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Why this money manager has the confidence to recommend investors 'stay calm' – The Globe and Mail



John Zechner.The Globe and Mail

John Zechner has seen his share of market downturns in his nearly 40 years managing money. It’s that experience that gives him the confidence to recommend investors “stay calm” during the latest market rout – and start buying if they have the stomach for more volatility.

“We’ve seen buying opportunities like this before, where stocks seem to discount the absolute worst-case scenario and, in the end, what we’ve ended up with are some pretty good buying opportunities,” says Mr. Zechner, chairman and lead equity manager at J. Zechner Associates, which oversees more than $1-billion in assets.

“It’s not like we don’t have some bad news in front of us,” adds Mr. Zechner, citing the trajectory of rising interest rates that threaten to push the U.S. and Canadian economies into a recession. Still, he says he believes the market has already priced in at least a moderate economic downturn and investors are pessimistic – a sentiment that has been associated with market bottoms in the past.

“We also don’t see the same type of excesses as in past economic downturns and therefore believe any recession will be short and shallow,” he says, adding that the job market is still strong, corporate balance sheets are in good shape and inventories of most major consumer goods are low by historical standards.

“Bottom line, the risk-reward trade-off in stocks has improved dramatically since the beginning of the year despite higher interest rates and increased economic risks.”

Investors in his firm’s Canadian balanced fund have been well positioned for the recent market swings. The fund, which includes about 50 per cent equities, 35 per cent bonds, 5 per cent preferred shares and 10 per cent cash, has seen total returns of 5.3 per cent over the past year, as of June 30, and an annualized return of 6 per cent over the past three years. The fund’s mix compares with an allocation of about 45 per cent equities, 35 per cent bonds, 5 per cent preferreds and 15 per cent cash at the start of this year.

The Globe and Mail recently spoke to Mr. Zechner about what he’s been buying and selling, and the smart stock tip he gave to his barber a few years back.

Describe your investing style.

Our core equity investment style has always been “top down” growth, meaning we first look at macro variables such as economic growth, profits and interest-rate trends before focusing on sector weights and individual stock picks. In terms of stock selection, we have a bias toward GARP (growth at a reasonable price) but will also add cyclical exposure such as energy, metals and industrials, depending on our outlook.

What have you been buying or adding in recent months?

We expect to see a peak in inflation soon and probably less “hawkish” behaviour from central banks than markets expect. With that in mind, we’ve been adding back to growth names in sectors such as technology (particularly semiconductors), communications services and health care, mostly in the U.S. We’ve also been buying depressed names in the consumer sector, including auto names such as Magna MG-T, Martinrea MRE-T and General Motors GM-N. Auto inventories are quite low, and manufacturers will need to ramp up again once the semiconductor shortage is resolved. Another name we’ve been adding to is Ski-Doo maker BRP DOO-T. The stock is acting as though we’re heading into a massive downturn and consumers won’t spend again. I’m finding lots of those types of opportunities. We’ve also been adding back some oil names on the recent weakness, including Crescent Point Energy CPG-T, Whitecap Resources WCP-T and Arc Resources ARX-T. Crescent Point is a stock we sold out of entirely at $13 in the spring and bought it back recently at $8.50.

What have you been selling/trimming in recent months?

We did lighten a bit on the natural gas, base metals and gold stocks recently, as investors began worrying about economic growth. Some copper names we trimmed included Teck Resources TECK-A-T, First Quantum Minerals FM-T and Hudbay Minerals HBM-T. We didn’t have a big position in the Canadian banks, but I did lighten a bit there too. I sold out of CIBC CM-T and trimmed Scotiabank BNS-T, which is the only name I hold in that sector right now. I just thought some of the tailwinds of the past two years for the banks are probably headwinds over the next couple of quarters.

What is the best stock tip you’ve given a friend or family member?

He’s not a family member, but in 2012 my barber asked me for my best stock idea, and I suggested Microsoft MSFT-Q. The company was out of favour at the time and trading at low multiples, but I felt it had longer-term potential. I’m not sure if he ever bought it – I didn’t ask, and I lost touch with him since the pandemic – but the stock has gone from about $25 then to about $250 today, which is a pretty good return if he did buy it.

This interview has been edited and condensed.

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German Chancellor Olaf Scholz coming to Canada to meet with Trudeau, business leaders



OTTAWA — The Prime Minister’s Office says Justin Trudeau will accompany the chancellor of Germany, Olaf Scholz, on a brief Canadian visit later this month that will include stops in Montréal, Toronto and Stephenville in western Newfoundland.

