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‘Unprecedented’ Supreme Court decision on Trans Mountain should be message for Quebec

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CALGARY – Alberta Premier Jason Kenney says the Supreme Court of Canada’s “unprecedented” dismissal of British Columbia’s move to stop Trans Mountain pipeline expansion project should “send a message” to Quebec that it can’t block the Energy East pipeline project.

During a Global News Radio interview over the weekend, Kenney bluntly criticized the federal government and federal regulatory processes for major projects such as pipelines and oilsands developments. Asked about the proposed-then-withdrawn Energy East pipeline project, the premier quipped that it’s been easier for Russia to build a pipeline through Europe than for a pipeline company to build a project across Canada.

“They’re having an easier job building a similar pipeline across the 28 member states of the European Union than we can in Canada. This is just bizarre,” Kenney said.

Kenney’s interview was notable given the sharpness of his comments about a proposed oilsands development and the recent Supreme Court unanimous decision to dismiss B.C.’s case to restrict heavy oil shipments across its borders.

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Kenney said it was “unprecedented” that the Supreme Court would rule, after just 30 minutes to confer, on such an important case.

“They came right back, slam dunk, saying that no province has the right to block a pipeline because those are, under the constitution, inter-provincial pipelines are the exclusive power of the federal government,” Kenney said.

“So this should send a message to our friends in Quebec as well, who have been claiming that they could stop a possible Energy East pipeline that would take Canadian oil to the Saint John refinery and displace Saudi oil imports in eastern Canada,” Kenney said.

A spokesperson for the premier said Kenney’s comments about Energy East were aspirational and the office isn’t aware of any plans to revive the Energy East pipeline project, but is hopeful that it will be revived in the future.

TC Energy Corp., the Calgary-headquartered pipeline company that submitted an application to the build the Energy East pipeline in 2014, did not respond to a request for comment on whether the Energy East pipeline project would be revived.

So this should send a message to our friends in Quebec as well, who have been claiming that they could stop a possible Energy East pipeline

Alberta Premier Jason Kenney

The company withdrew its application to build the project in 2017 after Ottawa made changes to pipeline reviews so that both upstream and downstream emissions from the project would be considered in a regulatory review of the $15-billion, 1.1-million-barrels-per-day pipeline.

Since the original application and the withdrawal of that application, however, the market for building new oil export pipelines has changed dramatically.

“I think the country should have as many pipeline options to get its oil to market as possible,” said Dennis McConaghy, a former TC Energy executive who has since authored two books about pipelines in Canada.

However, McConaghy noted that between TC Energy’s Keystone XL pipeline, Enbridge Inc.’s Line 3 replacement project and the federally owned Trans Mountain expansion project, more than enough pipeline space is being constructed for the medium-term growth of the Canadian oil industry.

“The actual necessity of Energy East is diminished,” he said.

In addition, TC Energy had previously planned to convert two underused natural gas pipelines between Alberta and Ontario to carry heavy oil as part of the Energy East proposal. The company has since reworked contracts on that segment of its Mainline pipeline network and is now moving more gas between Alberta and Ontario – meaning it’s unclear if the existing pipelines are still capable of transporting 1.1 million bpd of oil.

TC Energy is also the company currently building the $6.6-billion Coastal GasLink pipeline project through northern B.C.

On Monday, Coastal GasLink president David Pfeiffer said a group of Wet’suwet’en Nation protestors blockading work on the pipeline near Houston, B.C. have not yet caused delays in the company’s construction schedule. “We have the ability to make up for lost time. However, time is short,” he said.

B.C. Premier John Horgan also appointed former Northern B.C. MP Nathan Cullen to consult and de-escalate tensions in the region.

Kenney said the pipeline company has agreements in place with all 20 elected First Nations groups along the pipeline route. “I think the solution is for (the opposed group) to do what the elected council did and consult their local residents, 80 per cent of whom, I understand, support the project,” Kenney said.

Kenney also reiterated on Monday his call for Prime Minister Justin Trudeau and his cabinet to approve Vancouver-based Teck Resources Ltd.’s $20.6-billion Frontier oilsands mine, which has recently completed its regulatory review and is awaiting a federal decision, which is due in February.

While unveiling permanent board members for the Alberta government’s Alberta Indigenous Opportunities Corporation, Kenney said he “implored” the prime minister to approve the project north of Fort McMurray.

Over the weekend, the premier was more blunt on the radio show when he said approvals for Teck’s project “should have been automatic” following what he called a 10-year review process.

“If the Prime Minister vetoes this project after all the approvals, after the 10 years and hundreds of millions of dollars spent on it… he will be sending a message to Alberta and the rest of the country that he really meant what he said in Peterborough about three years ago that he wants to ‘phase out’ the oilsands,” Kenney said.

In recent weeks, environmental groups have also stepped up pressure on Ottawa to reject the Frontier project.

The federal government has only said so far that it is reviewing multiple factors, including environmental concerns and the creation of middle-class jobs, as it considers the project.

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FTX founder speaks for 1st time since crypto company's collapse – CBC.ca

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  1. FTX founder speaks for 1st time since crypto company’s collapse  CBC.ca
  2. Here’s what an FTX investor thinks of Sam Bankman-Fried  Fox Business
  3. A journalist who interviewed Sam Bankman-Fried about FTX’s collapse said it ‘felt like a therapy session’ for the crypto mogul  Yahoo Canada Finance
  4. SBF Missed FTX’s Risks  Bloomberg
  5. View Full Coverage on Google News



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Blackstone limits withdrawals from its US$69-billion REIT – The Globe and Mail

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Blackstone Inc limited withdrawals from its $69 billion real estate income trust (REIT) on Thursday after receiving too many redemption requests, an unprecedented blow to a franchise that helped it turn into an asset management behemoth.

