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Restaurants plead for help as Omicron threatens to take devastating toll – Financial Post

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Ottawa ‘actively assessing’ whether new measures needed in light of variant, Freeland’s office says

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Small businesses and restaurants in Canada are calling for more government support as fresh restrictions now being imposed to battle the Omicron variant of COVID-19 severely restrict their trade and new “incredibly limited” aid programs fall short.

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In an open letter to Canadian premiers Tuesday the Canadian Federation of Independent Business and Restaurants Canada pleaded for immediate help.

“Put frankly, tens of thousands of small firms across Canada will receive no support from governments while government restrictions dramatically reduce their ability to serve customers and public health warnings frighten many consumers into staying home,” the groups said.

In a statement late Tuesday, a spokesperson for Finance Minister Chrystia Freeland’s office said the federal government is considering possible changes to support measures due to Omicron.

“In light of the public health situation and new restrictions in a number of provinces, we are actively assessing if regulatory adjustments are needed to provide additional flexibility for the support measures contained in Bill C-2,” the statement said.

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Most provinces have now announced further capacity limits to restaurants and businesses; even in those that haven’t, nervous consumers are cancelling reservations and going back to shopping online, the letter said.

Ontario has limited indoor settings to 50 per cent capacity, including shops and restaurants. Bars and restaurants must close at 11 p.m., with the exception of take-out and delivery service. Quebec has shut down bars, casinos, theatres and gyms. Restaurants can serve at 50 per cent capacity during limited hours . On Tuesday, Nova Scotia added similar restrictions on dining and gym capacity.

Olivier Bourbeau, vIce-président of Quebec and federal affairs at Restaurants Canada, said prior to the release of the Federal Government’s statement that he doesn’t think Ottawa will make it easier to qualify for aid.

“We have been asking the Federal (government) to do so,” he said, including seeking to move the threshold back to the 10 per cent that was in place for earlier wage and rent subsidies.

“But they stick to their 40 per cent,” Bourbeau said.

“CFIB and Restaurants Canada also reached out to all Premiers to support us in that demand,” he added.

He said the organization is also asking that a Lockdown Support Program apply not only when businesses are fully closed, but with the current capacity limits in place in many provinces including British Columbia, Manitoba and Ontario.

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Even before the Omicron outbreak, the sales of almost two-thirds of small businesses had not returned to normal, CFIB says. A quarter of those said their businesses could fail within the next six months.

Government support programs, including those announced last week by Deputy Prime Minister Chrystia Freeland, are restricted to the hardest hit and don’t fill all the gaps, according to the industry groups and those who work closely with the hospitality industry.

Help from Ottawa is now “incredibly limited,” the CFIB said, noting that data — even before Omicron — showed that 80 per cent of the small businesses that need help no longer qualify for aid.

  1. Bank of Canada Governor Tiff Macklem said in an interview with Financial Post editor-in-chief Kevin Carmichael that additional supply disruptions could further stoke inflation.

    Omicron hit likely short-lived but supply chains may suffer, says Bank of Canada governor

  2. None

    Labour shortage threatens to become economy’s biggest bottleneck

  3. The World Economic Forum has postponed its annual meeting in Davos next month.

    Omicron swiftly put an end to World Economic Forum’s Davos meeting in January

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Under Ottawa’s new programs, a restaurant that has lost 35 per cent of its revenue, and a retailer that has lost 45 per cent, will no longer receive support, according to the open letter.

Federal “lockdown” support is only available to businesses which have been almost completely shut down. If the business has had to restrict operations to 50 per cent, it is ineligible.

“More help is certainly needed as the current criteria for eligibility disqualify many restaurants,” said Chad Finkelstein, a lawyer whose practice at Dale & Lessmann LLP in Toronto is heavily focused on the restaurant industry.

“When restrictions were previously lifted, many restaurants saw a few months of sales growth that now — in a sad, ironic twist — disqualify them from most support programs as a result,” he said.

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Dan Kelly, head of the CFIB, told the Canadian Press that businesses are likely to have burned through reserves or cushions built up in periods when restrictions were loosened.

“Any little glimmer of hope that many businesses saw at the end of this two-year tunnel is quickly being extinguished,” he told the Canadian Press.

The CFIB letter calls for the premiers to introduce a new round of provincial small business grants. They also asked the provinces to urge Ottawa to:

  • Return wage and rent subsidies to spring of 2021 levels
  • Revise extra lockdown supports so that businesses facing partial restrictions are included
  • Reopen the Canada Emergency Business Account (CEBA) loan program with a larger loan, a larger forgivable portion and delayed repayment requirements
  • Ensure that new firms can qualify for all programs

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Stocks plunge into the red then rebound as uncertainty returns to markets – CBC News

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Stock markets plunged into the red before recovering to finish the day in positive territory on Monday, as fears over war in Ukraine and higher interest rates in the U.S. and Canada took investors on a wild ride.