In a statement released Saturday, the PMO confirmed the Aug. 21-23 visit starts in Montreal, where meetings will be held with German and Canadian business leaders, and a tour is scheduled at an artificial intelligence institute.

The two men will then head to Toronto, where Trudeau will take part in the virtual summit about Russia’s annexation of Crimea, followed by an appearance at the Canada-Germany Business Forum.

The trip will conclude with a stop in Stephenville, N.L., where Trudeau and Scholz will attend a hydrogen trade show.

The statement says the two men intend to talk about clean energy, critical minerals, the automotive sector, energy security, climate change, trade and Russia’s “illegal and unjustifiable invasion” of Ukraine.

The prime minister and chancellor last met in June at the G7 Summit in Germany.

This report by The Canadian Press was first published Aug. 13, 2022.


The Canadian Press

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Air passengers losing patience with enforcement agency as backlog of complaints balloons – CBC News



Canadians whose travel plans have been derailed by flight delays or cancellations say they’re losing patience with the agency responsible for enforcing compensation rules.

The Canadian Transportation Agency (CTA) — a quasi-judicial tribunal and regulator tasked with settling disputes between airlines and customers — has been dealing with a backlog of air passenger complaints since new regulations came into place in 2019 that require an airline to compensate passengers when a flight is delayed or cancelled for a reason that is within the airline’s control.

But that backlog has spiked in the last few months as a hectic summer travel season has resulted in an increasing number of customers claiming airlines are skirting federal compensation rules.

  • Have you had filed an airline complaint with the CTA and haven’t heard back? Tell us about it in an email to

The CTA said the backlog of complaints has risen to 18,200 after a spike in new grievances filed in recent months. The agency said 7,500 new complaints were filed between April and July this year, more than half of the amount of complaints it received all of last year.

“The CTA continues to process air passenger complaints as quickly as possible, based on their merit, impartially and in a rigorous manner,” the agency said in a statement.

But those who have recently filed new complaints could be in for a long wait to get a response from the agency.

This graphic shows the compensation air travellers could be entitled to depending on the length of their flight delay. (CBC)

Michelle Jacobs waited nearly a year before hearing back from the CTA, and when she did it was only to confirm that she was filing on behalf of her two children. She filed a complaint in August 2021 after Air Canada cancelled the family’s flight from Deer Lake, N.L., to Toronto citing staffing issues.

“It’s frustrating,” she said of the CTA process, “I mean there are laws put in place for this type of stuff and it seems that they’re just really holding you off to see if you’ll just go away.” 

Jacobs said she had considered giving up her CTA complaint, but after she was contacted last week by the agency she now has a sliver of hope that an investigation of the case is proceeding.

Passenger considering going to court instead

Kevin Smith, who has been fighting Flair Airlines for compensation since an initial flight from Vancouver to Ottawa on New Year’s Eve was cancelled and rebooked the next day, says he’s running out of patience with the CTA.

Smith said he filed a complaint with the agency in early February but has not yet received a response.

While he’s frustrated with Flair continuing to deny him what he said would be fair compensation, he said the CTA not responding “makes everything worse.”

“You can’t rely on the enforcement, the laws are basically meaningless and it’s kind of like the wild, wild west,” he said.

The Canadian Transportation Agency has a case tracker to allow passengers to keep tabs on their complaints. Due to a current backlog, the site only indicates that the agency will process a complaint as quickly as possible. (Submitted by Kevin Smith)

Rather than waiting for the CTA to respond, Smith said he is now considering taking Flair to small claims court, something Gabor Lukacs, founder and president of Air Passengers Rights Canada, has started recommending to passengers who contact him.

“A judge may or may not agree with them but they are going to get a fair and impartial hearing which is way more than they can expect from the agency,” Lukacs said.

While the CTA said it has been able to process complaints faster in recent years, it is currently facing a staffing shortage and attempting to hire more facilitators who can help resolve complaints. The government has allocated funding to the CTA in recent years in an effort to address the backlog, including $11 million in April’s budget.

When asked by CBC, Transport Minister Omar Alghabra’s office didn’t say if the government is willing to do more to ensure the CTA can address the backlog and instead said airlines need to comply with regulations.

“Travellers also have rights regarding refunds and these must be respected,” Alghabra’s office said in an emailed statement.

