Five things you should know before starting your day on Dec. 20
The U.S. Federal Reserve raises rates, shrugging off any pressure from U.S. President Donald Trump. Royal Bank of Canada denies snooping on users’ Facebook messages. And Berkshire Hathaway exits Home Capital after making a tidy profit, leaving a 15 per cent stock decline in its wake.
Here are some of the Financial Post’s top stories:
Ironically, climate change is opening up the Canadian Arctic. Ships that have successfully gone “over the top” via Arctic routes such as the Northwest Passage and the Northern Sea Route along Russia’s coastline have clocked major time savings, leading to hopes of more traffic through the once-foreboding passageway.
Yet some experts say a multitude of challenges, including poor charting, unpredictable weather and a severe lack of port infrastructure and ice-breaking capability make Canada’s Arctic more likely to become a site for tourism and smaller-scale destinational shipping than a maritime superhighway, writes
Royal Bank of Canada said Wednesday that it did not have the power to see the messages of Facebook Inc. users, rejecting part of a newspaper report that alleged the lender had been given that capability by the social media network, writes Geoff Zochodone.
The New York Times reported on Tuesday that Facebook had granted companies “more intrusive” access to user data than had been disclosed, and that Facebook had allowed RBC, as well as Netflix Inc. and Spotify Technology S.A., to “read, write and delete” private messages of users.
ALEFIA MAKES ITS MOVE
In the first significant sign of consolidation in the Canadian cannabis sector post-legalization, Aleafia Health Inc. announced Wednesday that it will be scooping up Emblem Corp. in an all-stock deal worth $173 million that both companies claim will create the largest network of medical cannabis clinics across Canada.
“We were looking to buy a business that had high margin products, was medically focused and that was producing today. Emblem stood out,” Aleafia CEO Geoffrey Benic told Vanmala Subramaniam.
MARKETS ARE FED UP
Equity markets reacted badly after U.S. Federal Reserve Governor Jerome Powell hiked interest rates, with the Dow Jones Industrial Average losing more than 400 points after the announcement.
But by trimming the number of rate hikes they foresee in 2019, to two from three, policy makers signalled they may soon pause their monetary tightening campaign. Officials had a median projection of one move in 2020.
“This is clearly a disappointment for those hoping for a dovish rate hike,” said David Joy, chief market strategist at Ameriprise Financial in Boston. “It is a more moderate rate hike but it is a rate hike and there is still a gap between where the Fed is and where the market is in terms of policy expectations for next year.”
Warren Buffett’s role in the saga of Home Capital Group, the embattled alternative lender, is coming to a close, with Berkshire Hathaway Inc. saying it will “substantially exit” its investment in the company. Home Capital shares plunged, according to a Bloomberg report.
Home Capital stock reacted badly to the Oracle of Omaha’s exit, but chief executive Yousry Bissada insists the company is doing “fine”.