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Daily Pulse

Canada

The bid by billionaire Jim Pattison to take Canfor Corp. private is facing growing opposition from shareholders, though the investment firm has no plans to sweeten its bid for the Canadian lumber company. Several investors have balked at Pattison’s offer of C$16 a share, saying it undervalues the firm that traded at more than twice that price in 2018. Proxy votes were due today, with results being released later and a final vote on Wednesday in Vancouver still possible. The Pattison Group, through its subsidiary Great Pacific Capital Corp., launched a C$981.6 million ($746 million) bid to take Canfor private in August. Great Pacific owns 51% of the stock, and for the deal to go through, a majority of the remaining shareholders must support it.

Prime Minister Justin Trudeau’s government released new budget estimates that showed federal finances in much worse shape than expected, even before the Liberals move ahead with tens of billions of dollars in new campaign pledges. The government is currently on track to run a deficit of C$26.6 billion ($20.2 billion) this year and C$28.1 billion in 2020, according to a fiscal update released Monday in Ottawa by Finance Minister Bill Morneau. That’s above the C$19.8 billion and C$19.7 billion deficits projected in the government’s last budget. Deficits in the five years between 2019 and 2023 will exceed projections by about C$35 billion.

United-States

U.S. Defense Secretary Mark Esper said Turkey’s threats to close two critical NATO installations raise questions about its commitment to the military alliance. A day after President Recep Tayyip Erdogan warned of possible retaliation if the U.S. imposes sanctions over Turkey’s purchase of a Russian missile system, the Pentagon chief suggested the country may have set itself on a collision course with the North Atlantic Treaty Organization.

Roche Holding AG will complete its takeover of Spark Therapeutics Inc. on Tuesday after gaining U.S. antitrust approval, capping almost a year of efforts to seal the $4.8 billion deal. The Federal Trade Commission found the combination would cause no harm to competition on Monday, the same day U.K. regulators approved the transaction.

Europe

Boris Johnson will change the law to ensure the Brexit transition phase is not extended, setting up a new cliff-edge for a no-deal split with the European Union at the end of next year. The pound erased all its gains made since last Thursday’s general election. The U.K. prime minister wants to deliver his election promise to ratify a new free-trade agreement with the bloc before the bridging period maintaining the status quo runs out on Dec. 31, 2020.

Unilever slumped after Chief Executive Officer Alan Jopebacked away from his predecessor’s growth targets as consumers around the world jilt mainstream brands. The maker of Ben & Jerry’s ice cream and Dove soap said sales gains will be slightly below guidance for 2019 and in the lower half of its multiyear range of 3% to 5% in 2020. The stock fell as much as 6.6% in Amsterdam on Tuesday, the steepest intraday decline in almost three years. Analysts at RBC Europe said the new outlook implies fourth-quarter growth will be the Anglo-Dutch company’s weakest for more than a decade.

Asia

Hong Kong’s economy ends the year wounded, with the chances for stabilization in 2020 hanging on whether future protests are peaceful or lapse back into violence. Economists forecast a 1.3% contraction for 2019 and predict year-on-year declines will continue in the first two quarters of 2020. Yet the unrest has tapered in recent weeks after an electoral win for pro-democracy parties in November, and there’s a chance that the contractions in visitor numbers and retail sales will ease up on a month-to-month basis. Businesses and households can look to the government’s annual budget early next year as a potential source of fresh stimulus and structural support for the economy.

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.