Morning Update newsletter: Housing concerns; opioid bias fears; China's 'project of the century'

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Home Capital risk contained, but housing market a primary concern: Poloz

Breaking his silence on Home Capital, Bank of Canada Governor Stephen Poloz said the mortgage lender's problems are contained but the sharp rise in house prices and their potential effects on the financial system have emerged as a primary concern. Mr. Poloz said the Bank of Canada sees no signs that Home Capital's rapid deterioration has triggered contagion. On housing, the Bank of Canada is concerned that a shock to the Canadian economy could stress the financial system if it meant that over-leveraged Canadians suddenly would have trouble servicing their mortgage debt. (for subscribers)

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Doctor's pharma links raise fears of bias on opioid panel

Officials overseeing new national standards for prescribing opioids did not honour a pledge to exclude medical experts who receive income from drug companies from voting on the measures. Sol Stern, a family doctor in Oakville, Ont., and one of 13 panel members who voted on the standards, has been a paid speaker and advisory board member for drug companies, including the pharmaceutical giant whose pain pill triggered Canada's deadly opioid epidemic, according to his declaration form posted online last week.

Cables reveal Canadian government's muted reaction to Zimbabwe massacre

There was disturbing news in the cables from the Canadian diplomats in Harare. High-level sources had revealed to the Canadians that Robert Mugabe's soldiers were slaughtering thousands of dissidents in western Zimbabwe. But the response from Ottawa was muted. The killing of an estimated 20,000 civilians in 1983 and 1984 by a Zimbabwean military unit remains the most horrific atrocity of Mr. Mugabe's long rule. But the Canadian reaction was so mild that the Pierre Trudeau government even invited Mr. Mugabe to visit Canada just a few months after the massacres began.

China pitches 'One Belt, One Road' by telling other countries they have nothing to fear

Have no fear, China's top political leader urged Sunday: in a world of sectarian strife, poverty and rising isolationism, Beijing has an answer that can bring new wealth by tearing down old barriers. China's One Belt, One Road initiative is "a project of the century," President Xi Jinping said Sunday in a speech at the outset of a two-day conference that gathered together presidents, cabinet ministers and investors from 130 countries. Mr. Xi on Sunday sought to allay fears his plans will privilege China's economic and political interests. He then promised $170-billion in funds for bank loans, foreign aid and government-run investments to support One Belt, One Road countries. (for subscribers)

Ottawa set to release details of hybrid carbon-tax plan

The federal government will unveil a carbon-tax plan this week that would provide breaks for major industrial emitters, while ensuring most Canadian families get rebates to offset higher energy bills. Environment Minister Catherine McKenna will release a "technical paper" outlining the federal proposal for a levy that would only apply in provinces that refuse to implement their own tax or cap-and-trade system. The federal government plans to impose a broad carbon tax covering most emissions from fossil-fuel production and consumption, starting in 2018 at $10 per tonne of carbon dioxide emissions in 2018 and rising to $50 in 2022. (for subscribers)

THE LOOKAHEAD

Specialty, discount retail earnings set to echo wider sector's woes

After U.S. department stores including Nordstrom Inc., J.C. Penney Co. Inc. and Macy's Inc. reported disappointing results last week and saw their share prices get slaughtered, specialty and discount retailers will get their turn in the earnings spotlight. While the results should be better than last week's dreadful showing, given the shaky state of retailing, a few nasty surprises are always possible. Retailers have been struggling in the face of weak mall traffic, penny-pinching consumers and growing competition from Amazon.com Inc. and other online merchants. As sales fall, store closures and bankruptcies have become increasingly common. (for subscribers)

MORNING MARKETS

Oil and loonie rise

The Canadian dollar got a bit of a boost on Monday as oil and other commodities prodded stock markets higher, cushioning the hit to sentiment from a successful missile test by North Korea and a cyberattack that locked 200,000 computers in more than 150 countries. Oil prices were higher, driven by the suggestion of an extended production cap by OPEC and Russia. Tokyo's Nikkei lost 0.1 per cent, while Hong Kong's Hang Seng gained 0.9 per cent, and the Shanghai composite 0.2 per cent. In Europe, London's FTSE 100 was up 0.1 per cent by about 5:45 a.m. (ET), though Germany's DAX and the Paris CAC 40 were down by between 0.2 and 0.3 per cent. New York futures were up.