Early in the afternoon, the Dow was off by more than 1,000 points, or about three per cent, and the tech-heavy Nasdaq was faring even worse as investors worried about the prospect of war in Ukraine.

“What really sparked the sell-off today is the fact that we seem to be marching inexorably towards a full-scale invasion of Ukraine by Russia,” Dennis Mitchell, CEO of Toronto-based investment firm Starlight Capital, said in an interview.

Canadian shares were not exempt from the sell-off, as the benchmark Canadian index was on track for its worst day in months, down more than 600 points, or three per cent at one point.

In the afternoon, however, the market changed direction and investors started buying up shares. All three major U.S. stock groupings, the Dow Jones Industrial Average, the S&P 500 and the Nasdaq, finished the day in positive territory.

“The selling that you’re seeing today is usually a good indication that this is a good buying moment,” Mitchell said.

After falling nearly three per cent by midday, the TSX mounted a comeback of its own in the afternoon but fell short of reversing its losses, and closed the day down 50 points to 20,571.

Dianne Swonk, chief economist with Grant Thornton, said the pandemic has been a time of unprecedented volatility for almost two solid years now, and that can sometimes result in wild swings for stock prices.

“This is giving us a lot of turbulence out there,” she said in an interview, “and the problem is it it ups the uncertainty at a time when uncertainty is already high.”

Higher rates coming

Prior to Monday’s trading, the major event of the week was slated to be the Bank of Canada’s interest rate decision on Wednesday. Expectations are growing that central banks will soon have to raise their interest rates to keep a lid on inflation, which has run up to the highest level we’ve seen in decades lately.

All things being equal, higher interest rates are bad news for stocks because they raise the cost of borrowing. That gives companies and investors less of an incentive to borrow to invest.

Currently, the market is pricing in about a 60 per cent chance of a rate hike in Canada as soon as this week. If one doesn’t come this time around, it’s a near certainty to happen next time the bank meets in March, according to trading in investments known as swaps.

Swonk said some of the uncertainty comes from figuring out how central banks are going to try to find the right balance between keeping a lid on inflation but also not harming the economy that is still being hit by Omicron.

“They don’t want to put the flame out on the economy, but they certainly want to cool it off a bit,” Swonk said. “That’s left many people unsure of how fast rates will go up.”

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Declining U.S. Petroleum Inventories Push Oil Prices Higher – OilPrice.com

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Declining U.S. Petroleum Inventories Push Oil Prices Higher | OilPrice.com


Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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  • U.S. commercial petroleum stocks have fallen in most of the weeks in the past year and a half.
  • The continuously declining U.S. petroleum stocks over the past year suggest that supply has not caught up with rebounding demand.
  • Petroleum stocks at lower than seasonal norms have contributed to market tightness alongside the OPEC+ group’s inability to fully meet its rising monthly production quotas.

Petroleum inventories

Despite a crude oil inventory build in the latest EIA report, U.S. commercial petroleum stocks have declined in most of the weeks in the past year and a half, falling below seasonal averages for the past five years and even below the five-year average before the pandemic.   The continuously declining U.S. petroleum stocks over the past year suggest that supply has not caught up with rebounding demand as U.S. exploration and production companies have not responded with a spike in new drilling activity to the rising crude oil prices.  

Petroleum stocks at lower than seasonal norms have contributed to market tightness alongside the OPEC+ group’s inability to fully meet its rising monthly production quotas and rising global demand as economies look to return to normal. 

Global oil demand has held resilient during the Omicron wave so far, prompting the International Energy Agency (IEA) to revise higher its 2022 demand growth estimate by 200,000 barrels per day (bpd) last week. 

In the United States, the latest EIA data as of January 14 showed a small crude inventory build of 500,000 barrels and another large increase in gasoline stocks, which added 5.9 million barrels. This follows a combined build in gasoline inventories of over 18 million barrels for the previous two weeks. 

Despite the increase, gasoline stocks in the U.S. are now in line with the five-year average 2015-2019, before the pandemic, according to estimates by Reuters market analyst John Kemp.

Compared to the latest five-year average, which includes the pandemic years, gasoline stocks are now about 2 percent below the five-year average for this time of year, EIA data showed.

The data also pointed to the fact that total commercial petroleum inventories in the United States decreased by 1.5 million barrels in the week ending January 14. U.S. crude oil inventories are about 8 percent below the five-year average for this time of year. Distillate fuel inventories are about 16 percent below the five-year average, and propane/propylene inventories stood at some 7 percent below the five-year average, according to the EIA. That’s including the pandemic years. 

