Cup-bound Reds retrace steps to final
After dispatching the Impact to compete for the MLS championship, Toronto players, staff look back on a dimmer past
The Canadian Press
Friday, December 2, 2016 – Print Edition, Page S5

TORONTO -- Bill Manning remembers having to sell defender Drew Moor on Toronto FC while trying to recruit him as a free agent last winter.

Manning, who joined Toronto as president in October, 2015, knew where Moor was coming from. He had watched the ups and many downs of Toronto FC from afar during his eight seasons as president of Real Salt Lake.

"I'll tell you TFC had a bad reputation with players for many, many years," Manning said.

"Guys didn't want to come here.

... I remember when we were recruiting Drew Moor, he had a lot of questions about what this club used to represent and we sold him on a vision of what we wanted to be and where we wanted to go."

With help from Moor and others, Manning, general manager Tim Bezbatchenko and coach Greg Vanney are delivering on that vision.

On Wednesday, Toronto dispatched the Montreal Impact 5-2 on the night and 7-5 on aggregate to complete a memorable Eastern Conference final. The series, a showcase for exciting soccer, drew 97,004 fans over the two games, as well as an average TV audience of 1.4 million for the final leg, TSN said.

One win from the MLS championship, Toronto is now a very desirable soccer landing pad.

"Nights like this is what I was hoping for when I visited here almost a year ago," said Moor, a 12-year MLS veteran. "Obviously having been in the league as long as TFC's been around, I know their history well and I couldn't be more proud to be a part of what we're doing this season.

"We'll enjoy this tonight but we've got bigger fish to fry as well."

That would be upstart Seattle, on Dec. 10 at BMO Field. Toronto gets to host the MLS Cup final by virtue of finishing five points ahead of the Western Conference playoff winner.

The Sounders have come a long way from July 26 when they parted ways with long-time coach Sigi Schmid. At the time, the team was 6-12-2 and in ninth place in the 10-team Western Conference.

Seattle has gone 12-3-4 since with Brian Schmetzer at the helm.

Toronto, meanwhile, is 12-3-5 since July 16.

The teams drew 1-1 when they met July 2 at BMO Field in a game that saw Toronto field a lineup that featured perhaps just four starters due to injuries and a crowded schedule. Seattle was without striker Clint Dempsey, who remains out injured, and had not yet signed Uruguayan play maker Nicolas Lodeiro.

The Sounders are 7-2-2 all time against Toronto FC, including a 3-1-1 record at BMO Field.

The two teams share some common ties.

Goal keeper Stefan Frei spent his first five seasons in Toronto before joining Seattle in 2014. Defender Eriq Zavaleta was drafted by the Sounders in 2013 and appeared in five games before being traded to Toronto in January, 2015.

Seattle midfielder Nathan Sturgis (14 games in 2011) and forward Herculez Gomez (seven games in 2015) also spent time in a Toronto uniform.

Unlike the past, the current Reds are happy right were they are.

"Just about across the board, every single guy who's at this club has chosen to be at this club," captain Michael Bradley said. "And we've chosen to be here for a reason.

"Because we look around and we see unbelievable potential in terms of a city, a market, a fan base, a stadium, a training ground - every box gets checked.

You look around the league and there are other clubs that check a lot of boxes. I'm not sure there's another club that checks every box. This club checks every box."

But "the stuff on the field - ultimately the most important thing - up until recently hasn't been right," Bradley acknowledged.

It is now.

Under former boss Tim Leiweke and current CEO Michael Friisdahl, owner Maple Leaf Sports & Entertainment has spared no expense in turning the franchise around.

TFC is the best team money can buy in Major League Soccer.

Star striker Sebastian Giovinco's $7.12-million (U.S.) salary this season is more than the entire Montreal team combined.

Credit Vanney, who took over with 10 games remaining in the 2014 season after Ryan Nelsen was fired, for helping right the ship and keep all the talent happy - although the ultra-focused Bradley clearly plays a huge part in keeping the players on point.

Vanney finished the 2014 season with a 2-6-2 mark but his coaching record in Toronto now stands at 35-33-17. To put that in context, Toronto's all-time record is 95-146-89.

The 42-year-old U.S. native admits he has learned on the job.

Today, he is an astute tactician who is good with people.

Vanney showed that on the pitch Wednesday and then after when he made a point of thanking his entire roster, including those who didn't make the matchday 18.

"I give a lot of credit to the guys who weren't in the 18 because they played like crazy this week to get these guys ready," said Vanney as Bradley, sitting next to him, nodded in agreement.

"They were excellent all week in training and really gave us things to think about to help us get prepared."

Associated Graphic

TFC forward Jozy Altidore celebrates after scoring the team's second goal during Wednesday night's game against the Montreal Impact in Toronto. TFC now progresses to the MLS Cup final.


Barca wins, but Messi falls short of record
Argentine forward scores his 10th goal in the group stage this season, one shy of tying Ronaldo's 11 last year
The Associated Press
Wednesday, December 7, 2016 – Print Edition, Page S3

BARCELONA, SPAIN -- Lionel Messi opened the scoring in Barcelona's 4-0 win over Borussia Moenchengladbach on Tuesday, but fell short of matching Cristiano Ronaldo's goal record in the group stage of the Champions League.

Messi struck his 10th groupstage goal this season, one less than the 11 netted by Ronaldo with Real Madrid last season to set the record.

Arda Turan scored a hat trick for Barcelona, which had already secured first place in Group C.

Moenchengladbach finished third and will play in the Europa League next season. All positions had already been decided ahead of Tuesday's final round.

Manchester City drew 1-1 with Celtic in England in the other match of the group. Barcelona finished with 15 points, six more than Man City. Moenchengladbach ended with five points and winless Celtic with three.

Messi scored in the 16th minute at Camp Nou after a onetwo with Turan inside the Moenchengladbach area. The Argentine slid behind the defenders and fired home a low left-foot shot after receiving Turan's return pass.

Messi had a great chance to match Ronaldo's record in the 73rd, but his close-range header was brilliantly saved on the goal line by goal keeper Yann Sommer.

Turan scored in the 50th, 53rd and 67th minutes to help the Catalan club end a three-game winless streak. It conceded a 90th-minute equalizer in a 1-1 home draw against Real Madrid in the Spanish league on Saturday.

Barcelona was without forward Neymar and midfielder Ivan Rakitic because of suspensions.

Coach Luis Enrique also rested striker Luis Suarez, giving a chance to recently signed forward Paco Alcacer, who has been criticized by Barcelona fans for his lacklustre performances.

Ronaldo last year became the first player to reach double figures in the six games of the group stage. Messi played in only five matches for Barcelona this season, but he twice scored hat tricks - in the home games against Celtic and Manchester City. He also netted once against .

City in Manchester and twice against Celtic in Glasgow.

Ronaldo on Wednesday will try to become the first player to score 100 goals in European competitions. He is two short of the milestone heading into the game against Borussia Dortmund at the Santiago Bernabeu Stadium.

Messi now has 93 goals over all in the Champions League, two less than Ronaldo.

Group A Little-used forward Lucas Perez scored a hat trick as Arsenal easily beat Basel 4-1 to finish at the top of its group.

Getting a rare start, the Spanish forward gave Arsenal a three-goal lead by the 47th minute as the visitors coasted to victory.

Mesut Ozil's delightful assist let Alex Iwobi score in the 53rd before Basel substitute Seydou Doumbia struck a consolation goal in the 78th.

Mistakes cost Paris Saint-Germain dearly as it missed out on top spot in Group A following a late 2-2 home draw with Ludogorets - an unheralded Bulgarian side that had not won any of the previous five group games.

Dutch forward Virgil Misidjan scored in the 15th minute and Brazilian forward Wanderson made it 2-1 in the 68th, shortly after Edinson Cavani had levelled for PSG.

Winger Angel Di Maria saved face for PSG in the second minute of injury time with a scuffed shot, and Cavani was desperately close to grabbing the winner in the final seconds.

Group B It was meant to be a battle to advance in Lisbon, but it turned out to be a shootout for top spot as Besiktas collapsed in Ukraine.

Napoli won 2-1 at Benfica but both teams qualified for the knockout stage after Besiktas fell to a surprise 6-0 thrashing at Dynamo Kyiv.

Substitute Dries Mertens changed the match after coming on in the 57th. The Belgium international set up the opener for Jose Callejon on the hour mark before securing the win in the 79th.

Napoli gifted Benfica a consolation goal three minutes from time when Raul Albiol was caught napping, allowing Raul Jimenez to seize the moment and fire past Reina.

In Ukraine, Dynamo's star winger Andriy Yarmolenko started the night's torment for Besiktas with smart footwork on the byline and a cross to the far post for Artyom Besedin to score the ninth-minute opener.

Besiktas looked lively for the next 20 minutes until defender Andreas Beck was dismissed for a collision with Derlis Gonzalez, who was through on goal for Dynamo. Yarmolenko scored the resulting penalty and Vitaliy Buyalskiy soon made it 3-0 with a lobbed effort after a Besiktas defensive mix-up.

A deflected shot from Gonzalez provided Dynamo's fourth in first-half stoppage time. Serhiy Sydorchuk and Junior Moraes added to the scoreline after Besiktas striker Vincent Aboubakar was red-carded for a second offence.

Group D Robert Lewandowski curled in a spectacular free kick to give Bayern Munich a 1-0 win over Atletico Madrid, but the Spanish side still won the group, finishing with 15 points to Bayern's 12.

Bayern's win stretched its record to 15 straight Champions League home victories and ended Atletico's hopes of winning all six group matches.

By holding PSV Eindhoven to a 0-0 draw, newcomer Rostov clinched third spot and a place in the Europa League.

Associated Graphic

Barcelona defender Lucas Digne, right, vies with Moenchengladbach's Andreas Christensen during their match on Tuesday.


Group winners watch as heavyweights wait in the wings
The Associated Press
Thursday, December 8, 2016 – Print Edition, Page S3

ROME -- Sevilla and FC Porto grabbed the final two spots in the last 16 of the Champions League on Wednesday, while Juventus and Borussia Dortmund finished up with the debatable advantage of being group winners.

A team that finishes top of its group will be drawn against a runner-up when the knockout stage begins - which usually offers a clear advantage. Not this year.

With the likes of titleholder Real Madrid, Bayern Munich, Manchester City and Paris SaintGermain hanging around as possible opponents in Monday's draw, group winners will be wary.

"When we reached the final in Berlin [in 2015] we had finished second in our group," Juventus chief executive officer Giuseppe Marotta said. "When we finished first last season we were eliminated [by Bayern Munich].

"So it's difficult to think rationally. The important thing in the Champions League is the draw.

We'll rely on destiny," Marotta said before a 2-0 win over Dinamo Zagreb made sure the Bianconeri would finish atop Group H.

Group E Bayer Leverkusen finally scored from a penalty this season, although it needed help from the opposing goalkeeper, in a 3-0 win over Monaco.

Both teams were already assured of advancing to the Round of 16 before the final group matches and Monaco fielded a youthful side missing many regulars.

Monaco finished on 11 points, one more than Leverkusen.

Meanwhile, Tottenham won at Wembley Stadium at the third attempt, beating CSKA Moscow 3-1 to secure third place and a consolation spot in the Europa League.

Group F A late equalizer by substitute Marco Reus earned Borussia Dortmund a 2-2 draw against defending champion Real Madrid and first place in the group.

Dortmund also set a groupstage record with 21 goals as it stormed back from being 2-0 down. Karim Benzema had scored a goal in each half at Santiago Bernabeu Stadium to give Madrid a convincing lead, but forward Pierre-Emerick Aubameyang pulled the German side closer in the 61st and Reus netted the decisive equalizer in the 88th.

Dortmund finished the group with 14 points, two more than Madrid.

Cristiano Ronaldo was held scoreless for the fourth straight time in the Champions League, again failing to become the first player to score 100 goals in European competitions. His current total is 98.

Group G FC Porto breezed into the knockout phase with a 5-0 rout of Leicester, which had already secured the top spot in the group on its competition debut.

Porto's emphatic victory over the much-changed English champions ensured it was not overtaken by FC Copenhagen.

Leicester finished two points ahead of Porto with 13 points from six games. In its Premier League title defence, Leicester has 13 points from 14 games to sit two points above the relegation zone.

Group H Gonzalo Higuain ended his scoring drought as Juventus beat Dinamo Zagreb 2-0 to win the group. Juventus had already qualified for the knockout stages, but the victory secured them the top spot ahead of Sevilla, which also advanced following a 0-0 draw with Lyon.

Higuain blasted a strike into the top left corner from the edge of the area after being set up by Mario Lemina early in the second half. It was Higuain's first goal since scoring on Nov. 2 against Lyon. Defender Daniele Rugani added another for Juventus with a header from a corner taken by Miralem Pjanic. Juventus finished with 14 points, three ahead of Sevilla.

Associated Graphic

Tottenham's Dele Alli, left, scores his side's third goal against CSKA Moscow goal keeper Igor Akinfeev at Wembley Stadium on Wednesday in London.


NHLPA spurns league's Olympic bargain
Players' Association not interested in participating in 2018 Pyeongchang Games in exchange for three-year contract extension
The Canadian Press
Saturday, December 3, 2016 – Print Edition, Page S5

TORONTO -- The NHL Players' Association has formally rejected the league's offer to allow players to participate in the 2018 Olympics in exchange for an extension to the current collective agreement.

NHLPA executive director Don Fehr says that the players, primarily the executive board, showed no interest in the idea.

He says he hopes "we'll still be able to conclude an agreement to go to the Olympics."

Fehr tells The Canadian Press in an exclusive interview that "we still think it's [playing in 2018] important and we'll go from there."

The NHL proposed the idea to the players' association in the course of discussions last month.

Under the plan, the NHL would green light participation in the 2018 Pyeongchang Games if the players agreed to extend the current contract by three years, eliminating a potential opt-out clause in the fall of 2019.

Had the players agreed, the CBA would have been extended to 2025, transforming it from an eight-year pact with an option to 10 years with three added on top of that.

Fehr said there was no appetite among players to extend the agreement for nine more seasons (including this one) in what would effectively be the career lifespan of most players in the league today. There were elements of the agreement, he noted, that the PA wanted to further examine before it got into bargaining.

League officials did not immediately respond to an e-mail seeking comment.

NHL players have participated in the past five Olympics and hope to return in two years.

Concerns have bubbled this time around, partly as a result of policy changes under International Olympic Committee president Thomas Bach.

He has been resistant to continuing to fund (along with the International Ice Hockey Federation) out-of-pocket payments for NHL players (insurance, travel, accommodation primarily) to attend the Games.

The IOC and IIHF have covered these costs, upward of $10-million (U.S.) according to NHL commissioner Gary Bettman, since 1998 when the NHL first began attending the Games. Bach recently told the Olympic channel that "it is in the interest of both (the IIHF and NHL) and also of the IOC to have the best players at the Olympic Games", noting that "all the rational arguments are speaking in favour of participation."

NHL owners are wary of shutting down their season for twoplus weeks in February to accommodate the Olympics, what with the requisite scheduling changes and potential for injury. There's also a considerable time difference in South Korea, which could hurt North American viewership.

"I can't imagine the NHL owners are willing to pay for the privilege of shutting down for 17 days," Bettman told attendees of the PrimeTime Sports Management Conference in Toronto last month. "I just don't see that."

IIHF president Rene Fasel said recently that the federation could find the money to fully cover the out-of-pocket payments, somewhat dulling the NHL's stance regarding the money issue.

Because Olympic participation requires the NHL to condense its schedule, the league intends to settle the matter soon. The schedule for the 2017-18 season is currently in the early stages of being crafted and Bettman said recently that a decision one way or the other was needed by early January.

The NHL board of governors will meet next week in Florida where it's expected that Olympic participation will generate considerable discussion.

Players have long been vocal proponents of the NHL's participation in the Olympics. Washington Capitals captain Alex Ovechkin has even said that he would attend in 2018 whether the NHL was involved or not.

Montreal set for hostile welcome at BMO
Impact leave comfort of Olympic Stadium with full knowledge of the rowdy scene that will greet them Wednesday in Toronto
The Canadian Press
Wednesday, November 30, 2016 – Print Edition, Page S3

MONTREAL -- The tables will be turned on the Montreal Impact in the second leg of the MLS Eastern Conference final.

After playing before 61,004 home fans at Olympic Stadium while winning the opening game 3-2 last week, they will face Toronto FC in the second leg Wednesday night before a soldout house at BMO Field.

"Once they cross the white lines, the players are focused on what they need to do," coach Mauro Biello said this week. "We can't control how loud they're going to scream.

"We can only focus on what we're doing on the field. We have to stay focused on whatever the game is going to give us. Some players want to quiet the crowd.

It could turn into a positive in terms of motivation and what we need to do well."

Toronto coach Greg Vanney and star midfielder Michael Bradley have urged their fans to be as noisy and hostile as possible to the visitors to help overcome their one-goal deficit in the twogame, aggregate goals series.

"That's good," Impact defender Hassoun Camara said. "As a footballer, it's always nice to play in this type of stadium.

"Toronto is a good team with a good stadium. We're ready for that. We'll try to focus on the task on the field and fight for our team and our city."

It may help the Impact that they have a veteran team, with nine of 11 starters aged 30 or more. Many have played big games before large, unwelcoming crowds before, including in the CONCACAF Champions League where the Impact reached the final in 2015.

"We have players who have been in big moments," Biello said. "Laurent Ciman, Nacho [Piatti], Didier [Drogba], Hernan [Bernardello] have all played at the highest level, whether it's in England or France or Argentina or wherever.

"It's about keeping calm in those moments and knowing how to manage situations. When you have that type of experience, you're able to deal with adversity."

It will be a very different experience from the first leg, which was played indoors on a hard, artificial surface. BMO Field is out in the elements and the field is reported to be in good condition despite wear and tear from the Grey Cup game played there on Sunday.

That's fine for the Impact's Belgian defender Ciman, who said it will be "better than ours because we'll be playing on natural [grass]."

Busloads of Impact fans are set to travel to the game, while a Montreal theatre has been reserved for supporters to watch the match on a large screen.

It is likely the biggest series ever between two Canadian club teams.

"There are a lot of people behind us," said Biello, a Montreal native. "That's cool.

"People are seeing the success we've had and they want to push us and see us do well. We're proud, but we want to bring even more joy to them by winning. We have a job ahead of us. We're one step away."

The winner advances to the MLS Cup final game on Dec. 10 against the Seattle Sounders. If Montreal wins, they will travel to Seattle. If TFC wins, it will play host to the championship game.

Montreal has a history against Seattle from previous leagues, before they both made the jump to MLS. The Impact beat the Sounders 2-0 in the defunct A-League final in 2004, but Seattle knocked off Montreal in the second round of playoffs the following year.

CFL finds lack of 'conclusive' evidence of concussion effects
The Canadian Press
Saturday, November 26, 2016 – Print Edition, Page S3

TORONTO -- CFL commissioner Jeffrey Orridge isn't following the NFL's lead and acknowledging a link between football-related head trauma and brain disease.

In March, Jeff Miller, the NFL's top health and safety officer, made the admission during a discussion on concussions convened by the U.S. House of Representatives' committee on energy and commerce. It marked the first time a senior league official conceded football's connection to chronic traumatic encephalopathy, or CTE.

But Orridge didn't follow suit on Friday, when asked about the issue during his annual state-ofthe-league address.

"I can't speculate or comment on what the NFL's findings have been and what led them to that conclusion," Orridge said. "Last I heard, it's still a subject of debate in the medical and scientific community.

"The league's position is there's no conclusive evidence at this point."

A month after Miller's admission, a U.S. federal judge gave final approval to a $1-billion (U.S.) class-action lawsuit settlement between the NFL and thousands of former players. It would cover more than 20,000 retirees for the next 65 years for serious medical conditions associated with repeated head trauma.

The CFL has been named in a $200-million (Canadian) classaction lawsuit over concussions and brain trauma.

In March, a B.C. judge dismissed former player Arland Bruce III's concussion lawsuit against the league, former commissioner Mark Cohon, neuroscientist Dr. Charles Tator, the Canadian Football League Alumni Association and every team in the league. Bruce claimed the defendants down played the effects of repetitive head trauma and misrepresented player safety issues about concussions.

"The court case and ruling were a real 1-2 [punch] for CFL players," Brian Ramsay, the executive director of the CFL Players' Association, said in a statement Friday. "Despite efforts to improve health and safety protections and benefits in the [collective-bargaining agreement], the league has always resisted.

"During the court case, the league argued, and the court agreed, that the only protection injured players could count on was to be secured through collective bargaining, a path the league, has up to now, refused to follow, leaving injured players in a real bind.

"With access to the courts denied, the CFLPA is now pressing for Workers' Compensation coverage for professional football players in the CFL. If team management don't step up and take full responsibility for injured players, the public health care system, financed by taxpayers, ends up with the bill for those injured players. That's not fair in our view and we're making a case to change that situation."

Orridge wouldn't comment about the class-action suit. But he told reporters the number of concussions suffered in the CFL this season was down 20 per cent (40 compared with 50 in 2015).

"I respect and admire all the people who helped build this league, there's no doubt about that," he said. "And I'm appreciative of what they may be going through.

"But some of our former family members are party to a classaction suit that is pending litigation ... so I can't go any further than that. But certainly, you know, without them, there would be no us."

Associated Graphic

Under commissioner Jeffrey Orridge, seen speaking in Toronto on Friday, the CFL is taking a different view from that of the NFL regarding the sport's connection to CTE.


McCoy and Co. burn the Jags
The Associated Press
Monday, November 28, 2016 – Print Edition, Page S4

ORCHARD PARK, N.Y. -- LeSean McCoy scored twice, including a career-best 75-yard run and the Buffalo Bills won their second in a row by beating the Jacksonville Jaguars 28-21 on Sunday.

Tyrod Taylor's 16-yard touchdown pass to Justin Hunter with 10:46 remaining put the Bills ahead for good during a second half in which the teams traded the lead five times. Taylor also scored on a seven-yard run in helping to keep Buffalo in the playoff hunt.

The Bills (6-5) won for the second straight week when trailing at halftime after doing so just once last season.

Buffalo trailed the Jaguars 7-6 after two quarters on Sunday, and overcame a two-point deficit in a 16-12 win at Cincinnati last week.

Taylor also produced just the second fourth-quarter comeback of his career and improved to 2-11 when the Bills trail by four or more at any point in a game.

The Jaguars (2-9) lost for the sixth straight game - their longest skid since opening the 2014 season at 0-6.

The game was decided with four minutes left, when the Jaguars were unable to convert a fourth-and-nine at the Buffalo 46.

Blake Bortles hit Marquise Lee on a crossing pattern over the middle, but he was limited to a fouryard gain.

The Bills then took over and ran out the clock.

Bortles went 13-of-26 for 126 yards and two touchdowns and also had a career-best 81 yards rushing.

The Jaguars' offence was hampered by injuries. Chris Ivory, who opened the scoring with a two-yard run, was sidelined in the first half by a hamstring injury. And then Jacksonville lost receiver Allen Hurns, also with a hamstring injury while diving into the end zone on a 12-yard catch and run.

Hurns's touchdown put the Jaguars up 21-20 in the opening seconds of the fourth quarter.

The Bills responded with Taylor leading an eight-play, 76-yard drive which he capped with a perfectly placed pass to Hunter at the goal line.

McCoy then dived across the goal line for the two-point conversion.

McCoy finished with 103 yards rushing and showed few signs of being bothered a week after having surgery for a dislocated left thumb.

His two touchdowns came 33 seconds apart spanning halftime.

After scoring on a seven-yard run late in the second quarter, he opened the third quarter by scoring on Buffalo's first snap from scrimmage.

Taking the handoff, McCoy burst off right tackle and blew past defensive backs Jalen Ramsey and Tashuan Gipson.

The Jaguars snapped the NFL's longest active drought by scoring on their opening possession for the first time in 25 games.

The streak began in Week 3 of the 2015 season and featured the Jaguars combining for three field goals, punting 18 times and turning the ball over three times.

Associated Graphic

Bills receiver Justin Hunter lays out for a touchdown catch against Jacksonville at New Era Field on Sunday.


MLB, players association reach agreement on five-year labour contract
The Associated Press
Thursday, December 1, 2016 – Print Edition, Page S3

IRVING, TEX., NEW YORK -- Negotiators for baseball players and owners have a verbal agreement on a five-year labour contract, a person familiar with the talks told The Associated Press on Wednesday night.

The person spoke on condition of anonymity because the sides were still putting the deal in writing. They hoped to have a signed memorandum of understanding later Wednesday.

The deal extends the sport's labour peace to 26 years since 1995 and was reached about 31/2 hours before the expiration of the current collective agreement.

As part of the deal, the luxury tax threshold rises from $189million (U.S.) to $195-million next year and to $210-million in 2021, the person said. There also will be a new penalty for signing certain free agents that could affect a team's draft order.

Negotiators met through most of Tuesday night in an effort to increase momentum in the negotiations, which began during spring training. This is the third straight time the sides reached a new agreement before expiration, but in 2006 and 2011 the deal was struck weeks in advance.

Talks took place at a hotel outside Dallas where the players' association held its annual executive board meeting.

The luxury tax was among the final issues in talks that included topics such as compensation following the loss of free agents and management's desire for an international draft.

Tony Clark, the first former player to serve as executive director of the union, and others were set up in a meeting room within earshot of a children's choir practising Christmas carols. A man dressed as Santa Claus waited nearby.

While there were no games to be lost at this point, without a deal or an extension of the current collective agreement, baseball faced the prospect of a hold on transactions and other offseason business only hours after the Mets finalized their $110million, four-year contract for Yoenis Cespedes and held a news conference with the outfielder in New York on Wednesday.

Baseball had eight work stoppages from 1972-95, the last a 71/2-month strike in 1994-95 that led to the first cancellation of the World Series in 90 years. In 2002, an agreement was reached just before players were set to strike.

Brady leads Pats to victory, breaks quarterback wins record
New England has won seven of its past eight, prepares for tough stretch against Ravens, Broncos and Jets
The Associated Press
Monday, December 5, 2016 – Print Edition, Page S2

FOXBOROUGH, MASS. -- Tom Brady now stands alone when it comes to career wins by an NFL quarterback.

Brady became the league's leader in victories among QBs, earning his 201st by throwing for 269 yards and a touchdown to lead the New England Patriots past the struggling Los Angeles Rams 2610 on Sunday.

Brady, who was 33-of-46, had tied Peyton Manning last week in a win over the New York Jets.

"It's always been about winning, and I've been very fortunate to be on a lot of great teams," Brady said of reaching the milestone.

"I'm just really grateful."

His lone touchdown pass came on a 14-yard pass to Chris Hogan in the first quarter. LeGarrette Blount scored the game's first touchdown, rumbling for a 43yard, ankle-breaking score in the first quarter while spinning around safety Maurice Alexander in the process. He finished with 88 yards on 18 carries.

"That's a record that I don't think will ever be broken. He'll continue to build on it, I'm sure," Blount said about Brady's wins mark.

The Patriots (10-2) have won seven of their past eight as they prepare for a tough stretch against three teams with winning records over their final four regular-season games. On the same day that Los Angeles coach Jeff Fisher and general manager Les Snead were given contract extensions, the recently relocated Rams (4-8) proved they still have a long way to go after losing for the seventh time in eight outings.

The Rams entered the game ranked 31st in total offence, averaging just 295 yards a game. Those struggles continued Sunday. They managed just 25 yards in the first half, the fewest by a team in a game this season. Los Angeles was outgained 402-162 for the game.

In his third career start, rookie Jared Goff was picked off twice, completing 14 of 32 passes for 161 yards. "I kind of made a point to watch his first drive," Goff said about watching Brady.

Associated Graphic

New England's Tom Brady makes a pass as Rams defensive end Ethan Westbrooks defends on Sunday at Gillette Stadium.


So what is the point of the EU?
Saturday, December 3, 2016 – Print Edition, Page B2

ATHENS -- When Pierre Moscovici, the European Commissioner for Economic and Financial Affairs, took to the stage Monday evening in Athens, a few of us were expecting a stirring speech. The moment demanded it. The economic and financial crisis that nearly tore the European Union and euro zone apart five years ago had been replaced by a political crisis that threatens to do the same. What would he say about it?

Not much, as it turned out - an opportunity wasted. We didn't need statistics or boilerplate blather about structural reforms.

We needed a rousing speech on why the EU countries should even bother staying aboard the EU when the whole integration project seems to be on a Titanic run.

Mr. Moscovici, a Parisian who was France's finance minister until 2014, was speaking before the guests at the American-Hellenic Chamber of Commerce's annual gab-fest. He told the audience some of the things they expected, and wanted, to hear, of course. "There is light at the end of the tunnel," he said, about the rumoured Greek recovery, adding that Greece "must be at the core of Europe, not on the fringe."

But what was the "Europe" he was talking about? Europe is undergoing seismic change that could crack it wide open. Britain is on its way out of the EU and European populist parties, each of them emboldened by Brexit and Donald Trump's presidential victory, are on the rise.

On Sunday, Italy holds a referendum on constitutional reform that is turning into a popularity contest between centre-right Prime Minister Matteo Renzi and Beppe Grillo, the former comedian who leads the anti-establishment, Euroskeptic Five Star Movement. The polls suggest that M5S could win the next election, putting the euro zone's third-largest economy in the hands of a party that is calling for a referendum on the common currency.

On the same day as the Italian referendum, Austrians go to the polls to elect their next president.

There is a good chance he will be Norbert Hofer of the right-wing, anti-immigrant Freedom Party.

Next spring, Marine Le Pen, the Trump-cheering, xenophobic, anti-EU and anti-euro Front National leader could snatch the French presidency even though the polls suggest she will lose in the second voting round. But as the Brexit and Trump victories showed, polls can be dead wrong.

Mr. Moscovici is not known for his engaging speaking style. He is not the boss of the European Commission, the EU's executive arm. But still, he and the other commissioners occupy the top rung of the whole apparatus that comprises the world's largest trading bloc and the one region of the world where war is unthinkable.

As the nationalist and populist forces gain momentum in Europe, they need to do a compelling sales job on the benefits of EU membership, for so many of its 500 million citizens are convinced the whole supra-national construct is an exercise in deadening bureaucracy, undemocratic decision-making and inertia that has left many crucial policy areas blank.

The EU has a refugee policy, but, incredibly, no immigration policy.

It has no common military that can enforce the external borders (though the tiny Frontex fleet in the Mediterranean is giving it a shot). It has an effective competition regulator, but no common market for energy, banking and telecoms. It has the euro, which is used in 19 of the EU's 28 countries but which seems to be impeding growth in Italy, Spain, Greece, Portugal, Finland and maybe France.

So what is the point of the EU? It is not a frivolous question given its spectacular shortcomings after 60 years of existence. A majority of British voters didn't see the benefit of the EU and are hitting the road. The bloodless response by the European commissioners and their allies to the populist uprising only makes it easier for the skeptics to be skeptical. It's easy to write off the populists such as Ms. Le Pen, Mr. Grillo and Nigel Farage of the UK Independence Party as egomaniac EU wreckers, but at least they have passion.

In reality, there is only one European who has a fair chance of keeping the EU and euro zone from blowing apart and that's German Chancellor Angela Merkel. Next week, she will appear at her Christian Democratic party conference to outline her strategy for running for a remarkable fourth term.

The German election has to be held no later than October, 2017.

While she will probably win, her victory would be far less sweet if the rising, far-right Alternative for Germany party enters parliament or her pro-European stand is rendered useless by populist election victories in France, Austria and the Netherlands before the Germans go to the polls.

(Italy's election is scheduled for 2018, but could happen earlier if Mr. Renzi loses Sunday's referendum and resigns as he has promised to do.)

In the next weeks and months, Ms. Merkel has a great, and crucial, opportunity to campaign from Europe as well as Germany.

She believes in the rule of law, democracy and open markets and is against winner-take-all capitalism, closing the borders to refugees and using bombs to try to impose freedom on dictatorships.

Her message must be that the EU countries together can preserve these freedoms and principles and that each country, on its own, is too weak to have any clout on the world stage in areas such as trade, defence, climate change and intellectual capital.

Ms. Merkel is famous for her steady, low-key, non-hysterical approach to crises. Time for her to get some passion too before the populists steal it all.

Associated Graphic

A woman wears a mask of Italian Prime Minister Matteo Renzi during a Friday rally for Sunday's constitutional referendum.


How to play the oil rally? Look to the drillers
Friday, December 2, 2016 – Print Edition, Page B1

The rally in crude oil this week has made one thing clear: Beaten-up drillers stand to benefit the most if there is a long-term recovery in energy prices.

For all the headlines devoted to oil itself, the bigger moves by far were made by companies that help producers get the stuff out of the ground.

Oil surged more than 8 per cent on Wednesday and continued to rise above $51 (U.S.) a barrel on Thursday, after the Organization of Petroleum Exporting Countries (OPEC) agreed to its first production cut in eight years.

A broad index of Canadian energy stocks, which includes senior producers such as Suncor Energy Inc., followed the rally, rising more than 5 per cent - punctuated, no doubt, by Ottawa's approval of two major pipeline projects.

But oil and gas drillers enjoyed bigger moves, highlighted by the 17-per-cent jump by Calgary-based Precision Drilling Corp. on Wednesday, to its highest level in more than a year.

Who knows whether the rally in crude oil will continue (some observers are already questioning whether OPEC's production cuts will stick).

But here's a reasonably sound prediction: If you want to bet on oil, drillers are the way to do it if you can handle some risk.

These companies, which provide drilling rigs to energy producers and explorers, were hit especially hard during the dramatic collapse in crude oil.

When prices fell close to 75 per cent between 2014 and February of this year, a lot of oil production became unprofitable and drilling rigs were left looking laughably out of place.

According to data from Baker Hughes, the U.S.-based oil-field services giant, the number of active rigs in North America fell as much as 80 per cent over this period, for the worst decline in decades. Precision Drilling reported seven straight quarterly losses, its annual revenue shrank by more than 60 per cent and its share price - which has tracked the price of oil remarkably well - shed more than two-thirds of its value.

This bad news, though, is looking increasingly out of date.

Even before Wednesday's euphoric rebound, the price of crude oil had recovered by about 75 per cent from its February low of $26.21, and oil and gas drillers have been sounding increasingly upbeat.

Okay, maybe they're paid to sound that way. But in the case of Precision Drilling, Canada's largest driller, the optimism is being supported by actions. The company rehired 1,000 workers in October and it has reactivated 56 North American rigs since May. It has even successfully raised prices on some of its rigs.

The market has noticed the shift. After this week's rally, the shares are trading above $7 and have more than doubled from their lows in February of $3.42.

Missed the rally? Don't worry: If the price of oil continues to recover, there's plenty of upside left in Precision Drilling. The shares would have to double just to get back to their 2014 highs above $15 when oil traded at more than $100 a barrel. This suggests greater potential than, say, a senior producer or pipeline stock.

Oil might not have to recover that much, either. Some observers believe that an oil price within the current range of $50 to $55 a barrel is the point at which many companies see value in exploring and producing again, so even modest gains in oil prices could have a profound effect on oil drillers.

Indeed, Scott Treadwell and Dave Wolters, analysts at TD Securities, noted that last month was the best November over the past four years for adding drilling rigs - partly reflecting better ground conditions but also rising confidence among producers, in their view.

Precision Drilling has also been laying the groundwork for a turn in the commodities cycle, implying that it should emerge as a stronger company if the price of oil plays along.

For example, it has more than $350-million in cash - plenty, according to Jason Zhang, an analyst at Cormark Securities, to pay for equipment upgrades that will win market share from rivals.

The company already appears to have made some headway, adding nine rigs in November.

"As activity continues to ramp up, we believe that Precision's top-tier fleet and high-quality crews will be in high demand both in Canada and the U.S.," the TD Securities analysts said in a note this week.

Oil's recovery is not a sure thing, but that's good - because when the recovery is a sure thing, oil and gas drillers may be out of reach.

Precision Drilling (PD)

Close: $7.07, down 5¢

Worst-to-first year proves that a stock-picking strategy works
Wednesday, November 30, 2016 – Print Edition, Page B1

When Bank of Nova Scotia reported strong quarterly results on Tuesday, it gave a big boost of credibility to a stockpicking strategy that works wonders with Canada's biggest lenders: Buy last year's laggard.

Scotiabank's stock has been the best performer among the big banks this year and the gains seemed justified by a fourthquarter profit of more than $2-billion.

That's up 8 per cent from last year, on a per-share basis, which was well above analysts' expectations for profit growth of just 4 per cent.

But what's particularly noteworthy here is that Scotiabank was a dog last year. The share price slumped 15 per cent in 2015 and trailed Toronto-Dominion Bank - the best-performing bank stock - by 13 percentage points.

There were some fundamental reasons for Scotiabank's laggard status in 2015. Mostly, investors were worried about its international operations, which were focused on developing economies in Latin America at a time when this region was struggling with low commodity prices and shifting U.S. monetary policy.

But fundamentals only seem to get in the way of picking a good Canadian bank stock.

The better approach is simply to look at the annual share-price performance of the five biggest banks, buy the worst stock and hold it for a year.

There is a 40-per-cent chance that the laggard you buy will blossom into this year's top performer. And there is a very good chance that you'll outperform the S&P/TSX composite index.

Indeed, this strategy - which echoes the Dogs of the Dow - has delivered an average annual gain of more than 16 per cent, using numbers going back to 1999, versus 10 per cent for the index. These numbers do not include dividends.

Importantly, the strategy also delivered better returns than buying and holding a single bank stock, such as TD or Royal Bank of Canada, over the same period of time.

These results are based on calendar years. But given that the Big Banks have begun to roll out their year-end results this week, we figured that now was as good a time as any to examine how the strategy has been holding up in 2016.

From the looks of it, it has been doing very well. Since the start of 2016, Scotiabank shares have risen 32.6 per cent, versus a gain of 15.3 per cent for the S&P/TSX composite index.

However, it is not enough to do well. Ideally, last year's laggard must also outperform its peers - and Scotiabank has done just that from the start of the year through Nov. 28. It beat RBC by 11.2 percentage points, TD by 14.6 points, Canadian Imperial Bank of Commerce by 16.5 points and Bank of Montreal by 18.4 points.

Scotiabank also beat National Bank of Canada - the smallest of the Big Six - by 8.2 percentage points, although we didn't incorporate the smaller bank into the original strategy because it is more regional (maybe next year).

Of course, any strategy that rewards laziness deserves some skepticism. Intrigued investors should rightly question the underlying theory here.

Our answer: Canada's biggest banks are remarkably large, diverse and competitive, offering similar rates and services in the same domestic economic environment. Unless management makes a real blunder that can't be corrected, or pounces upon an opportunity that can't be replicated by rivals, the stocks should drift along in a fairly tight range.

When they don't, opportunity knocks - for now, at least.

Canadian banks have been pegging more of their growth on international expansion: RBC and CIBC recently made big bets on U.S. private and commercial banking, while TD and BMO are focused on U.S. retail banking and Scotiabank has doubled down on the Pacific Alliance countries of Peru, Colombia, Chile and Mexico. This suggests that their share prices could start to diverge more meaningfully as these farflung operations grow more substantial, offering a potential challenge to this stock-picking strategy.

That seems years away, though.

For now, bad is good and good is bad - which sets up Bank of Montreal nicely for 2017 and puts Scotiabank back in the doghouse.

Associated Graphic


Family business: Do governance scores paint the full picture?
Monday, November 28, 2016 – Print Edition, Page B1

When The Globe and Mail first began scoring governance in Corporate Canada 15 years ago, some of the country's most respected business families freaked out.

Ted Rogers, late founder of Rogers Communications Inc., argued wife and fellow board member Loretta was as independent a thinker as you will ever meet, so the company should not lose points by having Mrs. Rogers counted as a related party director.

Power Corp. of Canada's lawyer took issue with the ranking of the Desmarais clan's conglomerate. There were approximately 40 large familycontrolled companies in the TSX benchmark, and they made their voices heard.

Over time, the outrage faded.

Governance grades became part of corporate coverage, alongside a long list of tools that use both analytics and opinion to predict a company's prospects, measures that range from analyst recommendations to credit ratings and lists of the best places to work.

Where early surveys found family-controlled companies fell short of best practices in the boardroom, most companies evolved, to their credit.

The same improvement in governance played out at dual-class share companies, which make up approximately 15 per cent of the S&P/TSX index and also lag single-class peers in board rankings.

While heads may no longer be spinning, the methodology of the ratings remains largely the same. Family-owned companies tend to lose marks in governance surveys over issues such as the composition of their board, and end up ranking behind companies with no controlling shareholder.

Which begs the question: How much weight should investors put in governance scores?

Are Manulife Financial Corp. and Sun Life Financial Inc., top insurers on The Globe and Mail's rankings, better stocks to own than Great-West Lifeco Inc., which trails its rivals on governance scores due in part of the fact it is controlled by Power Corp.? Is family-controlled Bombardier Inc. in a tailspin due to poor governance, or the fact that it's years behind schedule and billions over budget on an unproven aircraft?

There's no simple answer. Family-owned companies point to academic evidence that shows a controlling shareholder is positive for performance. A recent study by the University of Toronto's Rotman School of Management found that over a 15-year period, Canadian publicly listed family firms significantly outperformed the rest of the S&P/TSX index, to the tune of an additional 25-per-cent total return to shareholders.

But the same academic work found that thorny governance issues such as compensation get even more difficult when a family is involved. Rotman's Clarkson Centre for Board Effectiveness is working on a report that sweeps in "the unique challenge of compensating a CEO who is a member of the controlling family."

The next instalment of the Rotman study should make for interesting reading. Talk to boardroom veterans, and they'll quietly observe that the biggest shift in governance at familycontrolled companies over the years is a steady move to experienced, outside management, rather than a chief executive officer who inherited the job as a member of the lucky sperm club.

So what should investors do with results of governance rankings? Recognize that top scores on governance do signal that the right systems are in place for shareholders, but don't consistently translate into a stock that outperforms.

Understand that issues such as family control or a dual-share structure will weigh heavily on where a company ranks against peers.

Scoring boards puts a spotlight on the governance process, opening boardroom doors that were historically closed to shareholders.

These surveys shows which boards have adopted best practices, and which are lagging.

They highlight companies that, for one reason or another, are run differently from peers.

In simple terms, the role of the board is to find the right CEO, ensure that individual and the rest of the management team execute well, and try to stop potentially fatal mistakes.

These rankings help outsiders understand which boards are best positioned to do that job.

Associated Graphic

Laurent Beaudoin, left, then-chair of the board of Bombardier, arrives at the company's annual meeting in Montreal in 2014 with his son Pierre, then-president and CEO and now current chairman.


Payments system poised for overhaul
Thursday, December 8, 2016 – Print Edition, Page B1

Canada is set to overhaul the way financial transactions are processed as changing technology and globalization reshapes the way individuals and businesses move money and access their funds.

Payments Canada, a not-forprofit group that clears and settles payments on behalf of all chartered banks in Canada and other financial institutions, is poised to roll out a five-year plan to update its outdated processing system on Thursday. This behind-the-scenes infrastructure clears and settles $197-billion worth of transactions made by retail customers and large financial institutions each business day. The changes will be largely invisible to consumers at first, but over time will affect the way goods are bought, money is transferred and the amount of information that can be attached to payments.

The change comes as rapid changes to technology have caused consumers and businesses to demand faster and simpler payment processing than the current system can handle. And the costs will add up as Payments Canada prepares to spend as much as $250-million to make the changes. The organization's 115 members will also incur their own separate costs as they adjust to the new standards, legal frameworks and regulations.

Some of the big banks are already budgeting and readying teams to tackle the transition.

