Good morning. Finance Minister Bill Morneau expects the government's shortfall could be at least $18.4 billion for 2016-17. Facebook CEO Mark Zuckerberg is backing Apple in its bitter battle with the U.S. government over attempts to gain access to information. And BHP Billiton, the world's biggest diversified miner, slashed its interim dividend 75 per cent as it tries to deal with the commodities rout. These stories and more in your morning cheat sheet to the Financial Post.
By lowering the economic bar, Finance Minister Bill Morneau might be hoping to reset the expectations for spending and growth that Canadians so clearly voted for only a few months ago, Gord Isfeld reports.
Call it damage control in advance of the March 22 federal budget — a spending document that the Liberal government now projects will show a lot more red ink than promised during the election campaign.
Morneau said the government's shortfall for fiscal 2016-17 would be at least $18.4 billion — not the $10-billion deficit figure previously anticipated. That sum includes a $6-billion contingency fund, bumped up from $3 billion last year.
Add in another $10 billion or so for new stimulus spending and that puts the 2016-17 deficit closer to $30 billion-plus, according to analysts. This comes after a small budget surplus a year earlier, and sets the course for a string of ever-narrower shortfalls over the remainder of the Liberal government's mandate — dependent on the pace of economic growth.
Ottawa is assuming that pace will be around 1.4 per cent, down from a previous forecast of two per cent, although the projection is based on oil prices averaging US$40 per barrel. Crude was trading just above $33 on Monday.
OPEC producers fear any cuts in their output would be immediately replaced by nimble U.S. shale oil producers, leaving the group with lower oil revenues with little impact on prices, Yadullah Hussain reports.
Tensions are rising between OPEC and non-OPEC producers with both camps pointing to each other's rising production as the factor that's driven oil prices to decades-low level.
"Because of high prices, we had high supply. In 2013, 2014 and 2015, we see non-OPEC increasing production by five million bpd, while OPEC did not increase – yes we did in 2015, but not in other years," El-Badri said.
"I don't know why the United States … wants to export, but at the same time, they want to import and store it. I am not how we can we tackle it," Badri said, noting that the group has regular discussions with other rivals, except for the U.S.
Facebook CEO Mark Zuckerberg threw his support behind Apple in its bitter battle with the U.S. government over attempts to gain access to information protected by the company's sophisticated encryption technology, Mark Scott reports.
Speaking at the Mobile World Congress, an annual tech and telecommunications conference in Barcelona, Zuckerberg said Facebook would play its part in the fight against global terrorism, but that weakening the digital security of technology companies was a bad idea.
A federal magistrate judge, at the Justice Department's request, recently ordered Apple to bypass security functions on the phone of a gunman in the December mass shooting in San Bernardino, California. But the company has refused to comply with that order, fearful that it could be forced to create a so-called backdoor to its encryption technology that could be misused by government agencies.
"I don't think building backdoors is the way to go, so we're pretty sympathetic to Tim and Apple," said Zuckerberg, in reference to Apple's chief executive, Tim Cook.
Zuckerberg's comments mirror previous statements that Facebook and other global tech companies have made in support of Apple's standoff with the government.
Online shopping was the winner this holiday retail season, according to a report that says many traditional retailers will have to up their game in order to prevent Amazon and eBay from siphoning away sales in the future, Hollie Shaw reports.
BHP Billiton Ltd. cut its payout for the first time in 15 years as the world's biggest mining company seeks to protect its balance sheet and credit ratings amid a price collapse that saw first-half profits tumble 92 per cent, David Stringer reports.
Underlying profit fell to $412 million at its continuing operations in the six months to Dec. 31, from $4.9 billion a year earlier, Melbourne-based BHP said. Its first-half dividend was cut to 16 cents from 62 cents a year earlier and the company said it will adopt a policy to provide payouts at a minimum of 50 per cent of underlying attributable profit.
The big global miners are trimming dividends, slashing budgets and selling assets as pressure builds on them from investors and credit ratings companies to conserve cash to weather the commodities rout. BHP's rating was lowered by Standard & Poor's this month to a level unseen since 2003, and the company was warned it may face a further reduction.
"Slower growth in China and the disruption of OPEC have resulted in lower prices than expected," Chief Executive Officer Andrew Mackenzie said.