Compared to the 2015-2019 average, total U.S. commercial inventories are 4 percent below the pre-pandemic five-year seasonal average—the lowest level for this time of the year since 2015, Reuters’ Kemp has estimated. 

In December 2021, for example, U.S. petroleum demand returned to 21.1 million bpd with more people driving places instead of flying, the American Petroleum Institute’s chief economist Dean Foreman said in API’s latest Monthly Statistical Report

Related: The Nickel Supply Squeeze Could Send Prices Even Higher

“By contrast, the production of U.S crude oil and natural gas liquids (NGLs) remained flat overall, with a minimal response by investment and drilling even as oil prices returned to more than $80 per barrel in January,” Foreman wrote. 

“Lower domestic oil production has also required refiners to use oil that’s already been produced and consequently reduced U.S. crude oil inventories to below their five-year range,” he added. 

At the end of December, crude oil inventories were below the five-year range and at their lowest for December since 2014, API’s report showed. Moreover, total inventories were at their lowest for December since 2017.

Lower-than-normal petroleum inventories have been putting an upside pressure on U.S. and international oil prices, which hit the highest since October 2014 last week. 

The tighter market these days is reflected in the rising backwardation in the futures prices of both major benchmarks, WTI and Brent, with prompt prices higher and rising compared to those further out in time.

Robust demand, insufficient investment in new supply, low inventories, and declining global spare production capacity have prompted major Wall Street banks – including Goldman Sachs, JP Morgan, and Morgan Stanley – to forecast that oil prices could hit $100 per barrel as soon as this year. 

By Tsvetana Paraskova for Oilprice.com

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Bitcoin drops to six-month low as investors dump speculative assets – Ars Technica

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Bitcoin drops to six-month low as investors dump speculative assets

Bitcoin dropped to a six-month low on Saturday, extending a steep fall recorded in the previous session as the cryptocurrency market was swept up in a powerful shift by investors out of speculative assets.

The price of the biggest digital token by market value fell 4.3 percent on Saturday morning in Europe to $35,127, the lowest level since July 2021. Bitcoin has now lost almost a quarter of its value this year.

Other cryptocurrencies have also come under intense selling pressure, with an FT Wilshire index of the top five tokens excluding bitcoin down 30 percent in the first month of 2022.

The cryptocurrency rout comes as investors have dumped shares in tech companies on expectations the US Federal Reserve will move to rein in loose pandemic monetary policy to combat inflation. Global stock markets posted their biggest declines in more than a year this week, with the fast-growing companies that powered the rally from the depths of the coronavirus crisis enduring intense falls.

Investors now forecast the Fed, the world’s most influential central bank, will raise interest rates three to four times this year, something that has sent bond yields surging. Higher yields on low-risk assets like US government bonds make the potential returns that can be earned through speculative investments like cryptocurrencies look less appealing, analysts say.

Andrew Sullivan, managing director at Outset Global in Hong Kong, said Asia was seeing “huge volumes going through in a number of markets as investors move to cash” on Friday, as technology shares in the region fell.

The sharp sell-off in digital assets also came a day after the Russian central bank announced on Thursday draft proposals seeking to ban all cryptocurrency trading and mining. The proposed regulations would also block cryptocurrency investment by banks and forbid any exchange of cryptocurrency for traditional currencies in Russia, one of the world’s largest centers for crypto mining.

The central bank said in its 36-page report that the rapidly rising value of cryptocurrencies “is defined primarily by speculative demand for future growth, which creates bubbles,” adding they “also have aspects of financial pyramids, because their price growth is largely supported by demand from new entrants to the market.”

The announcement initially had little impact on bitcoin, which rose as much as 3.7 percent against the dollar on Thursday. But by Friday afternoon in Asia the cryptocurrency had dropped more than 10 percent from the previous day’s high to hit its lowest level since August.

“The Russian regulators have been frustrated [with the cryptocurrency industry] for several years and none of their warnings have been heeded,” said Vince Turcotte, Asia-Pacific sales director at Eventus Systems.

He added that, while the Russian proposal was “relatively harsher,” it was only the latest in a slew of announcements on cryptocurrencies by regulators across the globe focused mainly on protecting retail investors.

Turcotte likened the situation in Russia to that of China before Beijing began a more forceful crackdown on the industry. “Nobody listened to [Chinese officials] until they actually brought the hammer down,” he said. Last year, China declared that all crypto activities were illegal.

© 2022 The Financial Times Ltd. All rights reserved Not to be redistributed, copied, or modified in any way.

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