can and make sure it doesn’t happen.”

Financial Post

• Email: ejackson@nationalpost.com | Twitter:

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Why the stock market is outperforming the economy: Morning Brief – Yahoo Canada Finance

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<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Tuesday, May 26, 2020” data-reactid=”16″>Tuesday, May 26, 2020

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET.&nbsp;” data-reactid=”17″>Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. 

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Subscribe” data-reactid=”18″>Subscribe

<h2 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Corporate profits look better than expected, the economy looks worse than expected” data-reactid=”19″>Corporate profits look better than expected, the economy looks worse than expected

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="During the early days of the coronavirus pandemic, economic and market forecasters were flying blind.” data-reactid=”20″>During the early days of the coronavirus pandemic, economic and market forecasters were flying blind.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Accelerating numbers of confirmed COVID-19 cases along with sudden lockdowns around the globe made it impossible to estimate with any accuracy the kind of impact economies and businesses would see.” data-reactid=”21″>Accelerating numbers of confirmed COVID-19 cases along with sudden lockdowns around the globe made it impossible to estimate with any accuracy the kind of impact economies and businesses would see.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="As preliminary March data — which captured the earliest impacts of these lockdowns — started to trickle in, forecasters were quick to slash their expectations. Economists predicted depression-like numbers and the financial market pros predicted earnings would crash.” data-reactid=”22″>As preliminary March data — which captured the earliest impacts of these lockdowns — started to trickle in, forecasters were quick to slash their expectations. Economists predicted depression-like numbers and the financial market pros predicted earnings would crash.

Now, after two months and many economic and earnings reports later, two narratives have emerged: the U.S. economy as a whole is in worse shape than expected, and the profits of America’s biggest corporations are doing better than expected.

<h3 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="The economy looks worse” data-reactid=”24″>The economy looks worse

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Following the releases of April economic numbers, including dismal jobs numbers and disastrous retail numbers, economists revised their forecasts even lower.” data-reactid=”25″>Following the releases of April economic numbers, including dismal jobs numbers and disastrous retail numbers, economists revised their forecasts even lower.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="On May 12, Goldman Sachs cut its GDP forecasts and while warning the unemployment rate would spike to 25%. The same day Goldman cut its forecasts, Credit Suisse economists made similar cuts while warning “a longer growth slump will outlast fiscal relief.”” data-reactid=”26″>On May 12, Goldman Sachs cut its GDP forecasts and while warning the unemployment rate would spike to 25%. The same day Goldman cut its forecasts, Credit Suisse economists made similar cuts while warning “a longer growth slump will outlast fiscal relief.”

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="BofA economists lowered their GDP estimates last Wednesday, warning that GDP in Q2 would fall at a 40% rate while saying the recession will be “unlike anything we have seen in modern history.”” data-reactid=”27″>BofA economists lowered their GDP estimates last Wednesday, warning that GDP in Q2 would fall at a 40% rate while saying the recession will be “unlike anything we have seen in modern history.”

And just on Friday, JPMorgan economists cut their 2021 GDP forecasts while warning the unemployment rate would stay above 10% through at least the end of the year.

<h3 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Big companies are doing better” data-reactid=”29″>Big companies are doing better

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Through Friday, 97% of S&amp;P 500 (^GSPC) companies had announced their Q1 financial results, including many retailers whose quarters went through April.” data-reactid=”30″>Through Friday, 97% of S&P 500 (^GSPC) companies had announced their Q1 financial results, including many retailers whose quarters went through April.

And these numbers have mostly been better than expected.

“Although aggregate earnings are beating estimates by +2.6%, ex-Financials, earnings are surpassing expectations by +7.1%, with 65% of companies exceeding their lowered projections,” Credit Suisse’s Jonathan Golub wrote on Friday.

To be clear, it looks like earnings per share will have been down by around 14% in Q1. But the takeaway is that analysts were expecting worse.

“Expectations were -10.5% at the end of March, and -25.3% when 1Q reporting season began,” Golub added.

These better-than-expected earnings results help, in part, explain the rebound in the stock market.