"All payments are a friction in the economy and commerce. If payments aren't smooth, we all kind of suffer," said Jan Pilbauer, executive director of the modernization program at Payments Canada, which was formerly known as the Canadian Payments Association. "We know that Canadians expect a bit more from payments."

The legacy Canadian paymentprocessing system is creaking under the weight of increased real-time retail payments, new entrants to the payment space, changing global standards for sending payment messages and regulatory pressures. Many of the old systems designed to process cheques and transfer funds can take many hours - even multiple days - to clear.

Financial institutions also told Payments Canada in a consultation process that they want richer business data to be able to travel with payment information.

"So, if you are paying an invoice, I don't see why the invoice couldn't be part of the payment. Once the payee receives the payment they can see what the payer decided to pay for and what they decided not to pay for, and the reconciliation [of the data] wouldn't be manual," Mr. Pilbauer said. As payments become evermore global, many countries are standardizing this process and Canada wants to align itself with these trading partners.

Consumers and businesses also increasingly want to be able to initiate and receive payments at all hours of the day, any day of the year. To cater to that 24/7 demand, the electronic-payment space has attracted fintech startups offering inventive digital wallets and in-app payments.

But the old clearing and settlement systems don't have the access tools and other features needed for easy development of new applications and software.

In a consultation paper aimed at stakeholders earlier this year, Payments Canada said that "Canada's core payments systems are largely outdated and were not designed to support emerging needs for faster, datarich payments and regulatory change."

"People have to be able to use the [new systems] to build new, exciting and cool services," Mr. Pilbauer said. He likens the project to building a good road with clear laws, where different new business developments such as electric vehicles, driverless cars and Uber rides can all make use of the same motorway.

Canada lags many of its global counterparts in developing a more modern payment system.

Britain, for example, implemented faster payments infrastructure in 2008, and other regions such as the United States and Australia are also in the process of speeding up transactions.

Some of these countries are now preparing another wave of modernization as innovation in smartphones and other technologies keeps changing end user's demands.

After observing the successes and failures of these efforts, Canada is now taking a broader approach that also includes initiatives to strengthen legacy systems, Mr. Pilbauer said.

In South Africa, Friedland-backed mine is told to stop exhuming historic graves
Monday, December 5, 2016 – Print Edition, Page B1

JOHANNESBURG -- A court has ordered Ivanhoe Mines Ltd. to stop exhuming and relocating dozens of historic graves at the site of its planned $1.6-billion platinum mine in South Africa.

The Vancouver-based company says it is complying with the interim order, but will fight it in a court hearing in late January. It says the court order hasn't affected construction at the site, where its first shaft has reached a depth of more than 120 metres underground.

The court order is the latest sign of tensions between Ivanhoe and some community members near the mining site in Limpopo province, about 280 kilometres northeast of Johannesburg.

The mine is expected to become the biggest new platinum mine in the world. The company's billionaire founder and executive chairman, Robert Friedland, has called it the world's lowest-cost and longest-life platinum mine.

Hundreds of the mine's opponents have held a series of protests against the project over the past two years, including a protest at the Canadian high commission in Pretoria. They have also attempted to launch challenges against the mine in the courts and at government departments and agencies.

Ivanhoe has identified 154 graves around its mining site, in an area where it plans to build infrastructure for the mine. About two weeks ago, it began exhuming and relocating the graves. It says it obtained permission from the families of each person buried in the graves.

Community members who oppose the mining project went to court to seek an urgent order to halt the exhumations.

They argue that Ivanhoe failed to consult the community properly, and they say the company used financial payments - known as "wake fees" - to manipulate the next of kin.

The company denies this, saying that the "wake fees" of about $2,600 each are intended to compensate the families for the costs of traditional ceremonies and rituals at the reburials.

Last Monday, after the company had exhumed more than 50 graves, the High Court of South Africa issued an interim order, prohibiting the company from "destroying, damaging, altering, exhuming and removing" any graves or graveyards at the site.

The court also authorized the South African police to enforce the order with arrests if necessary.

Jeremy Michaels, a spokesman for Ivanhoe's subsidiary Ivanplats, which owns 64 per cent of the platinum project, said the company "was not advised" that the opponents were seeking the court order, and "therefore did not have an opportunity to present evidence before the court reached its interim decision."

He said the company will seek to overturn the interim order at a court hearing scheduled for Jan. 26. The company has received "all official authorizations required" for the grave relocations and has managed the process with "dignity, respect and sensitivity," he told The Globe and Mail.

The mine is currently employing 550 permanent and contract workers, and it will provide thousands of additional jobs in the future, the company says. It expects the first shaft to reach the platinum deposit in late 2017.

Construction of a bigger second shaft is expected to begin next year.

The company has complained of violence by opponents of the mine, including incidents of arson, assault and illegal blockades. The opponents have their own complaints of violence. Po...

lice have fired rubber bullets to disperse protesters at the mine site, injuring some of them. Opponents have also alleged that they were threatened with the loss of pensions, welfare payments and farm fields if they refused to co-operate with the mine. The company denies any knowledge of such threats.

One community member who strongly criticized the company, Holly Maponya, was shot by an unknown assailant or assailants in April this year near his house.

Police have said they are investigating the incident, and Ivanhoe says there is no evidence that the incident was connected to its development of the mine.

Cooling housing market good for banks as well as consumers
Wednesday, December 7, 2016 – Print Edition, Page B1

Canadian banks have navigated through weak economic growth, low interest rates and a depressed energy sector with their profits intact, but one big threat remains: the domestic housing market.

Most observers believe the market is overheated, especially in Toronto and Vancouver, at a time when policy makers are introducing measures to cool things down.

But Fitch Ratings believes that if the cooling measures are good for the housing market, they'll be good for the banks as well - offering a remarkably soothing view for investors.

"To the extent that this creates an orderly slowdown in the pace of home price appreciation or even modest correction, this may be viewed as supportive to current Canadian bank ratings," the credit rating agency said in its 2017 outlook for the sector.

The outlook follows generally upbeat fourth-quarter results from the big banks, punctuated by Bank of Montreal's seasonconcluding earnings report on Tuesday. BMO reported a profit of more than $1.3-billion, up 11 per cent and ahead of analysts' expectations.

The sector's strong showing has driven the S&P/TSX banks index to a record high this week and up more than 21 per cent in 2016, as concerns about low oil prices and their impact on the broader economy have subsided.

Perhaps concern about the housing market is the next to go.

In one of the key changes to the market, the Canadian government announced in October that it is considering a lender risk-sharing proposal, which would put the banks on the hook - rather than just taxpayers - for some losses when a homeowner defaults on an insured mortgage.

Fitch estimates that Canadian home prices are overvalued by a remarkable 25 per cent, implying that there is a lot of downside risk should prices correct.

Comments on the proposals are expected to close at the end of February. Fitch then expects that implementation will apply to new mortgage originations, phased in over a fiveyear period.

If house prices fall sharply under a particularly grim scenario, then Canadian banks will suffer, and Fitch warned that a severe downturn in the market could affect its ratings on individual banks.

But the agency's base case calls for a cooling housing market, leading to a slowdown in mortgage lending activity and a deterioration in credit performance.

"The mortgage business has been a strong area of loan growth over the past several years and solid contributor to earnings. As such, moderate price corrections or a slowdown in the housing market could potentially impact earnings and loan growth for all the banks," the agency said in its outlook.

But this isn't bad news. Fitch, which rates the banks as "stable" for 2017, believes that government actions should be seen as supportive of the longterm stability of the Canadian banking system. This is good for banks, even if their profit growth takes a near-term hit.

As well, Fitch points out that the banks have a diverse range of businesses across the country.

"These banks are price leaders benefiting from their solid franchises in key markets and business segments. This allows them to ensure appropriate riskreturns while keeping a focus on the quality of their businesses," Fitch said.

Even though the banks' growth is constrained by a slow economy - GDP growth is expected to creep up by just 2 per cent in 2017, up from expected growth of 1.6 per cent in 2016 - bank profits are sound, in their view.

"Fitch Ratings expects Canadian banks to maintain their focus on solid risk management and good capital position to ensure strong buffers against risks, which should continue to deliver stable credit performance," it said.

Associated Graphic


Scrutiny of BCE-MTS deal goes into overtime
Thursday, December 1, 2016 – Print Edition, Page B1

A stringent examination of the state of wireless competition in four provinces is delaying BCE Inc.'s $3.1-billion deal to acquire Manitoba Telecom Services Inc.

As BCE and MTS await a range of regulatory and government approvals, the federal competition authority has gone to court to compel companies not directly involved in the deal to turn over reams of information about their own wireless businesses.

The Competition Bureau obtained orders from the Federal Court in August and September forcing both Rogers Communications Inc. and Telus Corp. to provide more than three years of information - on details such as new wireless customers, prices, revenues and expenses, network quality, and transfers of phone numbers to new accounts - first in Manitoba and then Alberta, Saskatchewan and Ontario under the second set of orders.

In documents filed with the court, the bureau said it needed the additional data to determine whether the merger will "lessen or prevent competition substantially" but BCE and MTS argue that the lengthy information-gathering process from non-parties to the deal has unreasonably delayed the path to a decision.

BCE announced its planned takeover of one of the last remaining provincial telephone companies - and competitor to the three national wireless carriers - on May 2. In a letter to the bureau, Paul Collins, a lawyer for MTS, stated that under the usual timelines for reviews of large mergers, the "statutory waiting period" for this deal would have expired on Sept. 30., but is now expected to take much longer.

Under the timelines of the orders, the bureau would only recently have received the information from Rogers and Telus (who are not parties to the main transaction, although Telus has agreed to acquire MTS subscribers and retail locations from BCE in a separate deal), and must now analyze it.

"While the Commissioner [of competition] has discretion at the early stages of a review to examine the facts, that does not justify a nationwide sweep for information about, for example, pricing in markets unaffected by the merger, especially at such a late stage in the process," wrote Brian Facey, a lawyer for BCE, in a letter to the bureau in September, ahead of a court hearing for the second request.

Federal Court Chief Justice Paul Crampton limited the production of material to just Manitoba in his first order in August, however, the bureau clearly saw a need for more information and persisted in its requests.

It returned in September seeking a broader order and filed an affidavit from an academic and consultant, Paul Johnson, who said data on one or two provinces is insufficient to determine whether lower prices in Manitoba are due to a more competitive environment in that province.

BCE's lawyer Mr. Facey wrote in the September letter that BCE does not currently have a large share of the Manitoba wireless market (BCE and Telus are the two smallest wireless players in the province). Based on a merger simulation the company provided to the bureau, he said it is BCE's position that prices in Manitoba will actually be lower.

"The transactions will not result in any competitive harm, including any price increases, but instead will produce very significant cost savings and dynamic efficiencies and innovations," he said.

BCE spokesman Mark Langton said Wednesday that the company is eager to get started with its pledge to invest $1-billion over five years after the deal closes. "We see tremendous opportunity in Manitoba and believe we'll be a major contributor to economic growth as we enhance broadband communications across the province. We continue to work with regulators to achieve required approvals and complete the transaction on schedule."

Industrial Alliance buys Scotiabank unit
Growing Canadian insurer announces $139-million equity financing to help fund acquisition of HollisWealth
Tuesday, December 6, 2016 – Print Edition, Page B1

Bank of Nova Scotia is selling its HollisWealth network of financial advisers to a growing Canadian insurer, parting ways with a business it acquired five years ago.

Industrial Alliance Insurance and Financial Services Inc. is buying HollisWealth, adding $34billion in assets under administration for an undisclosed price.

To help fund the purchase, Industrial Alliance announced a $139-million equity financing.

HollisWealth has 800 licensed advisers and became part of Scotiabank when the bank acquired DundeeWealth in 2011. The investment advisory business is in a period of rapid change, owing to a mix of regulatory initiatives, the proliferation of lowcost fund providers and the emergence of digital financial products such as robo-advisers, which offer inexpensive guidance to investors. Canada's banks own the country's largest full-service adviser networks, but in the past few years they have started reforming them, largely to focus on high-net-worth clients.

Clients with less than $500,000 in investable assets are now often referred to bank branches for investment advice.

The Globe and Mail was the first to report on the sale talks between the two firms. Following the reports, Scotiabank chief financial officer Sean McGuckin was asked about a potential HollisWealth sale on a conference call. The CFO declined to comment, but added that in wealth management, "a lot of the value comes through our branch distribution," suggesting an independent adviser network is less desirable to the bank.

Industrial Alliance has been steadily growing its wealth management business, making 25 acquisitions since 2000, and the HollisWealth purchase would give it $75-billion in assets under administration.

Wealth management has become a more attractive business for life insurance companies as they grapple with modest growth and low interest rates that hamper their ability to generate low-risk returns on investments. Wealth management units also require minimal capital, because their revenues are mostly fee-based.

Based in Quebec City, Industrial Alliance has said in the past that it wants to build scale in asset management because it sees a large transfer of wealth in the coming years from people over the age of 50. At a recent investor day, the company added that it wants to grow its distribution network, while acknowledging the need to "stay current" with the growth of robo-advisers and the next generation of investors looking to digital channels.

"We see a lot of value" in independent advisers, despite the digital trends, chief executive officer Yvon Charest said in an interview Monday. "Some organizations that developed the robo-adviser software were dreaming customers would go direct to them; within a year, you have seen a change."

What's happening now, he added, is that some robo-advisers are calling advisers and suggesting they use the robo-software.

Scotiabank first invested in DundeeWealth, the firm that owned HollisWealth, in 2007 by buying an 18-per-cent stake. In 2011, Scotiabank acquired the remaining shares for about $2.3billion.

In late 2013, the adviser network was renamed HollisWealth after the street in Halifax where the bank's historic head office is located: Hollis Street. The rebranding was prompted by an expiring trademark agreement.

Scotiabank mulls HollisWealth as sweeping changes loom
Saturday, November 26, 2016 – Print Edition, Page B1

Bank of Nova Scotia is in talks to sell HollisWealth, an independent adviser network, as the wealth-management industry faces slowing growth and greater regulatory pressure, sources say.

Quebec City-based Industrial Alliance Insurance and Financial Services Inc. is the front-runner to buy the business, those people said. It isn't clear how much Industrial Alliance is offering for the asset or if the process will result in a definitive sale.

HollisWealth provides advisory services including investments, insurance, mortgages, tax services, estate planning and private banking. The firm's network consists of about 800 advisers in more than 300 locations across Canada.

Scotiabank is mulling a sale of HollisWealth at a time when regulators are forcing wealth-management firms to disclose hidden fees and commissions - sweeping changes that are driving up compliance costs across the industry and squeezing margins.

Wealth management, meanwhile, has become an important focus for insurers as they grapple with modest growth and low interest rates that are hampering insurers' ability to generate low-risk returns on investments.

Scotiabank spokeswoman Diane Flanagan and Industrial Alliance spokesman Pierre Picard declined to comment.

Toronto-based Scotiabank is weighing a sale of HollisWealth some nine years after it made its initial investment in the firm's predecessor parent company DundeeWealth Inc. In 2007, Scotia bought about 18 per cent of wealth-management firm DundeeWealth for $348-million. Then in 2011, Scotia acquired the remaining shares for about $2.3-billion.

In late 2013, the firm was renamed HollisWealth after the street in Halifax where the bank's historic head office is located: Hollis Street. The rebranding was prompted by an expiring trademark agreement.

HollisWealth has since undergone other changes. Earlier this year, the then-head of HollisWealth, Tuula Jalasjaa, left the firm.

A sale of HollisWealth also would mark another step in the restructuring of Scotiabank's wealth-management business.

Late last year, Scotia Wealth Management rebranded itself and combined services including financial planning, investment management, private banking, insurance, business-transition planning and estate and trust services.

At the time, executives said the goal was to create a onestop shopping model for customers.

Vanney's staffing defies co-worker adage
For TFC's head coach, hiring friends has proved to work out well - his assistants are a tight-knit group that 'make each other better'
The Canadian Press
Thursday, December 8, 2016 – Print Edition, Page S3

TORONTO -- In 1996 while Greg Vanney was a student-athlete at UCLA, he took a class that required him to start a business.

He chose to form a soccer team - the Arizona Futbol Club.

When Vanney went home to Arizona that year, he trained with the Marcos de Niza High School team, his alma mater in Tempe, and got to know its coach, Michael Rabasca.

"We kind of hit it off and in 1997 we started the club that I wrote the business plan about and he ran the club for several years," Vanney said.

Some two decades later, the 42-year-old Vanney is head coach and technical director at Toronto FC and Rabasca is his director of cognitive development.

It's typical of the ties that bind Vanney's coaching staff at Toronto, which hosts the Seattle Sounders in Saturday's MLS Cup final.

Like Vanney, assistant coaches Dan Calichman and Robin Fraser were captains at the Los Angeles Galaxy with Fraser following Calichman as skipper and Vanney wearing the armband after Fraser, when Cobi Jones was absent.

Fraser and Vanney played in the same Galaxy backline at the 1996 and 1999 MLS Cups.

Jim Liston, Toronto's director of sport science, was the strength and conditioning coach at the Galaxy during the 1999, 2001 and 2002 Cup final runs.

Liston and Vanney were later reunited at the Competitive Athlete Training Zone (CATZ), a high-performance training facility co-founded by Liston. Rabasca and Vanney crossed paths again at the Real Salt Lake academy.

Fraser would serve as director of coaching for Vanney's Arizona Futbol Club, which was later merged into the Sereno Soccer Club.

Vanney played at UCLA with Nick Theslof, another TFC assistant coach. Theslof went on to work with Juergen Klinsmann at the German national team and Bayern Munich. He was also an assistant coach and technical director at Chivas USA while Fraser was head coach and Vanney was an assistant coach and technical director of the youth academy.

Fraser says while the coaches share a soccer mentality, there is plenty of room for debate.

"No conversation's a short conversation, put it that way," he said. "But I think in the end it's good, it's really good. We challenge each other, think about certain things and I think as a group, we make each other better." Vanney agrees, saying the group complements each other in expertise and character.

Liston, aside from his sports performance side, is a vibrant, positive leader, according to Vanney.

"Which isn't really me. I'm not really an over-the-top vibrant guy," Vanney said.

Fraser, a two-time MLS defender of the year and five-time allstar, is on the quiet side like Vanney. Like Liston, Calichman is more vocal.

In addition to his soccer background, Rabasca is a former occupational therapist who worked with patients who had severe brain injuries. His job was to "create new pathways in the brain to be able to re-learn to do things."

Over the years, Rabasca started connecting the dots in combining the two interests. Vanney, who calls Rabasca a mentor, describes him as incredibly wellorganized.

He keeps Vanney on track "when I've got things all over the place."

A technical expert, Theslof often works individually with players.

Goalie coach Jon Conway was already at the club when Vanney joined in December, 2013, as assistant general manager and academy director. Vanney, who took over as head coach in August, 2014, knew Conway from their time as players and the two worked together at the TFC academy.

While Vanney, Fraser and Calichman were all defenders, Vanney says they come at it from different angles.

Vanney, who won 36 caps for the United States, was an attacking fullback before moving to centre back so he thinks offence.

Calichman works with the centre backs.

Vanney says he and righthand-man Fraser, who won 27 caps for the United States, also concentrate on larger team matters.

So what's it like having three defenders as coaches?

"It means that they never leave me alone," veteran centre back Drew Moor said with a laugh.

"I think almost every single day one of them will start talking to me. I get about halfway across the field and the other one will start talking to me. And just when I'm almost off the field, the third one will come and start talking to me.

"But it's huge, I think," he said more seriously. "They certainly made defence their focus this season. They are all very good defensive minds. I feel like my thought process is very similar to what their's is and that's just to be difficult to play against and organize the players around you."

With the off-season addition of Moor, fullback Steven Beitashour and goal keeper Clint Irwin, Toronto lowered its goals-against this season to 39, tied for second best in the league. The team gave up 58 last year, tied for worst.

"I think in terms of where we've come defensively this year, it's been a lot to do with the way they coach and the way they think about things and the way they see things from the sidelines," said Moor, who played next to Vanney at FC Dallas for most of the 2006 season.

The Toronto coaching crew is clearly a close group that has each other's back. Vanney chose carefully.

In looking back at his career, Vanney says he cherishes the friends he made along the way.

"That's why I work with Robin and Dan and Mike and Nick and all the guys. That, to me, is what it was about. Obviously, through all of that, you win. And when you win your bonds become tighter, but it really was about the people. That was the takeaway from the experience for me - and the knowledge and the passion for the game."

Associated Graphic

Toronto FC head coach Greg Vanney, right, kicks a ball during Wednesday's practice session ahead of this weekend's MLS Cup final match against the Seattle Sounders in Toronto.


Vancouver plays down the revenge talk ahead of rematch
The Canadian Press
Saturday, December 3, 2016 – Print Edition, Page S5

VANCOUVER -- Erik Gudbranson trudged off the ice at Air Canada Centre last month furious at what had just happened.

His Vancouver Canucks were embarrassed 6-3 by the Toronto Maple Leafs on the scoreboard in the eighth defeat of what would turn into a nine-game losing streak. That was only part of the reason for his seething anger.

It really started when veteran teammates Jannik Hansen and Daniel Sedin were felled by crushing and, in the case of the latter, controversial hits from Morgan Rielly and Nazem Kadri in quick succession that infuriated the Canucks.

There were also spears, fights and slashes on both sides in a wild third period before Toronto's Matt Martin started pummelling rookie Troy Stecher - an exchange that prompted Vancouver goalie Ryan Miller to jump in against the bruising winger. A full-line brawl ensued as the teams combined for 171 penalty minutes on the night, including 157 in the third alone. Miller and Leafs goalie Frederik Andersen, who skated the length of the ice to join the fray, were both tossed.

After the game, Gudbranson made a point of yelling in the vicinity of reporters outside the locker rooms: "Matt Martin's dead."

The Canucks got a call from the league about those comments, and both teams did their best to cool the temperature of the rivalry, at least publicly, ahead of Saturday's rematch at Rogers Arena.

"I was just pissed off," Gudbranson said. "I think everybody can relate to the moment that I had at that time."

But the Vancouver hockey market is acutely sensitive to this type of exchange after former Canucks forward Todd Bertuzzi decked Colorado Avalanche counterpart Steve Moore to the ice in 2004.

Moore sustained a concussion and three fractured vertebrae as a result of the incident, ending his playing career. Bertuzzi eventually pleaded guilty to criminal assault causing bodily harm.

Moore's lawsuit against Bertuzzi and the Canucks, which was settled shortly before trial in 2014, alleged Vancouver put a bounty on him after his check injured captain Markus Naslund in a game earlier that season.

Gudbranson said Friday he has never had any intention of following through on the threats he shouted back on Nov. 5.

"It was kind of a fit of rage that I had," the hulking defenceman said. "I understand that it was wrong, but the number of times that I've said that is probably higher than most people expect.

Do I mean it? No. That's the honest truth. I'm not going to kill the guy. But I was just frustrated at that point."

For his part, Martin said he never heard the comments directly and was solely focused on helping his team get a win Saturday.

"I would say both teams probably got caught up in the emotions," Martin said. "That's sports, that's hockey and things like that happen. It will be important to keep your emotions in check."

Rielly, who levelled Hansen - the Canucks forward hasn't played since because of broken ribs - seconds before Kadri smoked Sedin, said the Leafs aren't concerned about what's being talked about on the outside.

And as with almost every player offered up by either team to reporters on Friday, he also towed the party line of trying to focus on getting two points and not the potential for extra curriculars.

"Obviously some things occurred, but we're just going out there to win a game," Rielly said.

"That's our purpose, that's why we came here. We're not going to worry about anything else."

Kadri felt at the time his hit to the shoulder and head area on Sedin was clean and the NHL's department of player safety agreed with its decision not to suspend the forward. He reiterated Friday he's happy Sedin didn't miss any action, adding that he will be ready for whatever comes his way against the Canucks.

"I'm always prepared, and obviously I'm not the only one out there, I have my teammates to help protect me," Kadri said.

"We're going to be all in it together. Two points is more important than any kind of revenge in this league and I think both teams are well aware of that."

The NHL will be paying close attention to the game - senior league officials are expected in the building - and, like his players, Leafs head coach Mike Babcock tried to douse water on any talk of retribution. "What I have found over the years is that there is always a lot of talk and nothing happens," he said.

The Canucks (10-12-2) and Leafs (10-9-4) will each be looking to rebound after posting disappointing losses last time out. Vancouver fell 3-1 on Thursday at home to Anaheim, while Toronto was shut out 3-0 in Calgary a night earlier.

Associated Graphic

Canucks goalie Ryan Miller and Maple Leafs goalie Frederik Andersen fight in a game between the two teams at Air Canada Centre on Nov. 5. Both goalies were ejected for taking part in the full-line brawl.


Woods is hot and cold in his return
Former juggernaut has an impressive front nine in the Bahamas, but makes mistakes on the back half
The Associated Press
Friday, December 2, 2016 – Print Edition, Page S4

Not only did Tiger Woods return to golf Thursday, he returned to being Tiger.

Just not for long.

Hardly looking like a player who had not competed in 466 days, Woods ran off three successive birdies with a variety of shots and was tied for the lead in the Hero World Challenge as he approached the turn.

Three shots in the bushes, one shot in the water and a few fits of anger sent him toward the bottom of the pack. A pair of double bogeys over the final three holes ruined an otherwise impressive return, and Woods shot 40 on the back nine at Albany Golf Club and had to settle for a one-over 73.

He was in 17th place in the 18man field. Only Justin Rose had a higher score.

Even so, Woods has reason to be encouraged. After taking 15 months off to recover from two back surgeries, he felt no pain or limitations. His misses were not big, just costly. And he was playing again.

"It could have been something really good," Woods said. "I got off to a nice, solid start and made a few mistakes there. I didn't play the par fives very well in the middle part of the round and consequently, got it going the wrong way. ... But all in all, I feel pretty good. I'm looking forward to another three more days."

He was nine shots behind J.B. Holmes, who opened with an eight-under 64 and had a oneshot lead over Hideki Matsuyama, with U.S. Open champion Dustin Johnson at 66.

Curiosity was greater than expectations for Woods, who was coming off the longest hiatus of his golfing life. Plagued by back problems since 2013 when he was No. 1 in the world, he finally shut it down after tying for 10th in the Wyndham Championship on Aug. 23, 2015, and then going through two back surgeries.

With high anticipation, he tugged his opening tee shot into the rough on the left edge of a bunker and gouged that out to 15 feet for par. Just like that, it all started to feel as though he had never been away.

"By the time I hit my tee shot on the second hole, I had already gotten into the flow of the round," Woods said. "That's something that for me, when I've taken layoffs and taken breaks, it's 'how quickly can I find the feel of the round?' To not play in 15, 16 months and get it on the second hole is nice."

For a short time, Woods seemed up to the task. He hit a 5-iron from 231 yards just over the green and passed his first test, a 30-yard pitch-and-run and that checked slightly and rolled out to a few feet from the hole for a birdie. He faced a more difficult pitch up the slope on the next hole and hit a chunk-andrun to three feet.

His confidence kept building - the flop shot from 40 yards to five feet for birdie on the par-five sixth, the wedge to five feet for birdie on the seventh and a 6-iron he struck so well on the par-three eighth that he was asking for perfection. "One yard! One yard!" he said as the ball was in the air, and then settled two feet away.

At that point he was tied with Holmes.

But he flubbed a pitch on the par-five ninth and made bogey.

Two holes later, he flared an iron from the sandy waste area into a bush and had to take a penalty shot, making another bogey on a par five. Woods was still hanging around in the middle of the pack when he hit 7-iron to 12 feet on the par-five 15th and two-putted for birdie.

And then it all fell apart.

From the middle of the 16th fairway, he pulled his approach and dropped the club as it sailed into a bush. He had to play that backward to the fairway, pitched a wedge some 30 feet by and made double bogey. And then on the 18th, he pulled his driver and immediately slammed the club into the turf as he watched for the splash.

His pitch hit the pin - it was too strong, anyway - and he missed from 20 feet for another bogey.

"Just made some really silly mistakes, mistakes I don't normally make," Woods said. "But I haven't played in a while. Unfortunately, I made those mistakes.

I can clean that up. We've got three more days. Wind is supposed to pump on the weekend, and I'll be playing a little bit better."

Associated Graphic

Tiger Woods hits a shot from a green-side bunker during the first round of the Hero World Challenge in Nassau on Thursday. Woods finished 17th for the day in an 18-man field.


Orridge seeks to calm nerves over Argos' future
Boatmen finished last in East in first season playing at BMO Field, which will host Grey Cup for which interest has been low
The Canadian Press
Saturday, November 26, 2016 – Print Edition, Page S3

TORONTO -- CFL commissioner Jeffrey Orridge continues to sound optimistic about the CFL's future in Toronto despite a disappointing season from the hometown Argonauts and lagging ticket sales for Sunday's Grey Cup game.

Under new ownership, expectations were high for the Argonauts heading into the 2016 season as they moved from the domed Rogers Centre to the outdoor BMO Field. But the season was marked by disappointments.

Toronto (5-13) finished last in the East Division and posted a dismal 2-7-0 record at home, averaging just 16,380 spectators at the 26,500-seat stadium with no sellouts.

Orridge preached patience on Friday during his annual state-ofthe-league address.

"Things don't happen overnight," he said. "We all wish they would've sold out every game ... it didn't happen this year, but let's be optimistic because we know we're doing the right things, all the elements are in place, we're going to get better.

"You've got a brand new stadium, committed, quality ownership with people who really care and one of the largest markets in Canada. It's got all the elements of success, it just takes time. We still have a vested interest in making sure our biggest market is successful."

It may be the league's biggest market, but Grey Cup organizers were forced to slash ticket prices last month in an effort to drum up interest in the CFL's marquee event. TSN, the CFL's television partner, also offered its employees up to five free tickets for Sunday's game between the Ottawa RedBlacks and Calgary Stampeders.

On Thursday, the CFL nixed a promotion with Pizza Pizza offering Grey Cup tickets as part of a $29.99 package that also included a large three-topping pizza, 10 chicken wings, four cans of pop and two dipping sauces.

Orridge admitted mistakes were made in ticket pricing.

"We made a correction; we listened to the fans," Orridge said.

"In terms of Pizza Pizza, that was a situation where it was an unauthorized promotion.

"But we always give tickets to our corporate sponsors, we always give packages away to people who've been supportive of us. Ticket giveaways are nothing new ... the idea is to spur engagement and get people more involved and so promotions is all part of the game."

The commissioner was also forced to answer for poor officiating this season, including crucial mistakes made on a key play in the Edmonton Eskimos' 24-21 East Division semi-final win over the Hamilton Tiger-Cats. With the score tied 21-21, the Ticats should have received a first down near midfield with 1 minute 30 seconds remaining, but instead, on second-and-14, quarterback Zach Collaros was intercepted, allowing the Eskimos to kick the game-winning field goal.

"I'm as disappointed and frustrated when things don't go right, when mistakes are made," Orridge said. "But I think, on balance, our officials do an amazing job; they get the vast, vast majority of calls right.

"I think we've done an incredible job with instituting video replay and we're setting the benchmark for other leagues.

Anytime there's innovation, you've got to evaluate it and see how it can get better so that's what we're going to do in the offseason. We're going to review the reviews."

Orridge also said the CFL board will discuss how Edmonton's Jason Maas complied with the league mandate that head coaches wear a live microphone on the sidelines during a regularseason game. Maas was fined $15,000 and the Eskimos received a $20,000 penalty after Maas failed to do so during an earlier contest.

Facing a one-game suspension and $25,000 fine if he didn't comply, Maas wore a microphone in Edmonton's regularseason finale but not a headset and barely spoke after delegating play calls to his assistants.

"Did he comply with the letter of the law? Absolutely," Orridge said. "Was he non-compliant with the spirit and the intent?


"So because it was a board mandate, the board will subsequently be meeting on that and I will orchestrate that. I can't give you more details right now, but rest assured - we're continuing to look to ways to improve alignment and make sure everything is followed."

Associated Graphic

Phil Landon rides Tuffy the horse in a hotel lobby as part of Grey Cup celebrations in Toronto on Friday. The city may be the CFL's biggest market, but Grey Cup organizers were forced to slash ticket prices last month in an effort to drum up interest in the league's marquee event.


IOC, WADA leaders clear air over doping scandal
Though their organizations clashed over banning Russian athletes, Bach and Reedie have now agreed to set aside differences
The Associated Press
Tuesday, December 6, 2016 – Print Edition, Page S3

LAUSANNE, SWITZERLAND -- With another report on Russian doping looming at the end of this week, the presidents of the International Olympic Committee and World Anti-Doping Agency met Monday to clear the air over their "perceived differences" over the handling of previous evidence of systematic cheating in Russia.

IOC president Thomas Bach and WADA head Craig Reedie said they agreed to put aside any disagreements and "move forward together" in tackling doping and protecting clean athletes.

"There was a very positive atmosphere in our meeting today, and I am very happy that any perceived misunderstandings could be clarified," Bach said. "We agreed to continue to work closely together to strengthen the fight against doping under the leadership of WADA."

The two men met ahead of a three-day meeting beginning Tuesday, in Lausanne, of the IOC executive board. On Friday in London, WADA investigator Richard McLaren will release his latest findings on Russian doping, including evidence of manipulation of samples at the 2014 Sochi Winter Games.

The IOC and WADA clashed over the summer after the agency recommended that Russia be banned outright from the Rio de Janeiro Games. The IOC rejected that call, instead allowing international federations to decide which Russians could compete.

"This was a very constructive meeting with a good atmosphere," Reedie said. "We share a common goal to strengthen the fight against doping and to protect the clean athletes and in this direction we will closely co-operate."

The IOC said it was confident that progress was being made on reforming WADA's governance and setting up an independent drug-testing unit under the agency's umbrella ahead of the 2018 Winter Games in Pyeongchang, South Korea.

Reedie, an IOC member from Britain, was re-elected last month to another three-year term as WADA president. That came after some leading Olympic officials had publicly called for a "neutral" president to take over.

McLaren's first report, issued in July, detailed state-backed doping programs and coverups in Russia across more than two dozen summer and winter Olympic sports. His latest report is expected to focus on Sochi, including allegations by the former Russian lab director that he helped dope Russian athletes before the games and swapped tainted samples for clean one through a concealed hole in the wall at the lab.

Without knowing the contents of McLaren's report, the IOC board is expected to issue a statement setting out how it will deal with the new findings - including the possibility of stiff sanctions.

The report will be sent to two commissions that the IOC has set up to look into the allegations.

Bach said last month that once the investigations and hearings are completed, the IOC will take "the necessary measures and all the sanctions because if only part of this would be true, it would be an unprecedented attack on the integrity on the Olympic Games and on the Olympic competitions."

The IOC will also review the result of its retesting of stored samples from the 2012 London Olympics and 2008 Beijing Games, a program that has produced about 100 positive cases so far. Many of the positives have involved weightlifting and athletes from former Soviet countries such Belarus, Kazakhstan and Ukraine - which could face IOC scrutiny for possible warnings or sanctions.

The executive board will also receive reports from organizers of the Rio Games, as well as those from Pyeongchang and Tokyo. While Rio faced unprecedented political and financial pressures, Pyeongchang and Tokyo are now dealing with their own problems.

Pyeongchang is preparing for the Winter Games - just 14 months away - at a time when South Korean President Park Geun-hye is facing possible impeachment in a political scandal centring on allegations that a long-time friend manipulated government affairs from behind the scenes.

Tokyo, meanwhile, is trying to reduce costs of the 2020 Olympics after construction costs soared to several times their original estimate. The IOC told Tokyo organizers last week it would not accept a proposed budget of up to $20-billion (U.S.) and demanded further cuts.

The IOC board is expected to ratify the venue locations for the five additional sports - baseballsoftball, surfing, skateboarding, karate and sports climbing - approved for inclusion in the Tokyo Games.

Associated Graphic

WADA president Craig Reedie says his recent meeting with IOC head Thomas Bach was 'very constructive.'


Full roster set for Grand Prix Final
'My biggest challenge is trying to keep my nerves at bay,' Toronto's Chan says about the competition in Marseille
The Canadian Press
Wednesday, December 7, 2016 – Print Edition, Page S2

Patrick Chan knows if he's to find success at the Grand Prix Final this week, he has to keep his eyes off the scoreboard.

The three-time world champion from Toronto is part of Canada's strongest team ever at this week's Final in Marseille, France, and expects some sky-high scores in the men's field.

"My biggest challenge is trying to keep my nerves at bay and staying calm," Chan said. "I'm competing against the top five in the world; it's kind of the all-stars of the season. My biggest goal and my biggest challenge is not to get too taken back, too distracted by the jumping competition going on.

"Scores are going to be put up.

At this point we know there's going to be record-breaking scores - there's no doubt about it."

The Grand Prix Final features the top six skaters in the Grand Prix standings in each of the four disciplines. Canada is sending entries in all four disciplines for the first time ever, because of Kaetlyn Osmond's successful Grand Prix season.

She's the first Canadian to make the Final in women's singles since Joannie Rochette in 2009.

Chan, meanwhile, has won a pair of golds, a silver and bronze at the final, and finished fourth last year in his comeback season.

He'll face a trio of huge jumpers in Japan's Olympic champion Yuzuru Hanyu, Shoma Uno of Japan and American Nathan Chen.

Chan beat Hanyu to win Skate Canada, and then roared back from third-place after the short program to win the Cup of China.

Chan paused on a recent conference call when asked whether he believes he can win in Marseilles.

"Well, I didn't really go into either of my Grand Prixs, especially Cup of China, with any expectation to win," he said. "At this point in my career, if I'm doing it for the results, if I'm doing it for winning as many gold medals as possible, I'm setting myself up for failure.

"So I've learned to just go out and be concerned with my own challenges and my own goals, because the minute I start to get concerned with winning - winning would equate to me trying to do as many quads as Yuzu and Shoma - I'm setting myself up for trouble and I've experienced that before."

Hanyu is aiming to be the first singles skater to win four consecutive Final titles.

Canadian ice dancer stars Tessa Virtue and Scott Moir are chasing their first gold medal after finishing runner-up in four previous Grand Prix Finals.

The dancers, who took two seasons off after their silver-medal performance at the Sochi Olympics, have bounced back in top shape, winning the recent NHK Trophy in Japan with a worldrecord score.

In pairs, Canada's two-time world champs, Meagan Duhamel and Eric Radford, hope to clean up some uncharacteristic bobbles at the NHK Trophy. Duhamel and Radford won gold at the event slightly more than a week ago in Japan, despite nearly botching their final lift.

"Completely shocking to us. It doesn't happen very often and it'll never happen again," Duhamel said.

In the lift, which comes seconds before the end of their program, Radford gracefully hoists Duhamel overhead. But the two mistimed it. There were a few tense seconds, when Radford's arms were straining, that the lift looked in doubt.

"It ended up just being strength between the two of us," Radford said. "And as it was going up I had five different thoughts of, 'Okay, it's going to make it. Nope, I'm not going to make it. Yep, I'm gonna make it. Nope, I'm not gonna make it.' Eventually we got it up and squeezed out two and a half points for that lift."

Julianne Séguin and Charlie Bilodeau, who were fourth in pairs in the Final last season, are Canada's other entry in the event.

Associated Graphic

Patrick Chan says he'll focus on his own challenges and goals rather than on winning medals at the Grand Prix Final in France.


Emotional Berry lifts Kansas City
The Associated Press
Monday, December 5, 2016 – Print Edition, Page S2

ATLANTA -- What a homecoming for Eric Berry.

A pick six, a pick two and a victory he'll never forget.

After Atlanta grabbed the lead with less than five minutes to go, Berry intercepted a two-point conversion pass by Matt Ryan and returned it 99 yards to give Kansas City an improbable 29-28 triumph over the Falcons on Sunday.

There were plenty of tears, to be sure.

Berry grew up in suburban Atlanta and was playing in the city for the first time as a pro. His mother was in the stands at the Georgia Dome, cheering him on.

But, most poignantly, this was where he returned for treatment after a mass was found in his chest near the end of the 2014 season turned out to be Hodgkin's lymphoma.

"The last time I came home during the season it was to get chemotherapy," Berry said. "I take pride in a lot of things that people take for granted, so when opportunities come my way I just cherish them and try to make the most of them."

Boy, did he ever.

In the final minute of the first half, Berry stepped in front of Ryan's throw over the middle and returned that pick 37 yards for a touchdown that gave the Chiefs their first lead. After scoring, Berry found his mom - wearing his No. 29 jersey - and delivered her the ball. She blew him back a kiss.

"I just handed it to her and told her I'd be back," he said.

Promise kept.

"I shed a few tears before the game, I shed a few tears during the game and I shed a few after," Berry added. "It was just a lot of emotions. I tried to contain them and let it show through my play."

The Falcons, rallying from a 2716 deficit, went ahead 28-27 on Ryan's five-yard touchdown pass to Aldrick Robinson with 4 minutes 32 seconds remaining.

Atlanta decided to go for two, looking to stretch the margin to a field goal. But Berry read it all the way, stepped in front of the tight end and took off the other way with no one even close to him, providing the Chiefs with their winning margin. It came after Denver stole a game in similar fashion last month, returning a blocked PAT for the winning points at New Orleans.

Ryan was clearly down after the game, knowing this was one that got away from the Falcons (7-5).

"A poor play on my part," the quarterback said. "I was expecting combination coverage to the outside. Eric Berry did good job coming down off and going onto the tight end."

Those weren't the only backbreaking plays given up by the Falcons. On fourth-and-two from their own 45, Kansas City faked a punt and snapped the ball directly to Albert Wilson, who played his college ball in the same stadium for Georgia State. Wilson burst up the middle for a 55-yard touchdown that extended Kansas City's lead in the third quarter.

"I had a sense it would come down to the end, and it did," Falcons coach Dan Quinn said. "But I reminded the team that it never comes down to one play."

Alex Smith completed 21-of-25 passes for 270 yards, including a three-yard touchdown to Spencer Ware. Travis Kelce was Kansas City's top receiver, hauling in eight passes for 140 yards.

Ryan was 22-of-34 for 297 yards, but his two huge mistakes doomed the NFC South-leading Falcons. Julio Jones hauled in seven passes for 113 yards, while Devonta Freeman had a couple of one-yard touchdown runs.

Associated Graphic

Atlanta Falcons running back Devonta Freeman is tackled by Kansas City Chiefs inside linebacker Ramik Wilson during the second half at the Georgia Dome on Sunday. The Chiefs won 29-28.


Brady registers 200th career win
Patriots celebrate franchise's 500th victory as their quarterback moves up to tie Peyton Manning for first on the all-time wins list
The Associated Press
Monday, November 28, 2016 – Print Edition, Page S4

EAST RUTHERFORD, N.J. -- Tom Brady tied Peyton Manning for the most wins by a quarterback in NFL history, getting his 200th by throwing a go-ahead eight-yard touchdown pass to Malcolm Mitchell with one minute 56 second left to lead the New England Patriots to a 22-17 victory over the New York Jets on Sunday.

Trailing 17-16 with 5:04 left and the ball on the Patriots' 17-yard line, Brady led an efficient drive, completing six passes to push New England down the field.

After James White stretched for four yards on fourth-and-four, a 25-yard catch by Chris Hogan put the ball at the eight. Brady then zipped a pass to Mitchell to put the Patriots (9-2) ahead.

A two-point conversion try by White was initially ruled good, but the call was reversed because the ball never crossed the goal line - giving the Jets (3-8) a final chance.

But on second-and-five from the 30, Chris Long hit Ryan Fitzpatrick before he could throw, resulting in a fumble that was recovered by Trey Flowers.

