Amanda Lang talks pipelines and more with Alberta Premier Danielle Smith

Key Concepts

• Economic Slowdown: A period of reduced economic activity, characterized by declining growth rates, increased unemployment, and decreased consumer spending.
• Inflation: A general increase in prices and fall in the purchasing value of money.
• Productivity: The efficiency with which goods and services are produced.
• Venture Capital/Growth Capital: Funding provided to startups and early-stage companies with high growth potential.
• Sovereign Public AI Infrastructure: Government-funded and operated artificial intelligence systems and resources.
• Critical Minerals: Minerals essential for the development of new technologies and economic security.
• Regulatory Reform: The process of reviewing and changing laws and regulations to improve efficiency and effectiveness.
• Digital Infrastructure: The physical and organizational structures and facilities needed for the operation of digital technologies.
• Business Confidence: A measure of how optimistic businesses are about the future economic outlook.
• Pipelines: Infrastructure for transporting oil and gas.
• Emissions Cap: A limit on the amount of greenhouse gases that can be emitted.
• Carbon Taxes: A tax imposed on the carbon content of fuels.
• Investment Climate: The overall environment for investment in a particular region or country, influenced by factors such as government policy, economic stability, and infrastructure.
• Provincial Cooperation: Collaboration between different provinces within a country.
• Trade Agreements: Formal agreements between countries to facilitate trade.
• Section 232 Tariffs: Tariffs imposed by the US on imported goods deemed to be a threat to national security.
• Electric Vehicles (EVs): Vehicles powered by electricity.
• EV Mandate: Government regulations requiring a certain percentage of vehicle sales to be electric.
• Charging Infrastructure: The network of charging stations for electric vehicles.
• Hybrids: Vehicles that combine an internal combustion engine with an electric motor.
• Retail Investor: An individual investor who buys and sells securities for their own account.
• Index Investing: An investment strategy that aims to replicate the performance of a specific market index.

Business Briefs

This section provides a quick overview of key business and economic news from the past week.

• Budget Passage: The minority government's budget passed in a narrow confidence vote, with the Green Party leader Elizabeth May supporting the government in exchange for a commitment to meet Paris Agreement climate targets.
• Inflation Eases Slightly: Headline inflation in Canada decreased to 2.2% in October, down from September, primarily due to lower gas and food prices. However, RBC economists noted that nearly half of consumer prices are still rising at or above 3%.
• New Home Building Declines: The pace of new home construction fell by 17% in Canada in October, with significant declines in Ontario and British Columbia. However, housing starts in other areas like Montreal, Calgary, and Edmonton contributed to positive year-over-year growth.
• Foreign Takeover Requirements: The Canadian government is reportedly imposing net benefit requirements on Britain's Anglo-American for its takeover of Canada's Tech Resources, potentially requiring the combined entity to be a Canadian firm.
• Bitcoin Value Drop: The cryptocurrency Bitcoin has lost 30% of its value from its October peak, erasing all its gains for the year. Competition from stablecoins is cited as a potential driver of uncertainty.

Ontario's Investment Climate and Economic Priorities

Daniel Tish, President and CEO of the Ontario Chamber of Commerce, discusses the impact of the recent federal budget on Ontario's investment climate and the province's economic priorities.

• Budget Direction: Tish views the budget as moving in the right direction, with the business community appreciating its ambition and alignment with chamber priorities.
• Key Budget Measures: The chamber supports measures such as the productivity super deduction, enhanced R&D tax credits, funding for sovereign public AI infrastructure, and new venture and growth capital funding.
• Scaling High-Potential Businesses: A primary focus is on helping high-potential businesses scale to ensure future economic growth and incentivize productivity investments.
• Addressing Productivity Challenges: Tish acknowledges that Canada's productivity challenges are long-term and will require sustained effort to overcome.
• Need for Comprehensive Tax Review: The chamber advocates for a comprehensive, top-to-bottom review of federal and provincial taxes, including both taxes charged and tax incentives, to identify the most effective measures for productivity gains.
• EI Modernization: Simplification and speed in EI eligibility are desired, particularly for those in non-traditional, seasonal, or part-time work. Reducing premium volatility for employers is also a priority.
• Regulatory Reform and Digital Infrastructure: Continued regulatory reform and faster deployment of digital infrastructure are seen as crucial.
• Business Confidence: While overall economic confidence fluctuates, Tish notes that a significant majority of businesses (61%) are confident in their own business prospects and resilience.

Alberta's Premier on Pipelines, Trade, and Growth

Danielle Smith, Premier of Alberta, shares her perspectives on major projects, interprovincial cooperation, and Canada's trade relationship with the United States.