The U.S. economy appears to be in worse shape than expected. (AP)
The U.S. economy appears to be in worse shape than expected. (AP)

<h3 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Bigger companies cash in as their smaller competitors struggle” data-reactid=”47″>Bigger companies cash in as their smaller competitors struggle

We’re aware that Corporate America is a part of the U.S. economy, and so these stories aren’t mutually exclusive. Still, these diverging narratives call attention to the fact that big companies have massive advantages in the current environment as everyone else struggles to keep up.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="With many small businesses shuttered and tens of millions of Americans workers headed to the unemployment office, government stimulus checks have made their way to big retailers like Amazon and Walmart, which both reported blowout quarterly numbers.” data-reactid=”49″>With many small businesses shuttered and tens of millions of Americans workers headed to the unemployment office, government stimulus checks have made their way to big retailers like Amazon and Walmart, which both reported blowout quarterly numbers.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="“The stimulus might as well be called the Amazon and Walmart shareholder act,” NYU professor Scott Galloway said to Yahoo Finance. “There are some unintended consequences here. The strong are getting stronger.”” data-reactid=”50″>“The stimulus might as well be called the Amazon and Walmart shareholder act,” NYU professor Scott Galloway said to Yahoo Finance. “There are some unintended consequences here. The strong are getting stronger.”

For Galloway, what’s happening in business now was inevitable. “The future doesn’t look any different. It’s just being accelerated faster… After 11 years of a bull economy, a lot of these small businesses quite frankly just shouldn’t be around. And they have to adapt and reshape.”

However, many would contend that it’s unreasonable for all businesses to have prepared a financial buffer for a pandemic that led to an unexpected, fragmented, government-mandated, months-long economic shutdown.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="“We let big box retailers stay open because they sell essential goods, but they also sell the same nonessential goods that small stores — who were forced to close — normally do,” Gary Cohn, former director of the National Economic Council recently tweeted. “We can’t let this run small stores out of business and need to make sure we level the playing field.“” data-reactid=”57″>“We let big box retailers stay open because they sell essential goods, but they also sell the same nonessential goods that small stores — who were forced to close — normally do,” Gary Cohn, former director of the National Economic Council recently tweeted. “We can’t let this run small stores out of business and need to make sure we level the playing field.“

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="By Sam Ro, managing editor. Follow him at @SamRo” data-reactid=”58″>By Sam Ro, managing editor. Follow him at @SamRo

What to watch today

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Economy” data-reactid=”60″>Economy

  • 8:30 a.m. ET: Chicago Fed National Activity Index, April (-4.19 in March)

  • 9 a.m. ET: FHFA House Price Index month-on-month, March (+0.6% expected, +0.7% in February)

  • 9 a.m. ET: S&P CoreLogic CS 20-City home price index MoM SA, March (0.3% estimated, 0.45% in February); S&P CoreLogic CS 20-City YoY NSA, March (3.4% estimated, 3.47% in February)

  • 10 a.m. Conference Board Consumer Confidence, May (87.5 expected, 86.9 in April)

  • 10 a.m. ET: New Home Sales, April (500,000 expected, 627,000 in March); New Home Sales month-on-month, April (-20.3% expected, -15.4% in March)

  • 10:30 a.m. ET: Dallas Fed Manufacturing Index, May (-73.7 in April)

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Earnings” data-reactid=”68″>Earnings

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Pre-market” data-reactid=”69″>Pre-market

  • 6:55 a.m. ET: AutoZone (AZO) before market open

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="READ MORE” data-reactid=”72″>READ MORE

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Include question period in Phase 2 of Manitoba's economy restart, NDP says – CBC.ca

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If restaurants, pools and gyms can reopen in the next sweeping phase of Manitoba’s reopening plan, so should a democratic institution holding the government to account, the Official Opposition says.

NDP Leader Wab Kinew wrote to Dr. Brent Roussin and the premier on Monday, arguing the restoration of regular sitting days of question period should be included in Phase 2 of the economy restart, like the many eateries and recreation centres that can soon open their doors.

No date is attached to the second phase yet. 

“The democratic functions of the Legislative Assembly are an essential part of our province,” the letter reads.

“Other provincial legislatures and Parliament are ensuring that regular sittings of their Houses will take
place in June and during the summer.”

Another edition of question period will occur on Wednesday, but no additional dates have been set. The legislature normally goes on summer recess in early June.