Brady and the Patriots then ran out the clock - helped by LeGarrette Blount's 23-yard scamper - to win the closely played game that had been flexed out of a prime-time spot.

Patriots fans loudly chanted "Brady! Brady!" in the final moments at MetLife Stadium, which had lots of empty seats with frustrated Jets fans apparently opting to stay home.

It was the 500th win in franchise history for the Patriots, who became the first original AFL franchise to reach the mark.

Brady, who was questionable with a knee injury before game time, wasn't his usual spectacular self, but finished 30 of 50 for 286 yards and two touchdowns.

Mitchell caught five passes for 42 yards and two touchdowns.

Fitzpatrick, who was back as the starter after missing New York's last game with a sprained knee, was 22 of 32 for 269 yards.

The Jets had taken a 17-13 lead with 10:17 left when Quincy Enunwa leaped over Malcolm Butler in the end zone to grab a pass from Fitzpatrick.

The wide receiver's right foot came down inbounds and while his left foot never touched the ground his backside did.

It was initially called an incomplete pass, but Todd Bowles challenged and the call was reversed - for a 22-yard touchdown.

Stephen Gostkowski's 41-yard field goal with 7:02 left cut the Patriots' deficit to one at 17-16.

New England took advantage of a Jets turnover in the second quarter when Robby Anderson caught a pass and gained 25 yards, but had the ball punched out of his hands by Devin McCourty.

Butler recovered, and Brady went to work with an efficient drive.

He completed an 18-yard pass to Julian Edelman, joining Manning (71,940), Brett Favre (71,838), Drew Brees (64,180) and Dan Marino (61,361) as the only players with 60,000 yards passing.

A 15-yard run by Dion Lewis got the ball to the five and he added a one-yard run.

On the next play, Brady fumbled the snap but recovered and fired a pass to Mitchell for the tying score.

New England tight end Rob Gronkowski left the game late in the first quarter with a back injury.

He had been uncertain to play after missing last week's game with a chest injury.

It was not immediately certain if the latest injury was connected to the previous one.

Gronkowski had no catches when he left, with Brady unable to connect with him on two third-down throws.

Associated Graphic

Patriots receiver Julian Edelman, right, goes to the ground after a catch against the Jets during Sunday's game in New York.


Thursday, December 1, 2016 – Print Edition, Page S2

Toronto -- It was perhaps a little more difficult than it should have been, but the Toronto Raptors will accept the outcome regardless.

Facing a Memphis Grizzlies team ravaged by injury, the Raptors pulled away in the fourth quarter for a 120-105 victory at Air Canada Centre on Wednesday night, Toronto's fourth consecutive win.

The Raptors (12-6) were sloppy - Toronto committed 20 turnovers - which kept the Grizzlies (11-8) close through three quarters before Toronto was able to seal the win.

A DeMarre Carroll open three from the right side with just more than four minutes left provided Toronto with its largest lead of the game to that point, at 107-95, and a depleted Grizzlies roster had nothing left in the tank to mount a comeback.

Point guard Kyle Lowry enjoyed another solid outing, leading Toronto with 29 points off 8-of-13 shooting while dishing off eight assists. Teammate DeMar DeRozan added 24 points.

The Grizzlies went into the game battered and bruised.

At the top of the list is guard Mike Conley, their best player, who suffered a back injury in Monday's game against Charlotte and could be lost for up to eight weeks.

Former Raptors star Vince Carter hurt his hip in the same game and didn't play on Wednesday.

Chandler Parsons, the Grizzlies' big free-agent signing of the off-season, continues to recover from knee surgery; James Ennis III is out nursing a sore calf muscle; and Zach Randolph missed his second game attending to a personal matter.

Still, it did not deter the Grizzlies from jumping to a 5755 lead by the end of the first half, aided in no small part by 11 Toronto turnovers that negated a strong 57.6 per cent (19-of-33) shooting effort by the Raptors.

The Raptors flexed their muscle in the third to fight their way to an 89-82 lead heading into the final frame.

Associated Graphic

The Raptors' Lucas Nogueira dunks against the Memphis Grizzlies during their matchup on Wednesday. Former Raptor Vince Carter was back in Toronto, but rode the bench with a hip injury.


How Italy's political chaos affects global bonds
Saturday, November 26, 2016 – Print Edition, Page B2

ROME -- At some point, the gorgeous, three-decade-long bond rally had to come to a close, since all good things must end. But who would have thought Italy would join Donald Trump as the agent of its destruction.

On the day after the Nov. 8 election, U.S Treasury bonds took their biggest plunge in five years.

Until then, bonds had gained 3.8 per cent in the year. In the summer, the yield on benchmark 10year Treasuries was 1.3 per cent.

By Friday, their yield had climbed to 2.38 per cent as investors hammered the sell button. Their fear is that Mr. Trump's pledge to stimulate the economy with thumping great tax cuts and $1-trillion (U.S.) in infrastructure spending will trigger higher deficits and stoke inflation, and they're probably right.

Not to be outdone, the Italians decided to create a little political mess of their own that is rattling the bond markets. Italian bonds matter. Italy, which is sagging under 2.2-trillion ($3.15-trillion Canadian) in debt, runs the world's third largest bond market, after the United States and Japan.

The mess in question is the Dec. 4 referendum on constitutional reform, which Prime Minister Matteo Renzi, the reforms' main cheerleader, seems set to lose.

Bond investors are freaked out by the potential political chaos that a No vote would unleash, since Mr. Renzi has said he would hit the road if the vote goes against him, leaving a power vacuum that could be filled by the populist, anti-establishment Five Star Movement (M5S), the main opposition party.

Investors may have overreacted.

The referendum itself is not the big risk. Instead, it's the election that will happen after it. But that election may not get called until mid-2018. More than a few economists and market strategists agree that the risk of the referendum itself is overstated. Italy's Mediobanca Securities suggests investors "buy into the dip."

The dip is under way. In the past month, the yield on Italian 10year bonds has climbed 71 basis points, to 2.1 per cent, as prices fell (100 basis points equals 1 percentage point). The increase vastly outpaces the rises of other European Union bonds, even those of Brexit-bound Britain and France, which could elect Marine Le Pen, an EU-hating, protectionist xenophobe, in next spring's presidential elections.

Four or five years ago, at the height of the European debt crisis, the yield on Italian 10-year debt went as high as 7.8 per cent and there was grim talk of a bailout, except that no one could figure out how to save a Group of Seven country with a crushing debt-to-gross domestic product ratio of 128 per cent (now 133 per cent), Europe's second highest, after Greece. The shambolic Italian banking system, laden with 360-billion in impaired loans, only heightened concerns the country was on a suicide run.

Some deft fire fighting by the European Central Bank, including a bond-buying program, a flood of cheap loans for banks and, lately, an enormous quantitative-easing program, took Italian bonds out of the emergency ward. A year ago, their yield had fallen to about 1.4 per cent - money for nothing, really.

The new fear is a No vote in next weekend's referendum. Investors seem to think that rejection of the constitutional reforms - essentially the downgrading of the upper house, the Senate, into a largely powerless blather council - would plunge Italy into chaos. It would not. Instead, the status quo would persist and life would go on.

Of course, it's not that simple, because of Mr. Renzi's vow to resign if he loses the referendum.

To be sure, he will tender his resignation, but Italy's stabilityminded president, Sergio Mattarella, may not let him go before the regular parliament ends in mid-2018. Or he may ask another centre-left politician or a technocrat to lead a government until then. The prospect of a snap election right after the referendum is exceedingly low.

The wrinkle in the scenario has little to do with the referendum and a lot to do with Italy's new electoral law, called the Italicum, which would guarantee a solid majority to the leading party through the awarding of bonus seats. A couple of years ago, when Mr. Renzi's Democratic Party was way ahead in the polls, the Italicum was a dream come true for the centre left. Now, it's a nightmare, because M5S has come on strong and is now roughly equal to the Democrats in the polls, at 30 per cent. In other words, a "drain the swamp" protest party, led by a loudmouth former-comedian named Beppe Grillo, could get a super majority if an election were held today. He wants a referendum on the euro and resuscitation of the old lira, a currency that suffered from endless devaluations.

If Italy, the third-largest economy in the euro zone, were to leave the euro, the euro zone would die, perhaps the wider EU, too.

Surprise - Mr. Renzi, who is not keen to end his political career at age 41, now wants to change the electoral law, presumably ending the winner-take-all premium for the top party. To do otherwise would stack the cards in M5S's favour in the next election.

The game now is reforming the electoral law to prevent M5S from gaining more support and winning an election. The party's victory may never happen, or if it does, it could be a long way off.

Bond investors should hold the panic. In Italy, it's simply chaos as usual.

Big banks to report modest gains in earnings
Monday, November 28, 2016 – Print Edition, Page B1

Canadian bank stocks have posted double-digit-percentage gains so far this year, sidestepping threats arising from struggling energy companies, a weak Canadian economy and new rules imposed on the domestic housing market.

But how will banks fare in the coming year?

The country's six largest banks are set to report their fiscal fourth-quarter and year-end financial results starting Tuesday morning. Expectations are modest - analysts forecast profits will nudge just 2-per-cent higher from last year's fourth quarter.

Worries about the banks' loan books from earlier in the year appear to have abated. Oil prices have stabilized between $45 (U.S.) and $50 a barrel, easing concerns in previous quarters that the banks would stand to lose hundreds of millions of dollars in bad loans if energy companies defaulted - with losses potentially spiralling higher if the depressed energy sector spilled into the broader economy.

A modest number of energy companies have defaulted on their obligations and many have sold assets or raised equity in part to pay down debt. Analysts expect the banks will continue to set aside money to cover bad loans, but expect these provisions for credit losses (or PCL) to moderate.

"Notwithstanding a drop in oil prices from current levels, we believe we may have seen the peak in oil and gas PCLs," Darko Mihelic, an analyst at RBC Dominion Securities, said in a note.

At the same time, fears about banks being dragged down by any downturn in the housing market remain largely in check, even as Ottawa has taken steps to tighten regulations around lending. Canadian bank stocks have rallied in recent weeks despite sizable short positions by investors betting the banks will eventually be squeezed.

Some analysts expect the government measures will cool Canada's housing market, which has already seen slower sales in some regions, notably Vancouver.

The Toronto area, however, has continued to surge.

One of Ottawa's key proposals is to make lenders share the risks associated with mortgages by introducing a deductible on mortgage insurance. While that would increase the banks' exposure to housing-related losses, some argue there is a benefit for the banks in the long run as they compete against smaller, lessdiversified mortgage lenders.

"The creditworthiness of those large financial institutions with more diversified earnings profiles will hold up much better than smaller, monoline mortgage lenders," Peter Routledge, an analyst at National Bank Financial, said in a note.

Recent trends in interest rates have also helped bank stocks. Rising bond yields in the United States and Canada have steepened the yield curve - now that long-term bond yields have risen relative to the yields on short-term bonds - which should make loans more profitable and drive the banks' net interest margins (or NIM) higher.

"Though we have long held that 'seeing will be believing' with respect to NIM expansion for the banks, we certainly acknowledge that the curve steepening seen in the past two months is a positive step in this regard," Sumit Malhotra, an analyst at Bank of Nova Scotia, said in a note.

Mr. Malhotra looked at the reaction of Canadian bank stocks the last time bond yields took off, when the Federal Reserve announced three years ago that it would start winding down its bond-buying stimulus program known as quantitative easing.

He found that over the eightmonth period between May and December, 2013, when the yields on U.S. and Canadian 10-year bonds surged, bank stocks jumped 17 per cent on the promise of rising profits.

Mr. Malhotra noted that Canadian banks aren't as rate sensitive as, say, Canadian lifeinsurance companies and U.S. banks, but they clearly benefit.

"As such, the outlook for bank earnings power would improve if bond yields continue to increase," he said.

Still, analysts remain cautious about fourth-quarter results. The economy, after all, is barely growing, consumers are still indebted, and any substantial downturn in housing would hurt profits. But barring any major shocks on these fronts, analysts see gains ahead for the banks' bottom lines.

Some analysts expect profit growth among the big banks will accelerate to as much as 6 per cent in fiscal 2017, as the banks' recent cost-cutting efforts make them more efficient and the headwinds subside. If investors embraced these stocks during a difficult year, a good year should, at the very least, justify the rally in share prices.

Bank of Nova Scotia kicks off the reporting season for the big banks on Tuesday, followed by Royal Bank of Canada on Wednesday, Canadian Imperial Bank of Commerce and Toronto-Dominion Bank on Thursday and National Bank of Canada on Friday. Bank of Montreal concludes the season on Dec. 6.

Associated Graphic


OSC's new cop vows to take 'strong' stand
Friday, December 2, 2016 – Print Edition, Page B1

The new head of enforcement at the Ontario Securities Commission says he has been handed a mandate to be "strong and courageous" in pursuing new types of cases that will send signals to people breaching laws in different areas of the capital markets.

In his first major interview since taking the helm of the OSC's 160-person enforcement division in October, Jeff Kehoe said he has been told to be bold, and plans to tackle a wider range of cases than the OSC has prosecuted in the past. "We have to be strong and we have to be courageous," he said. "We have to take cases that are not surefire wins; we have to take cases that are designed to send strong regulatory messages that are aligned with our strategic priorities."

Mr. Kehoe said the enforcement division is reviewing new types of issues - including mutual fund trading involving unacceptable incentive payments and misleading disclosures using non-GAAP financial measures - that are significant concerns to other OSC staff who oversee various parts of the capital markets, such as staff in the corporate finance section or the mergers review group.

"They help us identify the high risks, they help us investigate, and then we send clear messages to the street," Mr. Kehoe said.

The OSC is currently participating in a review of how syndicated mortgage products are regulated in Ontario, which could result in another new area of enforcement for the commission, he said.

Currently the sale of syndicated mortgage-based securities - a market worth $6-billion annually in Ontario - is entirely regulated by the Financial Services Commission of Ontario (FSCO), which does not have a track record of aggressively prosecuting wrongdoing. But Ontario Finance Minister Charles Sousa said in his fall economic review that his staff have set up a working group to review mortgage security regulation.

Mr. Kehoe said the OSC receives complaints about fraud in the sale of syndicated mortgage products, but has no jurisdiction to investigate them and must refer all the cases to FSCO.

He said the enforcement team could easily add mortgage products to its oversight because they are marketed and sold similarly to many other investment products.

Prior to joining the OSC in October, Mr. Kehoe spent 12 years at the Investment Industry Regulatory Organization of Canada (IIROC), the self-regulatory organization for Canada's brokerage industry, where he was head of enforcement from 2010 to 2013.

He left IIROC in 2013 to work for entrepreneur Michael Wekerle, co-founder of Difference Capital, and left that job in July, 2015.

Mr. Kehoe said he was drawn to the OSC because he wanted to return to a public service role, which he finds meaningful work.

He said a key priority in his new job will be to find ways to make greater use of emerging technology, especially the field of data analytics, to assist investigators. With capital markets "changing at breakneck speed," and with new investor risks emerging constantly, he said regulators have no choice but to "adapt, or else."

New technology can help the commission scan social media sites to spot scams or wrongdoing even before victims have filed a complaint, he said. It can also speed investigations by sifting through reams of data such as thousands of e-mails or millions of pieces of trading information.

"Instead of waiting for the complaints, waiting for somebody to come forward, we could identify the risks, do some quick analysis and become an early disruptor," he said.

Mr. Kehoe is optimistic the OSC's new whistle-blower program, introduced in July, will also help the enforcement division uncover bigger cases that are hard to detect, including illegal insider trading.

"The [U.S. Securities and Exchange Commission] has been successful and I don't see any reason why we would not be as successful," he said. "It only takes one or two strong cases to essentially send a strong shot across the bow."

He is less optimistic, however, about an initiative by the OSC to get new powers under federal legislation to use wiretaps in investigations of insider trading.

Mr. Kehoe was formerly a wiretap agent when he worked as a Crown attorney earlier in his career, and said he knows firsthand how slowly wiretap approvals happen and how expensive it is to monitor tapped phone lines.

With insider trading often a "sporadic" crime, typically involving minimal conversations over long periods, he isn't certain a lot of useful evidence can be gathered at a reasonable cost with wiretaps. "I'm not sure it would be a panacea," he said.

Associated Graphic

Jeff Kehoe, the OSC's new head of enforcement, has been given a mandate to be bold.


Why tobacco stocks still have allure
Thursday, December 8, 2016 – Print Edition, Page B1

Investors have done very well with tobacco stocks, even as smoking rates steadily decline.

But an obstacle is now emerging in the form of rising bond yields.

Are tobacco stocks still worth owning after tumbling nearly 9 per cent since the summer? You bet.

Of course, you have to get around a thorny ethical issue before starting any discussion about tobacco stocks. Smoking kills about 100 Canadians each day, according to Health Canada.

Infants also die from the effects of second-hand smoke, making tobacco stocks the No. 1 enemy of anyone who prefers ethically sound investments.

But if you can look beyond this issue, tobacco stocks have one compelling feature: They deliver awesome returns over the long term - and there is no reason to believe that this trend is about to unwind.

The shares of Altria Group Inc., the go-to name in the sector and owner of the Marlboro brand of cigarettes, have risen 228 per cent over the past decade (to the end of November), versus 57 per cent for the S&P 500.

Add in dividends, the best feature, and Altria's gains over this period expand to 455 per cent. Over 20 years, total returns balloon to an incredible 2,162 per cent.

What's remarkable is that smoking rates, and the actual number of smokers, has been declining. This week, the Centers for Disease Control and Prevention reported that the number of U.S. smokers dropped below 40 million for the first time since it began tracking the data 50 years ago. From 2005 to 2015, the smoking rate shrank to 15 per cent from 21 per cent.

For just about any business, this would cause a big dent in profits - but this is the tobacco business, where addiction and brand identity give companies the luxury of raising prices, more than offsetting a shrinking market. Just last month, Altria hiked prices on its cigarette brands between 2 per cent and 3 per cent.

Altria has also been snapping up rivals - including Canada's Rothmans Inc., in 2008 - and diversifying into wine, beer, cigars and vapour cigarettes.

The impact since 2008, after Altria spun off Philip Morris International Inc. and its stake in Kraft Foods, is profound: Revenue rose more than $3-billion (U.S.), to an expected $19.4-billion in 2016, according to Bloomberg. Profit on a per-share basis has grown almost threefold.

Rivals have enjoyed similar success amid frenetic consolidation. Reynolds American Inc. - which owns the Camel brand - has risen 480 per cent over 10 years. The company recently snapped up Lorillard LLC in a $27-billion deal in 2015, and is now the subject of an unsolicited $47-billion offer from British American Tobacco PLC.

But the great years for shareholders coincided with falling bond yields, which made dividend-paying stocks especially attractive. As a result, dividend yields went down, down, down - hitting a low of 3.2 per cent, in the case of Altria in mid-2016, down from more than 6 per cent in 2008.

Altria's dividend increased over this period, but share prices rose even faster.

Now, though, bond yields are rising. The yield on the 10-year U.S. Treasury bond rose above 2.4 per cent earlier this month, up dramatically from just 1.4 per cent in July, as investors anticipate faster U.S. economic growth, rising interest rates and higher inflation. Suddenly, tobacco dividends look less attractive, which is why share prices have sold off.

This looks like an opportunity, for two reasons.

First, the move in bond yields is anticipating changes that haven't actually occurred. While the Federal Reserve is expected to raise its key interest rate in December, rosy forecasts of economic growth and inflation must overcome a global economy that continues to plod along.

The dip in tobacco stocks over the past six months might be as bad as it gets.

Second, tobacco companies are generous with their dividends.

Altria has raised its dividend 50 times over the past 47 years, and currently distributes about 80 per cent of its profit to shareholders. Since 2008, the company has doubled its quarterly dividend.

If the pace continues, which is a reasonable assumption, the rising payouts should offset concerns about higher bond yields.

Altria Group (MO)

Close: $65.41 (U.S.),

up $1.11 Reynolds American (RAI)

Close: $55.40 (U.S.), up 21¢

Associated Graphic


Approvals won't end pipeline battles
Wednesday, November 30, 2016 – Print Edition, Page B1

CALGARY -- If there's one thing that's become clear over the past decade of pipeline battles, it's that approval doesn't beget acceptance. Canadians are about to get more proof.

For those executives and politicians with big dreams of sending batches upon batches of heavy Canadian crude oil to the Pacific and onward to Asian markets, that's good reason to keep any victory dances to a minimum.

These fights are far from over.

Yes, with new federal approvals in hand, Kinder Morgan Canada and Enbridge Inc. can get on with the business of working through the lists of conditions they must meet before trenching rights of way to points south and west from Alberta.

But the project that is now officially dead - Northern Gateway - is the most instructive as backers, opponents and governments huddle to hammer out strategies for their next moves, all while claiming the environmental and economic high ground. It was three years ago that Northern Gateway, the $7.9-billion pipeline proposed by Enbridge to ship oil sands-derived crude to Kitimat, B.C., from Alberta, won National Energy Board approval.

After a decade of planning, discussion and hearings, that proved to be not the beginning of the project's road to construction, but the beginning of the end.

Six months later, the Harper Conservative government gave the proposal its green light, providing that the company meet the 209 social, safety, economic and environmental conditions set out by the NEB. Several B.C. aboriginal groups remained staunchly opposed to Northern Gateway.

Enbridge chief executive officer Al Monaco pledged to rebuild relationships with First Nations.

Many leaders were not swayed.

Then came the federal election campaign of 2015, when then-Liberal candidate Justin Trudeau said that the Great Bear Rainforest was no place for an oil pipeline, and that the northern B.C. coast was all wrong for tanker traffic.

Last summer, the federal Court of Appeal reversed the green light, blasting a slipshod approach by the former government to consult with aboriginal communities before it gave final approval. By then, few industry officials wagered the line could still be built.

Tuesday's approvals don't signal clear sailing either. Battles are about to intensify for Enbridge's Line 3 replacement and Kinder Morgan's Trans Mountain expansion. The curve ball in the equation is the increasingly likely resurrection of Keystone XL under the administration of president-elect Donald Trump after years as a protest point.

The Trans Mountain expansion is seen as the oil patch's best hope to get its crude to the Shangri-La known as tidewater. Today, backers say increasing pipeline capacity to the United States is all fine and good, but that long-reliedupon customer is turning into a fierce competitor as its own exports increase.

Kinder Morgan wants to use its existing right-of-way to triple the capacity to nearly 900,000 barrels a day, which would land in Burnaby, B.C., for shipment to AsiaPacific markets. The Alberta government has been front and centre pushing for such market access, hoping for it to help jumpstart its stalled economy while holding out the promise of tougher carbon restrictions.

Despite that, the wall of opposition to the expansion has been growing to include the mayors of both Burnaby and Vancouver, as well as First Nations such as the Tsleil-Wauthuth. Its leaders met with Natural Resources Minister Jim Carr this week to press their case that Trans Mountain should not proceed under any circumstances due to oil-spill risks that could have long-lasting impact on the coastal community. Count on busy courts. One would think Line 3 would be a breeze, given that Enbridge touted the $7.5-billion project as a safety measure - fitting out an existing route to the U.S. Midwest with all new equipment. It won NEB approval last spring, but is still hung up in the United States, where it faces opposition by environmental groups in Minnesota, including, one of the leaders of the battle against Keystone XL.

Indeed, the protests and blockade of the Dakota Access pipeline have shown opposition to projects is pancontinental in scope.

Government approval isn't the end of the fight. Not even close.

Prime Minister Justin Trudeau can give his nod to a pipeline to the stars if he wants. That's when the complications really start.

Enbridge (ENB)

Close: $56.69, down 73¢

Optimism holds gold down amid triple helping of chaos
Tuesday, December 6, 2016 – Print Edition, Page B1

Gold, the traditional haven from financial turmoil, is now being crushed by a market for which it seems ideally suited.

Over the past month, a triple helping of chaos - including Donald Trump's election in the United States, Indian currency reform and an Italian referendum - has surprised investors in three large economies.

Yet gold has only sunk lower and lower. Instead of seeking shelter from uncertainty, investors have chosen to place their bets on renewed prospects for economic growth.

That trend continued Monday as the suddenly not-so-precious metal hit its lowest point since February, falling as low as $1,158.13 (U.S.) an ounce, despite the unexpectedly lopsided defeat of Italy's establishment in a referendum on the weekend. A month ago, gold was above $1,280 an ounce.

The vote in Italy underlines concerns about the country's fragile banks. In more normal times, Italy's troubled financial sector might be seen as an excellent reason for European investors to take refuge in gold.

Similarly, India's decision to fight tax evasion by scrapping high-value banknotes last month would ordinarily be expected to spur demand for gold in that country.

For that matter, a Trump presidency was seen as a surefire positive for bullion only a few weeks ago. Forecasters believed U.S. investors would stampede into any asset that could offer shelter from Mr. Trump's peculiar brand of economics.

But that story reversed itself within hours of his election. The president-elect is now expected to pry open the national wallet of the United States. The prospect of tax cuts and infrastructure spending has boosted hopes for stronger economic expansion and dragged bullion decisively lower.

"Most pre-election gold commentary made it seem like the prospect of the Trump presidency would be markedly bullish [for the metal] due to the uncertainty surrounding many campaign promises, with many forecasts of $1,500 an ounce," Rory Johnston of Bank of Nova Scotia wrote in note.

Instead, Mr. Johnston noted, "the market narrative of a Trump presidency quickly shifted from one of uncertainty to a focus on stimulus spending, inflationary pressure and rising U.S. interest rates."

According to this new story, the president-elect will spur growth by cutting taxes and spending more on public works. Since stronger growth is likely to spur inflation, the Federal Reserve will push rates higher to keep a lid on the overheating economy.

Gold pays no dividends or interest, so any bump higher in rates makes the metal less attractive in comparison to bonds.

Higher U.S. interest rates also draw capital into the United States, bolstering the value of the greenback. That is bad for gold prices, which are typically denominated in U.S. dollars, because the stronger currency makes it more expensive for nonAmericans to buy the metal.

Analysts at Citigroup said on Monday they have slashed their forecast for average gold prices in 2017 to $1,160 an ounce, down from $1,275 previously.

"The bearish outlook is driven by a strong U.S. dollar outlook post-Trump and the back-up in bond yields," Alexander Hacking wrote.

His forecast assumes a Federal Reserve rate hike next week followed by two more increases in 2017.

He downgraded his recommendation on Kinross Gold Corp. of Toronto to sell as a result of the weakened outlook for gold. He already had a sell rating on Agnico Eagle Mines Ltd. of Toronto.

Barrick Gold Corp. of Toronto is the only stock in the sector that earns a buy recommendation from the Citi analyst, while Goldcorp Inc., Silver Standard Resources Inc. and Newmont Gold Co. all get neutral ratings.

But gold investors shouldn't give up all hope. Mr. Johnston at Bank of Nova Scotia is sticking to his forecast of an average price of around $1,300 an ounce in 2017 and 2018.

Next year "could present a repeat of 2016's political surprises with an ample supply of European Union elections and referenda on the docket," he says.

If the results aren't to investors' liking, gold may come back into fashion with a vengeance.

Energy stocks ride high on pipeline, OPEC decisions
Thursday, December 1, 2016 – Print Edition, Page B1

Canadian energy stocks ripped to fresh highs Wednesday as OPEC set a new course for the global oil market, a day after the Canadian government bolstered the sector by approving two major pipeline projects.

Combined with a rising consensus economic forecast, market forces have swung in support of the energy-market recovery.

"The headwinds are now being outweighed by the opportunities," said Rafi Tahmazian, portfolio manager at Canoe Financial in Calgary.

"All of these things are powerful positives, which have taken a lot of pressure off of the oversupply."

Canadian oil and gas stocks reacted forcefully Wednesday, with the S&P/TSX capped energy index gaining 8 per cent on the day to reach its highest level in a year and a half. All 39 names in the index were in positive territory.

That rally roughly matched the movement in crude oil itself. West Texas intermediate rose to as high as just shy of the $50 (U.S.) mark after the Organization of Petroleum Exporting Countries announced its first production cuts in eight years.

Two years after the oil cartel triggered the long descent in crude prices by refusing to limit production, a surprise deal out of Vienna will see 1.2 million barrels a day cut from its current output.

"If OPEC is able to adhere to these quotas, it would help to reduce the glut that has plagued the market over the last two years," TD economist Dina Ignjatovic said in a note.

The announcement seemed to spur a recovery in the global oil market that has been sporadically unfolding over the course of the year.

After the oil crash hit its low point in January, the price of crude doubled, then traded within the $45-$50 range over the past six months.

But there was little in the way of concrete development to drive the commodity higher over that time, Mr. Tahmazian said.

"It was all speculators and short covers and rumours," he said. "This is one of the first big tangible things we've seen for our sector since the meltdown [started] in 2014."

Now, reality is catching up to market speculation, Mr. Tahmazian said.

Progress from OPEC, however, doesn't yet seem to be fuelling much of a change in crude forecasts. TD said it is expecting a range of $45 to $55 over the next year.

Bank of Montreal is sticking with a similar outlook, analyst Randy Ollenberger said.

"The importance of what we've seen today is that it will give investors comfort that there is a floor price," Mr. Ollenberger said.

"They've signalled that they don't want to see the oil price go back below $40."

There are many fund managers, both in Canada and elsewhere, who have largely taken a pass on the energy rally and remain underweight in oil and gas stocks.

"They're concerned about the risk of oil prices slipping back. If we've taken that away, you could see incremental buying in the space," Mr. Ollenberger said.

The OPEC deal helps reduce the risk of certain energy names, particularly those most leveraged to the price of the underlying commodity, he added.

Some of Wednesday's biggest stock moves were among companies heavily concentrated in exploration and production - Cenovus Energy Inc. and Canadian Natural Resources Ltd. rose by 10 per cent and 9 per cent, respectively.

Pipeline stocks, on the other hand, were some of the sector's calmer names on the day.

On Tuesday, Prime Minister Justin Trudeau approved Kinder Morgan Canada Inc.'s Trans Mountain pipeline expansion and Enbridge Inc.'s Line 3 to the U.S. Midwest.

It was a "monumental event, but don't expect much of a share-price reaction," Raymond James analyst Chris Cox said in a research note. The announcement was largely in line with market expectations, he said.

Still, the pipeline approvals should help companies make their cases for new oil sands projects, Mr. Cox said. Plus, "we do see positive implications for investor sentiment with respect to the Canadian large-cap producers in the context of an eventual oil-price recovery."

Montreal firm eyes bid for Valeant assets
Monday, December 5, 2016 – Print Edition, Page B1

MONTREAL -- In an effort to speed up its growth, Knight Therapeutics Inc. says it is interested in buying assets that might be dumped by debt-challenged Valeant Pharmaceuticals International Inc. and Endo International PLC.

The Montreal drug distributor, launched by former Paladin Labs founder Jonathan Goodman, is keen to acquire Valeant's Canadian sales operation in its entirety or in chunks, Mr. Goodman said Friday. Knight is also interested in buying Endo's international business, including assets in Canada, Mexico and South Africa, he said.

At the top of his wish list is his former business, Paladin, which he sold in 2014 to Endo for $3.2billion in cash and stock as part of a tax-inversion manoeuvre that saw U.S.-based Endo reincorporate in Ireland.

Knight was spun out as an independent entity as part of that deal, with Mr. Goodman as its chief executive officer. Its current business is small, with less than $2-million in revenue on a small menu of commercialized products in the third quarter, but its potential buying power is big: As of the end of September, Knight had $645-million in cash on its balance sheet and no debt.

Knight has communicated its interest to the chief executives of both Valeant and Endo, although no talks are talking place, Mr. Goodman said.

"So far [it's] only unrequited love," Mr. Goodman told The Globe and Mail. "They know of our keen interest, ability to quickly finance and rapidly close on a fair and reasonable transaction."

Knight's positioning comes at a difficult time for makers of specialty pharmaceuticals such as Concordia International Corp., Mylan NV, Valeant and Endo, whose shares have faced pressure amid increased public scrutiny of their pricing strategies. Market turmoil will present opportunities for well-capitalized companies and private equity in the near term, said Laurentian Bank Securities analyst Joseph Walewicz.

Knight sees itself as a buyer in a situation where Valeant and Endo instigate a sales process under duress, Mr. Goodman said. He said he doesn't intend to make an unsolicited bid for the businesses because that typically means paying more.

Facing hefty debt loads built up by several years of binge buying, both Valeant and Endo have been exploring asset sales in recent months to reduce leverage.

At Laval, Que.-based Valeant, chief executive officer Joseph Papa has announced just one divestiture during his seven-month tenure and the reported breakdown in talks over the sale of its gastrointestinal drug unit Salix last month has sparked concern that the company will have trouble raising money to help pay down debt totalling $30-billion (U.S.). At Endo, chief executive officer Paul Campanelli is dealing with an $8-billion debt mountain amassed in a growth-by-acquisition strategy.

Valeant said its Canadian business is not for sale. "We have publicly designated [it] as core to us," said Scott Hirsch, Valeant's senior vice-president of business strategy.

Endo said it is assessing its businesses and hasn't made any decisions on monetizing assets. "As we get closer to our February earnings call, we'll provide more colour whether this is something that we will be considering," Mr. Campanelli told analysts Nov. 8.

Heather Zoumas-Lubeski, an Endo spokeswoman, declined to comment further.

Knight has a supportive investor base confident in the company's ability to deploy capital to generate returns, analysts say.

Mr. Goodman, who suffered a traumatic brain injury in 2011 that nearly took his life, has reassembled much of the team he had at Paladin, including former chief of finance Samira Sakhia. They want to buy Paladin back as a way to buy the sales infrastructure and other expertise they would otherwise build over time. At current market multiples, Paladin would be worth about $380-million (Canadian) as measured by enterprise value to sales, Laurentian estimates.

"In a year from now, I may not need them because I'll have it," Mr. Goodman said of the manpower capability he intends to establish. "I will have built it. Now is the time."

In tough year, Big Six banks answer the bell
Wednesday, December 7, 2016 – Print Edition, Page B1

Canada's six largest lenders defied the odds in 2016, with fiscal-year results substantially stronger than many feared they would be.

In a year when the Canadian economy was ravaged by plummeting energy prices and a surprise wildfire and when global shocks such as the Brexit vote and the United States election caught investors off guard, the country's Big Six banks hummed along, churning out solid results.

Comparing their earnings yearover-year can be tricky, because they have all endured large restructuring charges in the past 24 months, which boost expenses.

But this year, revenue growth from the Canadian personal and commercial banking arms, which dominate their profits, averaged 4.6 per cent - a victory considering underlying economic growth was anemic.

Canadian banks largely credited their earnings mix for their continued strength. "We think the diversification is underappreciated," Bank of Montreal chief financial officer Tom Flynn said in an interview. The different businesses within a bank often complement each other, so even if one is struggling, others counteract the weakness.

Looking forward, the odds are stacking up against the banks again next year - albeit in different ways. Regulators have forced lenders to be even more conservative with their capital, which limits how much money they can invest in their businesses.

There is also uncertainty about the extent to which new federal mortgage rules will calm overheated housing markets in Toronto and Vancouver. Housing loans have boosted bank bottom lines for many years now. But many times since the Great Recession, Canada's banks have predicted they'd have a tough time repeating their successes and they've proven themselves wrong.

Investors don't seem very worried. Five of the Big Six bank stocks have set record highs in the past month - three on Tuesday alone - and are now trading around their historical peaks.

In fiscal 2016, the tale of bank profits is a two-part story. In the first half of the year, many banks endured energy loan losses and investors panicked about exposures to the sector, despite lenders' assurances that they could handle a storm.

Optimism returned in the second half of the year, thanks to a partial rebound in energy prices and to solid earnings.

BMO capped fourth-quarter results Tuesday with a profit that handily beat expectations. Quarterly net income hit $1.35-billion, up from $1.21-billion a year ago.

Adjusted for one-time items, earnings were $2.10 a share, well above analyst expectations of $1.85. The bank increased its quarterly dividend by two cents to 88 cents a share. For the full fiscal year, BMO earned $4.63-billion, up 5 per cent from 2015.

BMO's capital markets division served as its profit driver in the quarter, with earnings up 65 per cent to $396-million from a year ago. Gains came almost across the board, with better revenues in everything from mergers-andacquisitions advisory activity, to equity and debt underwriting, and equity and interest-rate trading.

Canadian personal and commercial banking, which delivers the lender's largest profit, had earnings grow 5 per cent in the quarter, driven by solid loan and deposit growth. In wealth management, which includes the bank's insurance division, income jumped 15 per cent, owing to strong operating growth.

Results in BMO's U.S. personal and commercial banking arms were encouraging. For multiple years after BMO bought Marshall & Ilsley in 2010, returns from this unit weren't significant, in large part because the U.S. Midwest struggled to deliver economic growth after the Great Recession.

Profit in that division is now improving, with income hitting $286-million last quarter, up 38 per cent from a year ago. Some of those gains were fuelled by BMO's acquisition of General Electric's transportation financing business in the United States.

Bank of Montreal (BMO)

Close: $92.06, up $2.48

'Discouraging shift' to part-time work fuels job growth
Saturday, December 3, 2016 – Print Edition, Page B1

Part-time work is fuelling Canada's job growth this year, a discouraging trend for a country still desperately trying to recover from the oil slump.

For the second consecutive month, the creation of part-time work outpaced full-time hours, leading to an unexpected net gain of 11,000 new jobs in November.

"Plenty of jobs in the offing, but not the kind of work we'd like to see," Avery Shenfeld, chief economist with CIBC, said in a research note.

Over the past year, Canada has added 213,000 part-time jobs and eliminated 30,500 full-time positions, according to Statistics Canada's monthly labour report released on Friday.

Brian DePratto, economist with Toronto-Dominion Bank, called the shift discouraging but not surprising. "The labour market appears to be evolving in line with an overall economy that continues to struggle to find traction," he said in a research note.

The jobs report continued to show the diverging fortunes of oil-producing Alberta and nonresource-dependent provinces.

Ontario, Quebec and British Columbia accounted for all the fulltime job growth over the year.

Meanwhile, Alberta has been responsible for most of the fulltime job losses. In the 12 months to November, the province eliminated a staggering 74,000 fulltime positions.

Last month's losses reversed some of the gains made over the fall. Alberta's unemployment rate shot up 0.5 percentage points to 9 per cent, its highest level since 1994.

On the flip side, Quebec has proven to be one of the strongest job creators this year.

Its unemployment rate fell to 6.2 per cent, the province's lowest rate since recordkeeping started in 1976 and the second-lowest jobless rate in the country after British Columbia.

Quebec has added 81,000 jobs over the year and its finance minister told reporters that the government's rigour in keeping public finances under control has boosted overall confidence.

But the country's strongest economy, British Columbia, shed 9,300 positions, marking another drop since September. The decline comes after the provincial government imposed a tax on foreign housing buyers in an attempt to thwart real-estate speculators and cool the housing market. Although the tax has curbed housing sales, it is unknown whether the slowdown was responsible for the job losses or if it would lead to further labour-market deterioration.

"We are going to find out how much of what was going on in B.C. was really just linked to what was going on in the housing market," said David Watt, chief economist with HSBC Bank Canada. "If the housing market comes off the boil and it looks like it has, the job market is going to come off the boil. We will see if there was underlying economic vigour or just the housing bubble playing out."

Across the country, employment increased by 31,200 jobs in the services-producing sector and dropped by 20,600 positions in the goods-producing sector. The construction, manufacturing and transportation industries suffered the biggest declines last month.

The national jobless rate eased to 6.8 per cent from 7 per cent.

November's labour report comes ahead of next week's interestrate announcement, where the Bank of Canada is expected to keep rates at rock-bottom lows.

Associated Graphic



World Cup qualification chase has new coach Arena's squad fighting for its life
The Associated Press
Wednesday, November 30, 2016 – Print Edition, Page S3

NEW YORK -- Bruce Arena opened a binder to a page with 48 names, his depth chart for the U.S. soccer team.

Back in charge for the first time in a decade, he views the U.S. team's state as urgent following losses in the first two games of the final round of World Cup qualifying and already has plans.

"We're fighting for our lives starting March 24. We're behind the eight ball," he said. "We've got to close the gap and we get six points in the next two games, the gap is closed."

During an hour-long session with reporters Tuesday, Arena said comments he made in 2013 about foreign-born players on the national team were aimed at the U.S. player development system, not a criticism of German-Americans who made up almost a quarter of the 2014 World Cup roster under Jurgen Klinsmann.

"I was told today, somebody, they referenced me in Spain as the Donald Trump of soccer," Arena said. "I think that I'm at fault obviously for those statements, but I would like to clear that up. It's absolutely ridiculous.

It's no way in the way I think.

"I think the phrase foreign nationals is a very poor term, whoever uses it, and I will not use it. I will not use dual citizens.

They're national team players," he explained. "The comment regarding foreign-born players, at the time I believe was referencing player development. And I was simply saying that if our senior national team program consists of a large minority of players, large majority of players that were born elsewhere, where are we going with our development?

It has nothing to do with who should be playing on the national team, who should not."

Now 65-years-old and a member of the U.S. National Soccer Hall of Fame, Arena coached the U.S. team from 1998-2006 and is the winningest coach in team history. He led the Americans to the 2002 World Cup quarter-final, their best finish since the first tournament in 1930, then was fired after a first-round elimination in 2006. He took over from Klinsmann last week following a 2-1 home loss to Mexico and a 4-0 rout at Costa Rica.

"Mexico certainly came out and took control of the game early, and I don't think that should happen at home," Arena said. "I think the game in Costa Rica was not good from start to finish. In general, I think the theme in both games [has been]: Our back line played poorly, and I don't think they're poor players. I think they can play better, so we've got to get them organized, get the right players in the right spots and get them playing better as a unit."

Arena plans to open training camp in Carson, Calif., around Jan. 8 and follow with a pair of exhibitions with a roster mostly from MLS. Qualifying competition resumes March 24 with a home game against Honduras, followed four days later by a match at Panama.

Arena says goalkeepers Tim Howard and Brad Guzan need competition from the rest of the player pool, 31-year-old midfielder Benny Feilhaber likely will get an opportunity to return after playing just three games under Klinsmann and 35-year-old midfielder Jermaine Jones "certainly still has something to offer."

He views captain Michael Bradley as a defensive midfielder rather than a playmaker, a role Klinsmann encouraged Bradley to assume.

Settling on the centre of the field is one of Arena's keys.

"We need a better passer in the midfield than we have. We need to have a player in the attacking half of the field that can deliver the right ball at the right time," he said. "Who that is remains to be seen. There's a couple of domestic players that are very good at that that we'll look at in camp in January, and that to me is an area that we've got to identify.

And that will help establish how we play. Do we play with one striker, two strikers? Do we play with three? How do we define our midfield shape based on that."

Arena's office at the StubHub Center moves only about 30 feet from his previous job as coach of the LA Galaxy and his parking spot remains the same. As he takes over, he wants to change the United States's mentality and consistency.

"Too many peaks and valleys," he said, moving his hands up and down. "We've got to get them to level out their performance a little bit more."

A former German star player and coach, Klinsmann criticized the level of play in MLS. Arena said it has come a long way.

"MLS isn't on the level of the EPL or the Bundesliga or La Liga, Serie A. We know that," he said.

"But right after that, we're in that area below that, and it will get better."

Arena doesn't tweet and isn't that interested in statistics.

"I'm not a person that digs deep into analytics because I don't think the sport of soccer is an analytic sport," he said. "I think baseball clearly is. I think football can be, obviously, basketball a little bit more. I think soccer is a hard one."

Associated Graphic

Bruce Arena, again at the helm of the U.S. national soccer team, speaks during an interview in New York on Tuesday.


