Here are five things you need to know this morning:
Global trade winds are shifting, Macklem says: “I’m actually giving a speech next week in London so I’ll have a lot more to say about this,” was Tiff Macklem’s response last week when I asked him on rate-decision day where trade issues rank on the central bank’s list of risks. Today was the day for him to make good on that promise and he delivered, telling a U.K. business audience this morning that the outlook for global trade is shifting rapidly. That’s critically important for small, open economies such as Canada’s, where exports comprise up to a third of Canada’s national income. National security concerns have become a major source of tension when dealing with trading giants such as China, and while that poses challenges for global trade, it will also create opportunities. “The rewiring of global trade will likely lead to more supply shocks in the future,” Macklem said. “These disruptions will affect businesses and jobs, and they could drive up inflation. Trade disruptions may also mean that inflation will be more volatile.” Macklem noted that trade in goods from developed economies is slowing around the world, while trade in services is picking up the pace. That’s a concerning trend for a resource-based economy such as Canada’s. If it wasn’t already time for Canada to shake the pejorative moniker that economist Harold Innis bestowed on our economy almost a century ago — “hewers of wood and drawers of water” — the shifting winds of international trade make it long overdue now.
Looming U.S. dockworker strike would wallop supply chains, Maersk warns: Speaking of trade, one of the biggest shipping companies in the world is sounding the alarm about a looming work stoppage, with Maersk saying the odds of a dockworker strike in the U.S. are increasing by the day. Industry group USMX and labour union ILA have been trying to hammer out a new work agreement to govern activity at critical ports all along the U.S. coastline for weeks, but the two sides remain far apart. The deadline for a deal is Sept. 30 and Maersk said this morning that even a one-week strike would disrupt supply chains for a month or more. Bloomberg has previously reported that the dockworkers are looking for wage increases of up to 80 per cent over six years, although issues over automation are also a sticking point. Though much larger, it’s reminiscent of the scenario in Canada last month when a dispute with rail workers at CP and CN threatened to grind the network to a halt before the government stepped in to mandate binding arbitration.
Apple and Google lose legal fights in Europe: Lawmakers in Europe have won two court battles in their fight to rein in Big Tech, with Apple losing an old battle over US$14 billion worth of Irish taxes, and Google losing its challenge of a $2.4B fine for abusing market power. The European Union’s Court of Justice ruled in favour of a 2016 decision that found Ireland broke the law when it gave Apple a slew of lucrative tax breaks. The same Luxembourg-based court ruled that Google illegally levered its dominance in search to prioritize its own product listings. The rulings are two wins for antitrust czar Margrethe Vestager, who has targeted big tech companies on a number of fronts in recent years. The Apple ruling is especially noteworthy since it wasn’t Ireland that objected — they’re happy to allow Big Tech to turn the country into a technology hub by leaning into intellectual property loopholes in Irish tax law. Instead, it was the EU that deemed the tax policy of one of its member nations unfair and has ordered Ireland to claw back some of those funds. Apple doesn’t need to scrounge up the cash to pay the fine, as the money has been sitting in an escrow account for years now, awaiting a ruling.
OMERS takes big stake in Indian toll road assets: The pension fund for Ontario’s municipal workers has upped its stake in an Indian toll-road business. Bloomberg is reporting that OMERS has bought Allianz Capital Partners’ stake in Interise Trust, boosting its ownership of the business that owns more than a dozen toll roads from 21 per cent to 34 per cent. In addition to the obvious appeal for infrastructure assets that pension plans love, it’s also a big bet on India’s economy. Financial terms were not disclosed.
GameStop set to post earnings after the bell: Given the hoopla that surrounded the company during the pandemic, shares in GameStop continue to be one to watch, especially today as the company is set to reveal its quarterly results after the bell. Despite what vibrant Reddit communities continue to insist, the numbers for the video game retailer are expected to show further weakness, as analysts tracked by Bloomberg think the company’s quarterly loss likely doubled to nine cents per share, and sales are expected to have contracted by almost a quarter to just over US$895 million. The shares are changing hands at just over $24 in premarket trading, down by about half from a brief peak near $50 in May. To the moon, indeed.
