Another Flight Delayed

As if things couldn't get worse for Boeing, they announced yesterday an issue with their 787 Jetliner, which will lead to further delivery delays of the plane.

Boeing's Big Picture: More delays getting planes to customers is bad news for Boeing, they're already facing mounting cancellations as the Corona Virus devastates the travel sector. Meanwhile, the plane manufacturer is still struggling to get clearance to return their 737 Max to the skies after two deadly plane crashes grounded the fleet worldwide in 2019.

The Sky High Big Picture: The entire travel industry is on tenterhooks, it's unlikely any sort of stability will return before a vaccine. Hopefully for Boeing they'll be able to stabilize the Max by then.

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Apple's Epic Clapback

Ok, this headline might be an overstatement, but Apple is now counter suing Epic Games, the creator of Fortnite, further complicating what might become an Epic legal battle.

Flashback: Epic started the battle with Apple in an August lawsuit, after launching their own in-app payment system, in order to circumvent Apple's payment system which takes a 30% cut of transactions.

Apple's Claim: Apple is asking the court for damages related to the loss of revenue cause by Fortnite's in-app payment, as well as damages related to reputation harm after Fortnite launched a public relations campaign against the tech giant.

What's Next: Apple says it would readmit Fortnite to the App Store if it removed its direct payment system, but Epic is refusing, saying doing so would be "to collude with Apple to maintain their monopoly over in-app payments on iOS."

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Big Trouble in Big China

Two new fronts have opened up in the economic war being waged between China and the West. Disney's new live action remake of Mulan is facing a boycott while the U.S. government may imminently be banning cotton grown in China's Xingjiang region.

The controversy surrounding Mulan dates back several months to when the film's star Liu Yifei, said she backed the police in their brutal crackdown against Hong Kong's independence movement. The statement led to backers of a free Hong Kong to call for the film to be boycotted.

The anger towards the film was stoked again recently when viewers pointed out that the film thanked several governments in China's Xingjiang region, where parts of the movie was filmed, who are known to be part of the repression of Uighurs.

Fallout... The pressure is on Disney to save face now that they're being called out by members of the US House, and prominent Hong Kong Independence activist Joshua Wong.

The Trump Administration is very close to putting an import ban in place on cotton grown in the Xianjiang region, again due to the Chinese governments repression of the Uighur population, and the possible use of Uighur slave labour in the production of the cotton.

Fallout...The ban would have major repercussions for China and many western countries who rely on Chinese supply chains for manufacturing. Experts warn that this would lead to brands scrambling to relocate their manufacturing to other Asian countries, which although are competitive on price, do not have the same quality.

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Highs Go Low

Aurora Cannabis, once a darling of Canada's cannabis boom, has announced a write down of a whopping $1.8 billion in impairment charges, this includes $140 million in inventory charges and a $90-million asset write down. The announcement from the Edmonton based company is just the latest in bad news for the sector that has seen thousands of layoffs and other losses, starting before and continuing through covid.

Ok, but what's an impairment charge? It's back to school, so let's take a quick trip to Peak University. An impairment charge is an accounting term to refer to a drastic reduction in the recoverable value of an asset. Simply put, it's a way of bringing the value of an inflated asset back down to the reality of fair market value. Impairment charges are common when bubble markets hit hard times.

Getting High Again...Aurora is hoping to get back in the green (in more ways than one) they've started by appointing Miguel Martin as their new CEO, and have embarked on cost cutting measures which include the cancellation of a multi-year research and marketing deal with the Ultimate Fighting Championship. A cancellation that will cost them $30m.

Market Impact: The company's stock (TSE:ACB) closed at $9.92, down 10.79% since open.

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Back to School

Yesterday, more kids in Canada started the most uncertain back to school of their academic careers. Schools in Durham Region became the first in the GTA to welcome students back, with many schools staggering in-person attendance. A Toronto Star report described the first day of school as quiet, saying "In fact it was hard to believe there was any school at all."

How's it going so far?

