The Daily Chase: Budget day preview; Investment firms increasing crypto exposure

It looks like yesterday’s shot across the bow from Bank of Nova Scotia Chief Executive Brian Porter will fall on deaf ears in Ottawa.

It looks like yesterday’s shot across the bow from Bank of Nova Scotia Chief Executive Brian Porter will fall on deaf ears in Ottawa. CTV News is reporting there will be new details in tomorrow’s budget about the surtax on large financial institutions that the Liberals campaigned on last year. Ottawa Bureau Chief Joyce Napier is reporting the budget will detail the percentage those companies will pay. Recall that when the surtax was announced last summer, the Liberals said it would be a three percentage point surtax on earnings above $1 billion. Joyce also said in her report last night that the targeted surtax could be the start of a trend, which begs the question of what other sectors should be on alert. 

And we’ll have plenty of pre-budget discussion today beyond surtaxes. Cynthia Leach from RBC joins us at 9:40 a.m. to discuss the green transition and how the government can try to mobilize private-sector investment. Later, Stephen Brown from Capital Economics will talk to Andy at 4:30 p.m. about the risk that another heavy-spending budget will add more fuel to Canada’s inflation problem.

MARKET WATCH

U.S. Federal Reserve Governor Lael Brainard puts markets on edge yesterday when she stated “it is of paramount importance to get inflation down.” And this afternoon, with the release of minutes, we’ll get a better sense of how that perspective played into the outlook at the last policy-setting meeting. It’s a broadly sour mood in equity markets this morning, with all the major European indices trading lower and U.S. futures indicating it will be a weak open. In addition to the prospect of an increasingly hawkish Fed, Russia’s attack on Ukraine continues to cloud the outlook, and there are numerous reports that it’s only a matter of time before the European Union and U.S. expand their sanctions.

‘PIVOTAL YEAR’ FOR CRYPTO ADOPTION

That’s the assessment of the head of crypto and blockchain for KPMG in Canada. And it’s based on a survey released today (attached) by the advisory firm, which suggests almost one-third of institutional investors have either direct or indirect exposure to crypto, while almost four in every 10 financial services firms are offering crypto services. But as Michelle Zadikian reports at BNNBloomberg.ca, many firms have only dipped their toe into this space; according to KPMG’s survey, 71 per cent of institutional respondents to the survey said they’ve allocated less than two per cent of their portfolio to crypto.