But Conservative transport critic Melissa Lantsman said air passenger protections need to be strengthened because Canadians are currently bearing the brunt of a weak system.

“Whether it’s the CTA, whether it’s the government, whether it’s the airline, there is an abdication completely of responsibility,” Lantsman said.

NDP transport critic Taylor Bachrach agreed that regulations and enforcement need to be bolstered and argued that the fact there are so many complaints in the first place is indicative that airlines feel like they can get away with breaking the rules.

“The biggest problem is the airlines are making a mockery of these air passenger protection regulations,” he said.

Both Lantsman and Barchrach said the government needs to provide the agency with the resources needed to ensure passengers are compensated, but Lukacs said the CTA also needs to step up enforcement by issuing more fines when an airline breaks the rules.

Passenger rights advocate Gabor Lukacs questions the Canadian Transport Agency’s enforcement practices and says the agency should issue more fines when an airline violates air passenger protection regulations. (CBC)

Under the CTA’s regulations airlines could face up to $25,000 per incident every time they break air passenger protection regulations, something Lukacs said the agency doesn’t use often enough.

“If airlines knew that they are going to be facing hefty fines for each violation, they would not go that far,” he said.

The CTA recently announced new amendments to the regulations that would require airlines to provide a refund or a rebooking even if a delay or cancellations aren’t within their control. Lukacs said these new changes, which come into effect on Sept. 8, could make it harder for passengers to seek compensation from airlines.

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Toronto continues investigation into cause of massive power outage – CP24



Hydro One says it will take “several days” to repair hydro lines that were damaged after an upright crane in the lake slammed into them and caused a massive power outage downtown on Thursday.

The outage occurred in the city’s financial district at around 12:30 p.m., leaving approximately 10,000 customers without power at its peak.

A portion of the Eaton Centre was left in the dark, forcing hundreds of stores to temporarily close. The outage also knocked out power in parts of the Hospital for Sick Children’s campus.

Traffic lights were down in some intersections causing heavy traffic and significant streetcar delays. However, the outage did not affect subways.

Toronto Fire said crews responded to a number of elevator rescues, but no injuries connected to the outage were reported yesterday.

Hydro One says the outage was caused when a barge moving an upright crane in the Port Lands area hit overhead high voltage transmission lines.

“Now, what happened when that crane hit the line resulted in a downstream effect where a surge of power affected a nearby station on the Esplanade that we were actually using to reroute power to Toronto Hydro,” Hydro One Spokesperson Tiziana Baccega Rosa told CP24 Friday morning.

The City of Toronto says the barge was being operated by a subcontractor to Southland-Astaldi Joint Venture (SAJV), which is a contractor for the Ashbridges Bay Treatment Plant outfall project.

Crews were reportedly preparing to move equipment into the lake for the project when the incident occurred.

“We’re going to use stone that needs to be placed out in the lake and the subcontractors were going to do that work for us but they were moving equipment. The event occurred off-site while they were doing their preparatory work,” Lou Di Gironimo, Toronto Water’s general manager told CP24 Friday.


Baccega Rosa said Hydro One crews were able to reroute about 50 per cent of the power shortly after the incident, which resulted in power being restored in some areas quicker than others.

Crews then had to stop their efforts and wait for the fire department to clear the site for workers to safely enter and reroute the rest of the power.


Once crews gained access, they were able to reroute all power to Toronto Hydro and power was fully restored downtown by 8 p.m.

Baccega Rosa said there are established safety protocols to stay a minimum of 10 metres away from power lines, which were not followed yesterday.

“And that’s (for) anyone whether, you know, you’re a barge passing under them (power lines) or if you’re doing work around your house and you need to trim the tree branches around the line connecting your home. You know, everyone was very lucky yesterday that there was not a safety incident and no one was hurt as a result of this,” she said.

The city has launched an investigation into the incident and has requested a full report from SAJV to understand what happened.

“So the big thing that we’re going to look at is what happened? Who was in charge of the subcontractor work? What were the safety procedures in place at the time? And then what exactly happened when the crane hit the wires?,” Di Gironimo said.

Di Gironimo could not confirm if the subcontractors will face any consequences for the incident.

“That will be part of the investigation to find out what happened. What were those precautions that were supposed to be in place. What was followed? What wasn’t?”

He said the city is meeting with SAJV next week and plans to complete the investigation within a matter of weeks.

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