Cavaliers snap Raptors' winning streak
Coming into Monday night off of three-straight defeats, the Cavs prevailed over a high flying Toronto squad at the ACC
Tuesday, December 6, 2016 – Print Edition, Page S2

TORONTO -- In the grand scheme of things, a three-game losing skid in the uber-competitive National Basketball Association is hardly the sort of thing to turn your world upside down.

By this time last season, the Toronto Raptors, for example, had already endured a couple of three-game slides - and things did not exactly turn to stone for them after that. They fell just two victories shy of a berth in the NBA Finals.

So when Dwane Casey, the sagely Raptors coach, hears the 'My House is Burning Down' reaction of the NBA champion Cleveland Cavaliers to their recent run of losses, he only smiles that knowing smile and suggests that everybody calm down a bit.

"Again, everybody goes through that," Casey said before Monday's game against the Cavaliers at Air Canada Centre. "They're still the Cleveland Cavaliers. And LeBron James is still LeBron James, Kyrie Irving's still Kyrie Irving, and I promise you, J.R. Smith has not forgotten how to shoot the ball.

"To me, it's just a blip on the radar screen. Everyone goes through this, and they're still the king of the hill until somebody knocks them off."

It would not be the Raptors, at least on this night, as the Cavaliers (14-5) were able to hold off for a 116-112 triumph during an invigorating engagement at the ACC that snapped the Raptors (14-7) win streak at six games.

The Cavaliers displayed just too much elite firepower for the Raptors to manage, with four players scoring in double figures, led by 34 points from James.

Toronto native Tristan Thompson was also a handful, finishing with a game-high 14 rebounds to go with six points.

The game got away from Toronto in second half, the fourth quarter in particular when the Cavaliers pulled away during a three-point slugfest that left the Raptors reeling.

A James three-ball with just over four minutes remaining put Cleveland ahead 107-92, too much for the Raptors to battle back from. A DeRozan three with 10.3 seconds left, that would have cut the score to 114-112, was ruled out of bounds.

It is always a moment when James comes to town with the Cavaliers, especially after last season's bitterly contested Eastern Conference final in which Cleveland prevailed four games to two over Toronto in the best-of-seven affair.

And the two teams are back at the top of the Eastern Conference heap in the early going this season, with the Cavaliers holding a slender advantage over the Raptors by mere percentage points heading into Monday's contest for the best overall record.

Cleveland had already beaten the Raptors on two occasions this season. But the Raptors were on a heady surge, having won their last six - their last four by a ridiculous average margin of 29.8 points - while the Cavaliers came in on an unaccustomed threegame losing skid.

It was the longest such downward spiral in the 59-game regular-season tenure of Cleveland head coach Tyronn Lue, and it obviously got the attention of King James.

"We've got to get out of the honeymoon stage," James intoned to reporters after the Cavaliers were dumped by the Chicago Bulls in their previous outing on Friday.

Earlier on Monday, James complimented Toronto on its recent burst, paying homage to what he referred to as the Raptors "twoheaded monster" in DeMar DeRozan and Kyle Lowry for helping to blaze that trail.

"They've had our attention," James said of the Raptors as a whole. "They've had our attention for the last couple of years. I think they've had the NBA's attention."

Even for a game in December, the contest had all the trappings of a playoff battle and the players were certainly not holding anything back.

James shook himself up before 90 seconds had elapsed in the first quarter when he landed awkwardly after drilling home a fetching alley-oop feed from Irving, but was able to remain in the game.

The same fortune did not befall Smith, Cleveland's starting shooting guard who exited the game late in the first quarter with a knee injury and didn't return.

That was around the same time Toronto point guard Kyle Lowry took a lick to his upper lip by a Kevin Love elbow that required freezing before he could re-enter the contest.

The game rolled back and forth with a quick, crowd-pleasing tempo that resulted in both teams enjoying six-point leads at one point.

Late in the second quarter, after Toronto's Patrick Patterson and Love toppled over like bowling pins after a heavy collision at the top of the key, DeAndre Liggins connected on one of two free throws that provided the Cavaliers with a 62-61 lead by the break.

The Cavaliers began to flex their considerable muscle at the start of the third quarter, reeling off six straight points to pad their advantage to 68-61.

They would build on that, with Irving negotiating a behind the back pass off the fast break to James for an easy layup that was followed up by a Love three that left Toronto staring up at an 82-72 hole.

By the end of three the Cavaliers led 90-81.

Associated Graphic

Rookie Toronto forward Pascal Siakam, left, tries to contain Cleveland forward LeBron James in the first quarter at Air Canada Centre on Monday.


Amid all the fuss, Flames goalie stands tall
At 30, Johnson is getting his first real chance to be a No. 1 netminder - and he's making his hometown sit up and take notice
Thursday, December 1, 2016 – Print Edition, Page S3

CALGARY -- On Wednesday morning, in the hubbub of game day in the Calgary Flames' dressing room, there was a mad scramble to track down the latest Dougie Hamilton trade rumours, all dismissed out of hand by Calgary Flames' general manager Brad Treliving. Johnny Gaudreau, the injured forward, was around too, skating for the first time since breaking his finger, and inching closer to a return.

Amid all the hustle and bustle, noise and confusion, goaltender Chad Johnson was off in one corner holding court, exhibiting the same aura of calm and confidence that he's demonstrated on the ice.

If Johnson didn't exactly ride to the rescue to salvage the Flames' season, it was only because he'd been here right from the start, mostly watching from the bench behind Brian Elliott.

The Flames' goaltending received a complete makeover in the summer after the team finished with the worst defensive record in the league last season.

When Elliott, the opening-night starter, couldn't quite get it going, coach Glen Gulutzan turned to Johnson just before last week's season-high six-game trip and he responded with a series of excellent performances.

Up until the Philadelphia Flyers put an end to his winning ways last Sunday, Johnson had won five of his six previous appearances, and posted eye-popping numbers in that span (a 1.17 GA, a .958 save percentage, plus two shutouts). Over all, he is 7-4-1 on a team that had a 10-13-2 record heading into Wednesday night's game against the visiting Toronto Maple Leafs.

Upon further review, Johnson's strong play probably shouldn't have come as that much of a surprise. Last year, he emerged as the Buffalo Sabres' de facto starter following an early season injury to Robin Lehner and won 22 games in 45 appearances for a team that had finished dead last in the league the previous year.

By contrast, Elliott won 23 games in 42 appearances for a notoriously stingy St. Louis Blues team.

Johnson opted to sign with the Flames, largely because of opportunity (and knowing Lehner was almost certainly going to gobble up the lion's share of the starts this year, provided he stayed healthy).

That Johnson is originally from Calgary - he was born here in June of 1986, days after the Flames lost the Stanley Cup final to the Montreal Canadiens - factored into the decision, but it wasn't the primary reason he came home to play.

At 30, he is getting his first real chance to be a No. 1.

"It's all about who likes you, who sees you, the contract, the right fit - there's so much that goes into it besides playing well," Johnson said. "Some guys get it handed to them, others don't.

But it's like life - you've just got to grind it out and not worry and do your thing."

There have been a lot of goaltenders in the recent past whose careers have taken off after a decade of apprenticeship - from former Vézina Trophy winners Dominik Hasek and Tim Thomas to established credible starters such as Craig Anderson and Devan Dubnyk.

Sometimes, you just need to be in the right place at the right time. For Johnson, it always seemed that wherever he was, someone got there before him - a Tuukka Rask, a Henrik Lundqvist or a Mike Smith.

"No matter what you do, those are your go-to guys," Johnson said. "You're paying them the money and money talks. And they're great goalies. I was lucky to be behind them, and I understood that. I knew I just had to improve every year and wait for the opportunity."

Johnson is the first Calgaryborn goaltender to play for the Flames since Mike Vernon, who won the Stanley Cup for them in 1989 and then returned to finish out his career in Calgary in 2002.

That was also Johnson's last year in Calgary - he played for the Calgary Buffaloes of the Alberta midget hockey league in 2002-03 before spending the next four years at the University of Alaska.

Mostly, Johnson's formative years overlapped with the beginnings of the Miikka Kiprusoff era, the last time the Flames consistently received elite-level goaltending.

"I mean, I was a Flames fan," Johnson said. "Growings up in Calgary, it's your home team and there was always a lot of focus on the goalies. Mike Vernon, he was a legend around here and when you win the Stanley Cup, rightfully so. Then Kipper, the run he had, and what he accomplished.

"It's exciting to be in this locker room and be a part of the team you grew up with and watched and to be one of the goalies that you sort of admired growing up.

That's one of the reasons I signed here. I wanted that challenge - and the pressure that comes with it, of being in your hometown."

Follow me on Twitter: @eduhatschek

Associated Graphic

Calgary Flames goalie Chad Johnson got his chance in the spotlight when the team's goaltending got a makeover in the summer and coach Glen Gulutzan relied on him when starter Brian Elliott faltered.


Lakers not the draw they once were
Saturday, December 3, 2016 – Print Edition, Page S4

TORONTO -- It used to be an event whenever the Los Angeles Lakers came to town, not just in Toronto but whatever city the NBA's glamour squad descended upon.

Over the years, so star laden was the group from Tinseltown that you only had to mention first names - Jerry, Wilt, Elgin, Kareem, Magic, Shaq and Kobe - to identify immediately many of the game's most-storied performers.

Even Phil - Phil Jackson, their old coach - was able to craft a larger-than-life persona after winning five of his incredible 11 NBA titles from 2000 through 2010 when he guided the Lakers.

There were the showtime Lakers of Magic Johnson and Kareem Abdul-Jabbar that dominated the NBA in the 1980s, winning five titles and competing in another four championships over a 12year span.

The Lakers were in Toronto to play the Raptors at Air Canada Centre on Friday night.

Although the game was sold out - they always are these days in Toronto, no matter the opponent - the visit by the Lakers was devoid of any of the snap, crackle or pop that always used to trail the iconic team.

The Lakers are decent in the early going this season, but nothing like the star-studded glory teams of old where L.A. was must-watch television if you did not have the pull to score a ticket to the game.

"The star power ... it was like a three-ring circus," Toronto coach Dwane Casey recalled of the old Lakers dynasties.

"I think some of that is gone now but they're still a very talented team. It's not like they've fallen off the map."

They came close last year, winning just 17 times.

That was a franchise-low in what was the swan song for Kobe Bryant, a key ingredient along with Shaquille O'Neal on the dominant L.A. teams that went to the NBA finals series four out of five seasons, winning the championship in 2000, 2001 and 2002.

After that, O'Neal moved on and the Lakers reloaded with another talented centre in Pau Gasol and made three successive finals appearances, winning backto-back rings in 2009 and 2010.

To Canadian basketball fans, Jose Calderon is perhaps the most well known of the current squad - and that's primarily because of the Spaniard's previous eight-year run with the Raptors.

While a game against the Lakers does not carry the same panache these days, the rich history of the franchise still makes a date against L.A. a cherished moment for opposing players.

DeMar DeRozan of the Raptors grew up in L.A. and was weaned on the game during the 1990s when the aftermath of the showtime Lakers was still smouldering and L.A. still played at Great Western Forum.

And when fellow guard Kobe Bryant joined the Lakers in 1996, DeRozan's interest only deepened.

"Everybody was so into it," DeRozan said. "Being a kid, even just driving by the Forum was a big deal for me. We used to go to the games and sit in the top row.

The tickets were only $7."

Alex McKechnie had a good vantage point to witness much of the Lakers juggernaut first hand, beginning in 1997 when the physical therapist from Vancouver started consulting for the Lakers.

In 2003, it turned into a fulltime gig that lasted for seven years before he joined the Raptors as their director of sports science.

"The big thing I think, and it's very different today, is that we only had one bus when we travelled on the road and everybody was on that same bus," McKechnie recalled. "So when that bus pulled into an arena, it was very much a case of, 'The Lakers had arrived.' There was always a buzz, a cluster of TV reporters. We were always on TV, network television.

"The team would spill out of that bus one at a time, beginning with Phil every time. It was a real road show."

McKechnie said that the Lakers' wide appeal really struck him during one road trip when L.A. was heading to Detroit following a game in New Jersey.

"A snowstorm in New Jersey delayed the flight and by the time the team gets to the hotel in Detroit, it's 4 o'clock in the morning," McKechnie said. "But when the bus pulls up to the front doors there's still a stack of people waiting outside in the freezing cold for autographs.

"It just blew my mind that so many people would be out there waiting for the Lakers to arrive."

McKechnie said the Lakers always enjoyed coming to Toronto to play, even with the hassle of clearing customs, which meant that the players had to carry their own luggage.

"I think one time Kobe had something like 12 bags with him, or something like that," McKechnie said with a laugh.

Associated Graphic

With Kobe Bryant gone, the star appeal of the Los Angeles Lakers is a thing of the past. For a game story go to


Wild land seventh straight win over Leafs
Thursday, December 8, 2016 – Print Edition, Page S2

TORONTO -- Mike Babcock would rather not glance at the NHL standing, and who can blame him.

Despite the obvious strides his youthful Toronto Maple Leafs have made this season - they're almost watchable on a regular basis, after all - the coach couldn't help but notice that his team is bringing up the rear in the Eastern Conference standing.

And that's never a good look.

So instead of looking at the season as a whole, Babcock has instead chosen to divide the campaign into five-game digestible bits. If his team tallies six points over that segment, all is well, standings be damned.

It's sort of like being on a diet and opting to eat just a quarter of a chocolate bar.

And so, heading into Wednesday night's game against the Minnesota Wild at the Air Canada Centre, Babcock was asked for his thoughts about being a game above .500 and still mired in last place in the Eastern Conference standing.

It was subject that Babcock preferred not to address.

"We've got one game left in this five-game segment," said the coach, his soap box not yet beginning to strain. "If we win tonight, we've got seven points.

If we get six in every five games segment we're absolutely perfect.

"What I've found over the years, whether we were winning 50 games ini Detroit or whether we're here in Toronto, if you just stay focused on what you're doing, things work out in the end."

That was not the case Wednesday night where the Leafs did not play all that poorly.

But it seemed every time they made a defensive miscue, the Wild were there to pounce and it resulted in a 3-2 Minnesota victory.

For Minnesota, who remains very much in the playoff picture in the Western Conference, it marked its seventh consecutive victory over Toronto.

Jason Zucker, Chris Stewart and Eric Staal scored for the Wild.

Ben Smith and Tyler Bozak replied for the Leafs.

The game provided decent entertainment where the Wild would carry a tenuous 3-2 lead into the third period which is usually money in the bank for Minnesota with Devan Dubnyk guarding the crease.

Dubnyk came into the contest leading the NHL with a sparkling 1.63 goals against average and a stingy .946 save percentage.

The third period got off to a rough start when linesman Steve Miller was drilled in the leg by a slap shot that sent him crumpling to the ice in agony in the first minute. Miller was eventually helped off the ice and would not return.

The Leafs, smelling blood against a Minnesota team on the end of a five-game road trip, carried the play after that and would come close to squaring things but Dubnyk held strong. The Wild did register a shot on goal until after 15 minutes of play.

First it was a loose puck in front after a point shot from Jake Gardiner that the Leafs failed to corral.

William Nylander was a constant threat and Leo Komarov and Nazem Kadri just failed to click on a dangerous two-onone rush.

Finally, in desperation, Babcock pulled his goalie with about two minutes left to play and Connor Brown directed a shot from close in that Dubnyk got a toe on.

The game marked the first at home for the Leafs following what was, for them, a reasonable three-game western road swing in which they earned a win, a loss and then an overtime loss in Edmonton, Calgary and Vancouver respectively.

The Leafs dominated play in the opening moments of the first period on Wednesday but it was Minnesota that jumped in front 2-0 on goals by Jason Zucker and Chris Stewart on a breakaway at the 14:22 mark.

The Leafs got one back before the period's end on a goal by Ben Smith, who banged home a big rebound kicked out by Dubnyk.

Minnesota restored its twogoal lead after just 90 seconds of the second period when Eric Staal banged home a backhand while stationed on the doorstop of Toronto goaltender Frederik Anderson.

Anderson later made a great pad save to rob Mikko Koivu that would have put Minnesota ahead by three.

That save loomed large when, moments later, Tyler Bozak neatly stepped around Matt Dumba in the slot and then launched a backhand over Dubnyk's glove into the top corner of the net for a pretty goal that cut Minnesota's lead to 3-2.

Toronto next plays on Saturday in Boston against the Bruins where Babcock's five-game rating system starts anew, along with his dreams.

"If you get six in every five games you get in the playoffs, period," Babcock said.

Associated Graphic

Minnesota Wild right wing Chris Stewart, left, celebrates his goal with teammate Kurtis Gabriel as the Maple Leafs' Matt Hunwick skates by during the first period of Wednesday night's game in Toronto.


Toronto's free-agency outlook remains unclear
The Canadian Press
Friday, December 2, 2016 – Print Edition, Page S1

TORONTO -- Some big free-agent dominoes could fall at the upcoming baseball winter meetings near Washington.

Blue Jays general manager Ross Atkins said Thursday he expects teams and agents will soon become a little more active, adding it'll likely take a couple of big player signings or moves to put things in motion.

Whether Toronto will be involved remains a question mark.

Atkins, speaking at a luncheon with members of the Toronto chapter of the Baseball Writers' Association of America, said it's hard to say whether anything is imminent.

"We were close the first day of the off-season as well," he said.

"You're always close but nothing is done until it's done. It's really hard to say on how I see [the meetings] going. But we feel with [Kendrys] Morales here that we're in a good position to stay aggressive on the players that we feel are closer to ideal fits, more seriously consider on a daily basis all the guys that were here. And also, because Morales is here, we also feel like we will be in a position to be more opportunistic later in the off-season."

Morales, who had 30 homers and 93 RBIs last season for the Kansas City Royals, inked a $33million (U.S.), three-year contract with the Blue Jays last month. He will likely serve primarily as a designated hitter and could inject some needed pop in the lineup, especially if free-agent slugger Edwin Encarnacion doesn't return.

Encarnacion is coming off another big season and is one of top jewels in this year's freeagent crop. He had 42 homers and 127 RBIs last season for Toronto and is set to cash in with a very lucrative multi-year deal.

Atkins, as he said after Morales was signed, knows the odds of Encarnacion's return have been lowered.

"Two guys that do similar things is less than ideal for a team and money has been spent," Atkins said. "So it doesn't make it impossible but it certainly made it less likely.

We realized that the day we made the move and we talked to Edwin about that as well."

Toronto finished the regular season with an 89-73 record and qualified for the playoffs for the second straight year. The Blue Jays defeated the Baltimore Orioles in the wild-card game and swept the Texas Rangers before being eliminated in the American League Championship Series by the Cleveland Indians.

The Blue Jays defeated the Baltimore Orioles in the wildcard game and swept the Texas Rangers before being eliminated in the American League Championship Series by the Cleveland Indians.

The potential loss of Encarnacion at the DH/first base position isn't the only roster hole that needs to be addressed.

Corner outfielders Michael Saunders and Jose Bautista are also free agents. The pitching staff was weakened with the freeagent departures of southpaw reliever Brett Cecil (St. Louis Cardinals) and knuckleballer R.A.

Dickey (Atlanta Braves).

The team could use some more speed on the basepaths, a backup catcher, and left-handed hitting depth.

Reliever Joe Biagini may be stretched out as a starter but that would create another hole in the bullpen. The Blue Jays picked up the team option on Jason Grilli's contract but veteran reliever Joaquin Benoit is a free agent.

However, Toronto still has a solid core in place and is expected to contend in 2017. Josh Donaldson, Troy Tulowitzki and Russell Martin provide a solid nucleus and starters Aaron Sanchez, J.A. Happ, Marco Estrada and Marcus Stroman anchor a deep rotation.

The Blue Jays also signed Cuban free-agent prospect Lourdes Gurriel Jr. to a $22-million, seven-year deal last month and are expected to have the financial wherewithal needed to make roster improvements as needed. Toronto had an active team payroll of about $137million last season.

The winter meetings are set for Dec. 4-8 at the Gaylord National Resort and Convention Center.

The gathering will be held just days after a tentative five-year labour deal was reached between players and owners.

Also Thursday, Donaldson was named player of the year in voting by Toronto's BBWAA chapter.

Biagini was named rookie of the year and Sanchez took the nod for pitcher of the year and most improved player.

Pitching coach Pete Walker was named recipient of the John Cerutti Award. It's given to a person associated with the club who exemplifies goodwill, co-operation and character.

TFC hopes experience and new-found confidence lead to league championship
Wednesday, December 7, 2016 – Print Edition, Page S1

Toronto FC is still a team that likes to dig holes for itself, but that is where the similarity ends with teams from its first nine years in Major League Soccer.

There is a sense on the team now that things will work out after a lead is squandered or the opposition is allowed a quick advantage. No longer is a collapse inevitable after a few mistakes on the field.

Combine that with the homefield advantage for Saturday's MLS Cup and you understand why TFC is favoured to beat the Seattle Sounders for the league championship. If so, it will be the first time the Cup has gone to a Canadian-based team.

Nowhere was the resiliency of TFC more aptly demonstrated than after the first half of the first game of the two-leg Eastern Conference final against the Montreal Impact.

Montreal took a stunning 3-0 lead in the opening half, and TFC looked disorganized and dispirited.

But over the next 135 minutes of soccer in Toronto and Montreal, TFC gathered itself, fought back, slipped again a few times, but each time struck back.

Eventually the Reds stole a 7-5 aggregate series win in extra time.

Experience, preparation and confidence are the keys to bouncing back, according to TFC head coach Greg Vanney.

Confidence, for example, was sorely lacking in the 2015 Reds, not to mention some defensive skill that was remedied with a few personnel changes.

"In years past or last year, I don't think we were a confident enough group that once we gave away one goal that we wouldn't give away two or three goals," Vanney said Tuesday after his team's training session.

"So we would get a little out of hand in terms of how many guys would commit to the attack in trying to score goals and we'd take another goal.

"This year, our group is much more stable and balanced in terms of the mindset of sticking with the plan and seeing it through all the way. Then we adjust as we need to during the course of the game."

TFC defender Steven Beitashour showed that confidence a few minutes earlier Tuesday when he was asked if there ever was a point in the playoffs when he worried that it was all over.

"Never that it was going to end, but I'd say when we were down three-nothing to Montreal I started to worry a little bit," he said. "I started to say, 'Hey, this is not us.' "That was the only real concern. The type of players we have, we always expect to score."

If a team is prepared well in the sense that it knows what to expect from an opponent and has weathered more than a few crises, according to Vanney, then it is well suited to shrug off a bad turn or three.

"I think you gain that through experiences, a belief in what you're doing as a group," the coach said. "Preparation is always important, because if you know what you're planning for, you know what you're about to face.

"And you believe in what your long-term objective is and what you're capable of doing over the course of 90 minutes. It's a long game. Then it's easy for the guys to stick with it."

Thanks in part to the aforementioned personnel changes after last season, there are now enough veterans on the team that Vanney does not have to gather his troops after every onfield mishap and buck them up.

"I was looking at their reactions on the field during that [Montreal] game," Vanney said.

"After the first goal and the second goal, the veteran players were saying: Calm down, we don't need to get too amped up over this - we still have many, many minutes to play in a twolegged affair, and 90 of those minutes are at home.

"I think it's easier when you know you have that much time to recover from something. You don't have to get too caught up in it. Having experience on the field is important, but also just the messaging from the sideline and how we go about things is always important. This group has grown to recognize how it works."

Associated Graphic

Toronto FC's Sebastian Giovinco kicks the ball away from the Seattle Sounders' Cristian Roldan in July.


Oakland fights back against Buffalo to win sixth straight
The Associated Press
Monday, December 5, 2016 – Print Edition, Page S2

OAKLAND -- Derek Carr threw for 260 yards and two touchdowns to rally the Oakland Raiders to their biggest comeback in 16 years with a 38-24 victory over the Buffalo Bills on Sunday.

After falling behind 24-9 following touchdowns on the first two drives of the second half for Buffalo (6-6), the Raiders (10-2) took the game over with 29 straight points and won their sixth straight to remain one game ahead of Kansas City in the tough AFC West.

Oakland scored touchdowns on three straight drives, including scoring strikes from Carr to Michael Crabtree and Amari Cooper for his sixth fourth-quarter comeback of the season. This was the biggest comeback for the Raiders since overcoming a 21point disadvantage to Indianapolis to win 38-31 on Sept. 10, 2000.

The defence also tightened by forcing three straight three-andouts and then getting a turnover when Khalil Mack deflected Tyrod Taylor's pass that Nate Allen intercepted. Oakland took over at the 16 and put the game away with Latavius Murray's second touchdown run of the game to make it 38-24 on Carr's twopoint conversion pass to Seth Roberts.

The loss was crushing for the Bills, who entered December with hopes of ending the league's longest playoff drought. A big day by LeSean McCoy, who had 130 yards rushing, helped stake Buffalo to the big lead, but it wasn't enough.

The Bills are two games behind Denver for the second wild-card spot in the AFC and could be headed to a 17th straight season without a playoff berth.

Packers 21, Texans 13 Green Bay, Wisc. - Aaron Rodgers threw for 209 yards and two touchdowns, and the Green Bay Packers pulled away from the Houston Texans with two fourthquarter touchdowns for a 21-13 win Sunday to get back to .500.

The Packers (6-6) weathered snowy conditions at Lambeau Field, making just enough plays on the cold turf to even their record for the first time since they were 4-4 after losing to Indianapolis on Nov. 6.

Brock Osweiler connected with DeAndre Hopkins for a 44-yard touchdown pass with 1 minute 51 seconds left to get within eight for Houston. Nick Novak missed the extra point, with footing slippery at Lambeau.

The Texans (6-6) had one last shot after the Packers failed to run out the clock. But Osweiler's last-ditch pass-and-lateral play from Houston's 12 with 4 seconds left failed, handing Houston its third straight loss.

Steelers 24, Giants 14 Pittsburgh - The Pittsburgh Steelers ended the New York Giants' winning streak with a familiar formula.

Ben Roethlisberger passed for 289 yards and two touchdowns, Le'Veon Bell rolled up 182 yards of total offence, and Pittsburgh's resurgent defence harassed Eli Manning into a flurry of mistakes in a dominant 24-14 win on Sunday.

Antonio Brown edged good buddy Odell Beckham Jr. in their personal showdown, catching six passes for 54 yards and an acrobatic scoring grab at the back of the end zone. Tight end Ladarius Green added six receptions for 110 yards, both career highs, and a touchdown as the Steelers (7-5) won their third in a row to keep pace with Baltimore atop the AFC North.

Manning completed just 24 of 39 passes for 195 yards with two touchdowns and two picks in the red zone for the Giants (8-4), whose six-game run ended with a thud. Beckham was largely a nonfactor despite a game-high 10 receptions for 100 yards.

New York managed just 56 yards rushing and couldn't convert on its few opportunities. Both of Manning's interceptions came near the Pittsburgh goal line and the Giants missed on all three of their fourth-down attempts.

The Steelers have reinvented themselves on the fly following a four-game midseason slide. Rather than try to overwhelm opponents with the firepower they showed during a 4-1 start, Pittsburgh has relied heavily on Bell and the defence to get back in the playoff picture.

'There was nothing easy about it'
Laval Rouge et Or come back from a 14-point deficit to defeat the Calgary Dinos 31-26 and win ninth national championship
Monday, November 28, 2016 – Print Edition, Page S3

HAMILTON -- In the Canadian university football circuit, it's hard to ignore the dominance of the Laval Rouge et Or.

Since the birth of the school's football program in 1995, the Rouge et Or have made nine appearances in the Vanier Cup, the national championship. They won eight of those.

So in their 10th appearance on Saturday at Tim Hortons Field, it seemed only natural that the Laval Rouge et Or came back from a 14-point disadvantage, only took their first lead with 21 seconds left in the third quarter, blocked a punt for the go-ahead touchdown and rolled with dominance to their ninth national championship victory, defeating the Calgary Dinos 31-26.

After taking a two-year hiatus from the Vanier Cup, quarterback Hugo Richard marched Laval back into the Vanier Cup win column, finishing 25-for-32 for 339 yards, two touchdowns and one interception. He also ran for 62 yards on nine carries.

"I like showing to people that I'm capable of playing football.

There's always going to be critics, but listen, I'm my biggest critic, it doesn't bother me," said Richard, who was chosen as the game's MVP.

At the beginning of Saturday's final, Laval looked lost. Richard was sacked five times in the first half. The quarterback called a timeout, not knowing what play should be called. Laval was caught off guard when Calgary's Michael Klukas scored an 86-yard touchdown on the Dinos' first play of the game, and didn't expect Calgary to march into the end zone on its next possession on a two-yard rush from halfback Anthony Anderson.

But Laval never really went away. After Calgary went up 14-0, Richard didn't miss his opportunity and threw a 37-yard toss to Marc-Antoine Pivin and cut the lead to 14-7.

Calgary extended its lead to 17-7 after Niko DiFonte connected on a 43-yard field goal on the Dinos' first drive of the second quarter.

Richard was sacked for a fourth time early in the second quarter and the Rouge et Or had to settle for a field goal.

Laval drove the ball down into Dinos territory late in the second quarter but Tyrone Pierre fumbled the ball on the Calgary twoyard line. DiFonte kicked a 31-yard field goal on the Dinos' first possession of the second half to make it 20-10. Cedric Lussier-Roy sacked Adam Sinagra deep in Calgary territory to force a fumble in the third quarter. The Rouge et Or recovered and Richard didn't miss his opportunity, connecting with Antony Auclair for a five-yard TD to make it a three-point game.

Vincent Alarie-Tardif capped off a 10-play, 89-yard drive late in the third quarter by punching in a touchdown from three yards, giving Laval a 24-20 advantage.

Calgary regained the lead midway through the fourth off two consecutive field goals to make it 26-24. And in a crazy series of events, the Dinos intercepted Laval's Richard, followed by Laval blocking a Calgary punt.

Only minutes later when Richard marched in for the game-winning touchdown with 2:33 left in the game, securing the countryleading ninth victory.

"There was nothing easy about it," said Laval head coach Glen Constantin. "Trailing 14-0, that's a lot of adversity and the guys on the bench were a little bit disoriented about that but they believed." Sinagra came on in relief in the first quarter and completed 21of-38 passes for 276 yards and an interception for the Dinos. Calgary's Jeshrun Antwi had 25 carries for 177 yards and DiFonte kicked four field goals. Nick Statz had two of Calgary's seven sacks on Richard. The loss drops the Dinos to 4-6 in Vanier Cup compeitions, with their last championship coming in 1995.

Associated Graphic

Laval's Daniel Tshiamala-Tshibangu hoists the Vanier Cup after defeating the Calgary Dinos in Hamilton on Saturday.


For the RedBlacks, a second chance
Having come within minutes of claiming the Cup last season, Ottawa enters Sunday's game with a winning attitude
The Canadian Press
Saturday, November 26, 2016 – Print Edition, Page S2

TORONTO -- For the Ottawa RedBlacks, Sunday's Grey Cup is a second chance to be No. 1.

The RedBlacks gave up a late touchdown to lose last year's championship game 26-20 to the Edmonton Eskimos in Winnipeg.

They are back again, this time facing the powerhouse Calgary Stampeders at BMO Field.

Ottawa defensive co-ordinator Mark Nelson says the mood is decidedly different this year.

"To be honest with you, last year we were just happy to be there," he said after practice Friday. "I mean we'd been 2-16 the year before [as an expansion team] and that's a long year.

"We worked hard and it just seemed last year everything fell our way," he added. "All the close games we won, or the vast majority of them. Then we got the playoff game at home and we kind of got another miracle [via a late 93-yard TD reception by Greg Ellingson] on that. We won that. We were just so happy to be at the Grey Cup and enjoy it.

"Of course we wanted to win and all that. But it's a [very] different feeling this year. We've struggled all year. We're 8-9-1. We were not favoured in the [CFL East final] and we came through that. It's a different attitude with these guys this year. They've come here to win."

Centre Jon Gott agreed the season was a struggle.

"We had our ups and then we had some downs. It was a different season ... at the end of the year, we came together and we got here. So that's all that matters."

Coach Rick Campbell recalled how the team felt in the lockerroom after last year's Cup loss.

"After you come a minute or two away from a Grey Cup and you don't get it done, that feeling if you ever get back again, you want to make sure you leave no stone unturned and you do everything you can to give yourself a shot at winning it. I think our guys have been doing that this week."

Campbell said having been at the championship game last year has helped his team.

"It certainly doesn't hurt ... we have a whole group of coaches and players that are used to it," he said. "They know what it's like, they kind of understand the schedule and all the things that happen at the Grey Cup."

The RedBlacks were looseygoosey at practice Friday under a bubble at an east-end high school. Juron Criner brought the house down, twisting his body in the air to make a marvellous one-handed catch while being defended by Forrest Hightower.

All three of Ottawa's kickers were practising, including Chris Milo who has been sidelined by injury recently. Ray Early and Zach Medeiros have been handling kicking duties in his absence.

"I'm totally comfortable with Ray Early," Campbell said. "He keeps getting better and better as he gets more reps. So he's totally good to go. But we'll check on Chris and see how he is this afternoon. We'll definitely have a decision 100 per cent by [Saturday]."

Campbell was the runner-up for coach of the year at Thursday night's CFL awards. RedBlacks Earnest Jackson (outstanding player), Gott (lineman) and offensive lineman Jason LauzonSequin (rookie) also lost out.

"I want one prize and that's the Grey Cup," Gott said. "I didn't win [Thursday] night and that's fine but I want that Grey Cup."

Nelson says the awards snub might serve as "maybe a little bit" of a motivation. Not that Ottawa needs any more.

'A whole new ... frustration': Air Miles faces fresh backlash
Saturday, December 3, 2016 – Print Edition, Page B1

Edgar Governo had been saving up his Air Miles to go to Europe.

It was going to be a dream trip, visiting great landmarks around the continent.

"It would have been nice," he said.

Those plans went sideways this year.

Like millions of other collectors, Mr. Governo had been informed of the changes to the rewards program that would have seen points five years or older expire starting at the end of this year. Toronto-based parent company LoyaltyOne first announced the change in 2011, and was reminding customers this year to use their expiring Miles before the deadline.

Mr. Governo, a 38-year-old Winnipeg resident, anticipated he would have collected enough Miles for his European trip in another year or two. But not wanting to lose the value of his older Miles, instead he took a trip to Portland, Ore. in October - using up about 10,000 points on two round-trip tickets and accommodations. Then on Thursday, LoyaltyOne announced it was dropping the expiry policy, following political pressure and a backlash from customers.

Some people took to social media to express their relief that the expiry was cancelled, while others complained that they wished they hadn't rushed to use up Miles to meet the company's deadline.

"I enjoyed myself on the Portland trip. It was worthwhile, so I'm not saying I didn't get something, but it was purely based on a company policy," Mr. Governo said. "Now I feel a whole new kind of frustration. I changed my plans based on what the company told me, and for them to say they had changed their mind, it makes me feel manipulated."

He's not alone. "Today, our inbox has lit up," Andrew Wilson, a partner at Calgary-based law firm JSS Barristers, said Friday.

JSS is seeking certification that would allow it to pursue a national class-action lawsuit against LoyaltyOne.

Since the statement of claim was filed in September, Mr. Wilson said the firm has heard from roughly 2,000 people saying that they are among the affected collectors and sharing information that they suggested should be included in the claim.

Air Miles has roughly 17 million individual cardholders, and saw a 15-per-cent increase in the number of Miles redeemed for rewards in the first nine months of this year as the expiry deadline approached.

Mississauga resident Michelle Garcia rushed to use her Miles - with unfortunate timing. She spent 2,700 of her roughly 3,800 Miles on a Blue Jays jersey signed by Marco Estrada on Wednesday, just one day before the company announced the change.

"Literally the next day. I was like, 'Oh, jeez,' " she said. She was annoyed at having to spend her Miles before she'd saved enough for a trip. "They're Air Miles; I wanted to fly somewhere. I couldn't fly very far with 3,800 Miles, but I would have planned a trip [later]."

However, she said that she's happy with her jersey, which she plans to wear to games next season.

Gordon Preece was not so happy with his merchandise. The 65year-old Winnipegger had saved about 9,200 Miles when he heard about the change. He and his wife had been dreaming of a trip after his retirement. But he was receiving reminders about the expiry, and so a week and a half ago, they went shopping for rewards.

"We weren't in a position to take a trip so soon," he said. "We spent about 8,000 on a mini red bar fridge and some binoculars, neither of which we wanted. But it was all we could find."

Indeed, some collectors have complained that not all rewards are visible to collectors on the site - an issue the company has said was a result of tailoring rewards to people's preferences, and that it would fix - and that the merchandise available was sometimes overpriced or undesirable.

On Friday, Air Miles was informing some consumers that it would not be providing returns, order cancellations or exchanges on rewards that had already been ordered.

In a recent sit-down with The Globe and Mail, LoyaltyOne CEO Bryan Pearson said the expiry plan would improve customer "engagement" in the program by prompting collectors to check in on their balances, visit the website, and consider which category of Miles was most suited to them.

In a statement Friday, the company did not address whether it has received any consumer backlash in the past 24 hours, but said it was focused on advising people about the change, and that it expected the news to be "well received by collectors."

"It's just wrong," Mr. Preece said of the changes. "I don't know how a company can get away with that."

Air Miles executives have emphasized that the program is a free service, although collectors do give up personal information including their shopping habits, which has financial value to marketers.

"It's a free service, sure. We'd be shopping anyway," Mr. Preece said. "But at the same time, in our case, we bought things that we wouldn't have bought, all that time thinking at some point we would be able to go on a nice trip when we retired. ... I'll probably be dead before I can cash them in [for a trip] now. It's taken all these years just to get to 9,000."

In Milestone, Sask. on Friday, Deanna Brown had been keeping an eye on the Air Miles customer service online chat window for hours waiting to connect to an agent. She had already tried by phone but an automated message estimated the wait at about two hours. Having learned that the expiry policy had been reversed, she was trying to cancel an order she placed on the weekend for an immersion blender - 1,200 Miles had been debited from her account, but she could see the order had not yet shipped.

"I was hoping I'd be able to buy something useful. I went through the catalogue online for a few hours on the weekend, just trying to find something I could give as a gift, or use, and there wasn't a whole lot of really useful stuff," she said.

Though she has collected Miles for most of her adult life, Ms. Brown said she'd never really thought before about the value exchange that loyalty programs are built on: that in return for rewards, collectors share their personal information.

"They're receiving all this information about you. And after 20 years, you get an immersion blender you don't really want anyway," she said, with a laugh. "... Maybe it's not worth it."

How one man turned the oil crash into a $1.2-billion win
Monday, December 5, 2016 – Print Edition, Page B1

As with many great investments, one of the best bond trades in recent Canadian history emerged through a haze of fear.

As the worst crude oil bust in decades was unfolding, reams of high-yield Canadian oil and gas bonds sank to distressed prices as the market began to expect a wave of bankruptcies.

Few at the time saw the sell-off as a rare and extraordinary opportunity, and most that did were unable to capitalize.

"Market makers were telling me, 'Hanif, you're the only buyer in town,' which was a little unnerving," said Hanif Mamdani, head of alternative investments for RBC Global Asset Management.

He and his team scooped up more than $2-billion worth of higher-quality issues discounted by as much as 40 per cent from face value. Now, with the Canadian oil patch having rallied after a painful restructuring, and with industry deal-making on the rise, those bets are being richly rewarded.

"Coming up on 30 years in this business, this was by far the most profitable trade I've seen," Mr. Mamdani said, pegging his gains at $1.2-billion and counting.

The plunge in oil prices began in earnest more than two years ago when OPEC refused to put limits on production, which many took as a sign of the group's intention to wage a global price war.

By February of this year, crude prices had sunk to their lowest levels in 13 years; debt issued by high-quality Canadian exploration and production companies sold off at prices that seemed to reflect high levels of default.

Yields on short-dated bonds issued by companies including Precision Drilling Corp., Baytex Energy Corp. and Paramount Resources Ltd. approached the 20-per-cent mark.

"Our worst case was close to break-even. Our best case was that we could make, in some cases, 60- to 80-per-cent returns," Mr. Mamdani said. "It's one thing to have a flash crash where you get a nanosecond where you can buy a couple million in bonds.

Here was a chance to put an awful lot of money to work at very attractive prices."

Over two days last February, for example, he said he bought $150million in Paramount Resources paper at 60 cents to 70 cents on the dollar. Those bonds are now trading well above par.

Not that others in Canada didn't see a similar opportunity. But other prominent high-yield fund managers were facing redemptions as nervous investors pulled their money.

Some funds reliant on retail flows were forced to be sellers.

Mr. Mamdani credits his own investors' relative calm to a long track record - the PH&N High Yield Bond Fund, for example, has been under his management since 2000. And he and his senior analysts Justin Jacobsen and Emil Khimji were putting out research up to twice a week demonstrating the numbers behind the trade.

There was another Canadian fund manager, however, who was able to capitalize on the sell-off in high-yield energy debt.

In December, 2015, Barry Allan, president and chief investment officer at Marret Asset Management, launched a fund dedicated to buying up cheap energy bonds.

"The market was discounting virtually all of the mid-tier names defaulting. And we thought the market was assuming oil would stay at $30 [U.S.] a barrel for up to two years. We felt that was impossible," Mr. Allan said.

He raised about $125-million and focused primarily on U.S. names, as well as a handful of Canadian companies including MEG Energy Corp. and Precision Drilling.

In less than one year, the fund fulfilled its mandate, Mr. Allan said. He captured all the upside he had targeted and has returned almost all shareholder money at an average annualized return in excess of 20 per cent.

"I don't think we had a single name we lost money on," he said.

With a much larger stake in Canadian high-yield paper - not exactly the most liquid market - Mr. Mamdani faces a challenge in how to exit his trade. "We need to be prudent how we harvest these gains. Rather than just trying to sell on the open market, we've been able to come up with more elegant solutions where the companies themselves have purchased the bonds from us."

Two weeks ago, for example, Savanna Energy Services Corp. bought back - at slightly above par - more than $60-million in bonds from funds managed by Mr. Mamdani, which he originally acquired at less than 80 cents on the dollar six months ago.

Through similar deals, he's reduced his position by more than $1-billion. And those bonds he still holds pay an average coupon of about 8 per cent with far less risk than when he acquired them.

"Most of these companies have now de-risked their balance sheets, they've pruned their asset portfolios and they've massively reduced their costs," he said. "The businesses are so much healthier financially and operationally than they were six months ago."

BoC asserts Canadian rate independence
Thursday, December 8, 2016 – Print Edition, Page B1

In a Bank of Canada interestrate announcement that didn't tell us much that we didn't already know, the central bank's observation that Canada's economic recovery is different than that of the United States was, similarly, no great revelation. Yet it was probably the most important sentence in the news release.

You might easily have missed it, buried in the third paragraph of the BoC's notably brief fiveparagraph statement in which it held its key rate steady at 0.5 per cent (for the 11th-straight time).

It looked as if the bank just wanted to get out of the document without saying something it might regret later, but it took a moment, there in the mid-section of the statement, to state that "a significant amount of economic slack remains in Canada, in contrast to the United States."

Pretty much anyone who was paying attention already knew that.

Still, it stood out; it is not the norm for the Bank of Canada to compare-and-contrast with the United States in its rate statement.

This was no throwaway line.

Every word in the bank's painstakingly crafted rate announcement is carefully chosen, and these weren't spilled by accident.

It's a timely reminder - especially to the bond market - that Canada's interest rates are not on the same path as those in the United States.

