The Daily Chase: Awaiting Bank Surcharge Details; Investment firms are increasing their exposure to crypto

It looks like yesterday’s firing from Bank of Nova Scotia CEO Brian Porter will fall on deaf ears in Ottawa. CTV News reports that there will be new details in tomorrow’s budget about the surtax on large financial institutions that the Liberals campaigned on last year. Ottawa bureau chief Joyce Napier reports that the budget will detail the percentage those companies will pay. Recall that when the surtax was announced last summer, the Liberals said it would be a three percentage point surtax on revenues over $1 billion. Joyce also said in his report last night that the targeted surcharge could be the start of a trend, raising the question of what other sectors should be on alert.

And we’ll have a lot of pre-budget discussions today beyond surtaxes. Cynthia Leach of RBC joins us at 9:40 a.m. to discuss the green transition and how government can try to mobilize private sector investment. Later, Stephen Brown of Capital Economics will speak with Andy at 4:30 p.m. about the risk of another big spending budget fueling Canada’s inflation problem.

MARKET WATCH

Yesterday, US Federal Reserve Governor Lael Brainard put markets to the test when she said ‘that getting inflation down is of paramount importance’. And this afternoon, with the release of the minutes, we’ll get a better sense of how that perspective played into the outlook at the last policymaking meeting. The mood is generally bitter in equity markets this morning, with all major European indices trading lower and US futures indicating the open will be weak. In addition to the prospect of an increasingly belligerent Fed, Russia’s attack on Ukraine continues to cloud the outlook, and numerous reports indicate that it is only a matter of time before the European Union and the United States extend their sanctions.

“ROVING YEAR” FOR CRYPTO ADOPTION

This is the assessment of the head of crypto and blockchain for KPMG in Canada. And it’s based on a survey released today (attached) by the advisory firm, which suggests that nearly a third of institutional investors have direct or indirect exposure to crypto, while nearly four out of 10 financial services offer crypto services. But as Michelle Zadikian reports on BNNBloomberg.ca, many companies have only dipped their toes into this space; according to the KPMG survey, 71% of institutional survey respondents said they allocated less than 2% of their portfolio to crypto.

GRILLS BIG OIL FACES

The CEOs of Exxon Mobil and Chevron star in a US House committee hearing today, where the name says it all: ‘Gouged at the Gas Station: Big Oil and America’s Pain at the Pump”. Especially since this is a midterm election year in the United States, it will come as no surprise to see leaders excoriated by politicians.

OTHER NOTABLE STORIES

  • The Valens company, a Kelowna, B.C.-based pot processor, is trying to manage investors’ frayed nerves after its shares fell 34% in the past five sessions thanks to funding. In one open letter released late yesterday, the CEO and Chairman of Valens said the share issue had been “approached with caution” to meet the company’s capital needs and maintain its financial flexibility. They also said a facility in Mission, British Columbia, was being closed.
  • JetBlue confirmed after markets closed yesterday that it had offered to buy Spirit Airlines for $3.6 billion ($33 per share). This compares to the friendly cash and stock agreement with Frontier Group Holdings this Spirit Agreed in February (and which was then valued at US$2.9 billion). JetBlue shares rebounded and Spirit shares soared in the last half hour of trading yesterday after The New York Times reported on the proposal before it was officially announced.

NEWS RELEASES / NOTABLE EVENTS

  • Notable Benefits: Tilray Brands
  • 900: Ontario’s Financial Accountability Office Releases Report Comparing Ontario’s Fiscal Situation to Other Provinces
  • 10:00 a.m.: U.S. Treasury Secretary Janet Yellen addresses the U.S. House of Representatives Financial Services Committee hearing on the state of the international financial system
  • 10:30 a.m.: Chief executives of Exxon Mobil, Chevron, Devon Energy, Pioneer Natural Resources address the US House Energy and Commerce Committee hearing entitled “Gouged at the Gas Station: Big Oil and America’s Pain at the Pump”
  • 2:00 p.m.: The US Federal Reserve publishes the minutes of the last meeting