Sittings limited during pandemic

The legislature usually meets four days a week throughout much of spring, but sittings were indefinitely suspended by the COVID-19 pandemic in mid-March. 

There has since been one emergency meeting to pass COVID-19 legislation and three question periods in May. 

While negotiations between party house leaders for extra sitting dates have happened, no plan has been ironed out.

“It seems odd to me that when we look at Phase 2, I might be able to get a tattoo on my way to the gym after which I visited a patio, but I wouldn’t be able to hear the Premier answer accountability questions in Question Period,” Kinew said.

On Monday, the Liberals called for sittings every Monday to Thursday in June.   

House Leader Jon Gerrard says the existing sittings, conducted with a reduced number of MLAs, demonstrate the legislature can function under physical distancing and sanitation requirements.

“We have seven weeks of work to make up, and unless we go back with more sitting days, it is not going to get done,” Gerrard said in a news release.

“We should be sitting in June and September to make sure that the PCs have to justify and defend their agenda in public.” 

A number of Progressive Conservative MLAs are seen in the legislature in March 2020. (Gary Solilak/CBC )

Premier Brian Pallister was non-committal last week when asked about more question periods.

“I understand the job of opposition parties is to do what the opposition is trying to do here now,” he said in a media briefing.

“That being said, we’re focused in the middle of a pandemic on the recovery of our province and we’re also focused on being available in an appropriate manner, in a safe manner, here in the legislature and always to answer questions that the opposition and you in the media may have.”

The government said Monday that the health department is comfortable with the physical distancing measures in place for question period. Any additional sitting dates must be negotiated between the parties. 

During the pandemic, Manitoba legislators are meeting more frequently than their counterparts in other provinces. 

The Saskatchewan and Nova Scotia legislatures haven’t been recalled since mid-March. New Brunswick has only met once to consider COVID-19 legislation and Prince Edward Island will resume sitting tomorrow. 

The Manitoba NDP, however, says the provinces representing the vast majority of the population — including Ontario, Quebec, Alberta and British Columbia — have sitting dates in June. 

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Singapore cuts 2020 GDP outlook again as virus batters economy – TheChronicleHerald.ca

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By Aradhana Aravindan and John Geddie

SINGAPORE (Reuters) – Singapore downgraded its 2020 gross domestic product forecast for the third time on Tuesday, the trade ministry said, as the bellwether economy braces for its deepest ever recession.

The city-state lowered its GDP forecast to a contraction range of -7% to -4% from the prior range of -1% to -4%.

Singapore’s economy shrank 0.7% year-on-year in the first quarter and 4.7% on a quarter-on-quarter, a less severe decline than advance estimates, although officials and analysts warned of more pain ahead.

“There continues to be a significant degree of uncertainty over the length and severity of the COVID-19 outbreak, as well as the trajectory of the economic recovery,” said Gabriel Lim, permanent secretary at the ministry of trade and industry.

Following the news, the central bank chief economist Ed Robinson said monetary policy remains unchanged and will next be reviewed in October, as planned.

Singapore also downgraded its 2020 forecast for non-oil domestic exports to -4.0% to -1.0%, from -0.5% to 1.5% previously.

Exports have been a rare bright spot for the economy in recent months mainly due to a surge in demand for pharmaceuticals.

Analysts expect the trade-reliant economy to see a deeper contraction in the second quarter due to a two-month lockdown, dubbed a “circuit breaker” by authorities, in which most workplaces closed to curb the spread of the novel coronavirus.

The city-state has among the highest number of infections in Asia and has said that easing of the lockdown from next month will only be done gradually.

“The downward revision…implies a significant deterioration in the second-quarter momentum due to the circuit breaker period as well as a weak recovery trajectory,” said Selena Ling, OCBC Bank’s head of treasury research and strategy.

The government first flagged the possibility of recession in February when it cut its 2020 GDP forecast to -0.5% to 1.5%, from 0.5% to 2.5% previously.

Singapore’s finance minister is set to deliver the latest in a string of multi-billion-dollar economic packages to offset the hit to businesses and households from the pandemic later on Tuesday.

(Reporting by John Geddie, Aradhana Aravindan and Fathin Ungku; Editing by Sam Holmes)

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