The Bank of Canada's rate announcement comes just one week before its U.S. counterpart, the Federal Reserve Board, issues a decision on its own interest rates, and it's a slam-dunk that the Fed will raise its key rate for the first time in a year - the start of what financial markets now anticipate could be as many as four rate hikes over the next 12 months. This amid a more generalized rising expectation of inflationary pressures in the U.S. economy, as president-elect Donald Trump looks poised to inject fiscal stimulus into an economy that is already running very close to full employment.

Those expectations have been contributing to rising U.S. government bond yields - and with U.S. bonds acting as the world's benchmark, yields throughout the global market are rising in sympathy. The yield on Canada's 10-year government bond has risen half a percentage point since early November, despite the Bank of Canada having signalled a distinctly cooler and more uncertain outlook for the far less robust Canadian recovery.

The Bank of Canada gave this bond yield run-up prominent placing in its rate announcement, and, again, that was probably no accident. In the U.S. economy, which, in the words of the central bank, "is near full capacity," higher central-bank and market interest rates are entirely appropriate. In a Canadian economy that has "a significant amount of economic slack," the higher market rates being exported from the U.S. market are decidedly unhelpful, working against a central bank that as recently as October revealed it had considered a rate cut.

As the Bank of Canada continues to play wait-and-see on a wide range of uncertainties casting a shadow over the Canadian outlook - everything from Mr. Trump's policy positions to the wobbly global-trade climate to the timing of federal infrastructure stimulus to the householddebt-fuelled housing market - it would certainly be happier if borrowing costs weren't creeping up to throw a spanner in the works.

It appears it wanted to remind the market that Canada's situation is not the U.S.'s situation, and that the economic fundamentals do not justify bringing Canadian yields along for the U.S. ride.

To this end, it was telling that the central bank's rate statement emphasized some key weaknesses in Canada's economic condition while glossing over some recent strong points.

The statement made note that business investment and nonenergy goods exports - which the bank has long identified as critical components of a healthy Canadian recovery - "continue to disappoint." Meanwhile, the central bank said almost nothing about the better-than-expected quarterly gross-domestic-product data released last week, which included not only third-quarter growth that exceeded the bank's estimate, but also upward revisions of first- and second-quarter GDP above the levels the bank had already baked into its economic calculations. Those numbers suggest that the Canadian economy has less slack in it than the bank had thought it would at this stage - but the bank took a conspicuous pass on addressing that development.

The statement's focus and tone effectively revived the possibility that the Bank of Canada might still cut rates in the first quarter of 2017 - which was already dampening short-term Canadian yields in the hours following the announcement. If the bank's message continues to sink in with bond traders, this rate announcement will have succeeded in buying the bank some time, and some relief from rising yield pressures, while the uncertain outlook becomes clearer.

Banks show strength, but outlook weakens
TD, CIBC add to solid earnings season, but worries grow over forecast for 2017
Friday, December 2, 2016 – Print Edition, Page B1

Two more large Canadian lenders churned out solid fourthquarter earnings, extending a string of encouraging profits from the Big Six banks, but there is a growing consensus in the industry that next year will be much more challenging.

On Thursday, Canadian Imperial Bank of Commerce unveiled fourth-quarter earnings that easily beat analysts' expectations, while Toronto-Dominion Bank reported profit in line with analysts' predictions. For the full year, CIBC's net income jumped 7.9 per cent, after adjusting for one-time items such as restructuring charges, and TD's equivalent profit popped 6.1 per cent.

The struggle now is to replicate this performance. Throughout the week, the country's biggest banks have suggested there are darker clouds on the horizon.

Their concerns have largely manifested in cuts to return-onequity (ROE) projections. ROE is a key profitability metric in the industry, and so far three of the four banks that have already reported fourth-quarter earnings have cut theirs, or cautioned it could be bumpy. The fourth, Bank of Nova Scotia, already did so last year.

On a conference call Thursday, CIBC chief executive officer Victor Dodig lowered the bank's ROE target to about 15 per cent.

ROE was 16.8 per cent in fiscal 2016. He largely attributed the new outlook to tough macroeconomic headwinds.

The cuts signal future earnings will be harder to come by - particularly in Canada. The domestic economy is growing slowly, so there's less juice to drive profit, and margins on products such as mortgages are rather thin. The banks hoped interest rates would start to climb this year, but the energy rout has forced them to rethink their projections.

Ottawa's recent crackdown on scorching housing markets in Toronto and Vancouver are also expected to weigh on growth.

TD held an investor day for its Canadian banking division in October, 2015, and projected 7-per-cent growth for the unit, but its projection assumed some rate increases.

"Obviously the context has changed both around that and around real estate secured lending ... so those are the two main factors that have caused us to change the outlook," division head Teri Currie said on a conference call. The bank now expects annual profit growth in the "mid-single-digits."

Canadian lenders are also wrestling with new capital rules.

The more capital a bank must hold, the less it can invest in its businesses.

Despite the headwinds, Canada's banks aren't panicking because most have diversified businesses that give them exposure to other countries' economies. TD, for one, has a large retail bank in the United States, and it's starting to catch steam.

CIBC's fourth-quarter profit rose to $931-million from $778-million a year earlier - however, it is difficult to compare the two because the bank announced a large restructuring charge in late 2015. CIBC also announced another charge in the fourth quarter of 2016, but it was smaller, worth $134-million.

The bank's Canadian mortgage business was a standout last quarter, with loan growth hitting 11 per cent - much higher than its peers who have already reported. The hefty growth raised analysts' eyebrows because it comes at a time when the federal government and the banking watchdog have warned about the rapid rise of Canadian housing prices, particularly in Toronto and Vancouver, but executives stressed, on a conference call, that their risk assessment is thorough, particularly on uninsured mortgages.

CIBC's uninsured mortgages in and around Toronto and Vancouver also have lower delinquency rates than its Canadian average - just 0.07 per cent and 0.06 per cent, respectively, relative to the 0.25-per-cent average across the country.

TD's earnings climbed to $2.35billion in the fourth quarter, compared with $2.18-billion the year before. But like CIBC, the bank also incurred a large restructuring charge late last year, which skews the comparison.

Looking at the full fiscal year, TD reported encouraging results out of its retail division in the United States, with the unit making $2.96-billion, up 19 per cent from the year prior. For many years this business delivered low returns on equity, owing to a slow economic recovery and tough competition for loans.

Lately, though, the markets that TD operates in on the U.S. East Coast have shown good economic growth. TD also has ample funds to make loans.

"Yes, it is a fiercely competitive market," chief financial officer Riaz Ahmed said in an interview, "but we're well positioned with a clean balance sheet. ... We have a lot of room to grow in our loan-to-deposit ratio."

TD's Canadian banking arm had a much quieter year, with earnings barely rising. That matters because they comprise 67 per cent of total profit.

TD Bank (TD)

Close: $63.07, down 50¢

Toll roads: one more reason to ditch your car
Monday, November 28, 2016 – Print Edition, Page B1

Toronto's plan to charge highway tolls drives home a point about personal finance for the decade to come: Cars are a financial liability that will only get worse.

So many government priorities can be served by squeezing drivers - fight global warming, ease urban road congestion, find money for public transportation and other projects. Some households can't operate without a car, especially if they have kids or make long daily commutes from the boonies.

For everyone else, here are four reasons to think about ditching your car.

Toll roads are coming Toronto mayor John Tory announced plans last week to charge tolls on two heavily used highways that connect the downtown with the suburbs to the north and west - the Don Valley Parkway and the Gardiner Expressway. The cost being floated is a $2 toll, which would generate up to $200-million for public transportation and infrastructure projects. There is no way that other cities aren't studying Toronto's move.

City councils across the country are hypersensitive about property tax increases these days.

Calgary is looking to hold the line on taxes next year, while Ottawa is proposing a 2-per-cent increase and Winnipeg is looking at 2.3 per cent.

Small increases such as these are politically savvy in our slowgrowth economy, but they won't let some cities do more than maintain the status quo. Road tolls are an obvious way to augment city revenues.

Prepare for toll lanes on highways, metred toll highways such as Highway 407 in Ontario (the further you drive, the more you pay) and new tolls on old highways.

Gasoline prices are going to rise The federal government is working with the provinces to fight climate change by putting a price on carbon. Expect to see higher prices for home-heating fuel, for gasoline and possibly for electricity. There are estimates that a carbon tax would boost gasoline prices by about 11 cents a litre, enough to raise fuel costs for a household by a couple of hundred dollars a year on average. A carbon tax is symbolic of the view that cars are part of the problem in today's world and their use must be discouraged.

Even without a carbon tax, gasoline prices are likely headed higher over time.

Today's moderate prices are a result of slow global economic growth.

If output around the world starts to pick up, rising oil prices will push the cost of gasoline higher as well.

Car loans are crazy today A shocking 56 per cent of new vehicle loans today have a term of seven or more years, the auto industry analysts at J.D. Power and Associates say. The auto industry has clearly found a way to make its products affordable to everyone - reduce monthly payments by making them last a few extra years. And yet, the average new car payment in Canada is still roughly $570, according to J.D. Power.

People dismiss concerns about long-life car loans by talking up the deals they're getting - zero per cent financing in some cases. But cars sold with interest-free loans can be more expensive overall than vehicles with rebates or discounts that are financed at regular interest rates. If you get zero-cost financing, you usually don't get the best price breaks.

The worst part of car loans of six to seven years or longer is that they often result in people trading in a vehicle before the loan is paid off. The amount owing is added to the cost of a new vehicle, which is bad personal finance. Your goal with a car loan should be to pay it off and deploy that cash more productively, not fold it into a bigger loan.

What you buy today could be obsolete tomorrow The typical car or truck starts depreciating when you leave the dealer's lot. But there's now some additional risk of depreciation due to changing technology.

Plug-in electrics are coming down in price, and so are hybrid gas-electric vehicles. Chrysler's new Pacifica minivan comes in a hybrid model that costs less than the gas version in Ontario thanks to a provincial rebate designed to reduce exhaust emissions.

If hybrids or plug-ins reach a tipping point of affordability, the value of a basic gas-powered car could fall hard.

The rise of driverless cars could also lower the value of your family car. People who make grinding daily commutes in traffic are going to be all over these vehicles as they become affordable. Think you can ditch your car? If ever there was a time to sit out the car ownership experience for a few years to see what's coming, it's now.

Follow me on Twitter: @rcarrick

Pipeline key to expanding crude market
Approval of Trans Mountain's expansion to B.C. coast would help oil patch build sales beyond the United States, analysts say
Wednesday, November 30, 2016 – Print Edition, Page B1

CALGARY -- Ottawa's approval of Kinder Morgan Inc.'s Trans Mountain expansion gives Canada's oil industry a chance to do what it has long hoped for - sell crude to customers beyond the United States.

Although there is still much uncertainty about whether opposition to the project will delay the twinning of the Trans Mountain line, industry analysts insist this type of new pipeline capacity to an ocean coast is critical.

"At the current point in time, we as Canadians will take any pipeline that gets through," said Michael Tran, director of global energy strategy for Royal Bank of Canada.

"But it's the most imperative that we get pipelines pointing west - to get access to the Pacific.

Those are the most important because those are the pipelines that will ultimately bring Canadian crudes, namely heavy Canadian barrels, to China and India."

Today, Canada's energy market is virtually all weighted toward the United States. Less than 1 per cent of Canadian exports of crude in 2015 went to non-U.S. destinations, according to the National Energy Board. Mr. Tran has noted more than half of the country's oil exports go to just eight U.S. refineries. Having the option of getting to India and China is important because those are the key demand-growth areas of the future, he said.

While Canada once looked to the United States as a never-ending source of crude sales, the North American energy landscape has undergone a radical shift in recent years. Today, as Canadian energy producers struggle with low global commodity prices, they are also competing against a technological revolution in U.S. shale oil and natural gas that could allow production there to grow for years, or decades, to come.

On the other side, environmentalists argue that Canada's energy sector now has sufficient pipeline capacity to get its existing production to the U.S. markets - where heavy crude from Alberta will probably fetch the best price it can muster.

Adam Scott of Oil Change International said oil shippers already have adequate access to a number of separate buyers in the United States. Asian markets are far from certain, and much of the oil shipped through the current capacity of the Trans Mountain line ends up being tankered to the United States - not Asia. "Building pipelines and expanding the industry to fill them will completely undermine Canada's climate obligations," Mr. Scott said.

Arc Financial Corp.'s Peter Tertzakian said rising oil production in the U.S. - along with the election of Donald Trump as the next U.S. president - are important reminders that Canada's energy industry is overly vulnerable to U.S. factors completely outside of its control.

"It should be a wake-up call for everybody," said Mr. Tertzakian, the chief energy economist and managing director of the Calgary-based private equity firm.

"If we only have one supply chain to that customer, then we have limited options to compete globally."

Mr. Trump has said he is in favour of TransCanada Corp.'s Keystone XL pipeline, a project that would bring massive volumes of Alberta crude to key U.S. markets - and that was believed defunct under a Democratic administration. Even with the prospect that the Keystone XL pipeline could be revived, Canadian political and industry leaders have continued to beat the drum for at least one new project to a coast - in large part to keep the energy industry's options open.

There are a lot of unknowns about what policies Mr. Trump will pursue, said Mr. Tertzakian, but one thing seems certain - that he will encourage further U.S. exploration and production, which means greater competition for Canadian producers. He added the case for Keystone XL has weakened because of incremental increases to current pipeline lines to the U.S. in recent years, and compelling investment alternatives in Texas.

This month, the U.S. Geological Survey announced that that the Wolfcamp shale in the Permian basin of Texas contains an estimated 20 billion barrels of oil.

The potential of billions of more barrels of light, lower-carbon oil in the Wolfcamp field - the largest source of shale oil that the U.S. scientific agency has ever assessed - will be another major challenge to higher-cost Canadian oil sands producers, Mr. Tertzakian said.

Environmental, indigenous and economic issues have all been considered in recent calculations about pipeline projects, he said.

"Now we are hopefully realizing that an equally big - if not the biggest issue - is the issue of sovereignty over our own resources and supply chain."

Associated Graphic

Replacement pipes sit near crude oil storage tanks at Kinder Morgan's Trans Mountain pipeline terminal in Kamloops, B.C.


Ottawa aims to calm emissions worries
Thursday, December 1, 2016 – Print Edition, Page B1

OTTAWA -- The federal government will release a road map next week that lays out how Canada can achieve its 2030 target to reduce greenhouse gas emissions even as newly approved pipelines are expected to spur oil sands development.

Long worried about the lack of export pipeline capacity, Western Canadian crude producers are suddenly seeing the promise of a building boom that would erase such concerns - assuming governments overcome fierce political opposition to the projects.

But the prospect of growing oil sands production is stoking fears among environmentalists that the Liberal government is abandoning its commitment that Canada will reduce GHGs by 30 per cent below 2005 levels by 2030, and to undertake even deeper "decarbonization" by 2050.

In announcing two pipeline approvals Tuesday, Prime Minister Justin Trudeau and Environment Minister Catherine McKenna insisted that the construction of crude pipelines is consistent with Canada's climatechange strategy and its claim to international leadership.

Next week, Mr. Trudeau will meet provincial and territorial premiers to hammer out a pan-Canadian climate strategy that includes a national minimum carbon price. And Ottawa will indicate how Canada can achieve its 2030 emissions target, even if oil sands emissions grow by as much as 50 per cent between now and 2030, Ms. McKenna's spokeswoman, Caitlin Workman, confirmed Wednesday.

The Prime Minister has given the green light to Kinder Morgan Inc.'s Trans Mountain expansion and Enbridge Inc.'s Line 3 rebuild - which together will add 1.1 million barrels of capacity out of Alberta. At the same time, U.S. president-elect Donald Trump is signalling he'll approve TransCanada Corp.'s Keystone XL pipeline, which would add another 830,000 barrels a day in capacity.

Given the pipeline approvals, "it will be very difficult to hit those targets," Dale Marshall of Toronto-based group Environmental Defence, said on Wednesday. "I think we're either going to have massive stranded assets because the pipelines will not be filled, or they do get filled and we don't do our fair share" in addressing the international climate crisis."

The federal Liberals are counting on Alberta Premier Rachel Notley's climate change plan to keep a lid on oil industry emissions. The provincial NDP government has adopted a plan that would cap GHGs from the oil sands at 100 megatonnes by 2030, up from around 70 megatonnes today. It also is imposing a price on carbon emissions that would rise to $50 a tonne in 2022, if the Trans Mountain project gets built.

"Alberta's climate plan is a vital contributor to our national strategy," Mr. Trudeau told reporters. "We are able to approve pipeline projects because we have put in significant measures in place including a price on carbon pollution ... [and] because we're demonstrating genuine climate leadership."

Meanwhile, Ottawa is working with provinces on a host of other regulations and policies to cut emissions, including carbon pricing, an accelerated phaseout of coal-fired power, a plan to reduce GHG-intensity in transportation fuels and the heating and cooling of buildings.

However, Alberta's rising emissions from the oil sands will require deeper sacrifices elsewhere. To hit the 2030 target, Canada will have to cut its release of GHGs to 524 megatonnes from 732 in 2014. If oil sands producers hit their cap, they would account for nearly one-fifth of Canada's total emissions that year.

The producers insist they can meet that cap while boosting production through the use of innovative technologies that will reduce the per-barrel emissions of production. One promising approach aims to use solvents instead of steam to extract bitumen from underground deposits - a technology that would dramatically cut carbon emissions but has yet to be deployed in a commercial operation.

Meanwhile, emissions intensity in the oil sands is actually rising, as the industry shifts from mining to the more energy-intensive method of steam-assisted extraction from underground deposits. Between 2004 and 2014, per-barrel emissions rose on average by 25 per cent due to growing importance of that in situ production, the Calgarybased Pembina Institute has calculated.

At current emissions intensity, if all projects that have been granted regulatory approval get built, the industry will exceed the 100 MT cap by a significant margin.

Associated Graphic

Workers walk to a jet fuel barge at Kinder Morgan's Westridge Terminal in Burnaby, B.C., earlier in mid-November. Ottawa's green light for Kinder Morgan's Trans Mountain pipeline, issued on Tuesday, will make the terminal on Burrard Inlet a much busier place once construction is completed.


Stirring ghosts of bonus past won't help bankers this holiday
Wednesday, December 7, 2016 – Print Edition, Page B1

I pity the investment banker who decides to throw a hissy fit over this year's bonus payment.

Canada's six bank-owned dealers just turned in stellar results, collectively posting profits of $7.8-billion for fiscal 2016, a 5-per-cent increase over the previous year, on the back of strong takeover activity and a surge in equity financings from utilities and energy companies.

Bonus pay did not keep pace.

Variable compensation paid out by the six big banks totalled $12.8-billion, up 2 per cent from $12.5-billion last year, according to data from Bloomberg. That was the skinniest increase in payouts seen in the past six years. Individual bankers will sit down with their bosses this week and next to find out how big their slice of the bonus pie will be. Some will be disappointed.

For example, bonus pay is down by approximately 2 per cent at Royal Bank of Canada, in step with a slight dip in profits from the country's largest capital market group, even though RBC remains a market leader in M&A, equity and debt underwriting.

National Bank drained the bonus pool by 3 per cent, according to Bloomberg's data. Bonus pay was flat at CIBC, year over year, while Bank of Montreal and Bank of Nova Scotia should see the most smiles, as they increased variable comp by 8.4 per cent and 7 per cent, respectively.

Top talent is always going to engage in a little paycheque poker with the bosses, negotiating for the best possible deal. But these days, the odds are stacked in favour of the house.

Investment bankers who were unhappy with their bonuses have two cards to play. The employee's first ace, one that is easy to play, simply involves showing how their individual talent and relationships brought in business.

The second card - one that is far more dangerous to put on the table - is to threaten to leave for greener pastures, either a global firm or an independent dealer.

Both these arguments for a bigger bonus lost relevance in recent years.

When it comes to client relationships, banks have made a conscious effort to replace the individual with the institution.

Large corporations look to investment banks for a range of services, from credit to M&A advice, stock sales, derivatives and currency trading.

The same is true of a large institutional investor: Fund managers call on a range of analysts, traders and sales teams. No one banker dominates client coverage, which means no employee enjoys much leverage over the bank.

Threatening to quit for a rival dealer is likely to get a laugh from the boss. Where are you going to go? At this stage in the cycle, foreign dealers are firing, not hiring.

The ranks of the independent dealers have been thinned, and the likes of Canaccord Genuity, Cormark and GMP Securities cannot offer the lucrative payouts that used to drive compensation right across the rest of the Street.

And when it comes to paycheque poker, investment bankers have lost the ability to bluff.

Bay Street's financiers used to take home all their pay in cash.

Over two decades, this has evolved into schemes that now see the six big Canadian dealers hand out approximately 60 per cent of each year's bonus payment in the form of deferred compensation.

There are shares or units that vest over time, typically three to five years. Quit early and all that deferred comp is lost. These schemes were introduced to align the interest of bank and banker.

While deferred comp achieves that goal, these long-term payouts are golden handcuffs.

As bonus cheques are handed out and the holidays approach, investment bankers should be toasting the fact that variable compensation is 2-per-cent higher this year.

Step back and it becomes clear that industry trends are not friends to those who work on Bay Street. Technology is as disruptive to corporate finance and fund management as any industry; over time, fees will continue to fall for services such as trading, risk management and underwriting. While it's easy to look back fondly on paycheques past, the reality is this was a very good year on the Street.

Price check: Food costs to increase
Tuesday, December 6, 2016 – Print Edition, Page B1

Food prices are expected to rise as much as 5 per cent in 2017, outpacing this year's anticipated increase of up to 4 per cent, as retailers grapple with steeper import costs as a result of a weakened Canadian dollar.

That's the conclusion of a new food-price forecast from Dalhousie University's faculty of management, which says the increase of between 3 per cent and 5 per cent next year would be above what is considered to be an acceptable food-inflation rate of between 1 per cent and 2 per cent.

It predicts the average Canadian family's food expenses could increase in 2017 by as much as $420 on a total bill of roughly $9,000, including restaurant meals.

"There's not a whole lot of good news for consumers in 2017," Sylvain Charlebois, dean of the faculty of management, said in an interview.

The forecast comes as cautious consumers struggle to make ends meet and increasingly look for bargains, prompting grocers to press their suppliers for cost breaks so that they can pass on lower prices to shoppers - creating tensions between retailers and vendors.

As well, grocers feel the pressure of U.S. discount giants WalMart Stores Inc. and Costco Wholesale Corp., which have been lowering prices and pushing their suppliers for concessions.

As a result of the jockeying, food prices have been dropping in Canada over the past several months. In October, food prices fell by 0.7 per cent from a year earlier, the first year-over-year decline since January of 2000, according to Statistics Canada.

Since March of this year, food prices have declined every month except one from the previous month, slipping 0.4 per cent in October, Statscan data show.

Still, the deflationary trend is expected to turn to inflation by the second quarter of 2017, Mr. Charlebois predicted.

Amid the changes, grocers here face the potential arrival of German-based grocery discounters Lidl and Aldi, which are taking steps to aggressively expand in the United States and could eventually come here, he said.

Lidl, which considered rolling out stores here more than a decade ago, recently registered its trademark in this country, he said.

Lidl got trademark registrations as recently as in October, according to documents from the Canadian Intellectual Property Office.

In all, it has filed more than 1,000 trademark applications over the past 15 years or so and got about 600 trademark registrations for various products and services under its name, said Philip Lapin, partner at trademark law specialist Smart & Biggar in Ottawa.

"It would be unusual to file applications if they're not planning to do business here," Mr. Lapin said.

Lidl and Aldi have been disruptive forces in the European grocery market and now could be a threat to U.S. supermarkets, said Stewart Samuel, program director at food research firm IGD Services Canada.

But Mr. Samuel didn't think Lidl would arrive so quickly in Canada, where discounters are more established than in the United States. For example, Loblaw Cos. Ltd., the country's largest grocer, runs discounter No Frills, and Sobeys Inc., the second largest supermarket operator, owns FreshCo.

Even so, in the near term, the Dalhousie study forecasts rising prices in 2017 as a result of the tumbling loonie as well as uncertain conditions in the United States following the election of Donald Trump. The Trump factor could lead to higher labour costs if illegal farm workers have to be replaced by higher-paid Americans, as well as steeper oil and commodity prices, Mr. Charlebois said.

Prices of vegetables, meats and seafood are expected to increase by 4 per cent to 6 per cent next year while prices of fruits and nuts could rise by 4 per cent to 6 per cent, the study says. Food prices in restaurants are expected to gain between 2 per cent and 4 per cent.

Associated Graphic

A relatively weak Canadian dollar is likely to weigh heavily on rising food prices as chain stores such as Loblaw's press suppliers for discounts in an effort to offset increased import costs.


Alberta pays steep price as it abandons coal
Saturday, November 26, 2016 – Print Edition, Page B1

CALGARY -- Alberta is paying a hefty price to soothe investor fears as it ditches coal-fired power in a massive shakeup to its electrical grid.

The province's NDP government late on Thursday announced a deal to pay three major power producers $1.36-billion over 14 years as compensation for shutting down coal units years ahead of schedule. Funds will be paid using the province's levy on large carbon emitters.

It also said it settled a dispute with Capital Power Corp. and reached tentative deals with Altagas Ltd. and TransCanada Corp.

over cancelled power-purchase agreements, heading off a potentially costly legal spat. A dispute with Calgary's city-owned utility, Enmax Corp., remains unresolved.

The moves lifted uncertainty that had weighed on shares of generators most exposed to the mandated phaseout of coal. On Friday, shares of TransAlta Corp. jumped 17.09 per cent, while Capital Power gained 9.58 per cent on the Toronto Stock Exchange.

It comes after a week of upheaval in Alberta's power market that saw the province introduce a cap on regulated electricity rates and lay out plans for a so-called capacity-market structure, which guarantees producers a return on power even if they are unable to sell it.

Premier Rachel Notley is seeking to wean the province from coal by 2030 and spur investment in renewable sources of electricity without alienating companies needed to complete the hugely expensive switch.

Cash-poor Alberta is eager to attract new investment as it grapples with fallout from the collapse in oil prices, including tens of thousands of layoffs and a budget deficit of nearly $11-billion this year. It aims to generate one third of its electricity from renewable power, with the rest from natural gas, necessitating some $30-billion worth of new capacity.

Industry executives had warned that uncertainty over its electricity-market policies would keep investment on the sidelines. Now, the worst of those fears appear to have subsided.

"It certainly is a step forward in terms of resolving long-standing issues relative to a big change in the market," Siegfried Kiefer, chief strategy officer at the Atco Ltd., said on the sidelines of the Bennett Jones LLP business forum in Lake Louise, Alta. Atco will receive $65.8-million over 14 years, or $4.7-million per year.

TransAlta will receive annual payments of $37.4-million starting next year and ending in 2030, totalling $524-million.

The Calgary-based company said the new policy framework sets a clear path for investment in new hydro and wind development, as well as for new gas conversions.

Bank of Montreal analyst Ben Pham said benefits of switching coal plants to run on natural gas won't materialize for years, but he said the payments are positive for the company.

"Not only did the government make a rational decision, when combined with other actions this week (i.e., transition to a capacity market), we see this as improving investor confidence in the [Alberta] power market following a year of significant uncertainty and disruption," he said in a note titled Christmas Came Early. TransAlta said construction of a pumped hydro project at its existing Brazeau facility in Drayton Valley, Alta., could start by 2021, pending receipt of a long-term contract.

The company is also committed to converting units at its Sundance and Keephills coal plants to gas-fired generation by 2023, it said.

Edmonton-based Capital Power said it would receive annual payments of $52.4-million starting next year for a total of $734-million over 14 years.

The company said it would pay $20-million before taxes to settle its dispute with the province over the early termination of power contracts.

Royal Bank of Canada analyst Robert Kwan said the size of government payouts is a surprise given its budget deficit. But he said the moves this week significantly improve clarity for investors.

"Further, the announcements leave us feeling that the NDP government has taken a balanced approach when it comes to the power industry and ratepayers/ taxpayers," he said in a research note.

O n Dec. 2 and 3, the personal collection of Neil Leifer - perhaps the greatest sports photographer ever - will be auctioned in New York. His work charts a vanished sporting landscape - where boxing and horse racing ruled, and where baseball was played in the afternoon. These aren't just pictures. They're time capsules. They show that while the games themselves don't change much, the way in which we see them does. Cathal Kelly explains how Leifer's images captured a bygone era
Friday, December 2, 2016 – Print Edition, Page S2

Bill Mazeroski

This may be the most famous hit in baseball history - Bill Mazeroski's Game 7, tiebreaking, bottomof-the-ninth shot to win the 1960 World Series. The home-run ball landed outside Pittsburgh's Forbes Field, where a 14-year-old named Andy Jerpe picked it up.

Police escorted Jerpe into the celebrating Pirates clubhouse.

Mazeroski and a teammate signed it. A few months later, on the first nice day of spring, some of Jerpe's friends persuaded him to use his holy relic in a sandlot game. Jerpe was hitting fly balls when he accidentally sliced one into a thicket of knee-high grass.

A long search came up empty.

The Mazeroski home-run ball was never seen again.


Muhammad Ali's prismatic personality functioned like a diamond. Depending on how he held himself in the light, he could show you something different, and often contradictory.

There was never any harder man who allowed himself to seem so soft.

Of the hundreds of iconic photos of the 20th century's great sportsman, many are bright and airy. They show him in repose or at play. Ali's confidence was such that while he might be seen clowning, he knew he could never be mistaken for one.

This moment - the most epic and celebrated sports image of the century - is one of the very few in which Ali appears vicious.

He'd beaten Sonny Liston once, as Cassius Clay. A little more than a year later, in May, 1965, he'd face him again here as Ali. The champion's political renaissance was so disquieting to middle America that during the fight, TV announcers continued to refer to him by his birth name.

It didn't last a round. Liston jabbed with his left. Ali came over it with a right. The punch was so quick, many claimed later they hadn't seen it, leading to charges of a fix. Liston dropped.

After a few seconds, he tried to get up, wobbled and collapsed again. That's when this picture was taken, with Ali looming over Liston, screaming, "Get up and fight, sucker!"

"[Ali] looked like a man in a different world," referee Jersey Joe Walcott would say afterward.

"I didn't know what he might do.

I thought he might stomp him or pick him up and belt him again."

You didn't see that on the broadcast, which aired in poorly framed black-and-white. During the knockdown, the camera tightened on Liston's face. Ali was unseen.

It wasn't until Leifer's photo was published that people got a real sense of Ali's imperiousness, and in glorious colour. It is the image of man as conqueror and conquered. It's victory at its most elemental, brutal and beautiful.


When we valorize racehorses, we talk in terms that might be used to describe a ballet dancer - "sleek," "lithe," "coltish." It speaks to elegance, which is not what crosses your mind when you get up close to one of these beasts. This photo gives you some sense of the reality - that a great thoroughbred is a battle cruiser fit to sail on land. Secretariat, pictured here, was so large in the chest - more than six feet around - that he required a custom-made girth. Here he is, piloted by Canadian jockey Ron Turcotte, winning the 1973 Kentucky Derby en route to a Triple Crown. Upon death, Secretariat's heart was found to weigh 22 pounds (10 kilograms) - more than twice the size of an average racehorse's. The veterinarian who performed his autopsy said, "I think it told us why he was able to do what he did." Gordie Howe .

After finding retirement discommodious, Gordie Howe joined the World Hockey Association's Houston Aeros, aged 45. He was four years older than the coach.

He played on a line with his sons, Mark and Marty. In one game, an opponent shoved 18-year-old Mark Howe onto the ice and pinned him there. When the elder Howe told him to let the kid up, the offender first chirped Howe and then yipped that maybe the kid should fight his own battles. "My dad reached over, put two fingers up the guy's nose and lifted him off Mark," Marty Howe recalled. "His nose stretched about a foot, it seemed.

I almost got sick watching it." It's uncertain if this photo captures Howe postviolence, or just contemplating the violence to come.

Nadia Comaneci

Searching around for some gap in her armour, critics would say of teenage Romanian gymnast Nadia Comaneci that she took no pleasure in her work. "People always accused me of not smiling like my rival Olga Korbut, but that was just my personality," Comaneci wrote. Here she is displaying her five medals from Montreal 1976, looking as grim as a KGB commissar. In years since, the world has become inculcated with the American ideal of triumph - tears, joy, gaudy displays of emotion. Whether or not she enjoyed much of it, Comaneci remains in this image a powerful symbol of Cold War psy-ops - an imperturbable communist athlete. Also, an unbeatable one.

Pele in Mexico

After winning his first World Cup in 1958, a 17-year-old Pele fainted.

Upon being roused, he burst into heaving sobs and was consoled by older teammates. Rarely has any top athlete ever seemed so young. Here he is in 1970 just after winning his third world title in Mexico's Azteca Stadium. He's not young any more. This is journey's end. In this moment, Pele has sealed his reputation as the greatest soccer player of all time.

He's a year from international retirement, but at his peak. Pele scored the opener in this contest, a header over Italian defender Tarcisio Burgnich. Afterward, Burgnich explained, "I told myself before the game, 'He's made of skin and bones just like everyone else.' But I was wrong." Ali overhead

As bounded by the ropes, a typical boxing ring measures 20 feet square. Viewed from the side, it looks like a platform - permeable and unthreatening. But from above, the ropes are a hard boundary and the ring becomes a claustrophobic bear pit. That visual reimagining of a profoundly familiar space is what makes this 1966 shot iconic. We recognize the victor - Muhammad Ali.

We've forgotten the man sprawled on the canvas - Cleveland Williams. Two years before this fight, Williams was shot by a policeman during a traffic stop and grievously injured. His return against Ali was just short of miraculous. Sadly, when Williams is remembered now, it is caged in this pose of defeat.

Koufax wins WS

They expanded the strike zone in 1963, tilting the board so far in favour of Sandy Koufax that it was functionally a fix. He's pictured here winning the World Series for the L.A. Dodgers in a sweep he manufactured nearly by himself. Koufax's gaudy numbers that season - a 1.88 ERA, 11 complete games, an insane 311 innings pitched - don't capture his dominance. After striking out 15 Yankees in Game 1 of that World Series, Yogi Berra said, "I can see how he won 25 games.

What I don't understand is how he lost five." Koufax's teammate, Maury Wills, explained, "He didn't. We lost them for him." Fidel Castro

Though far from the best, here is the 20th century's most influential pitcher. According to legend, Fidel Castro was a baseball star at the University of Havana renowned for his heater. In different versions of this apocryphal story, a passel of big-league scouts contrived to let him slip their grasp, putting the Cuban Revolution in motion. Former major leaguer Don Hoak claimed he'd stood in against Castro, after the student revolutionary ran onto the field during a league game to make his point from the mound. In the end, Castro extended his career for decades playing a different sort of sport.

"His fastball has long since died," a U.S. diplomat once said of Cuba's Maximum Leader. "He still has a few curveballs, which he throws at us routinely." Kennedy/Johnson

Beyond the formal beauty of its composition, what makes this photo of John F. Kennedy taking in a baseball game notable is that the president is wearing a hat.

Kennedy helped kill the ubiquitous fedora in the same way Clark Gable submarined the undershirt business - by being cool and refusing to wear one.

Remember when presidents were cool? Accompanying the shot is Leifer's press credential. It has a small tear at the bottom. In a more trusting world, this was how the Secret Service indicated that Leifer was one of the photographers allowed close access to Kennedy. Perhaps the only thing that hasn't changed entirely since this shot was taken is what's happening off-camera - baseball. That's the same.

Sugar Ray Robinson

This is a picture of the lion in whatever season follows winter, suddenly prey to the elements.

Sugar Ray Robinson, Ring Magazine's "greatest boxer of all time," is 44 in this photograph. He's old and haggard. He's just lost another one. Looking back on it later, Robinson will observe, "You always say, 'I'll quit when I start to slide.' And then one morning you wake up and realize you done slid." Fortunately, Robinson's legacy was too great to be undone by an unwillingness to admit that time is the one life companion who will never lie to you.

Griffith vs. Paret

Cuban welterweight Benny Paret is dying in this photo. Though it will take him 10 days to succumb, he's just been beaten to death by 29 unanswered shots - many of them point-blank uppercuts - from American Emile Griffith.

Griffith ended the fight in such frenzy that it took four men to drag him away from his unconscious opponent. Later, Griffith - who was bisexual - would say his rage was spurred by an insult in Spanish from Paret - maricon ("faggot"). "He called me a name," Griffith said. "So I did what I had to do."

Jays pushing their luck by not opening their wallets
Saturday, December 3, 2016 – Print Edition, Page S3

As we prepare for the baseball bazaar at next week's winter meetings, the Toronto Blue Jays are steadily nudging the public toward accepting a large step backward.

After losing a half-dozen guys, the team's only notable addition thus far is Kendrys Morales - the sort of medium-risk filler that also-rans use to plump up their rosters.

Morales - a player incapable of fielding a position, and one who had a lower Wins Against Replacement last year than all of the position players in the Jays starting lineup - is being made to sound like Babe Ruth reincarnated.

"Because Morales is here, we ... feel like we will be in a position to be more opportunistic later in the off-season," general manager Ross Atkins said this week.

In essence, let's let the big spenders have their turn, and then rummage through the bargain bin in February to see which misfit toys we can dig out. If that doesn't work out, don't worry. We've got this guy over here who once missed two calendar years after jumping on home plate and blowing up his ankle. What could go wrong?

Well, a bunch of things.

As it currently stands, Toronto doesn't have an everyday first baseman. Or a left fielder. Or a right fielder. Or a backup catcher. It is, as currently constructed, a basketball team.

The Jays seem very like a delusional Toronto house hunter. You don't want to buy since things are so expensive. You keep telling yourself the prices have to drop some time. While you wait, the market continues to go through the roof. You steadily downgrade your expectations - you wanted something fully detached with a driveway. Eventually, you're willing to go with a tool shed that needs a little work. That's what being "opportunistic later in the off-season" is starting to sound like.

As in urban real estate, there are no real bargains in baseball.

Every once in a while you get lucky - Jose Bautista circa 2011, for instance. But mostly you get what you pay for. Having enjoyed so much good fortune in recent years - acquiring Bautista, Edwin Encarnacion and Josh Donaldson effectively for nothing - one wonders if the Jays have begun to convince themselves that luck is a variety of skill. It isn't. It's luck. It goes both ways and does so chaotically.

This week, the New York Mets made Yoenis Cespedes - a very good, but not great player on the wrong side of 30 - one of the highest paid in history. Cespedes's average annual wage - $27.5million (U.S.) - is the new normal for a dependable No. 3 or 4 hitter in the order.

Right now, Morales is slotted into one of those two spots. He's getting $11-million a year. Everything about his history suggests he will perform at what that a-little-too-reasonable number suggests.

While on the one hand being told that anything is still possible, we're also being gently reminded that some things just aren't.

Atkins broadly hinted that Morales isn't the beginning of a shopping spree. He's the end.

"Two guys [i.e. Encarnacion and Morales] that do similar things is less than ideal for a team and money has been spent. It doesn't make it impossible, but it's certainly made it less likely."

Take special note of "money has been spent." That may be a shot across the bows of Encarnacion's agent. More likely, it's a statement of fact by a major-market pro baseball team whose budget approach lies somewhere between depressingly rational and miserly.

So that's Encarnacion gone, as well as the suddenly forgotten man, Bautista. The latter's price is coming down, but his pride remains fully intact. It is difficult to imagine him walking back his demands so far that he ends up worse off than he was while playing for people who've already passed on him.

Parenthetically, we're beginning to get a sense of what makes Atkins good at his job. He never gets upset; he never over-promises; he never admits a door is closed until it's been bolted behind him and, most important, he never tells a lie. It is the bad habit of sports fans to believe the best-case scenario when they're actually being told the worst. Atkins has a way of framing depressing news that makes it bearable. Or, at least, bearable as long as the team is still a winner.

The success of the past couple of years has papered over the fact that the Jays remain one of those teams not willing to take major risks. When former GM Alex Anthopoulos did so, he was functionally fired for his trouble. Incoming president Mark Shapiro was able to consolidate his new regime by extending the run of luck Anthopoulos had begun. Now that the bills have come due, that's over.

What we're entering is a period of retrenchment.

From a business standpoint, you can see the wisdom in this. A lineup with Donaldson, Morales, Troy Tulowitzki, Devon Travis and Russell Martin is still pretty good. It's probably not playoffgood, but it's enough to get you into September with a chance.

If they can still win, the men on top look like geniuses. That's an alluring possibility for new-generation executives such as Shapiro and Atkins. What Theo Epstein proved in Chicago is that a general manager can be a bigger star than any of his players, as long as he's made enough counter-intuitive moves on the way to the mountaintop.

The secret is going loudly against public opinion. Letting Encarnacion and Bautista wander off with only a half-hearted pursuit would qualify as such. We've already seen them do this once, with David Price. That worked out okay.

If it goes sideways on them, they don't have to deal with it until this time next year. At that point, they can lure the fanbase's attention away with a coaching change or the big signing they might have made at this point.

What Shapiro and Atkins can't fail to have noticed is that Toronto is uniquely susceptible to the yo-yo effect of roster management. You can let things drift off for a bit, frustrating fans. Just when they begin to pull back wholesale, you give them a nugget - trading for R.A. Dickey or Donaldson; putting up good money for a bad player such as Melvin Upton. You wait to see how that turns out. If it does (and it has), that buys you some time to let the yo-yo unfurl again. Two years of playoff appearances probably equals two more years' benefit of the doubt.

If Encarnacion and Bautista both leave and are not replaced by players of equal value (Morales doesn't qualify), the Jays aren't very good any more. They're just okay.

But that's probably enough for most people. At the least, they'll want to see how things turn out before losing their minds or losing interest in the team.

Viewed from that perspective, Shapiro and Atkins have a sort of prisoner's dilemma. They can spend on Encarnacion/Bautista (making fans happy and their employers' unhappy). Or they can go cheap (achieving the opposite effect).

Either case is completely conditional on how you do during the 2017 season. Both can end with everyone happy. But only one of them ends with you having saved a couple of hundred million dollars.

It's a reminder that the players never lie, either - when pressed, they'll tell you that baseball is a business. As such, it's not really about winning. It's about winning in a way that makes you the most cash.

It's not very romantic, but it does have the benefit of being highly predictable.

Stamps chase a season for the ages
To make this team the greatest in CFL history, Calgary has to win the Cup on Sunday - but former Stampeder quarterback Henry Burris and the underdog Ottawa RedBlacks have plans to make a little history of their own on BMO Field
Saturday, November 26, 2016 – Print Edition, Page S1

TORONTO -- If the Calgary Stampeders hoist the Grey Cup on Sunday night in Toronto, their 2016 season will be widely considered the greatest in CFL history.

The Stampeders went 15-2-1 in the regular season, including a stretch of 14 successive wins, which set a CFL single-season record. They dominated countless team and individual stats categories and won five of the seven major CFL awards, including the unanimous selection of star quarterback Bo Levi Mitchell as the season's most-outstanding player.

The Stamps fell just shy of earning the best CFL regular-season record. The 1989 Edmonton Eskimos, 16-2, still hold that honour, but that team was eliminated in the West Division final by the 9-9 Saskatchewan Roughriders. These Stampeders don't want to be remembered as another special team that didn't get it done.

Despite the dominant record, Calgary's season was not without some significant challenges, from injuries to a tough personnel decision that led to the streakbreaking loss.

Most significantly though, the team was faced with the shooting death of popular practice squad defensive back Mylan Hicks.

"We're not going to take nothing less, trust me, not after all we've overcome this season," said Stampeder Derek Dennis, who was chosen the CFL's top offensive lineman of the year. "I spent time with the New England Patriots in my career, so I know what a locker room with that special feeling is like. From being around [Patriots] like Tom Brady and Devin McCourty, I know, and this team has the same feeling."