WHAT EVERYONE'S TALKING ABOUT

Conservative leadership race divides along new poles

"The two ends of the Conservative Party used to be the Red Tories and Reformers. Now, the two poles in the party's leadership race are libertarians and social conservatives. In one corner, there's Maxime Bernier, the free-market libertarian who says he is fighting for individual freedoms, who promises to slash government, abolish untouchable policies like supply management for dairy farmers, expand the private sector's role in health care, and launch what he calls a 'Canadian Quiet Revolution.' In the other, there's Andrew Scheer, the social conservative who talks about values, a conservative in the traditionalist sense of the word, who is backed by most of the pro-lifers in the Conservative caucus though he carefully promises not to initiate policies – like anti-abortion legislation – that could divide the party, and lose an election." – Campbell Clark

Jagmeet Singh poses unique threat for the Trudeau Liberals

"In the hours following Ontario's last election, as a Toronto news channel cut to commercial, there flashed some footage of what appeared to be the evening's best victory party. It was not Kathleen Wynne's festivities, or those of any other Liberals celebrating their party's return to majority government. Instead, while most New Democrats around the province were grumbling about their failure to make electoral gains, the happy scene was unfolding in the headquarters of re-elected NDP MPP Jagmeet Singh, where an energized dance floor of South Asian twentysomethings and teenagers was dancing the night away. Looking like something even non-partisans might enjoy – accessible, fun, maybe even kind of cool – it was visual evidence of how Mr. Singh has offered hope to his party at a time when it has had few other bright spots east of Alberta." – Adam Radwanski

The totalitarian capitalism of tech giants should trump your fears of populism

"Of all the worrying things about populism, the most disturbing of all is that it doesn't really exist. This terrifying anti-intellectual, anti-immigrant, protectionist ideology that is sucking up votes like a giant vacuum cleaner is merely a phantom that obscures our view of the new corporate tyrants that govern our world. The old political fight between left and right is still there; you just can't hear it for the ranting populist rhetoric and fake journalism. The artillery has been muffled in the struggle between big business and big government and we don't see the armies because we don't recognize who is on which side. Is U.S. President Donald Trump fighting in the corner of blue collar Rust-Belt workers or Wall Street bankers?" – Carl Mortished (for subscribers)

Ottawa, provinces would be smart to heed Poloz's warning on trade-war dangers

"The thing about trade wars is that they rarely happen. There is a good reason for that. A war typically requires an action, and a reaction. And in the world of trade, retaliation is the nuclear option. As Bank of Canada Governor Stephen Poloz put it in a recent speech: 'With protectionism, everybody loses eventually, including the country that puts the policies in place.' There is a lot of talk about trade wars, particularly now, as an erratic U.S. President and his administration move to tilt the rules of trade in their favour, including a possible pullout from the North American free-trade agreement. There are noises in Canada of fighting back. Ottawa and at least two provinces are drafting plans to fight back." – Barrie McKenna (for subscribers)

HEALTH PRIMER

Seven foods that pack more potassium than a banana

Most Canadian adults don't consume enough potassium, according to Health Canada. That's not surprising, since fruits, vegetables, legumes (for example, beans and lentils) – foods that many people don't eat enough of – are among the best sources. And yet, Canadians would be smart to pay attention to the mineral: it helps to build muscle, transmit nerve impulses, maintain a normal heart rhythm and keep food moving through the digestive tract.

MOMENT IN TIME

Jefferson Davis heads to Montreal

May 15, 1867: Jefferson Davis served as president of the Confederate States of America from 1861 to 1865, until the collapse of the confederacy with the end of the Civil War. Captured by Northern troops, he was jailed for two years in Fort Monroe in Virginia, then released in mid-May, 1867, after posting bail of $100,000 (U.S.). He travelled by steamer to New York, then headed to Montreal, where his family was living. Canada had welcomed many Confederate supporters, and Davis was treated as a celebrity, despite his association with slavery and the disastrous effort to make the U.S. South independent. The Globe described Davis as "the redoubtable chieftain of the late rebellion," but also decried his "violent arrogance." Black Americans, who Davis had "wished to consign to perpetual bondage," now stood on a "better political footing than he and his active coadjutors in the rebellion," the paper noted. Richard Blackwell

Morning Update is written by Steven Proceviat.

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