Good morning, readers. It was 112 years ago that the San Francisco earthquake ruined about 80 per cent of the city, which was then the U.S. West’s business and cultural heart. Many fires erupted, but not all were the result of the 7.9 temblor. Because most insurers would cover damage from fire but not earthquakes, many home- and business owners set fire to their quake-damaged properties in order to collect monies to rebuild. Insurance payouts were the equivalent of $6.6 billion today. Here’s what we’re watching in business news:
SUM BIGGER THAN ITS PARTS
Trudeau’s cynical politics caught him in his own Trans Mountain trap, Gwyn Morgan writes. It should have been perfectly clear that Trans Mountain would face vastly more strident opposition than Northern Gateway or Energy East. Morgan offers a precis of “the saga of the three pipelines,” which he calls a national emergency. It’s no longer about a crucial route to tidewater, but also a test of Ottawa’s constitutional jurisdiction over nationally important projects, a destructive breakdown in relations between two provinces and very possibly a national unity crisis, Morgan writes.
Stephen Poloz’s cautious approach to interest rates is about to be challenged, Kevin Carmichael writes. While not expected raise borrowing costs today, with inflation and growth beginning to pick up Poloz will probably face mounting pressure to hike soon. Economists predict inflation will move well above the Bank of Canada’s two per cent target in the coming months, while growth should also return to an above-two per cent pace. It would mark the first time since 2014 that both exceed that level simultaneously.
NEW KIND OF LEDGER
Blockchain could put the squeeze on fee-heavy Canadian banks, Moody’s warns. On fee and commission income, Geoff Zochodne reports, Swiss banks may be most exposed to a blockchain-related disruption, followed by Canadian, Israeli and Italian banks. High-fee cross-border transactions could be completed much faster than in traditional banking, and could hit Luxembourg and Hong Kong banks most. Some Canadian banks are looking for ways to use the new technology.
OIL’S GONE TO POT
there’s no money to be made in oil. “This industry will be the next that is created in my adult lifetime,” Mottahed said. The internet and mobile telecommunications were the other two. He doesn’t see Canada’s energy industry solving its problems any time soon, what with too many regulations, taxes, too few pipelines, and a bad environmental reputation.
WAKE UP AND SMELL THE COFFEE
Starbucks is closing 8,000 of its U.S. restaurants for an afternoon next month in order to provide training for 175,000 employees in how to prevent racial discrimination at its stores, following the arrest of two black men who were sitting in one of its Philadelphia locations. CEO Kevin Johnson says “We’re committed to being a part of the solution.”