The Stampeders opened the season with a loss - 20-18 to B.C.

Then they played to a tie with Ottawa on July 8 after the game remained unsettled after two overtimes - the first CFL contest to end in a tie since 2009.

There was a white-knuckled overtime win over the Lions in Week 6 and then a shelling of those same Lions in Week 9.

"Everyone was saying that was the team who could take us down, so when we beat them, we said, 'Well, who else is going to stop us?' " Dennis said. "We began to believe the only team that can beat the Calgary Stampeders is the Calgary Stampeders."

A season with a 14-game win streak may have looked like smooth sailing from the outside.

After all, the Stamps scored more total points than any other team (586), allowed the fewest sacks (20) and boasted the league's sack leader in Charleston Hughes (16). Jerome Messam led the league in rushing yards (1,198), and Mitchell was tops in passing touchdowns (32). Still, the season was not without struggles.

The offensive line coped with a litany of injuries, causing 11 different players to be used on the line.

The Stamps were even forced to move some of their defensive linemen to the other side of the ball.

But the most difficult thing to overcome came on Sept. 25, when Hicks was shot outside a Calgary nightclub.

"There were some tough moments and there still are. I mean it's not over but I didn't have a template on how to handle it," first-year Stamps head coach Dave Dickenson said. "I can't say that I handled it well, but I just did my best, and the guys certainly have a purpose. We play for more than just ourselves."

All of Calgary's players turned to one another, particularly those who were with Hicks that night.

"We had to do a group session with the guys who were there that night. We sat and talked about our feelings and what it meant to go through it, we just cried and hugged," Dennis said. "I was one of the guys to have a chance to hug him last before he took his last breath. I had trouble eating, sleeping and keeping focus. But being at the facility every day around my brothers, playing football - that was therapy."

The team kept Hicks's jersey in his Calgary locker. His mother addressed the team, and his family will attend the Grey Cup. Defensive back Jamar Wall switched to Hicks's No. 31 jersey and scored a serendipitous 31st point off a B.C. Lions interception in last week's dominant West final victory.

Upon winning the most outstanding Canadian award on Thursday night, Messam (also with Hicks that night) dabbed tears from his eyes as he spoke about the fallen player.

"I dedicate this award to you," said Messam, holding his trophy up to the sky. "And I want you to know we're going to go get this Grey Cup."

The team determined to be one of the all-time best faced a tough decision down the stretch. With the West division already clinched and sitting on 14 consecutive wins, Dickenson decided to rest some of his overworked star players for a late October game against the already eliminated Montreal Alouettes, preserving them for the playoffs. The Stamps lost that game, and did not earn the 16th regular-season win needed to tie the '89 Eskimos.

"I'm comfortable with my decision, although I would have liked to set the record," Dickenson said.

"But I felt I put the team in the best situation to win the next game, which was more important. To me, that paid off."

Several teams have played to 15-3 regular season records - including the 2014 Stampeders, who went on to win the Grey Cup, and the 1993, '94, and '95 Stamps who all fell short. Three different Don Matthews-led teams finished with regular-season records of 15-3 and went on to hoist the Cup - the 1995 Baltimore Stallions and the '96 and '97 Toronto Argonauts.

Despite facing a RedBlacks team that finished 8-9-1 in Sunday's Grey Cup at BMO Field, the Stamps know regular-season records mean little in postseason play. In 2012, the heavily favoured 12-6 Stampeders lost the Grey Cup 35-22 to a Toronto team fresh off a 9-9 regular season. In 2013, the 14-4 Stamps topped the standings but lost the West final to the 11-7 Roughriders.

"We don't buy into the fact that we're favourites. We don't look at writers picking us or people making a spread on it, because if you do look at it, you allow cracks, seams to break open and give you a reason to lose," Mitchell said. "We can't buy into the hype about us."

Associated Graphic

With his eye on the prize, Calgary QB Bo Levi Mitchell leaves the practice field in Toronto on Friday as the Stampeders prepare for Sunday's Grey Cup game.


Calgary quarterback Bo Levi Mitchell, centre, practises with teammates Friday ahead of Sunday's Grey Cup game.


Boston nabs lefty Sale in 'blockbuster' trade deal
The Associated Press
Wednesday, December 7, 2016 – Print Edition, Page S1

OXON HILL, MD. -- No surprise that Chris Sale got traded. The real shocker? That the Boston Red Sox swooped in to snag him.

The reloading Red Sox pulled off the biggest deal yet at the winter meetings, acquiring the dominant ace from the Chicago White Sox on Tuesday for a hefty package of four prospects.

"The ability to get a Chris Sale doesn't come along very often," Boston president of baseball operations Dave Dombrowski said.

Sale joined an already talented rotation with the AL East champions, now pitching alongside 2016 AL CY Young Award winner Rick Porcello, former winner David Price and knuckleballer Steven Wright. He leaves behind a shredded reputation in Chicago, suspended by the team last summer after he flew into a rage and cut up retro uniforms that club was supposed to wear.

The 27-year-old Sale has been an all-star in each of the last five seasons, finishing high in Cy Young Award voting every time, but has never played in the postseason. To get him, Boston traded high-priced third baseman Yoan Moncada, considered by many the top young talent in baseball, along with pitchers Michael Kopech and Victor Diaz, and outfielder Luis Basabe.

Sale was a top trade target across the majors this off-season, and Washington seemed to be the favourite to land him this week.

"We put a lot of effort into it and thought we made a good, valiant effort ... and we fell short," Nationals general manager Mike Rizzo said.

"We reached as far as we were going to reach in the trade" with the White Sox, he said, adding he'd "been engaged with them for a couple of weeks informally and then it ratcheted up right before the meetings."

Dombrowski said he began talking to the White Sox in earnest on Friday.

"I guess you can look at quickness" in different ways, Dombrowski said.

To New York Mets manager Terry Collins, it was a great deal - for him, being division rivals of the NL East champion Nats.

"I really thought for sure he was going to end up in Washington. I really did," Collins said. "We dodged a bullet."

A few hours earlier, Boston got prime setup man Tyler Thornburg from Milwaukee. After that deal was announced, without tipping his hand, Dombrowski said, "We're trying to win now, as you can see."

Few knew then exactly how hard they were trying.

"That's a big one. That's a blockbuster. That was a wow," Yankees general manager Brian Cashman said.

Sale was 17-10 with a 3.34 ERA and 233 strikeouts this year, a season after he led the majors by fanning 274. He also comes with his benefit: a team-favourable contract that calls for a $12million (U.S.) salary next year and includes club options for 2018 at $12.5-million and 2019 at $15-million.

Given his financial status, Sale "was controllable and projected to be damn good going forward, and it's tough to give that up," White Sox GM Rick Hahn said.

"At the same time, we have to be realistic about where we are and the likelihood of, with this current group, getting to where we want to be. In the end, we had to make the tough decision to let go of someone as valuable as Chris in order to pull back what we feel is a premium package that's going to help put us in a better position long term," he said.

Drafted by the White Sox in 2010, Sale became a starter in 2012 and zoomed into a star.

"He pitches with an edge," Red Sox manager John Farrell observed.

But the relationship between Sale and the White Sox became extremely strained this year.

Sale was suspended for five days without pay for destroying collared 1976-style uniforms the team was scheduled to wear July 23, saying they were uncomfortable. He lost $250,000 of his $9.15-million salary and also was fined about $12,700 - the cost of the tattered jerseys. He blamed manager Robin Ventura for not defending his players.

During spring training, Sale was quite vocal about the decision to limit the time teammate Adam LaRoche's son was allowed in the clubhouse. That flap led to hard feelings all around, along with LaRoche's retirement.

The White Sox went 78-84, and aven't made the playoffs since 2008.

Boston went 93-69, then got swept by Cleveland in the AL Division Series.

The Red Sox signed Moncada in March, 2015, for a $31.5-million bonus, the largest ever for an amateur player, and paid an additional $31.5-million in tax.

For that $63-million, the 21-yearold played a total of eight games in the majors, all this season, and batted .211 with one RBI. He hit .294 with 15 homers in the mid-minors. The Red Sox still owe Moncada $16-million of the signing bonus, payable in four instalments through October, 2018.

The 20-year-old Kopech was the 33rd overall pick in the 2014 amateur draft. The right throws hard and went 4-1 with a 2.08 as a starter in Class A.

Basabe, also 20, hit .264 with 53 RBIs in Class A. Diaz, a 22year-old righty, went 2-5 with a 3.88 ERA in relief in Class A.

Deconstructing Gary Bettman's negotiating tactics
Monday, December 5, 2016 – Print Edition, Page S1

Those of us who are veteran Gary Bettman watchers were fascinated by the little cat-andmouse game the NHL commissioner has been playing with the players' association these past three weeks.

Nominally, it was about Olympic participation - and would the NHL go to Pyeongchang, South Korea, for the 2018 Games - but really it was about labour peace, something Major League Baseball seems to manage routinely, but hockey struggles with.

It all started after the hockey world landed in Toronto for Hockey Hall Of Fame induction ceremonies in November, with IIHF president René Fasel making Bettman an offer he theoretically couldn't refuse. All along, Bettman had insisted unless the International Olympic Committee came up with the money to finance NHL participation in the Olympics, it was a non-starter for his organization.

When Fasel said he'd come up with the money, it removed the single biggest logistical barrier to going.

Since the IOC suddenly wasn't the big, bad wolf anymore, it forced Bettman to up the negotiating ante. A wily veteran of labour negotiating, Bettman offered to go to the Olympics, if the players agreed to a three-year extension of the current collective agreement.

It was a clever tactical ploy because Bettman knew there wasn't a chance in 10,000 the players would say yes.

Olympic participation matters to the players, but it is a peripheral, not a core, bargaining issue.

To expect them to unilaterally exchange one for the other was unrealistic. Moreover, Bettman almost certainly knew his offer would be rejected. What he accomplished was to shift the narrative.

Now, if the league stays home and there's a giant outcry in response, Bettman can argue the players were complicit in the decision.

They had their chance to go (with only one string attached!) and said no.

The league is resisting the temptation to go to the South Korean Olympics for a variety of logistical and financial reasons.

It is, however, open to the idea of participating four years later in China because of the tangible economic gains that can be made from exploring the world's largest untapped hockey market.

The players want to play, but not at any cost, and not to maintain the labour status quo at a time when the escrow provision of the current collective agreement is eating deeply into the dollar value of their contracts.

Escrow is the mechanism by which the players and the owners divide the pie, each side getting 50 per cent of hockeyrelated revenues.

The problem is, with the sudden drop of the Canadian dollar, revenues have dipped and so the players' share is dropping, too, to the point where they are losing virtually all of the 15 or so per cent that is being withheld annually from their individual pay cheques under this system.

Ideally, the players would like to see escrow, if not eliminated altogether, then capped so their losses aren't as great as they are today.

That will be at the heart of any talks to extend the collective agreement, not the Olympics.

It's one of the more intriguing discussion points that will be on the docket when the NHL's board of governors meets in Florida later this week - and the clock is ticking.

The NHL is already in the early stages of setting up next year's schedule, which will include a 31st team, the Vegas Golden Knights.

While there is nothing to prevent the league from roughing in two different scheduling scenarios - one that includes an Olympic break, one that doesn't - the matter needs to be settled by the end of January.

In the meantime, it's a fascinating shell game, and like all effective shell games, diverts attention from the two main points.

One: The NHL should go to the Olympics because it belongs there. The appetite for best-onbest competition is enormous in every corner of the hockey world. The chance to perform on so important a sporting stage should never be turned down.

And there is risk of a serious fan backlash if the NHL continues to play league games during the Olympics, while a B-level hockey tournament is staged in Pyeongchang.

Two: The NHL needs labour peace, not a fourth lockout under Bettman's watch. If this opening salvo brings the league and the NHLPA to the negotiating table before things get too heated, then that has to be viewed as a positive step.

Some owners flatly oppose Olympic participation, on the grounds that it makes little financial sense to shut down the league for an event to be played in a faraway time zone that doesn't give the vast majority of viewers a chance to watch the games live.

But that position completely misses the point. The NHL went to Nagano, Japan, in 1998, facing the same logistical issues.

The Olympics helped spread the gospel of hockey to an unprecedented international audience, which ultimately enhanced the NHL brand.

Brand awareness and brand protection - that might not be the rallying cry you expect to hear when considering a decision as monumental as the NHL's Olympic participation, but if that's why the players eventually go, then who cares?

It doesn't matter if you make the right decision for the wrong reason.

It only matters that you do the right thing in the end.

The Reds express confidence ahead of must-win showdown against the Impact
Wednesday, November 30, 2016 – Print Edition, Page S1

TORONTO -- To listen to the players on Toronto Football Club, there are no white knuckles on their team despite being down a goal to the Montreal Impact entering the last of the two-game, totalgoal Major League Soccer Eastern Conference playoff.

"I don't feel like we're down a goal," goal keeper Clint Irwin said on the eve of Wednesday's match at BMO Field. "You're going into any game, you know you have to win. If you're going to win, you need to score a goal and keep them out. So really, it's a normal game in that respect."

The format of the series is the major reason behind that thinking. By scoring twice in Montreal last week in a 3-2 loss to the Impact, TFC left itself in decent shape for the final leg. Away goals determine the first tiebreaker if the teams split the semi-final series with a win apiece, so the Reds can eliminate Montreal and advance to the MLS Cup against the Seattle Sounders by winning a low-scoring game Wednesday night.

Having the final leg of the twogame aggregate series on their own pitch and in front of what is expected to be a record crowd of nearly 37,000 noisy fans is another big reason for TFC's upbeat attitude.

"We expect that it's going to be an electric night," TFC midfielder Michael Bradley said. "The support our fans have given us all season long has been incredible.

[Wednesday] night will blow everything out of the water."

A 1-0 or 2-1 win would send TFC to the MLS Cup on Dec. 10 at BMO Field; the Reds would get home-field advantage because they finished with more regular-season points than Seattle.

However, the games between Montreal and Toronto have not been low-scoring this season, and the Reds will have to play better defence against the Impact's quick, counterattacking style than they did in the first leg.

The Impact, paced by Italian striker Matteo Mancosu and Argentine midfielder Ignacio Piatti, scored two quick goals early in the first half and eventually built a 3-0 lead as TFC's back line appeared dumb-founded.

Bradley said that will not happen a second time.

"I promise you [Wednesday] there will be a few plays when Piatti and Mancosu are running into space," he said. "That can't and won't faze us. [The Impact] are comfortable sitting deep with a lot of guys behind the ball - so you have to have different ideas in terms of ways to unbalance them."

Each team earned a win, a draw and a loss against one another in the 2016 regular season.

"We've had success against them this season," Bradley said.

"We have a good grip on them, how they want to play. There are different ways we can make the game difficult for them, and turn the tables in our favour."

One of those ways appears to be starting the game with TFC's customary aggressive play. Since Montreal only needs a draw to advance to the MLS final, Toronto desperately needs to score the first goal.

"The mentality at home is to come out and be aggressive, to play forward, to try to create opportunities to put them on their heels, read situations in terms of when we can be aggressive and press right away," Bradley said.

But both Bradley and TFC head coach Greg Vanney warned that the Reds have to be patient.

They can't leave themselves open defensively with over-aggressive play - they have 90 minutes to score as long as they don't concede a goal to Montreal.

"This is one of those situations where we know at the start we are theoretically down, we need a goal," Vanney said. "Getting a goal over 90 minutes is certainly doable. We need to make sure we don't make it a bigger climb for ourselves - keep it clean on the defensive side and give our guys a chance. We don't necessarily have to rush at the beginning and look for the goal. We can get that goal over the course of the match."

The most important thing, the coach added, is to make sure each player gives a complete effort. If so, then the result should take care of itself.

"The one thing we can never leave is our energy or our effort in the locker room," Vanney said.

"We've got to take that on the field, be ready to compete, give everything we have to the moment. If we do that, we'll give ourselves a chance to win the game.

"Our energy, our effort, our commitment is ultimately what the fans will really get behind and support. If we leave our hearts and souls on the field, I think everybody can be proud of that."

Associated Graphic

Toronto FC midfielder Michael Bradley, right, and his teammates work out at practice Tuesday ahead of the home leg of the MLS Eastern Conference playoff against the Montreal Impact. Montreal won the first game 3-2.


Prodigal son Wiggins returns to Toronto
Thursday, December 8, 2016 – Print Edition, Page S1

TORONTO -- As the Toronto Raptors prepared for Thursday's game against Andrew Wiggins and the Minnesota Timberwolves, Raps superstar DeMar DeRozan was asked if he sees any of himself in the young Canadian Timberwolves standout.

"Nah, he's way more athletic than me," said DeRozan, a twotime all-star. "Once he hones in, he's capable of being everything he wants to be. It's all about putting in the work, not giving up, and not having any doubts. He has all the tools."

Wiggins - the first overall pick in 2014 NBA draft - will play his third career regular-season game in his hometown on Thursday when his Timberwolves visit Air Canada Centre.

With the promising talent on Minnesota's roster - Wiggins, Zach LaVine and a potential future MVP in Karl-Anthony Towns - compounded with a weakened Western Conference, some projected Wiggins could make his first playoff appearance in 2017. But the burgeoning squad has begun the season 6-15 and sits below all in the West standings except the Phoenix Suns and Dallas Mavericks. It's not a convincing start to the chase for the eighth playoff seed.

The 21-year-old from Vaughan, Ont., is playing for an inexperienced team newly led by veteran coach Tom Thibodeau. The coaching change brought a new system.

Wiggins is averaging 22.2 points a game this season, 20th among the NBA's scoring leaders. He has had exceptional moments, mixed with those that show his inexperience. He delivered one of the most sensational dunks this season last month when he soared up over Golden State's JaVale McGee with an outstretched arm that looked almost superhuman.

Then there was his explosive career-high 47-point performance against the Los Angeles Lakers.

"I'm finding myself, finding things I'm good at and things I need to work on," Wiggins said after the Lakers game. "The game has kind of slowed down for me a little bit. I'm able to read defences better now and see how the defence is set."

On the opposite end of the spectrum was this week's loss to the San Antonio Spurs, when the Timberwolves' growing pains were glaring next to a veteran opponent. Wiggins had just 11 points that night on 5-of-12 shooting as he was blanketed by Kawhi Leonard, who himself rolled for 31 points on just 15 shots.

From DeRozan's early years in Toronto, he can relate to what a raw talent like Wiggins is experiencing during tough early years with a losing franchise.

"You gotta go through the tough times to really understand how to win," DeRozan said.

Minnesota ranks 10th in offensive efficiency, yet 25th among the league's 30 teams in defensive efficiency - which helps to explain the losing. Many are watching eagerly to see how Thibodeau guides Wiggins and the other youngsters.

"He's a young kid, has a world of talent - one of the most talented players in the league - but the expectations were so unfair on [him]," Raptors coach Dwane Casey said. "Everyone expected him to be like today's LeBron or yesterday's Kobe or whatever. In time he has the opportunity to be that type of player. Today he's a very, very talented player but he's nowhere on the level of those guys, just because of Father Time. Just give the kid a few more years."

While his production dipped a little in late November, his average points are up over his first two NBA seasons. While scoring has always been a strength of his game, he's attempting - and making - more three pointers.

"He's looking a lot more comfortable, picking and choosing his spots. He's had a couple of big games so far this year but now it's about doing it consistently," DeRozan said of Wiggins.

"That's the next thing, the next part of his game. When you have a big game, now go out and do that consistently on an every night basis. He's just going to continue to grow."

Associated Graphic

Minnesota Timberwolves guard Andrew Wiggins, right, dribbles against the San Antonio Spurs at Target Center on Tuesday.


Since joining the NBA, Andrew Wiggins has faced criticism for not meeting high expectations immediately. However, some say it is only a matter of time before the Canadian guard hits an elite stride.


Carter 'put Canada on the map'
Thursday, December 1, 2016 – Print Edition, Page S2

TORONTO -- During a recent game involving the Memphis Grizzlies, the ESPN talking heads were sitting courtside and conveying their wisdom to the broadcast audience during a break in the action when Vince Carter ambled over and started hamming it up with the panel.

You've all seen it before - the unscripted appearance of the star athlete during a live TV segment, tousling the hair of the on-air talent while exchanging clever bon mots that leave everybody laughing uproariously.

Thing is, that sort of spontaneous public banter was never part of Carter's modus operandi, at least back in the day when he was cutting his teeth with the Toronto Raptors and assaulting the basket like few before, or since, have ever done.

As important as Carter was to the development of the game, both at the grassroots level and the pro ranks in Canada when he was a member of the Raptors for the first seven years of his NBA career, his public persona was always somehow strained.

"A knee is a knee," Carter once infamously sniffed to Toronto reporters trying to dig up information on an injury that nagged at Carter when he was at the height of his powers with the Raptors and the high-flying dunking darling of the NBA.

Now, 18-plus seasons down the road, Carter has obviously mellowed and the role of the league's elder statesman is obviously suiting him just fine. He even appears to be having fun.

Carter was in town Wednesday night with the Grizzlies to do battle against his old squad at Air Canada Centre.

Unfortunately for his Canadian fans, the hip he injured in Monday's game against Charlotte prevented Carter from suiting up for what might have been his Toronto swan song. And Carter was not made available by the team to talk about what might have been his final visit as a player.

Although it is hard to fathom for those who recall his heydays in Toronto, Carter is 39 - he'll be 40 in January - and is the oldest player in the NBA this season.

His rim-rattling ways a distant memory, Carter is still acquitting himself well on the court. He poured in a season-high 20 points Nov. 8 against Denver, becoming the oldest player in NBA history to score 20 or more off the bench.

"I think he's going to be remembered as one of the pioneers of Toronto basketball," said Jerry Stackhouse, a former NBA colleague of Carter's. "I think he's probably one of the guys [players such as] Cory Joseph and Andrew Wiggins will tell you he's the reason why they first started to fall in love with basketball.

"Vince was the one who really started to put Canada on the map."

And the rest of the league also started to take notice of the Raptors, which in the early 2000s was a franchise generally regarded as a northern upstart.

"His style of play was a SportsCenter event," Stackhouse recalled. "Every night you were checking SportsCenter [on ESPN] to see what kind of dunk Vince did that night. Everybody really saw him as that next guy and he put everybody on notice."

Stackhouse, who now coaches the Raptors 905, the club's D-League affiliate, had the misfortune of being in the same NBA allstar game dunk contest as Carter in 2000 in Oakland when Carter showed a jaw-dropping display of power and finesse.

It was Carter's NBA coming-out party and he took no prisoners in walking off with top honours in the only dunk contest he would ever participate in.

For Stackhouse, who was next in line to dunk behind Carter in the contest, it was a thankless task - like a comedian who has to follow an animal act to the stage.

"I'm getting ready for my dunk and people are still looking at the person sitting beside them in amazement of what Vince had just done," Stackhouse said.

The Canadian Press
Monday, November 28, 2016 – Print Edition, Page S2

Toronto -- Tailgating reviews were mixed as fans of all colours mingled in a jovial and "typically Canadian" party in a parking lot before Sunday's Grey Cup kickoff.

Ottawa RedBlacks fans said they loved the experience outside BMO Field in Toronto, where beers sold for $4 and fans grilled hot dogs and calamari.

"It's a really good opportunity for fans to get together, have some food and drinks before the game," said Lordele Greenyer, who came down from Ottawa a few days ago to take part in the festivities leading up to the game.

"There's no tailgating in Ottawa - definitely nothing like this - and I think they've done a very good job of it."

Some Calgary Stampeders fans said they preferred the tailgating back home and complained about the ticket prices and the "terrible" public transit.

"It wasn't well organized, it was difficult to find out where to go and the volunteers didn't know where the tailgating spot was," Barry Wilson said.

"But we had a really good time when we got here and we can't gripe about the weather," which was 6C and partly cloudy at kickoff.

Wilson wasn't the only one who couldn't find the tailgating lot - it was across six lanes of traffic and in the opposite direction of the stadium.

Another Stampeders fan, Denae Lallier, wasn't thrilled with the $500 ticket price.

Tickets were going for about half price on the grey market outside the stadium, but officials expected a record crowd for the recently renovated BMO Field.

Fans won't be treated to the teams' respective mascots.

A RedBlacks spokesperson said the Algonquin Loggersports Team that traditionally slices a "wood cookie" off a log at home games won't be on the field due to space issues and the same goes for the Stampeders touchdown horse, Quick Six.

The Governor-General of Canada, David Johnston, flipped the coin for possession before kickoff.

Prime Minister Justin Trudeau, who is in Madagascar leading the Canadian delegation to the summit of la Francophonie, sent fans a video message before the game.

"As we all know, anything can happen on Grey Cup Sunday," Trudeau said.

The Amaya gamble: questions about deal's small backers
Saturday, December 3, 2016 – Print Edition, Page B1

When David Baazov, founder and former chief executive officer of Canadian online gambling company Amaya Inc. unveiled his $24a-share proposal to buy Amaya on Nov. 14, it all seemed pretty straightforward.

Mr. Baazov had tabled a shareholder-friendly offer that was 31 per cent above the latest closing price of Amaya's shares. Unlike his previous Jan. 31 attempted bid, which had almost no information on funding, Mr. Baazov said he had "binding equity commitments" from four overseas entities for $3.65-billion (U.S.) Mr. Baazov said he just needed 5 business days to firm things up completely. After Mr. Baazov's announcement, Amaya shares jumped more than 14 per cent to close at nearly $21 on the Toronto Stock Exchange. While investors were bidding the shares sharply higher on news of the planned bid, the trading showed they left a fair chance the deal would not get done. After all, it wasn't clear how exactly Mr. Baazov and his backers were going to pull off the hefty financing required.

Nearly three weeks later, it still isn't. Two of the original four firms named as part of the equity syndicate on proposed deal are no longer involved.

And some observers are raising questions about the ability of the two remaining to raise the required funds, and whether the deal will actually be completed.

The size and scale of Mr. Baazov's proposed privatization of Amaya is the kind that multibillion-dollar private equity firms and investment banks typically make. In fact, in 2014, when Amaya bought Rational Group and its PokerStars operation for $4.9-billion (U.S.), that deal was financed by some of the best known financial institutions in the world, including Deutsche Bank AG, Barclays Bank PLC, Macquarie Capital, and GSO Capital Partners, the credit wing of The Blackstone Group.

For the currently proposed deal, Mr. Baazov's remaining partners are two little-known Hong Kong outfits: Head and Shoulders and Goldenway Group. If they were to equally share the financing for Mr. Baazov's $3.45-billion (U.S.) amended proposal to acquire Amaya, they would each be responsible for more than $1.7-billion (U.S.).

SpringOwl Asset Management LLC, a New York-based hedge fund company and owner of more than a million shares in Amaya, on Thursday sent a strongly worded letter to Amaya Inc.'s board urging it to sever all ties with Mr. Baazov and to not entertain his proposal.

"It is time for the company to full move on from the undue influence of former CEO David Baazov. Among other things we are not supportive of the self-interested, unsubstantiated potential transaction," wrote Jason Adler, CEO of SpringOwl in the letter.

"Given Mr. Baazov's current legal situaton and the lack of clarity ... we believe the Baazov offer, if pursued, has significant risks to closing."

"We will continue to engage constructively with SpringOwl," said a statement provided by Amaya spokesperson Eric Hollreiser.

In March, Mr. Baazov was charged with multiple counts of illegal insider trading, including stock manipulation, by the Autorité des marchés financiers (AMF), Quebec's securities regulator. None of the charges, in connection with the Rational Group deal, has been proven in court.

Riyaz Lalani, a spokesperson for Mr. Baazov, insists his Amaya proposal will succeed. "Mr. Baazov is highly confident in the ability of Head & Shoulders and Goldenway to finance the proposed transaction," the spokesperson wrote in an e-mail to The Globe and Mail on Thursday.

Head and Shoulders and Goldenway are small, privately held firms, virtually unknown outside their domestic market.

Founded in 1999, Head and Shoulders Financial Group Ltd. is based in Hong Kong but incorporated in the Cayman Islands. The firm's main English-language website lists operations that include wealth management, corporate credit and brokerage services.

Head and Shoulders Financial is also the parent of the Head and Shoulders Global Investment Fund SPC and the HS Special Event Segregated Portfolio, entities named by Mr. Baazov as key equity sponsors along with Goldenway.

Since it's a private company, Head and Shoulders' financials are not publicly available, with one exception: Earlier this year, Head and Shoulders attemped to go public in Hong Kong, and as part of a regulatory requirement was required to disclose detailed financials. For a time, the documents were posted on the website of the operator of the Hong Kong stock exchange, but were deleted after the IPO was aborted.

On Thursday, Andrew Webb, a Hong Kong-based corporate governance advocate and former investment banker, posted the documents on his financial data and news site Mr.

Webb says he posted the financials "in the interests of transparency" given that funds owned by Head and Shoulders are a key financial backer in the Amaya takeover transaction. The documents reveal a company that is a small player in the world of financial services.

As of Dec, 31. 2015, Head and Shoulders Financial had $615-million (Hong Kong) in assets under management, or roughly $79-million (U.S.). Head and Shoulders has 22 employees worldwide according to the document.

Head and Shoulders Global Investment Fund SPC had assets under management of $58-million (U.S.) as of the end of last year, and posted a one-year return of negative 19 per cent. HS Special Event Segregated Portfolio had no assets, according to the filing.

"Head and Shoulders is one of the [Amaya] backers that is supposed to have a lot of resources.

Well, it doesn't," said Mr. Webb in an interview from Hong Kong on Thursday.

"Unless it has grown massively since then, they would not be in a position to finance [the deal]," he said.

In the same filing, Stanley Choi is named as a controlling shareholder of Head and Shoulders Financial. He is also chair of Head and Shoulders.

"Head & Shoulders has more than sufficient capital committed with our LPs [limited partners] for our commitment to the Amaya transaction," Mr. Choi wrote in an e-mail to the Globe on Thursday. Mr. Choi declined to identify who those end investors are. Apart from his business dealings, Mr. Choi is also known as a competitive poker player. In 2012, he won the Macau High Stakes Challenge, earning a $6.4-million (U.S.) jackpot.

Goldenway Group, the other equity sponsor for the proposed Amaya transaction, like Head and Shoulders, is privately held and not subject to the widespread disclosure rules of a public company.

The firm's main English-language website lists four business arms: securites, precious metals, foreign exchange and asset management.

According to Mr. Webb, the Hong-Kong based financial services industry veteran, Goldenway is not well known in China and it is not a major player in finance. "I never heard of Goldenway," he said. There are traces of the company to be found in publicly disclosed documents. For a few years, Goldenway's precious metals and foreign exchange arm was publicly traded on the over-thecounter market (OTC) in the United States. A filing with the U.S.

Securities and Exchanges Commission (SEC) for the period ending Dec 30, 2013, showed assets of $57-million (U.S.) for Goldenway Inc. Goldenway also has a foreign exchange and trading operation in Britain called Goldenway Global Investments. A regulatory filing showed revenue of $1.04-million and assets of $1.5-million as of the end of fiscal 2015, according to Bloomberg data.

In an interview with the Globe and Mail last week, Wai Lam (Ricky) Lai, director with Goldenway Group, said the firm's investment in Amaya is being handled through Goldenway's private equity wing. Goldenway has the ability to invest at least $800-million (U.S.) in the gambling company, he added.

But in an e-mail to the Globe on Thursday, Mr. Lai suggested Goldenway doesn't have firm financial commitments from its investors yet.

"All the investment structure details and participants are not yet finalized," Mr. Lai wrote in the e-mail. "Goldenway Capital SPCSpecial Event SP would be one of the investors. There will be probably more than three entities eventually."

Amaya shares tumbled last week when The Globe reported some unexpected developments in Mr. Baazov's proposed takeover. First, the chief executive of KBC Aldini Capital Ltd. of Dubai, one of the originally named backers on the deal, said the firm had nothing to do with the Amaya deal. Mr. Baazov later announced "the equity commitment letter purported to be delivered to Mr. Baazov on behalf of KBC was delivered without KBC's knowledge or consent."

The Globe also reported that Ferdyne Advisory Inc., another originally named backer, was stricken from a British Virgin Islands registry in 2013 for nonpayment of fees and no longer appears to be a going concern.

Ferdyne was not listed as part of the amended Amaya takeover plan. Canaccord Genuity Group Inc. is the financial adviser to Mr. Baazov and Canaccord's CEO Dan Daviau is named in a filing as the chief point person on the deal.

Canaccord has declined requests for comment. Goodmans LLP, legal adviser to Mr. Baazov, has not responded to requests for comment. Shares in Amaya closed at $19.12 apiece on Friday, about $5 below the offer price, showing investors remain unsure.

Still, nobody can rule out the possibility that a deal gets done.

The two Hong Kong entities may have other means they haven't disclosed to raise the billions required from other investors.

But many also wonder, if there are other investors behind the deal, who are they? Why the big mystery?

Associated Graphic

David Baazov, former CEO of gambling company Amaya Inc., is facing charges of illegal insider trading in Quebec.


Olive farmers face disastrous harvest
Monday, November 28, 2016 – Print Edition, Page B1

For about 10 days every November, Arrigo Peri, a Rome orthodontist, closes his dental practice, drives to Puglia, in the heel of Italy, and indulges his passion - olives.

"Making olive oil is like making wine," he says. "It's like being an artist."

But this year, artistry gave way to misery. The harvest, which just wound up, has been a disaster pretty much everywhere in the country, with early estimates putting the Italian yield down 40 per cent.

Mr. Peri, 50, says the harvest on his own farm - 1,000 trees on 10 hectares - fell 75 per cent or more this year. He's lucky: Farmers in Abruzzo, the olive-mad region due east of Rome, between the Apennine Mountains and the Adriatic Sea, say their harvest was pretty much wiped out.

Coldiretti, the Italian farmers' group, last month said the harvest in Italy - the world's secondlargest producer of olive oil, after Spain - was on course to produce only 290,000 tonnes of oil this year compared with 470,000 tonnes in 2015 and an historical average of 400,000 tonnes. That means retail prices will go up, perhaps as much as 30 per cent, even though quality may go down as inferior domestic and imported oils are blended with highquality oils.

Mr. Peri plans to raise the price of his organic, extra-virgin oil, which carries the label "Eredi Perrone" (Heirs of Perrone, after his mother's side of the family) and which he sells to restaurants and dental clients, by about 20 per cent, to 12 ($17) a litre. This year, he expects his meagre harvest will produce no more than 2,500 litres, down from 5,000 to 8,000 litres in a good year.

The distressing news for olive oil producers in Italy and elsewhere in the Mediterranean is that dud harvests are no longer rare. "Supply has become more unstable in recent years," Vito Martielli, grains and oilseeds analyst at Rabobank, in the Netherlands, wrote in an October report.

"Weather conditions have impacted the most important producing countries three times in the last five years, causing supply failures."

In 2012, frost combined with severe drought wrecked the harvest in Spain, whose enormous production sets the global price for extra virgin olive oil. In 2014, extremely dry weather hit the Spanish and Italian harvests particularly hard; that year, Italy recorded its lowest production in 25 years.

While the 2016 oil production will not be a writeoff, unlike the one two years ago, Mr. Martielli expects a 7-per-cent production drop in Spain, a 29-per-cent drop in Greece, the third-largest producer, and a similar fall in Tunisia, whose output is close to Greece's.

In late November, the Spanish price for extra virgin oil reached 3,200 a tonne, up from 3,150 in September. The price last year was 3,000 or less.

In Italy, the spot price surged to 3,800 a tonne in recent days, up from 3,600 earlier in the autumn and 3,400 or less last spring, according to Bloomberg data. But in Puglia, where some of the best olive oil is produced - the area is famous for is low-acidity oil - the price has shot up to 5,000 a tonne.

Falling production in Spain, Italy, Greece and Tunisia will cause shortages around the world, which is developing a taste for olive oil as the health benefits of the Mediterranean diet become well known. Global demand rises 3 per cent to 4 per cent a year, Mr. Martielli says, and there is lots of room for growth. In Canada and the United States, average annual consumption of olive oil a person is only 1.1 kilograms; it Italy, it's 13 kg and even higher in Greece.

Mr. Martielli blames "weather conditions and pests" for the overall decline in the Mediterranean this year. Mr. Peri agrees that the changing climate is to blame.

He, his mother, Silvana Perrone, and his father, Gianni Peri, who died in 2010, spent years reviving the family olive-tree farm, which goes back to his mother's grandfather's era. Until 50 or 60 years ago, grape vines were grown between the oil trees and the combined production of wine and olive oil put the Perrone family in high standing in the local town, Acquaviva delle Fonti, which is near the port city of Bari, the capital of Puglia.

His grandfather pretty much ignored the farm and it went to waste. The fix-it job began in the late 1980s, after Mr. Peri's father retired. The work was tough, especially since the organic certification they coveted meant no herbicides or pesticides could be used. "We had to clean the trees and get rid of all the diseases," he says. "I washed every single tree myself, with a soap sprayer. It took me five days. It worked and the yields got better."

All went fairly well until the disastrous 2014 harvest. The yields recovered, and then some, in 2015. Then the olive-fly infestation hit hard. The fly lays its eggs in the olive, making it rot and fall to the ground. In the southern tip of Puglia, many thousands of olive trees were also severely damaged or killed by a bacterial disease called Xylella Fastidiosa.

"This is happening because the climate was not like it was before," Mr. Peri says. "We had no snow this year and no really hot days. Extreme heat and extreme cold kills the bugs. We also got a lot of rain, which is ideal for the fruit flies."

In spite of the two lousy harvests, Mr. Peri and his mother have no intention of giving up on the farm. They would like to make a profit from their labours, but that's not the point. "Making olive oil goes back to ancient times," he says. "It's cultural. It's something you're born with and it's in your blood."

Associated Graphic

Olive trees at the Pantaleo Piccinnino in Caprarica near Lecce in the Puglia region in Italy. Estimates put this year's Italian olive yield down 40 per cent after a dud of a season.


The olive harvest in Italy, which just wound up, has been a disaster everywhere in the country, with early estimates putting the Italian yield down 40 per cent.


Why Poloz may use words to cool the 'Trump effect' on rates
Monday, December 5, 2016 – Print Edition, Page B1

Despite signalling over the fall that it had inched toward an interest-rate cut, the Bank of Canada doesn't look prepared to take that plunge in this week's rate announcement. The key question is what the bank will communicate about how far it has pulled back from the edge.

The Bank of Canada will issue the last of the year's eight scheduled rate decisions on Wednesday morning, and it now looks overwhelmingly likely that the bank will hold its key rate steady at 0.5 per cent, where it has sat for the past 16 months.

The bond market is pricing in just a 3-per-cent chance of a rate cut - a pretty definitive declaration that it's off the table.

This just seven weeks after Bank of Canada governor Stephen Poloz divulged, in his opening statement at a news conference in mid-October, that the bank had "actively discussed the possibility" of a rate cut. It had just slashed its growth and inflation outlook and pushed back its projection for the economy to return to full capacity to mid-2018.

At the time, Mr. Poloz indicated that the only thing standing between the bank and a rate cut was an unusually high degree of uncertainty about its downgraded forecast. The bank had a long list of unresolved questions - such as the effects of the federal government's new mortgage rules and its infrastructure spending program, the trend for exports and the outcome of the U.S. presidential election - and wanted to wait for more clarity.

Yet as time has passed, it has looked less and less as if the Bank of Canada was seeing enough clarity to tip the scales in favour of a cut. The bond market's odds of a cut at either the December rate decision or the one in January have gone from 30 per cent in September, when the bank first started warning that it would have to lower its economic forecasts, to 25 per cent after the October rate decision and near zero today.

Mr. Poloz confirmed that sentiment at a news conference last week in Toronto. He made it clear that the uncertainties that prevailed in October were not much clearer at the end of November and suggested that he needed much more definitive evidence to move him off his fence to cut rates.

Then, on Wednesday, Statistics Canada pegged the country's third-quarter real GDP growth at 3.5 per cent - beating the Bank of Canada's October estimate of 3.2 per cent - and upgraded its figures for each of the first two quarters. Mr. Poloz had said in his news conference that the GDP numbers would provide some important insight into the state of the economy.

The question now is whether the Bank of Canada will use its rate-decision statement to keep alive the possibility of a cut in the first half of 2017 - something the financial markets have all but dismissed. Indeed, the bond market has now priced in a greater chance of a rate increase than a cut by April - which may represent a swing in market sentiment further away from a cut than Mr. Poloz is entirely comfortable with.

Mr. Poloz has no news conference scheduled for this week's rate announcement. The Bank of Canada does those only with every second rate decision, when it also releases its quarterly Monetary Policy Report, and that won't happen again until January. Whatever message the bank may want to deliver, it will have to do so through its rate statement, a brief document outlining the decision that typically runs only a handful of carefully worded paragraphs.

"Having stood pat in October, and seen [economic] data slightly top its projections since then, the Bank wouldn't be able to credibly claim that it seriously considered a rate cut in December," Canadian Imperial Bank of Commerce chief economist Avery Shenfeld said in a research report.

At the same time, though, it may want to strike a tone that keeps markets focused on the unresolved risks ahead - including a new complication, the runup in bond yields in the wake of Donald Trump's surprise win in the U.S. presidential race. The postelection spike in yields on many government bonds, including Canada's, has increased market interest rates for Canadian borrowers - something that would counteract the stimulative impact of the Bank of Canada's low-rate policy, should it persist, and act as a brake on growth.

By using its rate statement this week to keep alive the possibility of a rate cut, the central bank could dampen market expectations for Canadian interest rates and take some of the heat out of bond yields, leaning against the Trump effect in the market.

"The Bank will simply have to clear its throat and remind the market that a tightening in financial conditions [i.e., higher bond yields] isn't welcome, perhaps just by drawing attention to it," Mr. Shenfeld said. If the bank also emphasizes that the economy is a long way from fill capacity, it serve as a reminder "that there's still an outside chance of a cut, rather than a hike, in the first half of 2017."

Associated Graphic


HBC shifts focus from handbags to the home
Weakness in fashion-related sales spurs new push for retailer
Wednesday, December 7, 2016 – Print Edition, Page B1

As Hudson's Bay Co. struggles with soft sales in its core women's apparel business, it is shifting more attention to another, less prominent, category that is starting to get a bounce: home goods.

Toronto-based HBC isn't alone in trying to cash in on a rise in home-related sales. Across North America, those businesses are benefiting from consumers increasing their spending on new homes and fixing up existing ones and then buying other items to enhance their houses, HBC executives say.

As a result, HBC is racing to stock more home goods at its chains, especially its U.S.-based Lord & Taylor, which essentially hasn't carried home decor items in the past.

"One of the better categories is home over all - much better than apparel," Jerry Storch, chief executive officer of HBC, said on an analyst conference call on Tuesday after the company reported disappointing third-quarter results. "That's not just true for us - it's true economy-wide."

Retailers have grappled with weakening demand for fashion as shoppers shift their spending to home goods, tech items and experience-related activities such as travelling and eating out, pinching the bottom line of retailers such as HBC and forcing them to rejig priorities and offerings.

The changes were reflected in HBC's third quarter. It reported a loss of $125-million or 69 cents a share, compared with a profit of $7-million or 4 cents a year earlier. Sales grew to $3.3-billion from $2.57-billion, helped by the acquisition last year of the European Galeria Kaufhof.

Its sales from stores that were open at least a year fell by 3.6 per cent, after adjusting for currency fluctuations, and by 4 per cent when including foreign-exchange effects. Those sales, a key retail measure, grew 12.9 per cent on a constant currency basis in its digital business at HBC's legacy chains, which exclude its European operations and

HBC had already last month lowered its 2016 outlook, citing lower-than-expected third-quarter sales.

