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Daily Pulse

Canada

Telus received approval from TSX for a new buyback of up to C$250 million in shares over 12 months, starting Jan.2 2019.2018 buyback concluded on Nov.12 with Telus having purchased about 0.35% of shares.Stock declined 4.1 percent in the past 52 weeks.

Consumption of softwood lumber in the US is forecasted to increase over the next decade and reach an all-time high by 2030. Canada is poised to continue being a dominant supplier of softwood lumber to the US, but there will be changes in log availability. The timber harvests on public lands in British Columbia are set to decline over the next decade and uncertainty surrounds log availability in the eastern provinces.

United-States

The U.S. dollar is set for its worst week in nine months as this year's bull run shows signs of being stopped in its tracks.The Bloomberg Dollar Spot Index, which tracks the currency against 10 major peers, has slumped nearly 1 percent this week as the Federal Reserve's rate-hiking cycle raises fears of an economic slowdown. The greenback recovered some ground Friday after the euro slid amid thinner-than-average volumes ahead of the year-end holidays.

The U.S. government is just hours away from a partial shutdown with Congress at an impasse over funding President Donald Trump's border wall.Republicans in the House on Thursday night sought to meet Trump's demands, adding $5 billion for border wall construction to the Senate's version of a stopgap spending measure.But Senators from both parties have indicated that the modified legislation won't pass when the chamber returns for another vote on Friday, leaving lawmakers on both sides of Capitol Hill back where they started.

Europe

Britain's Brexit limbo is helping to give Luxembourg's booming funds industry a boost at the expense of jobs in the City of London.U.K. funds are racing to set up management units in the EU to avoid being locked out of the soon-to-be 27 nation bloc come March 29. And many are choosing tiny Luxembourg, which has already carved out a niche as the world's second-biggest fund market outside of America.

Asia

China's top policy makers confirmed that more monetary and fiscal support will be rolled out in 2019, as the world's second-largest economy grapples with a slowdown that's yet to show signs of ending."Significant" cuts to taxes and fees will be enacted in 2019 and while monetary policy will remain "prudent," officials will strike an "appropriate" balance between tightening and loosening, according to a statement published after the annual Economic Work Conference that concluded in Beijing Friday.

Husky Energy Inc. (HSE, Hold, Average Risk, Target C$22.00)

This morning, Husky released its 2019 budget and production guidance. For 2019, capital spending is C$3.3–3.5b while guided production is ~300 mboe/d, inclusive of the Alberta government-mandated production curtailments for the year. The guidance does not include production or spending for MEG; HSE indicated that it would provide an update to include forecast MEG production and capex following the resolution of the acquisition in 2019.

Oil & Gas

The EIA reported a 141 bcf withdrawal, above consensus expectations of 134 bcf, albeit still a touch shy of the five-year average of 144 bcf. That said, we expect relatively soft storage pulls throughout the holidays, with mild temperatures driving a collapse in heating demand this week and limited cold weather forecast until the closing days of 2018. Our three-week outlook implies a sharp contraction in the five-year storage deficit to ~575 bcf (from 720 bcf) by the January 4 storage report.

Fixed Income Macro Strategy

In our view, 2019 should see global growth moderating but not cratering. The US continues to assume global growth leadership as it heads toward a third consecutive year of above-potential GDP growth. Canada will be split between benefiting from US momentum and absorbing shocks from energy sector developments and higher borrowing costs—this suggests a growing economy, but at no faster than potential. Trade tensions should keep China on a slowing trajectory, with some reverberations through the euro area.

The author

Michel Doucet

Michel Doucet

Vice-President and Portfolio Manager
After obtaining a Bachelor's degree from the Faculty of Social Sciences at the Université du Québec in Montréal and his Master’s degree, Michel Doucet began his career as a junior economist at the National Bank head office in Montreal. In 1992 he joined the institutional equities and fixed income group at Lévesque Beaubien Geoffrion as an economist and market analyst. Over the years, he has led various projects related to the North American and international economies as well as Canadian public finances. In 1996, the team of institutional economists to which he belongs was ranked first in Canada by Brendan Wood International. In August 1997, Mr. Doucet joined the personal services division of Lévesque Beaubien Geoffrion where he served as an economist, fixed income market analyst and vice president. In 2004, he joined the Desjardins Securities full service team as Vice President. He now occupies the roles of fixed income strategist, economist and portfolio manager. He manages the Securities Portfolio Advisory Group, advisor marketing and distribution of financial planning and insurance.