/Posthaste: Stars soars 40% on $6B deal, Liberals’ twin deficits and why a manufacturing recession is already here

Posthaste: Stars soars 40% on $6B deal, Liberals’ twin deficits and why a manufacturing recession is already here

Good morning!

Investors can’t get over the terrible manufacturing data coming out of the U.S. yesterday that confirmed their worst fears — that we are heading towards a recession.

Services data from the U.S. out tomorrow could offer more clues about the state of the U.S. economy, but for now the major global share index hit its lowest level in a month this morning.

In Canada, manufacturing weighed on July’s GDP data. Goods producing industries led the decline (-0.7% as a whole). Mining, quarrying, and oil and gas activity pulled back markedly (-3.5%) on broad-based weakness.

“The soft start to Q3 reinforces the view that the Canadian economy is indeed cooling after near-4% growth in Q2,” writes Robert Kavcic, senior economist at BMO Capital Markets. Most analysts still believe Bank of Canada will leave interest rates unchanged on October 30.

However, down south, the poor data makes an already important U.S. Federal Reserve meeting on the same day even more of a crucial risk event, says Jim Reid, analyst at Deutsche Bank.

“What is hard to argue with is that the global manufacturing sector is now very much in a recession… Markets do seem to be having a somewhat hard time pricing in a more dovish Fed … Our U.S. economists do expect a cut this month.”

In Canada, Stars Group Inc, formerly known as the troubled Amaya Group, soared 40 per cent in pre-market trading after Paddy Power owner Flutter Entertainment Inc. said it would acquire the Toronto-based company for US$6 billion.

It’s Wednesday, so it must be Down To Business Podcast day. This week, Anthony Lacavera, the founder of Wind Mobile (now called Freedom and owned by Shaw) and private equity firm Globalive Capital, talks to host Emily Jackson about his experience starting a wireless company, the state of competition right now and what he thinks the government should focus on instead of pricing.

Here’s what’s you need to know this morning:


  • Cenovus Energy investor open house in Toronto, where it will unveil its five-year outlook in Toronto
  • Former Research In Motion chairman and co-CEO Jim Balsillie and Former Quebec premier Jean Charest to highlight most challenging issues facing Canadian manufacturers at the Canadian Manufacturing Technology Show in Toronto
  • Canadian Global Cities Council to bring together industry leaders to discuss Canadian natural resources economy
  • Eight food and agriculture entrepreneurs from five provinces across Canada are coming to Saskatoon October 1 and 2 in Saskatoon

Canada has been among the five best performing economies in the developed world since the global financial crisis, with domestic growth at a rock solid 2.22 per cent annually, outperforming advanced economies’ 1.88% showing.

However, the Canadian performance has been less than stellar when it comes to real GDP per capita, which grew at a more pedestrian 1.10% and lagged the 1.35% posted by advanced economies, according to a Bank of Montreal report.

The rankings among the industrialized economies shift markedly when we adjust for population growth, the bank notes.

“Differences in GDP growth rates between economies can often simply reflect differences in population growth, and somewhat mask true underlying economic performance,” BMO analysts said in a report. “For example, Germany and Japan stack up much more favourably than common perceptions when considered in this light, while Australia and Canada look a little less impressive.”


— Please send your news, comments and stories to yhussain@postmedia.com.
— Yadullah Hussain @YAD_FPEnergy

With files from The Canadian Press, Thomson Reuters and Bloomberg

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