On Tuesday, HBC shares fell 7 per cent to $13.52, hitting their lowest point since the company went public again in late 2012 on the Toronto Stock Exchange.

Still, the company's results can be confusing because of last year's Kaufhof acquisition and the rents that are now paid to real estate income trusts, company executives said.

The results should become easier to compare year-over-year in the next couple of quarters, they said.

And one of the brighter notes for HBC is the burgeoning demand for home goods, they said. HBC in Canada and Kaufhof in Europe are already well stocked in those lines, while the company is testing home furnishings at Lord & Taylor.

"The beauty of the department store concept is that we are able to shrink businesses that get weak, in cyclical weakness, and we can grow businesses that are getting strong," HBC's executive chairman and a U.S. real estate mogul Richard Baker said.

Maureen Atkinson, senior partner at retail consultancy J.C. Williams Group, said traditional retailers are feeling the heat of online players, especially Amazon, which has bolstered its fashion offerings.

Other fashion specialists, such as Zara and H&M, have also added home goods, she noted.

In the case of H&M, "it fits in with their fashion: good prices and they change the goods all the time ... cheap and cheerful."

She added the downturn in apparel is more acute among mid- to high-priced players such as HBC, rather than fast-fashion players such as Zara and H&M.

At HBC, sales are declining in women's handbags as well, although on a tear in its athletic wear department - known as athleisure because many of the items are worn in leisure time as well - and in the men's clothing and shoe categories, he said.

"We say, 'Men are the new women,' " Mr. Storch added, noting women's apparel sales are under pressure globally except in Australia.

"There's been a shift from apparel to home goods."

Last year, when HBC and other North American retailers felt a slump in apparel sales amid unusually warm fall and winter weather, they got stuck with excess inventory, which they had to clear out at discounts, hurting their margins. HBC is among chains that lowered their inventory levels in 2016 to avoid last year's margin squeeze.

In HBC's third quarter, those levels dropped about 2 per cent from a year earlier "as a result of the company's disciplined focus on this area," it said.

As for the upcoming and crucial holiday shopping season, retailers will enjoy two extra days compared with 2015.

"I would expect it to come late and strong for this holiday season given the calendar and the extra days before Christmas."

Hudson's Bay (HBC)

Close: $13.52, down $1.02

Associated Graphic

People gather outside a Christmas window display at Hudson's Bay in Toronto on Dec. 3. HBC is one of many retailers pushing home decor to make up for a drop in consumers' appetites for clothing.


CIBC's PrivateBancorp deal hits snag
Chicago-based bank postpones shareholder vote on sale amid uptick in U.S. financial stocks
Thursday, December 8, 2016 – Print Edition, Page B1

Chicago-based PrivateBancorp Inc. is postponing the shareholder vote for its $4.9-billion sale to Canadian Imperial Bank of Commerce, raising questions about whether CIBC will have to sweeten its bid next year.

The vote was originally scheduled for Dec. 8, but in the past week, two influential proxy advisers have recommended that investors reject the current terms.

Regional bank stocks have soared in the U.S. since Donald Trump was elected president, wiping out the premium CIBC offered to PrivateBancorp in June. A new date is expected to be set in early 2017.

PrivateBancorp said Wednesday it was still committed to the transaction, while CIBC added it is sticking to the agreed terms. But the delay suggests that CIBC had not been able to shore up enough votes of support, even though its chief executive officer, Victor Dodig, was confident last week that the transaction would be approved. It is yet another roadblock in CIBC's long-awaited expansion into the U.S. market, as it faces slowing growth in Canada.

For years, CIBC had said it would like to buy an asset manager in the U.S., but as it went looking, valuations soared, the Canadian dollar plunged and new regulations made it harder to buy money managers. Mr. Dodig, who took the reins in 2014, changed course and decided to bet big on a regional commercial bank, targeting the mid-sized market.

CIBC finally pulled the trigger in June, when it agreed to acquire PrivateBancorp, a private and commercial bank with about $18billion (U.S.) in assets, for a mix of cash and stock - a move many analysts saw as Mr. Dodig trying to put his stamp on the bank. If approved, the deal would be the biggest in CIBC's history and would boost the bank's presence in the United States, recasting the perception that it is overexposed to Canada.

But now, CIBC is ending the year on an uncertain note, with investors wondering whether the bank will revise its offer and spend more money to acquire PrivateBancorp. The delay in the vote buys CIBC some time to see if the market for U.S. bank stocks will cool off, making its bid appear more attractive again.

"In our opinion, CIBC's management will struggle between its desire to pursue its U.S. ambitions through this vehicle and maintaining the relative prudence of its original offer," Barclays analyst John Aiken said Wednesday in a note to clients.

"While we do not anticipate a sweetened bid from CIBC, we do admit that the likelihood is far from remote."

As the original Dec. 8 voting date approached, some shareholders suggested the bank should boost its bid by as much as $800-million (Canadian), according to someone familiar with the talks.

The deal was dealt a blow last week when proxy adviser firm Institutional Shareholder Services Inc. recommended that PrivateBancorp's owners reject the deal. Large institutional investors such as pension plans and mutual funds routinely rely on the opinions of these proxy advisers because they don't have the resources to study every deal that companies they own are involved in.

ISS said little about the deal's strategy. Instead, it made its case largely based on valuation. CIBC agreed to buy PrivateBancorp at a 30.8-per-cent premium, but ISS believes "support for this proposal is not warranted given that the premium originally offered to PVTB shareholders no longer appears compelling."

The KBW Regional Bank index, a benchmark for PrivateBancorp shares, has jumped around 40 per cent since the deal was first announced - and most of it has come since Mr. Trump was elected president last month. U.S. bank stocks have been soaring because investors assume regulations will start to loosen and that corporations will get a tax cut - but there is no guarantee they will.

Shortly after, Glazer Capital, a small New York-based hedge fund that specializes in merger arbitrage, or betting on the success of M&A transactions, put out a news release Thursday arguing CIBC needs to pay more to get the deal done. Glazer said it owns one million PrivateBancorp shares.

Initially, Glass Lewis & Co., the other well-known proxy adviser, said it was in favour of the deal and recommended that PrivateBancorp's shareholders vote for it to be approved.

Rather than focus on market swings, which could be shortlived, Glass Lewis said the proposed merger likely represents "the best strategic alternative available." Regional banks in the U.S. have been riding a wave of consolidation, as the sector grapples with more red tape and increased costs. But Glass Lewis changed its mind this week because of the recent rise in regional U.S. bank-share prices.

"We do not take issue with the strategic merits of the deal," the adviser wrote in an updated review. "However, without improved terms to the merger consideration, we believe that shareholders would not be well served supporting the merger agreement, as currently outlined."

Air Miles retreats from reward-expiration plan
Friday, December 2, 2016 – Print Edition, Page B1

After a backlash from consumers and threats of changes to some of the legislation governing loyalty programs, Air Miles parent company LoyaltyOne is backing away from its plan to let miles five years or older expire.

The Toronto-based company made the announcement on Thursday, two days after it appeared before a committee that was considering legislation in Ontario to block the expiration of any points of rewards programs operating in the province. The decision will cause a reduction of at least $200-million to LoyaltyOne's 2016 revenues.

However, according to a financial disclosure filed Thursday, the company will make changes to its program to compensate for that, which could include service fees and the types of rewards offered, among other things.

"Going forward, LoyaltyOne will adjust the value proposition to collectors to offset the lost economics ... and to maintain, as closely as possible, the economics of the Air Miles reward program prior to cancellation of the expiry policy," the filing reads.

The change to Air Miles' policy was first announced in 2011, and was scheduled to take effect at the end of this year. The practice of setting a time limit to use miles or other points is known in the industry as "date stamping," and it can be controversial: Aeroplan announced in 2007 that it would date stamp its miles to expire after seven years, but also pulled back from that plan in 2013, after receiving negative consumer feedback. "This decision cost us money - both a sizable one-time hit and an ongoing impact on our profitability," Vince Timpano, president of Americas Coalitions for Aeroplan parent Aimia Inc., told members of Ontario's standing committee on regulations and private bills on Tuesday.

Air Miles is now similarly cancelling its plan to force collectors to use miles before their deadline.

"We're hoping that by dealing with the expiry issue, foundationally, we are eliminating something that has been a concern to some of our customers - I wouldn't say all of our customers.

... And we're hoping that it will lead to more productive conversations between government and industry," Bryan Pearson, President and CEO of LoyaltyOne, said in an interview on Thursday.

The legislative pressure in Ontario began last month, when Liberal MPP Arthur Potts (Beaches-East York) tabled a private member's bill proposing that expiration of points in rewards programs should be banned. This week, the bill was clarified to state that it would not allow date-stamping specifically, leaving the door open for expiration for reasons other than "the passage of time alone."

Mr. Potts was prompted to bring the bill forward because of the discussion about the upcoming Air Miles expiration policy, he said in an interview earlier this week.

The conversations Mr. Pearson refers to were raised during the company's appearance at Queen's Park on Tuesday, where LoyaltyOne executives told the committee that more time was needed to properly draft the legislation.

By taking its year-end plans off the table, LoyaltyOne is proposing that there is no urgency to pass the bill immediately, and that more time for consultations between government and industry is needed.

"We would prefer to have a more meaningful conversation around what the right approach should be," Mr. Pearson said.

"We are taking a long view." Following the announcement on Thursday, a representative from Mr. Potts's office said that there were no plans to delay the legislation, and that a vote is still expected Monday.

While Ontario is the only province that has tabled legislation, Mr. Pearson said the company is concerned that if it passes, other provinces may follow suit. He noted that discussions have been held in other provinces as well, notably Quebec, but new regulations have not arisen yet.

LoyaltyOne, a subsidiary of Plano, Texas-based Alliance Data Systems Corp., said in a filing to the U.S. Securities and Exchange Commission on Thursday that as a result of this decision, it anticipates a one-time charge this year that will reduce its revenue by an estimated $180-million to $250-million (U.S.).

Customers can collect Air Miles for free because they offer up information on their shopping habits in return, which is extremely valuable to the progam's partner companies that want to market to them. Partners pay LoyaltyOne for each mile they give to collectors with purchases; the rewards program then makes money on the difference between that payment and the what it pays for rewards that collectors can later redeem.

By cancelling its expiry plans, LoyaltyOne is giving up pure profit - since the most valuable miles are those that are never used.

"Our goal will be to create a balance between the interests of the consumer, our partners and our shareholders," Mr. Pearson said, adding: "The vast majority of collectors have continued to use the card, to frequent our partners, and to redeem miles."

Scotiabank spurs optimism as big quarter caps bumpy year
Wednesday, November 30, 2016 – Print Edition, Page B1

Encouraging earnings from Bank of Nova Scotia capped off a choppy year in Canadian banking, one that started with concerns about energy loans and is ending with optimism about higher interest rates.

Scotiabank reported a $2-billion fourth-quarter profit on Tuesday, worth $1.58 a share - an 8-per-cent jump from the same period in 2015. Analysts expected earnings of $1.51 a share, according to Reuters.

The lender is the first of the Big Six to report for the quarter, creating some optimism for the sector.

Such solid earnings prove Scotiabank can deliver growth despite investor concerns about its international operations and energy exposures, both of which have hindered its share price.

The key now is to convince shareholders the recent profit streak isn't an aberration.

Already, investors are coming around. Scotiabank shares have soared 43 per cent to $73.70 from the year's low in January.

One key reason: People are much less worried about energy exposures than they were when oil prices plummeted to less than $30 (U.S.) a barrel. On a conference call on Tuesday, there was only one benign question about the bank's oil and gas loan losses.

As for the lender's foreign operations, Scotiabank has repeatedly stressed an international focus on four specific countries - Mexico, Peru, Chile and Colombia - all of which have rising middle classes and more stability than the likes of Brazil and Argentina.

Scotiabank and its peers may also benefit from market expectations that the U.S. Federal Reserve will hike interest rates in December, and investors also hope Donald Trump's infrastructure spending plans could stimulate the economy and create inflation, which has prompted a bond selloff. (Whenever bond prices dive, their yields rise, and that allows banks to earn better spreads on their loan products.)

However, Scotiabank still needs to prove its recent revamp will pay off. Chief executive officer Brian Porter has embarked on a massive restructuring over the past two years - one designed to slash costs - yet the bank's fullyear profit rose only 2 per cent from 2015. Full-year expenses grew by 11 per cent, outpacing revenues, which climbed 10 per cent.

Return on equity slipped to 13.8 per cent, just below Scotiabank's 14-per-cent target.

After accounting for a secondquarter restructuring charge, fullyear profit rose 6 per cent and return on equity hit 14.3 per cent.

On the conference call Tuesday, Mr. Porter said he expects similar adjusted profit growth next year, adding that Scotiabank's return on equity should be 14 per cent or more. The restructuring benefits will pick up in 2017 because many costs will be removed from the business, particularly in the Canadian banking unit.

Expense control is crucial for all Canadian banks because mortgage lending isn't what it once was. In the fourth quarter, Scotiabank's residential mortgage portfolio grew 2.8 per cent year-overyear - a fraction of the industry's once double-digit gains.

There are also worries that Ottawa's housing market crackdown could hurt the banks. "By and large, [Ottawa's] changes will moderate mortgage loan growth, but over time we expect to maintain and grow profitable market share," chief financial officer Sean McGuckin said on the conference call, adding that it's too early to project the crackdown's impact.

Mr. McGuckin reiterated Scotiabank's view that "the level of house price appreciation is not sustainable," which is why the lender encourages government action to "moderate the market."

At quarter-end, Scotiabank's common equity Tier 1 capital ratio was a healthy 11 per cent, prompting analysts to ask executives if they would spend more freely because they have a buffer.

They didn't provide any specifics other than to say their options include spending on organic programs, striking an acquisition and buying back shares.

Scotiabank's fourth-quarter profit in its Canadian banking division jumped 14 per cent from a year ago, aided by the acquisition of J.P. Morgan's Canadian credit card portfolio. Strong growth in credit cards and auto loans also boosted Scotiabank's net interest margin, or the difference between the average rate at which it borrows and the average rate at which it lends money to clients. Credit cards that charge 20-per-cent annual interest rates are much higher-margin products than mortgages and personal lines of credit.

The international banking division's profit jumped 9 per cent from the year prior, with the climb largely attributable to plain vanilla loan growth. Stellar profit from the global banking and markets unit came from solid fixedincome trading revenues as well as an expanding corporate-loan portfolio in North America.

Canadian banks continue to report earnings later this week, with Royal Bank of Canada set to release its results on Wednesday.

Scotiabank (BNS)

Close: $73.70, up $1.18

RBC's fourth quarter marks subdued finish to solid year
Thursday, December 1, 2016 – Print Edition, Page B1

Royal Bank of Canada ended a solid year on a subdued note, reporting fourth-quarter earnings that missed expectations and lowering a key return target for the next few years.

In the final quarter of its fiscal year, Canada's largest bank reported a $2.54-billion profit, down 2 per cent from the same period in 2015. Adjusted to exclude one-time items, RBC earned $1.69 a share, missing analyst expectations of $1.72 a share.

For the full year, RBC's headline figures were encouraging, with total revenues rising 8.7 per cent and profit hitting $10.5-billion despite a Canadian economy troubled by plummeting energy prices and the Alberta wildfire.

However, the bank missed two key performance targets in 2016.

RBC's earnings-per-share grew by only 0.7 per cent, largely because it issued equity to help fund its $5.4-billion (U.S.) acquisition of City National Bank, and its return on equity (ROE), one of the top metrics in the banking industry, dropped to 16.3 per cent from 18.6 per cent in 2015.

Focusing solely on these figures can be misleading, because RBC has delivered a string of strong profits over the past few years and it gets harder to keep beating good results. The City National deal is also the largest in the bank's history, which distorts comparisons with older metrics.

But on Wednesday the bank said it expects lower ROEs for the medium term, revising its target to "16 per cent-plus." On a conference call, chief executive officer Dave McKay said the new level accounts for the "pressure on returns in the market including persistently low interest rates and uncertainty on regulatory capital requirements," adding that achieving it would still rank RBC in the top decile of global banks.

The new target reflects a different outlook. A year ago, RBC's executives were rather optimistic about growth.

"We had a way more bullish outlook at this time last year on interest-rate increases," chief financial officer Janice Fukakusa said in an interview, adding that there was hope that the U.S. Federal Reserve would soon hike its benchmark rate multiple times.

All banks benefit from such increases because they then earn better margins on loans, but RBC would get an extra lift because City National's earnings are particularly sensitive to rate changes.

Ultimately, interest rates barely budged, but investors haven't cared much. Canadian bank stocks are on fire, and RBC is one of the leaders. Although the stock was down 2.5 per cent in midday trading Wednesday, it closed at a record high of $90.12 (Canadian) the day before. The dividend was unchanged at 83 cents a share.

Across the bank's divisions, wealth management was the standout in the fourth quarter, reporting a $396-million profit, up 55 per cent from the year prior.

Much of that rise came from the City National acquisition, but even after stripping it out earnings jumped 20 per cent thanks largely to lower restructuring costs and a growth in fee-based assets.

Capital markets earnings dropped 13 per cent from the same quarter in 2016, yet the headline profit clouds what is happening on the ground. Much of the drop was attributed to a higher tax rate this year, while corporate and investment banking as well as fixed-income trading delivered strong results.

Global equities and repo trading, though, saw their profits drop 26 and 20 per cent, respectively.

Corporate lending to oil and gas companies, which falls under capital markets, also continues to weigh on results. Gross impaired loans from this business grew by $185-million in the fourth quarter.

Canadian personal and commercial banking, which accounts for the bulk of RBC's profits, reported a $1.25-billion profit, up 2 per cent from the year prior.

Much like its rivals, RBC has needed to invest in new technology across the division to keep pace with clients' digital preferences, which raises expenses.

Loan growth in the unit was encouraging, with the value of residential mortgages climbing 6 per cent from the year prior - a solid jump in a tougher lending market. But it's getting harder to make money off mortgages.

"We've seen continuing pressure on our margins," Jennifer Tory, who runs RBC's personal and commercial banking, said of the mortgage portfolio.

Such pressure is a chief reason RBC decided earlier in November to significantly boost the rate on its five-year fixed mortgage by 30 basis points, to 2.94 per cent.

Bond yields have spiked since Donald Trump was elected president in the United States, and that means RBC's borrowing costs to fund mortgages have climbed.

Royal Bank (RY)

Close: $87.08, down $3.04

Baazov amends bid for Amaya; down to two backers
Saturday, November 26, 2016 – Print Edition, Page B1

Amaya Inc.'s founder and former chief executive officer has filed an amended proposal to take the online gambling company private at $24 a share without two of the previous four named equity backers.

In a filing with U.S. and Canadian securities regulators on Friday morning, David Baazov says he has "binding equity commitment letters" from Head and Shoulders Financial Group and Goldenway Capital, both of Hong Kong, for $3.45-billion (U.S.).

Mr. Baazov's original proposal filed on Nov. 14 had been for $3.65-billion and had included two other equity sponsors, KBC Aldini Capital Ltd. of Dubai and Ferdyne Advisory Inc. of the British Virgin Islands.

Earlier in the week, The Globe and Mail reported that Ferdyne Advisory was stricken from a British Virgin Islands registry in 2013 for non-payment of fees and no longer appears to be a going concern.

Mr. Baazov has declined multiple requests for comment on Ferdyne and did not address why Ferdyne is not listed as a sponsor in the Friday regulatory filing.

On Tuesday, KBC's founder and CEO, Kalani Lal, told The Globe he was never part of the financing, and that he had not even heard of Amaya. Mr. Lal also said a Canaccord Genuity Group Inc. investment banker had visited his firm on Wednesday morning with a letter of intent (LOI) apparently proving KBC was in the deal. The letter was a fake, Mr. Lal said.

On Wednesday afternoon, Mr. Baazov issued a statement that said KBC was not part of the deal after all, and that "the equity commitment letter purported to be delivered to Mr. Baazov on behalf of KBC was delivered without KBC's knowledge or consent."

On Thursday, in a telephone interview from Hong Kong, Ricky Lai, a director of Goldenway, said he was not put off by the revelation that KBC was not part of the deal and indicated he would gladly increase Goldenway's financial commitment if needed.

The Globe also asked Mr. Lai if he believed Ferdyne Advisory, the British Virgin Islands fund named in the original public filing as a co-investor in the deal, existed.

"I don't know," he replied. "I'll wait for our legal advisers to give us more information."

With the number of backers named in the equity syndicate cut in half, the combined financial commitment from Goldenway and Head and Shoulders has gone up substantially.

If the Hong Kong funds go 50/ 50 on the deal, the contribution from each would be about $1.7billion (U.S.)

Mr. Lai of Goldenway said in the interview on Thursday that the private equity fund was in a position to contribute at least $800-million, but declined comment on whether it could go higher.

In an interview on Wednesday, Stanley Choi, chair of Head and Shoulders, declined to specify how much his fund could invest.

A list of investments on the firm's website show most are small stakes in domestic Chinese companies. Mr. Choi declined to reveal the size of the firm's biggest historical investment, saying he could not comment because the company was private.

Goldenway sent mixed signals about how closely involved investment bank Canaccord Genuity was in its talks on the deal. On Thursday, Mr. Lai told The Globe he had never personally had dealings with Canaccord and that he was "only dealing with David [Baazov]." On Friday, Mr. Lai sent an e-mail saying the firm had met with Canaccord in its Hong Kong offices and that he himself had met Canaccord representatives personally.

Mr. Lai did not respond to a query to clear up the discrepancy.

Canaccord Genuity declined comment for this story.

Goodmans LLP was listed in the initial filing last week as legal adviser for Mr. Baazov. Goodmans has not responded to requests for comment.

Mr. Baazov's filing last week had indicated a definitive deal would be announced within five business days. The latest filing does not mention a timeline from an announcement.

Amaya shares rose 7 per cent in trading on Friday on the Toronto Stock Exchange to close at $20.10 (Canadian) a share.

In March, Mr. Baazov was charged with multiple counts of illegal insider trading, including stock manipulation, by the Autorité des marchés financiers (AMF), Quebec's securities regulator. The charges are in connection with the online gambling company's $4.9-billion 2014 acquisition of Rational Group.

None of the charges have been proven in court.

Amaya Inc. (AYA) Friday close: $20.10, up $1.31

Associated Graphic

David Baazov, founder and former chief executive officer of Amaya Inc. is attempting to take the Montreal-based online gambling company private.


Bill Gross on markets, Trump and his new Canadian fund
Tuesday, December 6, 2016 – Print Edition, Page B1

Legendary bond fund manager Bill Gross says the recent Trump-fuelled rally in U.S. equities has gone too far and suggests that investors take a breather.

Stocks have soared since Donald Trump was elected U.S. president, with the major American indexes reaching record highs on Black Friday before ending last week close to flat. Traders rushed to reprice stocks for higher outlooks for inflation, the U.S. dollar and economic growth, outcomes which are widely expected if the incoming administration begins to fulfill Mr. Trump's campaign promises.

Fund managers have been rotating into equities and out of bonds, as yields on Treasuries surged and prices fell. Last week capped off the largest four-week equity inflows in two years and the largest five-week fixed-income outflows in more than three years, according to a Bank of America Merrill Lynch research note published Friday.

But Mr. Gross, who joined Denver-based money manager Janus Capital Group Inc. two years ago, insists those campaign promises for growth are too good to be true and says now is a good time for equity investors to take some profits and hold a little more cash in their portfolios.

"The market has gone up too much on the enthusiasm of Trump policies," he said in an interview.

"Let's take a bloom off the rose here and not get too greedy."

He thinks slashing the corporate tax rate to 15 per cent from 35 per cent is nothing more than a "handout" that won't spur investment, and is adamant that the U.S. economy expanding at an annual pace of 3 per cent to 4 per cent growth "is just not going to happen."

"I think the U.S. will be lucky to hit 2 [per cent], and that sort of applies to Canada, too," he added. That is because of what he calls "structural headwinds" such as aging demographics, high debt loads and the displacement of labour due to technology, a process that he says hasn't created the same number of jobs with the same pay or better.

Mr. Gross's comments come as the man once dubbed the "bond king" is starting to manage a new fixed-income fund on behalf of National Bank Investments Inc., marking the first time Canadian retail investors can access one of his portfolios in Canadian-dollar terms and without any foreign-exchange risk.

A minimum of $500 is needed to invest in the NBI Unconstrained Fixed Income Fund, which made its debut last month. So far, Mr. Gross says he has $200-million invested in Canadian commercial paper, yielding about 75 basis points (a basis point is 1/100 of a percentage point).

But his plan is to scour the globe during the next couple of weeks for securities that will deliver a targeted return of 5 per cent a year, while mimicking the steadiness of a money-market fund. "That's really hard to do," Mr. Gross added, "but at Janus for the last two years, that's what I have done."

His Janus fund has returned 4.6 per cent this year and has grown to $1.7-billion (U.S.) in net assets from $9-million when he took over the fund in late 2014, propelled by an initial personal investment by Mr. Gross of more than $700-million.

In the Canadian-dollar NBI fund, Mr. Gross will hold fixedincome securities from around the world that have various maturities and credit ratings, the fund's prospectus states. It will also include a mixture of other asset classes such as common and preferred shares, mortgagebacked securities and derivatives.

Up to 25 per cent of the NBI fund can be invested in high-yield bonds.

"It's a $200-million [Canadian] account at the moment and my goodness, that is a nice cheque of confidence," he said. "We are putting that to work for them."

Mr. Gross was born in Ohio but his roots are in Canada. His parents were from Winnipeg and he says he considers himself "a Canadian guy, at least to a certain extent."

"I don't say 'eh' but I love hockey," Mr. Gross said with a chuckle. "I really like Canada."

Associated Graphic

Janus Capital's Bill Gross, seen in May, believes the U.S. faces 'structural headwinds' that will keep economic growth slow.


When baseball free agency began last month, Mason Wright and Tom Cardoso analyzed the market of available free agents - particularly those who might help the Blue Jays replace Edwin Encarnacion or Jose Bautista - for a visualization we published online. The market has now changed; two of the headliners have been snapped up by rival teams, and time is running out for Toronto's front office. The club needs to act fast. Here are the most likely courses of action
Saturday, December 3, 2016 – Print Edition, Page S2

The Toronto Blue Jays are facing a possible future without the two sluggers who have anchored their long-ball-driven offence since at least 2010. If one or both of first baseman Edwin Encarnacion or right fielder Jose Bautista signs with another team in free agency, they would leave huge holes in Toronto's offence.

Adding pressure to the team's front office is the fact that prime free agents from around baseball are starting to sign with other teams.

Team president Mark Shapiro and general manager Ross Atkins have taken one step toward occupying vacant spots in the batting order with a signing of their own - designated hitter Kendrys Morales - but their job isn't even close to being done. (Although he remains a free agent, outfielder Michael Saunders is also expected to sign elsewhere: another hole to fill.)

The Globe and Mail has analyzed this winter's market in an effort to identify run-producers who might offer the best value.

We're aware that offensive output is just one of several factors the Blue Jays' front office must consider when deciding how to configure their lineup, but this narrow view still yields some interesting insights. Namely: how best to replace 51 Runs Above Replacement (Bautista and Encarnacion's 2016 output) in 2017, without surrendering players or prospects on the trade market (though certain freeagent signings would require the Jays to give up a draft pick).

We relied on three variables in our analysis: 6 Each player's three-year average of Weighted Runs Created Plus (wRC+), a rating statistic used to determine offensive output regardless of league or ballpark, where 100 represents average value;

Each player's projected market value for the 2017 season: either the market value as determined by Spotrac, or the average annual salary over the length of the player's latest contract;

Each player's three-year average of Volatility (VOL), an advanced stat created by sabermetrician Bill Petti which seeks to quantify the consistency of a player's performance during the season. Low-volatility run-producers can be counted on to deliver on a daily basis, the perfect counterbalance to the streaky hitters in the Toronto lineup (such as Russell Martin or Kevin Pillar).

Based on those variables, our list of options includes freeagent non-pitchers who played a minimum of 100 games in 2016, and could fill a position of need should the Jays lose Encarnacion and/or Bautista. This restricts the group to first basemen, outfielders and designated hitters.

For comparison, Encarnacion and Bautista are also on the list, as are players who have signed contracts since the start of free agency (Morales, Josh Reddick, Yoenis Cespedes, Matt Joyce).

The resulting scatterplot graph plots all the players by market value and wRC+, with circles weighted by VOL. At first glance it shows just how valuable Encarnacion's and Bautista's bats are relative to other free agents, underscoring the challenge ahead for Atkins and Shapiro. But it also indicates where opportunity still lies for the Jays, as long as they don't wait too long to act.

The caveat here is that we haven't applied regression or aging factors to any of the threeyear averages. Players who appear attractive on the scatterplot but haven't been annotated are probably near the end of their careers and should see their production drop off accordingly. This includes Matt Holliday (age 36) and Adam Lind (age 33).

The bottom-left quadrant of the chart represents the notespecially-productive options, which grow more expensive as you move to the right. Ryan Howard, a former NL MVP likely to command a high price, fits the bill, as does Colby Rasmus with his unquestionable talent and defensive excellence but high offensive volatility.

The bottom-left corner of the chart indicates players who don't cost much, but who don't offer much on the offensive side of the diamond. It's where you'll find the likes of Peter Bourjos, Michael Bourn and Jeff Francoeur, and you'll know the Jays have struck out in free agency if they end up signing any of these players.

By filtering the list a little we can see who are the better runproducers of the group.

Free agents with a wRC+ of 105 or higher (that is, 5 per cent more productive than an average player): (Player stats provided are 2016 batting average, on-base percentage and slugging percentage.)

Edwin Encarnacion, Jose Bautista, Yoenis Cespedes, Dexter Fowler, Matt Holliday, Carlos Beltran, Adam Lind, Chris Carter, Josh Reddick, Pedro Alvarez, Mike Napoli, Mark Trumbo, Kendrys Morales, Matt Joyce, Brandon Moss. Let's explore three of these players in greater detail, with an eye on their power numbers.

Free agents with a VOL below .650 (that is, less variation in their performance from game to game): Jose Bautista, Dexter Fowler, Edwin Encarnacion, Yoenis Cespedes, Carlos Beltran, Kendrys Morales, Mark Trumbo, Michael Saunders, Angel Pagan, Mike Napoli, Ian Desmond. Consistency is the goal here: a player who can contribute to the team's offence on a predictable basis, series by series. Let's look at a few low-volatility options, and check their potential based on whether they tend to stay healthy over a 162-game season.

Better-than-average free agents whose career wRC+ vs. opposite-handed pitchers is above 110: Matt Joyce, Carlos Beltran, Yoenis Cespedes, Edwin Encarnacion, Jose Bautista, Dexter Fowler, Pedro Alvarez, Mike Napoli, Brandon Moss, Matt Holliday, Adam Lind, Chris Carter, Josh Reddick, Mark Trumbo. It's no secret the Jays fielded a lineup loaded with right-handed hitters in 2016, but the real issue was how bad those righties were against southpaw pitchers (18th in the majors in wOBA at .323), and how bad the few left-handed hitters were against righties (29th at .295). So, how does this crop of free agents stack up against opposite-handed pitchers? That's the kind of balance that's needed in the lineup.

The final decision for the Jays' front office will depend on a whole variety of factors: Do Encarnacion and Bautista both leave, or just one? Will a free-agent signing come at the cost of a draft pick? Are there better options available via trade? What are the defensive capabilities of a potential newcomer? How would he fit in the dressing room, and does his off-field behaviour pose any problems for the marketing department? But from a run-producing standpoint, the Jays can turn to one of the above options, unless they rest on their laurels and are forced to settle for a poor run-producer or highly volatile hitter.

Data sources: Fangraphs, Baseball Reference, Spotrac, Bill Petti.

Yoenis Cespedes (SIGNED) LF 31 years old Bats right .280/.354/.530

If money were no object, it's clear who the Jays would pursue once their superstars decided to move on. Yoenis Cespedes has established himself as an all-star outfielder in both leagues, displaying the kind of power that would make him an instant hit (get it?) at Rogers Centre. He was in line for a $23.75-million (U.S.) salary with the New York Mets in 2017, but exercised his right to opt out of the rest of his deal. He's hoping to sign for a term that's longer than the two years that were left on his last contract - and he'll likely get it, at a price tag the Jays probably can't afford.

Matt Joyce (SIGNED) OF 32 years old Bats left .242/.403/.463

He's not necessarily an everyday player any more, and his numbers don't pop out at you unless you pay attention to advanced stats, but Matt Joyce is an intriguing option on the market. The 2011 AL all-star was a bust after he was traded to Anaheim, but rebuilt his career last season with Pittsburgh as a sort of utility outfielder. His career slashline against right-handers is a very attractive .252/.353/.449, including a .403 OBP in his bounce-back 2016 season. Joyce is in line for a raise, but nothing outrageous. He could be a great fit if the Jays decide they need a left-handed hitter to serve in an outfield platoon with, say, Melvin Upton, Jr.

Mark Trumbo OF 30 years old Bats right .256/.316/.533

Rogers Centre is a comfortable home for power hitters, and if his 47-home-run campaign with Baltimore last year is any indication, Mark Trumbo is clearly able to handle AL East pitchers. But aside from those eye-popping longball numbers, it's hard to see what he would bring to the Blue Jays. He bats right (like most Jays), normally plays designated hitter (the preferred slot for Morales), and doesn't walk much.

He's also likely to command a hefty salary with those HR totals. The Jays can do better.

Filtering the list in a different way highlights the less volatile members of the group.

Dexter Fowler OF 30 years old Bats both .276/.393/.447

Dexter Fowler's combination of speed, pop, ability to get on base and ability to hit from both sides of the plate make him a prime target for a number of teams. He'll command a handsome, multi-year contract, though likely not at the level of Cespedes. Fowler, however, is more consistent and tends to stay healthier. He's never made fewer than 492 plate appearances in a season. He'd provide a different look for the Jays' offence - speed over power - but his dependability could be just what Atkins and Shapiro are looking for.

Mike Napoli 1B 35 years old Bats right 239/.335/.465

Players on the wrong side of 35 (and not named David Ortiz) tend to decline as run producers until they're ready to retire. Mike Napoli bucked that trend in 2016 and drove in 101 runs with 34 homers, both career highs. He has produced consistently enough to make this low-volatility list and helped lead his team to the World Series. And yet, Cleveland decided not to make him a qualifying offer. He only missed 12 games in 2016, but there's a lot of mileage on those 35-year-old legs, including 511 career games at catcher. Don't be fooled by his apparent consistency: Napoli isn't a good enough fielder to find a spot in the Jays' lineup, he strikes out a lot and his body is about to break down.

Ian Desmond OF 31 years old Bats right .285/.335/.446

Much like Michael Saunders in the Blue Jays' outfield last year, Ian Desmond played at an all-star level in the first half of the season before a long swoon into October. The cons against him are notable: He's a converted shortstop who hasn't mastered playing the outfield, he was qualified by his former team so would cost the Jays a draft pick if they signed him and he strikes out a little too much. But he was also good for 3.3 wins above replacement for Texas in 2016, can add a speed dimension to the offence (518 career stolen bases), and has missed more than eight games due to injury in a season only once. If the price is right, Desmond is worth a long look.

Our final consideration is performance against opposite-handed pitchers.

Carlos Beltran OF 39 years old Bats both .295/.337/.513

A switch-hitter who prefers to hit from the left but can produce against both types of pitchers, Carlos Beltran will turn 40 shortly after the season begins but can still play. His fWAR of 2.3 in 2016 put him 8th among all available free-agent hitters this winter. He's a veteran presence on his way to the Hall of Fame, and he'll be seeking a modest multi-year contract.

Chris Carter 1B 29 years old Bats right .222/.321/.499

One interesting player who was expected join the market after Friday's non-tender deadline is Chris Carter. Milwaukee designated him for assignment after they signed Eric Thames, the former Blue Jay who has been improving his pedigree in the Korea Baseball Organization. Carter resembles Trumbo in a few ways: He slugged 40-plus home runs last season, which will get clubs' attention, but struck out a lot and didn't provide much in terms of on-base percentage or defence (in his case, at first base). In fact, Carter's 2016 Ultimate Zone Rating (UZR), per Fangraphs, was the worst among free-agent first basemen at -5.7, a fact which will probably disqualify him from joining Toronto.

Brandon Moss 1B/OF 33 years old Bats left .225/.300/.484

Because the Blue Jays are always interested in acquiring players with plus power, Brandon Moss (28 homers in 2016) is on this list. He's 33 but can still log innings at first base or the outfield, and best of all he mashes righties from the left side of the plate (119 career HRs in that situation). Looks like a good fit as a platoon partner with Upton, if the price is right.

Another platoon option, if partnered with Morales at DH, would be Pedro Alvarez, who hits righties at a rate of .251/.326/.522. Morales is a switch-hitting DH who hits lefties at a rate of .330/.369/ .560. The Jays have already invested $11-million a year in Morales, but Alvarez could provide value if acquired cheaply (say, near the end of the free agency period).

Quarterback has faith in RedBlacks' second championship bid
Saturday, November 26, 2016 – Print Edition, Page S1

Henry (Smilin' Hank) Burris has a chip on his shoulder that is every bit as wide as his smile.

It has grown over his 17 seasons in the CFL, fertilized by repeated rejections from coaches and general managers so that now, as he prepares to start at quarterback for the Ottawa RedBlacks for the second-consecutive year in the Grey Cup at the remarkable age of 41, it is more block than chip.

Add the fact that the opposition is the heavily favoured Calgary Stampeders, the team that traded Burris to the Hamilton Tiger-Cats in 2012, and Burris sees Sunday's start at Toronto's BMO Field as a whole lot of redemption.

The Stampeders were starting to round into the CFL powerhouse they are now when Burris was traded. Up to then, following a 2008 Grey Cup win in which Burris was voted the game's most-valuable player, the Stamps were a good but inconsistent team. Burris says that rejection drives him more than any other because he played in Calgary for seven seasons, was heavily invested in the team and the community, and never had the chance to watch the rebuilding plan pay off.

"The fact is when you create something and spend so much time there, then it's taken away from you, it hurts," said Burris, who maintains a sunny demeanour despite the burn in his psyche. "Do I still carry that with me? Yes I do. I'm an athlete, so you have to carry that motivation with you.

"I'm looking forward to getting a chance to play against a place I called home for a long time so I'm pretty excited."

Burris sees his own slights as a metaphor for his fourth CFL team. Like Burris, who won the league's most-outstanding player award last year at the age of 40, the RedBlacks are a compelling story. In just their third year of existence as an expansion team, they are playing in their secondconsecutive Grey Cup.

However, given their 8-9-1 record in finishing first in the woeful East Division and that the 15-2-1 Stamps practically strolled into the championship game, few are giving the RedBlacks much of a chance. Burris thinks winning the franchise's first Grey Cup and his second in four tries as a starter would give both the RedBlacks and him their bona fides as winners.

"Coming into the season, after the first few games everybody put Hamilton on the pedestal as the Grey Cup contender along with Calgary," Burris said. "It seems like no matter what we've done, nobody gives us respect. Maybe they don't like the fact this is only three years and we've been at the show now two years in a row.

"Just like last week, nobody gave us a chance to beat Edmonton even at home [in the East Division final]. Now we're playing Calgary. Well, Calgary's a very good football team, they've done a lot of great things this year but again, at the end of the day it's all about playing football on Sunday.

Whoever executes the best, takes care of the football and makes plays will win the game. Why not us?" The slow burn over rejection is a recurring theme in stories about Burris. There is no doubt the hurt is genuine. Even his wife Nicole has been quoted at length on the subject.

However, Burris also says you need to be aware of the difference between business and personalities in teams' personnel decisions, such as his release in 2014 by Hamilton Tiger-Cats general manager and head coach Kent Austin after making the Grey Cup in 2013. Austin decided to go with Zach Collaros, who is 13 years younger than Burris.

"It's nothing personal with Kent, he made a business decision," Burris said. "But, shoot, you can ask any quarterback in this league when somebody steps in your position, hey if it's time for the future it might be time but give me my shot. Just don't take it away from us, give us a chance."

There is a sense, then, that Burris can compartmentalize his resentment. He admits it is a handy motivational tool.

"I understand business is business. I don't take things personally," he said. "But from a competitive standpoint I have to because at some point during the season I've got to play those guys again. Those are the guys who said I couldn't get it done.

"My job is to go out there and not only be better than what I've been but now I've got this extra fire lit, to show these people yeah, you gave up on me. Here's to show you shouldn't have."

There is much more than wounded pride that keeps Burris among the CFL's best players at an age where most professional football players have long been retired.

"His work ethic stands for itself," said 25-year-old secondyear RedBlacks running back Kienan LaFrance. "He's always in the gym, he's always in treatments.

Those are the things young guys notice and respect. That's what builds a good foundation for a team."

Burris says tearing the anteriorcruciate ligaments in both knees early in his career taught him the importance of proper exercise, stretching and nutrition. He is known for a rifle arm as a quarterback but he uses his mobility to avoid big collisions, although he calls himself "an ugly runner."

Also helping Burris are strong genetics, he said. Back home in Spiro, Okla., his 70-year-old father Henry Sr., is a social worker who can still keep up with his teenaged charges. "He's still racing high-school kids, doing situps and push-ups with them and he's beating a lot of the kids," Burris said.

Nicole Burris plays a leading role as well. She was an all-American lacrosse player at Temple University while Burris quarterbacked the football team and remains active along with their sons Armand and Barron. More important, she stoked the competitive fires this season after Burris injured his throwing hand in the season opener, came back too soon and lost his starting job to Trevor Harris for a time.

But the biggest factor may be on the mental side of the game.

Many athletes retire saying they can still play the game physically but mentally no longer have the commitment to the necessary work to stay in shape. Not Burris.

"He loves the game still," said RedBlacks head coach Rick Campbell. "He likes prepping, he likes going to meetings, he likes practice, all those things. Football can be a grind and it can wear you down and he shows no signs of that right now." Burris is preparing for the future. He is doing television work in Ottawa, where the family plans to settle, and operates a charitable foundation. He also hopes to turn what is now a series of football camps for children into a sports academy.

Despite the presence of Harris as yet another heir apparent, though, Burris does not sound like anyone who expects to retire after Sunday's game, win or lose.

He thinks his workout regimen and mental approach make him different than your average 41year-old quarterback.

"I say look at what I'm doing on the field and if you can say that's an old quarterback I can understand that," Burris said. "But if you look and say he can still outrun people, he still has a strong arm, he can still do things to be successful, at that point what is the problem?"

Associated Graphic

RedBlacks QB Henry Burris hands off to running back Kienan Lafrance at practice in Toronto on Friday.


Ottawa RedBlacks quarterback Henry Burris shares a laugh with teammates during a practice, in Toronto on Friday.


Real Madrid versus Barcelona. Ronaldo versus Messi. A player who rules the world versus a club on a historic run of quality. This weekend's Clasico isn't just a game. It's a turning point
Friday, December 2, 2016 – Print Edition, Page S1

Three weeks ago, Real Madrid's Cristiano Ronaldo re-signed what was already the biggest deal in global team sports. Between salary and bonuses, he'll be paid somewhere in the range of $75million a year.

Ronaldo is 31. The new contract will take him to 36 - an age at which most players who aren't goal keepers have retired. It is very unusual for a man in Ronaldo's position - forward - to maintain anything close to top form at that point.

Ronaldo may be different. Among the many obsessive ways he cares for his body, he's said to do 3,000 sit-ups a day. There may be no better-conditioned athlete in the world.