  • Ottawa Public Health Officials told 193 staff and students to stay home Tuesday after linking them to a handful of cases.
  • Ontario teacher unions are making the case to the province's labour board that school reopenings are dangerous and violate workplace safety laws.
  • Teachers in Mississauga staged a brief walkout over unsatisfactory PPE.

How are schools adjusting?

Some of the measures school boards are taking include:

  • Mandatory non-medical masks for all staff and students, teachers will receive face shields.
  • Closing of libraries and cafeterias.
  • Staggering school start and end times, recess, and requiring students only socialize within their class bubble.
  • Schools in higher risk areas will have class sizes reduced.

Bottom Line...
Case numbers have been ticking up across the country in the past few weeks, it's likely that the return to class rooms will accelerate this trend. Wear a mask and buckle up for a long winter.

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Market Updates

  • Stocks: The NASDAQ slipped 6% in recent days due to investor skepticism in the latest tech stock boom
  • COVID: Ottawa reverses course and extends small-business rent relief as the Government considers reforming it
  • Climate: Extreme wildfires continue to ravage California, threatening major power supplies

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Peak Picks

  • Advancements in Core Technologies: As Trump increases rhetoric around an 'economic decoupling', China's President Xi Jinping is pursuing the same strategy in his country but with a different approach.
  • Death and Propaganda: A beautiful long form piece in the New Yorker about how a Chinese-American family became Chinese propaganda.
  • All In: Poker is one of the few sports that can be played entirely online – here are how some of the biggest players are adjusting.
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  • Business: Some tough news. High-profile Toronto businessman John Ruffolo was paralyzed waist down after a trucking accident. We're keeping John in our thoughts and wish him a speedy recovery.
  • Belarus Uprising: Belarusian opposition leader Maria Kolesnikova has vanished amidst ongoing protests against the country's autocratic leader Alexander Lukashenko.
  • Data Divide: China is developing global data security standards to counter US attempts to limit Chinese technology to within the country's borders.
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5G Frenzy 

With Trump turning his sights on Huawei, Samsung is looking to fill the void with a $6.6bil deal with Verizon. The South Korean company announced that it signed a huge contract to be the exclusive provider of 5G equipment to the US telco.

Zoom out: In response to concerns about Chinese surveillance, a number of Western countries are banning domestic telecommunication providers from using Huawei hardware.

The challenge for telcos is that Huawei is a leader in 5G technology and they need to build 5G capacity to keep up with the latest innovations, such as self-driving vehicles.

Nokia was seen as the best non-Chinese alternative to Huawei, but complaints over quality issues has created a opening for a new supplier.

That's where Samsung comes in. The Korean technology giant is looking to leverage Government sentiment against China and quality issues with Nokia to become the leading supplier of 5G technology to western countries.

Their Verizon deal is a good first step. 
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Our Bad 

Have you ever e-transferred the wrong amount? If you have, you know it sucks to have to go back to the recipient and get the money back. Now, multiply that mistake by 100x and you have the Citigroup and Birgade Capital Management dispute.

Last month, billionaire investor Ron Perelman contracted Citi Bank to help him restructure the corporate loans of cosmetic company Revlon. As part of the deal, Citi was to restructuring $900m of loans, even returning some capital to lenders but... the bank made a huge mistake.

Citi accidentally transferred $170m of cash from Revolon to Brigade Capital Partners, which they were supposed to receive in payouts years from now – and now Brigade is refusing to give it back.

Seriously?!? Brigade argues that it's not clear that the money was returned to the lender in a clerical mistake.

But... Citi claims the opposite, saying Brigade is should be well aware that virtually no company, let alone a distressed company such as Revlon, would ever make a payment that big to a lender.

What's next? They're taking it to court. Citi is seeking a court ordered mandate for Brigade return the money. But for Brigade, this is a win-win... If they lose the court case, they'll return a bunch of money that wasn't theirs in the first place and if they win it's a huge bonanza for the fund! How fun.
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