The curbs in redemptions came because they hit pre-set limits, rather than Blackstone setting the redemption limits on the day. Nonetheless, they fuelled investor concerns about the future of the REIT, which makes up about 17% of Blackstone’s earnings. Blackstone shares ended trading down 7.1% on the news.

Investors in the REIT, which is not publicly traded, have been growing concerned that Blackstone has been slow to adjust the vehicle’s valuation to that of publicly-traded REITs, which have taken a hit amid rising interest rates, a source close to the fund said. Rising interest rates weigh on real estate values because they make financing them more expensive.

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Blackstone has reported a 9.3% year-to-date return for its REIT, net of fees, while the publicly-traded REIT index is down 3.02% in the same period. This outperformance has some investors questioning how Blackstone comes up with the valuation of its REIT, said Alex Snyder, a portfolio manager at CenterSquare Investment Management LLC in Philadelphia.

“People are taking profits at the value Blackstone says their Blackstone REIT shares are at,” said Snyder.

A Blackstone spokesperson declined to comment on how Blackstone values its REIT but said its portfolio was concentrated in rental housing and logistics and relied on a long-term fixed rate debt structure, making it resilient.

“Our business is built on performance, not fund flows, and performance is rock solid,” the spokesperson said.

Two sources familiar with the matter said turmoil in the Asian market, fuelled by concerns about China’s economic prospects and political stability, contributed to the redemptions. The majority of investors redeeming were from Asia and needed the liquidity, they said.

Blackstone said it would curb withdrawals from its REIT franchise after it received redemption requests in November greater than 2% of its monthly net asset value and 5% of its quarterly net asset value.

Analysts said that Blackstone’s REIT runs the risk of getting caught in a spiral of selling assets to meet redemptions if it cannot regain the trust of many of its investors. On Thursday, the firm said the REIT had agreed to sell its 49.9% interest in two Las Vegas casinos for $1.27 billion.

“The impact on Blackstone depends on whether the REIT is able to stabilize its net asset value over time, or is forced to enter an extended run-off scenario, with significant asset sales and ongoing redemption backlog – too early to tell, in our view,” BMO Capital Markets analysts wrote in a note.

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Big Six bank earnings show mixed bag for Canadian economy – CTV News

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The most recent earnings reports from Canada’s big banks are showing signs that the Canadian economy is slowing down ahead of a potential recession, with some signs of optimism.

The Big Six banks – RBC, TD, CIBC, Scotiabank, BMO and National Bank – all released their Q4 2022 reports this week. Five out of the six saw their profits dip compared to last year and three fell short of their earnings expectations.

Michael Morrow, managing director of mergers and acquisitions and capital markets at financial firm BDO Canada, says high inflation, lower capital markets activity and rising loan-loss provisions are all putting pressure on the big banks.

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High inflation has meant higher operating costs – including higher staffing costs amid a tight labour market – that has cut into their margins, Morrow said. Meanwhile, rising interest rates and economic uncertainties have slowed investment and led to lower capital markets activity.

“Capital markets activity continues to be a drag on all of the banks, particularly those that have a higher concentration of capital markets activity versus regular retail-related activity,” Morrow said.

RBC CEO Dave McKay said on an earnings call on Wednesday the bank is bracing for a “brief and moderate recession.”

In anticipation of an economic downturn, the big banks are also increasing their loan-loss provisions, which refers to money set aside to cover bad loans.

“As the bank’s worry about the economic performance of the Canadian economy, what that might mean is more loan losses going forward. And so their provisions every quarter has been creeping up, including this quarter,” Morrow said.

“It’s definitely a leading indicator in terms of where we think the Canadian economy will be next year and where the where the risks lie.”

Loan-loss provisions especially weighed heavily on CIBC, which set provisions for credit losses for the three-month period of $436 million, up from $78 million in the same quarter last year. CIBC missed its earnings expectations by over 19 per cent.

“As we look ahead to 2023, global economic growth is expected to be slower as central banks continue with their monetary policy tightening to tame inflation,” said CIBC CEO Victor Dodig on an earnings call on Thursday.

“In response to these headwinds … we are going to continue to take actions to reposition our business to adjust to these new realities, but also continue to grow our client franchise and moderate our expense growth.”

But despite these so-called headwinds, Morrow believes there is still good news to be gleaned from these results. Most of the Big Six are increasing their dividend rates for shareholders, which Morrow says “provides us with a view of confidence in the stability of the banks and their earnings profile.”

“If they’re increasing dividend rates, then that’s certainly an indication that they feel that the business and their capital ratios are going to be able to not only withstand this downturn, but continue to thrive through the year, through the back half of next year,” he explained.

On top of that, RBC announced it would be taking over HSBC’s Canadian operations in a $13.5 billion deal, pending regulatory approval. Morrow says he sees the purchase as a “positive vote of confidence for the Canadian economy,” especially given the fact that RBC is paying a premium price for the acquisition. The bank is paying 9.4 times HSBC Canada’s 2024 adjusted earnings.

“Certainly, you know, it gleans to the confidence that RBC has within the within the Canadian lending market. And if there were certain doubts in the Canadian market, you wouldn’t see these participants paying premiums in the marketplace at this point in the cycle,” he said.

With files from The Canadian Press and Reuters

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