• Pipeline Projects and Investor Confidence: Smith is optimistic about securing an agreement for a new bitumen pipeline to Asian markets, linked with the Pathways Project for lower-emission barrels. She emphasizes the need to restore investor confidence by addressing emissions caps, carbon taxes, and what she terms "nine bad laws" that have negatively impacted Alberta's investment climate.
• Attracting Investment: Smith believes that improving the investment climate is key to attracting back an estimated half a trillion dollars in projects that have gone elsewhere. Early signs of this include expansions by Enbridge, Trans Mountain, and South Bow.
• Interprovincial Cooperation: Smith expresses support for projects in other provinces, highlighting the benefits of major LNG projects (LNG Canada 2 and Suncor) for Alberta's gas fields. She advocates for focusing on areas of agreement, such as the expansion of the Trans Mountain pipeline, dredging of the Second Narrows, interties for renewable energy, biodiesel production, and the Port of Prince Rupert.
• Canada-US Trade Relationship: Smith is disappointed with Canada's perceived low priority in developing a free trade agreement with the US. However, she is encouraged by industry-led initiatives, such as the Cameco nuclear deal and Enbridge/South Bow oil projects, which demonstrate business moving forward despite trade challenges.
• Potential Trade Agreements: Smith sees potential for agreements on critical minerals and aluminum, while acknowledging challenges with steel (due to concerns about Chinese dumping) and softwood lumber and autos.
• Diplomatic Approach to US Relations: Smith prefers a diplomatic approach to engaging with the US, citing her positive interactions with Interior Secretary Doug Bergam. She has signed an MOU with Ontario Premier Doug Ford to prioritize finished cars from Ontario in Alberta's fleets and supports collaboration on pipelines and unlocking critical mineral resources.
• Creating a Climate of Growth: Smith emphasizes that all governments are facing deficits and that increasing revenues requires supporting wealth- and job-creating projects. She believes there is a growing understanding that printing money leads to inflation and affordability issues, and that premiers recognize the need to support the private sector for investment.

The Future of Canadian Auto Manufacturing and EV Adoption

Brian Kingston, President and CEO of the Canadian Vehicle Manufacturers Association, discusses Canada's investments in EV manufacturing and the challenges facing the sector.

• EV Investment Landscape: Canada has invested over a billion dollars since 2016 in making EVs affordable and practical, including significant funding for charging infrastructure. Billions more have been directed towards direct EV production investments, such as pledges for Honda's EV plant, Volkswagen's battery plant, Northvolt's planned plant (which declared bankruptcy), Stalantis' Nextstar energy plant, and GM's Bright Drop EV vans plant.
• Was the Investment a Mistake? Kingston argues that the investments were the "right move," securing $46 billion in new automotive investment for Canada, nearly double its historical share. While acknowledging a slowdown in EV market adoption and sales, he maintains that electrification is the industry's direction and these investments will pay off over time.
• US Competition and Investment Decisions: Kingston highlights that many automakers are looking to the US for future investments due to practical reasons and US government incentives.
• Securing a Deal with the US: Priority number one for Canada's automotive industry is securing an agreement with the US to eliminate Section 232 tariffs and renew the North American trade agreement, as 92% of Canadian auto production is exported to the US.
• Critique of EV Mandate: Kingston believes the federal government's EV mandate, which aims for 100% EV sales by 2035, needs to be repealed. He argues the government was dictating consumer demand, and the current collapse in EV demand makes the target unrealistic.
• Focus on Preconditions for EV Adoption: Instead of mandates, Kingston suggests the government should focus on preconditions for EV adoption, such as expanding charging infrastructure (addressing a current 70,000 charger gap), providing consumer incentives, and ensuring the electricity grid is ready.
• Technology Agnosticism: Kingston advocates for a technology-agnostic approach, allowing manufacturers to build what consumers want, including hybrids and traditional gas-powered vehicles, while supporting the transition to EVs as demand and infrastructure evolve.

The Takeaway: Investing Wisdom

Amanda Lang offers a concluding thought on investing, drawing parallels between retail investors and even seasoned professionals.

• Retail Investor Tendencies: Most individual investors are prone to buying high and selling low, and trading frequently, which erodes long-term returns.
• Warren Buffett's Admission: Even Warren Buffett, a highly successful investor, admitted to missing out on years of upside by not investing in Alphabet (Google) eight years ago.
• Lesson for Investors: The takeaway is that even the most skilled investors can make mistakes.
• Simple Investment Strategy: For most investors, the simplest and safest approach is to avoid trying to outsmart the market. This can be achieved by investing with experienced managers (e.g., buying Berkshire Hathaway shares) or by investing in broad market index funds, which are often described as "boring" but effective.
• Conclusion: It's a valuable reminder that even the best can err, and a disciplined, diversified approach is often the most prudent.