Nonetheless, a few foreheads wrinkled when Ronaldo laid out the timeline for the remainder of his career.

"It is not my last contract," he said. "I want to keep going until I'm 41."

Real would probably keep signing him until he's 81. At the moment, he is the most electric player in the world. He sells shirts by the pallet. When you have Real's aspiration - to be both the biggest and the best, every year, forever - $75-million for this unique attention magnet is a bargain.

Nonetheless, Ronaldo could sense the hesitation. Few stars are so motivated by a contrary spirit. When you begin to think he's flagging, that's when he starts to sprint again.

A few days later, Real played crosstown rivals Atletico in what would be their last encounter at the Vicente Calderon Stadium. (Atletico is moving in a few months.)

It was something of an occasion.

Ronaldo scored all three goals in the game. After the second, he jogged over to the sideline, bent to one knee, put his hand on his chin and looked thoughtfully into a camera for a long time. Every pro likes to talk about "the haters," but none has more of them than Ronaldo. That's who he was looking at.

"Those people will want to watch this game again," Ronaldo's teammate, Marcelo, said of the performance.

On Saturday, Ronaldo & Co. face Barcelona in the season's first Clasico. It's a funny moment in the greatest rivalry in sport.

Best known for chaos - transfers in and out, coaches being fired, fans going berserk at this or that change - Real has been eerily steady of late. The new manager, Zinedine Zidane, is so calm on the sideline, he is his own wax statue. The club's spent months buttressing its core by re-signing key players to longterm contracts. Ronaldo was the final and richest piece. Performance is consistently high. The team hasn't lost a game in the league for nine months. There are no tabloid stories of lockerroom insurrection (which have been regular features for years regardless of whether they're winning).

It's all very un-Real.

Perhaps Real has switched personalities - Face/Off style - with Barcelona.

A lockstep march into the brilliant light of the future has been the defining hallmark of Barca squads for more than a decade.

It's all become a little patchy in the past little while.

Last weekend, Barcelona finished 1-1 against Real Sociedad.

"It's not often I can say this as a Barca player, but we have to be pleased with the draw," defender Gerard Pique said.

Barcelona now trails Real by six points in La Liga. It is only December, but it's conceivable that a loss on Saturday could put the league out of reach. That would make it seem like an awful long time until May.

When we speak of Barca now, we're really talking about its forward line, which on paper may be the best in history.

Lionel Messi continues his high standard statistically, but there is a spring missing from his step.

He looks tired. The new beard and suddenly weird hair make him look like a man allowing himself to go to seed. He always looked younger than his years.

He suddenly looks older than 29.

Messi's had a fair bit of trouble recently. Quitting and unquitting his national team. Narrowly avoiding jail on a tax charge. A return of his mystery illnesses.

Falling decisively behind Ronaldo in their subjective best-ever competition. All that grind is starting to show.

A Spanish prosecutor has asked that Messi's striking partner, Neymar, be put in prison for two years for tax evasion (a lot of that going around, apparently).

The only guy who looks truly happy in his work is reformed cannibal Luis Suarez.

Led by those three, Barcelona is scoring, but the team is not dominating. Maybe this has something to do with Pique's dark comments about the squad lacking "the right attitude."

It's mildly alarming because at Barcelona, the correct attitude is meant to be baked into the cake.

That's the whole mystique - raised together like wolves, generations leading generations, all for one and so on and so forth.

Could that finally be coming apart under worldly pressures?

That is the most alluring alle gory we'll be watching Saturday.

Unlike Real, Barcelona is not given to panic moves, but it faces the same enormous duress.

Manager Luis Enrique has his laurelled career as a Barcelona player to shield him, but losing on Saturday puts him up on the plank. Who knows yet how long a walk he'd have?

And then there are those persistent rumours of Messi leaving Spain.

The player himself could have decisively shot them down at any time, but he hasn't. Instead, he slips around the idea. It was left to Enrique to unconvincingly scupper the latest ones - Messi to Manchester City.

"I don't know. I have no idea," Enrique said when asked about it.

He doesn't know about the rumour or he doesn't know if Messi might leave? It's a rather crucial point.

This is why these two teams are so big - because they are constantly on a knife's edge.

Week after week. And none bigger than this weekend. Ronaldo rules the world right now. Real looks to be on a historic run of quality. That can all end in 90 minutes.

Mes que un club, they say at Barcelona - which applies to both teams involved here.

As a result, on Saturday, it's also mes que un match.

Associated Graphic

Real Madrid's Cristiano Ronaldo, the world's most electric player, will face Lionel Messi's Barca this weekend.


Barcelona's Lionel Messi continues his high standard statistically, but he looks tired. The new beard and suddenly weird hair make him look like a man allowing himself to go to seed.


As Tiger Woods finishes up his undignified comeback at the Hero World Challenge, it's painfully obvious how many people remain invested in his phantom reversal of fortune. Which is simply not going to happen, Cathal Kelly writes
Monday, December 5, 2016 – Print Edition, Page S1

TORONTO -- On Sunday, Tiger Woods completed his gentle re-entry into competitive golf after a 15month absence.

It didn't go badly, but it reminded us that things will never return to normal for Woods on a golf course. At least, not in the way people want.

Woods picked the Hero World Challenge for his comeback. The event is organized by his foundation and is functionally an exhibition. There are only 18 entrants and no cut. Seventeen of them were ranked in the top 40 in the world. Woods was 898th.

Woods played well to start, then faded. He finished 15th. He donates his prize money from this tournament to charity. This will be a smaller cheque than they're used to.

"I'm so happy to be back here," Woods said after his third round. "I missed it."

That worked both ways, cringingly. The only thing that remained the same from the glory days was the fawning tone of the coverage. Woods's return completely swamped the efforts of his betters.

Every decent shot was cheered as if it were redefining physics.

Every mistake was explained away as fatigue. The word "rust" got tossed around a lot.

It is painfully obvious how many people remain enormously invested in Woods's phantom reversal of fortune.

People don't just want him back to his old self. They want things to go back to the way they were when Woods was great and golf mattered outside the four weeks every year they play the majors.

The harder they wish it, the more forlorn it seems. You just have to look at the guy they're pinning it all on. He's nowhere close to the same.

Like many men who are boyish into their 30s, middle age has caught Woods up all at once. The 40-year-old is still remarkably fit, but he looks much older and tired. All the shine has gone off him.

People would settle for the T-3000 version of Woods - dead-eyed, fist-pumping, metronomic. For a long time, he was golf's only bully.

That guy is gone now, and it has little to do with his pernicious back problems. Woods has been altered in some indefinable way that is impossible to miss when you watch him. He's been diminished by his many humiliations.

All the swagger has deserted him.

Many of the other competitors playing with him this week were Woods's favourite contemporaries or younger men who grew up idolizing him. This was all designed to make Woods comfortable, and give him the best odds at a brilliant return. In that sense, it failed.

Jordan Spieth, the charismachallenged Texan who would like to be Woods's heir, said he should be given a year (another one) to rediscover his game.

"The world we live in as fans, as spectators, it's a what-have-youdone-for-me-lately world. So I don't think it will happen," Spieth said.

It's an upside-down way of looking at things. If the golf world worked the way Spieth describes it, Woods would already be forgotten.

This isn't about practice or room to breathe. This is about getting old. Woods is a talented player who will never again be one of the best.

He seemed happy to be there - something that would have been an insult 10 years ago. But he's no longer an alpha. He's one of the pack.

The question is whether that's good enough. Clearly, it's okay in the short term. Given how many surgeries he's been through, Woods should be happy to be walking a course, never mind playing one.

But if his back holds up, that feeling will wear off quickly. Then he has to decide if he's golfing for fun or glory. Because one of those won't work any more.

More so than in any other sport, great golfers are able to accept the end. Arnold Palmer played for nearly 50 years after he'd stopped mattering as a player. Jack Nicklaus had it even tougher - not only watching his own ability erode, but having to settle into Palmer's shadow on the diplomatic circuit despite his better record.

For a long time in that little world, everyone had his place in the past-your-prime pecking order. The trade off to letting go of your competitive pride was getting monstrously rich as a designer, pitchman and barnstormer. Most important, you were allowed to stay in touch with the game.

Nobody managed that transition better than Palmer.

If you've been around golf lifers, every one of them has a gobsmacking story about Palmer's extracurricular activities. It never hurt him with the public. It seemed they rather liked him for this duality - vanilla family man in public, hard-drinking womanizer everywhere else.

Woods could still capture something of that. I believe that at this point, everyone recognizes that Woods has been mocked far more than is fair. Everyone loves a renaissance. Plus, there are vacancies. Palmer's gone. Gary Player is 81. Nicklaus is 76. Golf's old guard could use some new blood.

If Woods wants to begin transitioning to Palmer's elder-statesman role, now would be the time to start. Step back a little. Be seen having more fun. Competing would also be good, but not vital.

But I don't think he can manage it. He'll still build courses and shill products, but Woods is different from Palmer in a key way - he likes winning more than he likes golf. The edge that defined him as a top player has already become an emotional millstone as he declines. Every year, he seems ... less. By contrast, Palmer seemed to grow as he got older.

People loved him for that.

And Palmer liked people back.

Woods has never seemed to.

"One thing that I've been good at over the years is eliminating the noise," Woods said on Saturday.

The fans who will carry him through the next year, next decade, next lifetime on a course - that would be the "noise" he's talking about.

It would be very in keeping with Woods's 'kill the prisoners' approach that this is how his career ends - swinging pointlessly until collapse.

Woods was so good, he never had to learn how to take a punch.

He's taking them now. Eventually, he's going to take one he can't get back up from.

Associated Graphic

Tiger Woods hits his second shot on the third hole during the final round of the Hero World Challenge in the Bahamas on Sunday. Woods shot a 76 and finished 15th.


RedBlacks win nail-biter in overtime
Dominant Stampeders come apart at the seams, as Ottawa QB Burris has a night for the ages with record passing numbers
Monday, November 28, 2016 – Print Edition, Page S2

TORONTO -- A first-half runaway almost turned into a second-half nightmare for quarterback Henry Burris and the Ottawa RedBlacks.

But Burris, 41, now officially the grand old man of the Canadian Football League, struck for an 18yard touchdown pass to Ernest Jackson on the first drive of overtime, giving the RedBlacks, a third-year expansion team, their first Grey Cup with a 39-33 win over the heavily favoured Calgary Stampeders. Burris is the oldest player to start at quarterback in a Grey Cup game and he had a night for the ages, passing for more than 400 yards, the first player to pass for that much since Danny McManus did it in 1996 in a losing effort for the Edmonton Eskimos.

Burris and the RedBlacks had to sweat out Calgary's corresponding drive in overtime but quarterback Bo Levi Mitchell could not find a receiver in three tries and one of the greatest upsets in CFL history was in the books. It was also one of the most dramatic Grey Cups ever, as the Stamps fought their way back into contention in the second half.

The final minute of the fourth quarter saw Ottawa defensive back Abdul Kanneh make both the most egregious mistake of the night and one of the best plays of the game. First, he grabbed a towel in the belt of Calgary receiver Kamar Jorden that gave the Stampeders a first down and goal-to-go on the Ottawa eight-yard line.

Then, after backup quarterback Andrew Buckley was sent in to try and run in his second touchdown of the game, Kanneh tripped him, forcing Calgary to settle for a 10yard field goal with nine seconds to play that forced overtime and gave Ottawa another life.

After Burris opened the third quarter by directing another scoring drive that ended with a nineyard touchdown pass to Brad Sinopoli, it looked like there was an easy path to one of the CFL's great upsets. But the Stampeders somehow collected themselves and it was the RedBlacks who started making mistakes that ate into their 27-7 lead.

The comeback started with a 32yard Rene Paredes field goal.

Then Calgary quarterback Bo Levi Mitchell, who had a horrendous first half, finally started hitting his receivers with Lemar Durant catching a 33-yard touchdown pass. The big mistake on that one was committed by Ottawa defensive back Antoine Pruneau. He somehow did not touch Durant after the latter fell after making the catch, allowing Durant to get up and run for the major. A video review let the touchdown stand.

Late in the third quarter, after a Calgary drive was helped along by a pass-interference penalty to Ottawa, Andrew Buckley replaced Mitchell with the ball at the Ottawa one-yard line. Buckley ran for the touchdown, becoming the first Canadian quarterback to score a touchdown in the Grey Cup since Russ Jackson did it for the Ottawa Rough Riders in 1968.

Burris went back out for yet another scoring drive, ending it at 6:03 of the fourth quarter with a one-yard plunge for his second rushing touchdown. One oddity was that both converts were missed, on the Buckley and Burris majors, leaving the score 33-23 for Ottawa. RedBlacks defensive back Forrest Hightower gave his team some breathing room with his second interception of the game, stopping a Calgary drive with 3:21 left in the fourth quarter. But Mitchell and the Stampeders came back a minute later, working their way into Ottawa territory where DaVaris Daniels, on third-down and two yards, ran 19 yards for a touchdown with 1:38 left in the fourth quarter. The convert cut Ottawa's lead to 33-30, setting up Glenn Love's recovery of an on-side kick for Calgary that started the heart-stopping final 90 seconds of play.

The team that finished the regular season 15-2-1, cruised into the Grey Cup by crushing the B.C. Lions, who had the second-best record and was ready to be anointed the greatest CFL team of all time came apart at the seams.

Mistakes abounded, from Mitchell throwing interceptions to special-teams fumbles to bad penalties.

While Burris was picking apart the Stamps secondary with the help of receivers Greg Ellingson and Sinopoli, Mitchell looked nothing like the quarterback who was just elected the CFL's mostoutstanding player in the regular season.

Things were equally unhappy on the defensive side of the ball for the Stampeders. As they walked off the field at half-time, Calgary defensive coordinator DeVone Claybrooks and defensive end Charleston Hughes engaged in a spirited chat.

No doubt the subject was to do with getting pressure on Burris, who passed for 266 yards, completing 20 of 25 passes, one for a touchdown. He also scored one himself on a one-yard plunge.

That one ended a crisp opening drive for Burris as he marched the RedBlacks 66 yards on 10 plays and eliminated any doubts about him and his knee.

Mitchell and the Stampeders answered that touchdown with an efficient drive of their own. He completed four consecutive passes, ending a 79-yard drive with a strike to running back Jerome Messam.

It looked like the Stampeders were in charge and all was right with the CFL universe. But Burris and the would not go quietly, driving for a 37-yard field goal by Ray Early and then hit Patrick Lavoie with a six-yard scoring pass at 6:46. Early added a 29-yard field goal and the RedBlacks had a stunning 20 points by halftime.

However, Burris quickly went to work on any doubts when the third quarter started. He directed a 69-yard touchdown drive and ended it with a nine-yard pass to Sinopoli at 6:21 that gave Ottawa a 27-7 lead after the convert.

But things were far from settled in what turned out to be a far from your ordinary championship game. That touchdown shook the Stampeders from their torpor and with the RedBlacks now making most of the mistakes, the tension of the final 23 minutes and 39 seconds of the game began.

Associated Graphic

Patrick Lavoie of the Ottawa RedBlacks scores a touchdown during the first half of the 104th Grey Cup game against the Calgary Stampeders in Toronto on Sunday.


Ottawa RedBlacks' Brad Sinopoli, right, scores a touchdown as Calgary Stampeders Joshua Bell and Joe Burnett try to defend during Sunday's Grey Cup game.


Carlsen, Karjakin face 'Armageddon'
With Vladimir Putin among the transfixed audience online, a Crimean-born, hawkish Russian champion looks to dethrone a widely respected Norwegian grandmaster considered to be the most adept and adaptive player in the world
Wednesday, November 30, 2016 – Print Edition, Page S1

TORONTO -- A head of this year's World Chess Championship, which reaches the end game on Wednesday, defending titlist Magnus Carlsen reportedly hired Microsoft to protect his communications.

The Norwegian worried that Russian hackers would infiltrate his practice sessions and tip off his opponent, Sergey Karjakin.

It's gotten so bad that Russia didn't draw from its usual playbook on these matters - outraged denials followed by curling into a fetal ball of patriotic self-pity. If the Russians were quieter than usual, it was probably because Karjakin was expected to lose, continuing a streak of Russian failure at their national game.

That's changed.

The championship has instead become an epic grind and political proxy war. If East is not yet fighting West in reality, it is currently doing so virtually in Lower Manhattan. "For all normal people, this is a chess match, not a political game," Russian grandmaster Sergei Shipov told the New York Times this week.

In fairness, you must have noticed that there are fewer and fewer normal people left in the world. Carlsen and Karjakin have been playing inside a soundproof New York studio for the last three weeks.

Among the crowd that watches live via one-way mirror is a press secretary for Vladimir Putin. The Russian president follows each round online. Before he was emboldened enough to invade his neighbours, Putin hoped to express native strength through sport.

He began a series of works designed to grow Russia's global athletic reach, many of them financed by oligarchs under Kremlin pressure. They bought foreign teams and players, built stadiums, invested ludicrous amounts of money in fringe sports such as judo (Putin's obsession) and fixed the Olympics.

That last move was a bit much, causing the whole effort to collapse in on itself.

Karjakin, a 26-year-old Ukrainian turned Putin cheerleader, has risen from that competitive rubble.

He and Carlsen are perfect avatars for the geo-political moment.

Karjakin was born in Crimea, but left for Russia before the invasion. His new citizenship was granted by presidential decree.

He has since become a high-volume booster of the war in his native country.

In press reports, Karjakin is portrayed as a timid, suburban father of one and chess obsessive.

He holds the record for youngest grandmaster in history - age 12.

But his success at the very highest levels has come relatively late, and as a result, no one expected him to get this far.

By contrast, Carlsen, 25, is that familiar Western athletic type (if the word "athletic" is correct here) - a smouldering prodigy-cum-rock star who is in no doubt about his own talent, and given to famous bouts of pique. After losing one match in New York, Carlsen came out to his news conference, fidgeted petulantly while people were taking their seats and then walked off without speaking.

Some people regard Carlsen as the best player ever. His tactical signature is a profound adaptability. Playing a more formal style, Karjakin has spent most of November backed into the ropes while Carlsen whales away at him. It's proved an effective strategy. Of their 12 encounters thus far, 10 have ended in draws.

In Monday's penultimate game, with a chance for either man to seal it, neither bothered trying.

They played for 36 limp minutes - the shortest game in tournament history - and retired the field.

On Wednesday, they'll play a series of "blitz" games, each with a declining time limit. If those result in draws, a month's worth of effort will end in "Armageddon" - white is given five minutes, black only four, with a draw counting as a win for black.

Carlsen is considered the better at speed chess, but given that he was supposed to wipe the board with Karjakin from the start, that doesn't mean much now.

A loss would be an embarrassment for Carlsen and a blow to his carefully cultivated brand.

He's been given modelling contracts not because of his (let's be honest) middling good looks, but because he is considered unbeatable at something. You only get one chance to get that wrong.

But whatever the Scandinavian has to lose, Karjakin's state sponsors have so much more to gain.

After dominating most of the 20th century, Russian chess has been a basket case for years. Its central figure is billionaire Kirsan Ilyumzhinov, a Putin adherent, head of the World Chess Federation and a man who has claimed he was abducted by aliens. That would make sense, since Ilyumzhinov believes chess was invented on another planet.

It's rather a long way from Boris Spassky and the image created by a generation of Soviet players that Russians could outthink the rest of us. Even their dissidents - Garry Kasparov, Alexander Alekhine, et al. - deepened this impression of a nation's stolidity and cool ruthlessness. When we envision Russians at their best, we picture writers, revolutionaries and chess players. Often all three at the same time.

Karjakin is very much the type, meek and thoughtful, speaking with a stutter and deeply politicized. While Carlsen curls up painfully in front of the board, head desperately in hands, Karjakin sits there like a sphinx. He may not be the better player, but he could in the end be sold as the better man.

After a series of humiliations, Karjakin's victory - against insurmountable odds and western hubris! - would be worth far more to Putin's Russia than any weightlifting gold.

It's been a decade without a chess title - years in which Russia has increasingly seen itself as exceptional in the world community. You can imagine how easy it will be to spin a chess victory into a self-reinforcing vision of renewed strength - "They may be bigger than us, but we are smarter."

Whether you care about this game or not, it is a storyline that cannot be resisted, and one that Russia will fold into its agitprop.

The players themselves have been careful to keep things cordial, garlanding each other in bland compliments. Maybe the rhetorical dam will break once the event ends, however that may be.

After Monday's desultory draw, Karjakin said, "Let's hope there won't be Armageddon."

Yes. Let's hope that.

Associated Graphic

Norwegian star Magnus Carlsen, left, the current world chess champion, plays Russian grandmaster Sergey Karjakin on Monday in New York.


It was a sodden night at BMO Field, but even the lashing rain couldn't dampen TFC's drive, as the Reds fought back in extra time to beat the Montreal Impact and become the first Canadian team to advance to the MLS Cup final
Thursday, December 1, 2016 – Print Edition, Page S1

TORONTO -- Ten years ago, they were new and bad.

After they'd got the hang of things, they became much more terrible.

Years passed and the only thing that remained the same were the results. Five years ago, one of their own players called them "the worst team in the world."

Last year, they were still blowing it, just in even more painful spots.

Today, Toronto FC - the awkward, unloved stepchild of North American professional sport - stands one win from a championship.

I suppose that from now on when people tell you that anything is possible, you'll be forced to agree. You've seen the proof.

Toronto beat the Montreal Impact 5-2 in the second leg of the Major League Soccer Eastern conference final on Wednesday night. It took a little extra time and a great deal of worry, but they'll be used to that here.

Toronto will play the Seattle Sounders for a title at BMO Field on Dec. 10.

Played in intermittent rain, it wasn't a pretty game. The tonesetting play of the first quarterhour was a flying Jozy Altidore shoulder that nearly decapitated Montreal's Hernan Bernardello.

Then the goals started going in, every one of them a scrappy finish after an egregious error.

Had Montreal won here, it would have in part been a victory for thrift.

The Impact put their team together on the relative cheap. Their highest-paid player is poster-boy Didier Drogba. (The description is not meant kindly.

That's all Drogba can do any more: be on posters.)

What Toronto proved on Wednesday is another one of those small deaths of progressivism we've witnessed recently - money really does make the difference.

Each of their extravagantly paid superstars - Sebastian Giovinco, Michael Bradley and Altidore - had a telling hand in the win.

Bradley's physicality set the tempo. The most impressive goal of the game was a choreographed short-corner - Giovinco to Altidore - that the latter flicked off the side of his head into the corner of the Montreal net. Having seen how it's done, the less-expensively retained help carried it the rest of the way.

You know what that kind of skill costs? Apparently, $12-million (U.S.) a year - Giovinco's and Altidore's combined salaries.

It's nearly twice the total payroll of the Imapct.

Even more amazingly, you have to like Toronto's chances now.

The Sounders are a good, if profoundly unspectacular team. Like all people from the U.S. northwest, we must presume they are weak when the weather gets hold of them. The long-range forecast suggests the title game will be played in more seasonable - that is, bitterly cold - conditions.

A win in that game would vindicate the trouble Maple Leaf Sports & Entertainment have gone to to put TFC in the same strata as the Leafs and Raptors - the hugely expensive players; the hugely expensive stadium renos; the hugely expensive cost to their pride that was 10 years of utter futility.

Poetically, the man most responsible for turning it around - former MLSE president Tim Leiweke - was on hand Wednesday night to see it pay off.

That's the Toronto side of it.

Montreal's end is ash, for now at least. The Impact have come a long way in a few years, though I suppose that won't make them feel any better about a contest they had in their grasp several times, and let slip.

In a larger context, it was a great Canadian evening. We don't get many of those when it's men on the field.

When MLS first came to Canada, they made a great deal about growing the national game. It was the sort of thing that sounded nice. Aside from enjoying the conversion rate on their expansion-fee profits, the league made precious little effort to do anything for Canada beyond allowing them to hang out the shingle.

You got a small sense of the cross-cultural divide during a pregame news conference to announce changes to the league's domestic player rules.

Put simply, young Canadian talent will now have an easier path into MLS.

A photo-op that should have been all hands-across-the-border devolved into a snippy lecture from league commissioner Don Garber when he was pressed on the details.

"Everybody talks about this like it's a social issue," Garber barked. "It's not a social issue."

I suppose that translates as, 'Why do I have to keep telling you this? We like you even though you're Canadian.' And though that often doesn't seem true, it should be.

There are 20 teams in MLS, but the three in Canada form its most effective pillar. For the most part, they have always been some combination of new and/or bad, but their fan bases are among the most devoted.

While the league continues to talk about with over-the-hill Europeans in their profit centres, Canadian teams have managed to (mostly) resist that temptation. At the moment, each one of them is built to perform within their own particular budget constraints.

A moment like Wednesday night - a Grey Cup-sized crowd on hand at the National Soccer Stadium - was overdue. The supporters provided the noise. The game provided the reason to keep it up. The better team won, but it was close. It was the sort of contest that left you panting for more. In that sense, it was the perfect way to end a season.

And now, for the first time in MLS history, a non-American team will contest in the final game for a title.

That would be an impressive achievement. But on some level, the national finish line was Wednesday - two Canadian teams proving over two legs that the sport has found its northern niche.

MLS likes to nod toward Canada whenever they go through their roll of key supporters. Half the time, you suspect they're just saying it to be inclusive.

This morning, they know why they bother.

Associated Graphic

Toronto FC's Jozy Altidore celebrates after scoring during the Eastern Conference final against the Montreal Impact on Wednesday. TFC will face Seattle for the Cup.


TFC forward Will Johnson takes a shot on Impact goal keeper Evan Bush as Hassoun Camara watches on Wednesday night.


Lowering the NHL's concussion rate will require fundamental changes
Thursday, December 8, 2016 – Print Edition, Page S1

TORONTO -- In Ottawa this week, sports celebrities and technocrats got together to wrestle with the concussion problem. They called the gathering We Can Do Better.

They agreed that sports need a unified concussion protocol, that education is key and that concussion deniers need to get caught up with science.

Though well-meaning, it was rather like holding an anti-war conference to argue how we might more humanely remove wounded from the battlefield - say, by carrying them on stretchers rather than dragging them by the feet.

We're getting things backward.

The problem isn't how to treat people after they're bullet-riddled. The problem is that they are being shot in the first place.

This meeting was about head trauma in all sports, but, since this is Canada, it was really about hockey. Any Canadian discussion about hockey is primarily about the NHL. Change that iteration of the game and every other level will fall into line. Hockey's primary dilemma when it comes to head injury should not be concussion assessment, concussion treatment and concussion awareness (seriously, is there anyone left who isn't aware that getting hit hard in the head is bad for your health?). The first goal of the movement should be eliminating concussions, in so far as that is possible.

This butts up against two contradictory hockey trends (neither of which have anything to do with the "man's game" ethos) - the modern safety cult and our reluctance to change any of the rites of our national religion.

In order to make ourselves safer on the ice, we've spent decades adding to the amount and imperviousness of hockey equipment. These days, it's the sort of armour a medieval knight would've envied - cheap, lightweight and close to indestructible. If you removed and/or reduced some of the armour, you take away two things - a weapon and the false impression that you can't be hurt while wearing it.

People will complain that this is putting them at risk (another way of saying, "But I've already paid for all this stuff. And I like it."). It won't. There is no reason for a hockey player to have the same type of shoulder pads as a linebacker, unless their function is to make you a human battering ram. Substitute soft, thin padding for the rigid stuff and you eliminate the battering-ram mentality.

It's a simple solution, but unlike the "Let's get together, hold hands and pray things get better" approach, it requires real action. Also, it's unpopular. Another simple change - alter the aggressive physics of the game by putting fewer players on the ice.

One of the things that occur to you when you watch the NHL of 50 years ago versus the game of today is how much more crowded the playing surface seems.

The modern player is bigger and moves more quickly than his predecessors. He gets to the puck faster, putting more bodies in the strike zone. Once he gets there, he's so decked out in plastic plating, he doesn't hesitate to catapult himself at his opponent.

After all, what bad thing could happen (to the guy doing the catapulting)? The result is more collisions and more violent ones.

When do the worst impacts reduce dramatically? During overtime, when there are fewer men at play and, therefore, more time and space in which to operate. Roll two billiard balls randomly across the velvet of a pool table. Now roll 10. And now imagine the balls have the capacity to move out of each other's way. What do you think the difference will be? This isn't rocket science. It's just science.

What hockey's many critics miss when likening their headtrauma crisis to football's is how much more easily the former could be altered to make it safer.

Football is always going to be about groups of large men lining each other up and running directly into one another. That's the point of it. It's how every single play is meant to end.

There is only one way to solve that problem - stop playing football.

Hockey is instead about advancing as far as you can and then passing the puck away before you're hit. If you get nailed you have, on some level, failed. The hit is a punishment for that. A perfect offensive hockey play is one in which no player is struck full-on. When it happens over the course of 60 minutes, we call it Olympic-style hockey, as if it is only possible at the Olympics (where a larger ice surface mitigates the spacing problem).

And, of course, it is possible every night at every level if a few (major) tweaks are made to the game. People will always get hit while playing hockey, but they can be hit less and with reduced impact and/or recklessness. Fewer players opens the game up, lets skill flourish, gives NHL hockey back the flow it has been losing for years.

What's so frustrating about this is that by making elite hockey safer, you would also make it more enjoyable viewing.

If people wanted to spend their evenings watching objects chaotically banging into each other, Montreal traffic cams would be broadcast in prime time. That's being proved and reproved in the TV ratings each year. Ask Rogers.

Instead, this is that unicorn of crisis management - a single solution that that addresses two very separate crises.

All it requires is some boldness, which is in short supply whenever a legacy operation is involved.

The people who met this week in Ottawa can't dictate anything to the NHL. They'd clearly like to keep the league sweet and pliant with their reasonable measures.

But by proposing patches instead of fixes, they're giving hockey the institutional cover it needs to maintain the status quo.

More people may be salved once they've had their heads badly rattled. But the head rattling will continue unabated.

How is that progress?

There is no question we can do better. But 'we' don't have anything to do with it. The question is whether the cabal of NHL executives and owners who make these decisions will ever want to.

Qualtrough calls for sports 'culture shift'
Minister of Sport and Persons with Disabilities to join Governor-General in opening his 'We Can Do Better' conference on concussions
Tuesday, December 6, 2016 – Print Edition, Page S1

OTTAWA -- She may have been the only cabinet minister to offer a fist pump and shout when receiving her mandate letter from thenbrand new Prime Minister Justin Trudeau.

Carla Qualtrough had just reached the part where the PM lays out his explicit expectations for each minister. As Minister of Sport and Persons with Disabilities - the 45-year-old B.C. lawyer is both an athlete and legally blind - she was charged with preparations for the then-coming 2016 Olympics and Paralympics, celebrate the country's athletic achievements during Canada 150, work toward passage of a Canadians with Disabilities Act, and then: "Work with the Minister of Health and the Public Health Agency of Canada to support a national strategy to raise awareness for parents, coaches and athletes on concussion treatment."

Tuesday morning at Rideau Hall, Qualtrough will be present when Governor-General David Johnston opens his "We Can Do Better" conference on concussion injuries and what can be done about them.

She will listen while wellknown athletes such as Hockey Hall of Fame-member Eric Lindros and two-time Olympic gold-medalist Rosie MacLennan tell their personal stories. She will hear Dr. Charles Tator and other medical experts discuss what is known as well as what is not known. The minister will hear another Hockey Hall of Famer, Ken Dryden, deliver a keynote address in which he will ask the critical question: "Where we go from here?"

Part of where we go will involve governments. If the sports that establish the culture of their games - including the professional teams that so influence young athletes - will do little, or even deny any connection between head trauma and mental health, then effective action on this public health issue will have to come from elsewhere.

If young athletes are not demanding this, their parents most assuredly are. "It's become a consideration for parents as to whether or not they will put their kids in sports," Qualtrough says.

In 2014, an estimated 155,000 Canadians suffered concussions, some mild, some traumatic and life-affecting. Concussion awareness, like climate change, has slowly moved beyond the denial stage, though there are certainly doubters. The notion of "sucking it up and playing through it" remains prevalent in most contact sports: The injured player who continues on is admired; the injured player who stops is doubted or even dismissed.

"We don't say, 'Oh, that was really smart of Sidney Crosby to sit out four games because he's concussed,' " the minister says. "We say, 'We needed him and he scored two goals last night.' We need to shift the mentality around that. We're losing out on kids in sports. They're not playing because parents are worried about their safety."

The likes of Lindros, MacLennan and Dryden add credibility to the gathering, but so, too, does the Governor-General. Johnston was a star athlete in several sports, most notably in university as captain of the Harvard hockey team.

The minister, who has been legally blind from birth, won three bronze medals as a Paralympic swimmer, one at the 1988 Games in Seoul and two in Barcelona in 1992. As a parent of four active children between the ages of 4 to 19, Qualtrough appreciates the worry of parents. And as a former director of the Canadian Centre for Ethics and Sport and vice-president of the Americas Paralympic Committee, she has known dozens of athletes battling through concussion. Her own senior policy adviser, coincidentally, has been off work since late summer because of a concussion from an accidental fall.

"It does bring some credibility to the discussion," she says. "In the world I live in around disability sports, the people are risk-takers. If you look at a Paralympian who's a skier, they probably got injured doing high-risk [activity].

If you meet a wheelchair rugby player, they probably got injured in a diving accident. These are high-risk-taking individuals who are prone to these high-risk sports. There's a personality type, and a mentality around it that can be dangerous."

The various sports ministers - provincial and territorial as well as federal - meet every second year around the time of the Canada Games. The next scheduled meeting was for Winnipeg next summer, but Qualtrough has already held a meeting of all her counterparts, in Lethbridge, last June.

"Mainly because of this issue," she says.

The group left the Alberta city with a firm commitment to address health issues, and concussions specifically, related to sport and recreation. When the ministers do meet in Winnipeg, they hope to be closer to drafting a pan-Canadian policy that would include education and return-toplay protocols set by the Public Health Agency of Canada.

"Some really good work is being done," the minister says, "... but I don't think, with all due respect, that there is an overarching harmonization or plan. I'm hoping what will come out of this is we'll all be steering the ship in the same direction."

What she is trusting comes out of the Governor-General's gathering and the political initiatives underway is nothing short of "a culture shift in sports where it will be okay to sit out a game or two because that's the responsible thing to do, and because [that's what] good athletes do.

Then our role models will start doing it, and then our kids will start doing it. And this culture shift will have happened.

"I just don't want kids to have sport experiences. I want them to have good sport experiences.

"We need to act. This is a huge deal for sport."

Associated Graphic

Carla Qualtrough, Minister of Sport and Persons with Disabilities, seen in July, says there needs to be more of an effort to remind kids 'it will be okay to sit out a game or two' because of a head injury.


Canada invokes hero of the past to build a brighter future
Tuesday, December 6, 2016 – Print Edition, Page S1

VANCOUVER -- Al Charron's training regime for the 1991 Rugby World Cup was of the do-it-yourself variety.

Charron, in his mid-20s, lived in Ottawa, far from most national team players in British Columbia.

He focused on cardio: he would run at his old high school and, on some winter days, he'd jog down Bank Street with skates over his shoulders to the Rideau Canal and skate the rest of way to work at Natural Resources Canada.

"You make do," said Charron.

"It's truly Canadian. You do what you've got to do to get fit."

At the 1991 World Cup, Canada's 15-a-side rugby team delivered its best-ever performance. Canada reached the quarter-final, where it lost to New Zealand. In the match, Charron plowed through three New Zealanders for a memorable try.

Charron is one of the greats of Canadian rugby, but the game never really took off in Canada during the years he played. He retired in 2003. In the years since, however, the sport has gained some ground. It has been buoyed recently by the inclusion of rugby sevens in the Olympics and the success of Canada's women's team, capped by a bronze medal at the 2016 Rio de Janeiro games.

Now, Rugby Canada is making a big push to capitalize on the momentum. Backed by the federal government and Bay Street donors, Rugby Canada has started construction of an $8-million national training centre in the Victoria suburb of Langford, where the organization had previously built some facilities.

Tying together the past and future of Canadian rugby, it will be named the Al Charron Rugby Canada National Training Centre.

"It's massive. It was a missing piece," said Rugby Canada's Gareth Rees of the new training centre.

Rugby in Canada is centralized in the Victoria region but various national teams train in different places. The new centre will bring everyone together. The 19,000square-foot two-storey building will feature a large gym alongside meeting rooms and other things such as hydrotherapy to help deal with injuries. The official groundbreaking for construction was on Monday and it is set to open next September.

Charron embodies the spirit of Canadian rugby, said Rees, a former teammate. On the field, Charron, 6-foot-5 and 255 pounds, was a strong athlete and key player for Canada.

He captained the team 25 times and his 76 international matches is the most of a Canadian player.

Rees highlighted Charron's less-obvious play on the field.

"Simply put, it was the unheralded work that made other people look good," said Rees, today a Rugby Canada director and, as a player, the only Canadian in the World Rugby Hall of Fame.

The key backer of the new centre is the federal government, which announced $2.9-million of funding through Infrastructure Canada in mid-2015. The City of Langford contributed land worth $1-million and another $1.5-million will come from Rugby Canada, which will pay it back over 15 years. The remaining $2.6-million is in the hands of Rugby Canada's fundraising efforts, which are underpinned by two major donors in Toronto. Financier Bill Webb is contributing $750,000 over five years and financier Kevin Reed is putting up the same with several other people.

The training centre is essential for Canada's future success in rugby, said Webb, a Rugby Canada board member and recently retired as chief investment officer of Gluskin Sheff + Associates Inc.

"It's absolutely table stakes in the global game," Webb said.

Tim Powers, chairman of Rugby Canada, said: "When it comes to facilities and infrastructure, we're behind."

Rugby Canada still has to raise more money, and Webb is working on that campaign, too; Webb credited Charron for stoking interest in Rugby Canada and attracting donors to the organization, with projects such as a fund to support national team players.

"He's one of the great ambassadors of the game," Webb said.

While Canada has made gains in rugby, there is significant work ahead. Canada's women have shown what's possible: In the 2013 World Cup, Canada was second. And the sevens team is a perennial top-three power.

But on the men's side, competition is stiffer. The 15s team has won only one match of 12 in the past three World Cups, unable to advance past the pool stage. The men's sevens team has fared better, showing promise by finishing sixth in the 2013-14 season, but last season fell to 13th and didn't qualify for the Olympics.

To Charron, his hope is the new training centre will help elevate the sport in Canada, drawing new athletes.

"We'd still love to see rugby be a bigger sport in this country," Charron said.

Charron has always been the epitome of rugby's resilience in Canada.

In 2003, at 37, he planned to retire after the World Cup. He captained the Canadian team and was the oldest player in the tournament, playing after major knee surgery. In Canada's last match, against Tonga, Charron was clobbered by a shoulder-to-head tackle. He dropped to the field unconscious. Blood poured from his mouth.

He was carted off the field.

After 16 stitches in his lower lip and gums at the hospital, he returned to join his teammates at the hotel to mark the end of their tournament. Charron received a standing ovation.

"It was important for me to be there," Charron said. "I don't recommend for your last game to be stretchered off. But it could have been a lot worse."

Associated Graphic

Al Charron runs with the ball during a World Cup qualifying match in 2002 in Edmonton.


Wednesday, December 07, 2016


A Tuesday Sports story on rugby incorrectly said Gareth Rees was the only Canadian in the World Rugby Hall of Fame. While he is the only man, another Canadian, Heather Moyse, was inducted into the Hall this year.

Monday, November 28, 2016 – Print Edition, Page B8

Canadian National Railway: Flat fee changeover CN Rail adopted a new all-inclusive retainer in 2015, paying directors $35,000 (U.S.) a year in cash and $200,000 in share grants, but no longer paying meeting attendance fees. Under the new system, total pay averaged $378,363* (Canadian) a director in 2015, up 22 per cent from $311,303 in 2014. (CN pays directors in U.S. dollars but reports compensation in Canadian dollars, and said pay rose 6.5 per cent in constant U.S. dollars.)

CN said retainers were raised "given that they now apply regardless of the number of meetings attended by the directors." Royal Bank of Canada: Raising the retainer The bank adopted a flat-fee pay structure in 2010, paying a retainer of $185,000 in 2011 to cover all of a director's work during the year. There are no extra fees for attending meetings or sitting on committees, although committee chairmen get extra pay. The bank increased the retainer to $210,000 in 2014 and to $250,000 in 2016, for an increase of 35 per cent since 2011, citing growing responsibilities, greater time demands and the need to recruit internationally.

Goldcorp: Cutting director pay

In recent years, Goldcorp Inc. has made changes to temper its pay levels after total pay per director climbed 21 per cent to an average of $319,000* (U.S.) in 2015 from $264,000 in 2013. In 2015, the board introduced a cap on its annual grant of restricted share units, and in 2016 it switched from paying directors in U.S. dollars to paying the same face amount in Canadian dollars, representing a 28-per-cent pay cut based on the average exchange rate in 2015. The company said the changes align directors with shareholders.

Valeant Pharmaceuticals: Big fees but not for big shareholders

The troubled drug maker has never shied away from big pay packages, and pay for board members is no exception. Directors receive an annual cash retainer of $75,000 (U.S.), share units worth $375,000, and additional fees for sitting on board committees for total average pay of $490,000* per director in 2015. Total pay climbed significantly after Valeant merged with Biovail in 2010, with Biovail's premerger cash retainer set at $50,000 plus share units worth $110,000. Bill Ackman and Stephen Fraidin from Pershing Square Capital Management LP, Valeant's largest shareholder, opted to take no pay as directors after joining the board in 2016.

Open Text: Discretionary pay

Open Text Corp. pays its directors $50,000 (Canadian) a year in cash, but also provides a discretionary annual grant of share units. The company's shareholder proxy circular does not disclose the amount of the discretionary award in 2016. Instead, the compensation disclosure shows the total value of all equity awards, including cash fees that directors opted to take in share units. Total pay averaged $329,000* a director in fiscal 2016 ended June 30, up 12 per cent from $293,000 in 2015.

*Excluding board chairman, lead director and directors who didn't serve the full year.

Associated Graphic





Europe's youth-jobs crisis stokes generational divide
Saturday, November 26, 2016 – Print Edition, Page B1

PALERMO, ITALY -- Italy is a Group of Seven industrialized country. You would not know that in Sicily, the host of the next G7 summit, in May. If it were a nation, you could be forgiven for thinking it's a failed state.

The unemployment rate on the once-wealthy island is more than 22 per cent.

Far more shocking is the youth unemployment, at 56 per cent.

Additionally, many young adults have given up looking for work, meaning they're dropping off the job seekers' rolls.

Take Fabrizio Augugliaro, 30, graduate of a five-year mechanical engineering program at the University of Palermo. His job?

He plays the accordion on the street.

In the tourist season, pumping the squeezebox might earn him 30 ($43) in coins over a couple of hours.

"After I graduated, I looked for work - nothing," he said while smoking and drinking coffee in central Palermo's Piazza Bologni.

"He who has work blocks work for the young. The mentality here is a job for life, so the older workers don't want to risk bringing in younger competition for their jobs."

To be young in Sicily is to be without a job and living with your parents.

The same goes for many other regions of the southern European Union, and more than a few parts of the ostensibly rich northern EU, such as de-industrialized northern France and middle England.

Some 78 per cent of Italians aged 20-29 live with mamma and papa, according to recent figures from Eurostat, the EU's statistics agency.

The live-at-home figure in Britain is half that, but still high by North American standards. They do so not because their mothers' cooking is irresistible; it's because they can't afford rent.

At the height of the European crisis, in 2011 and 2012, disaffected youth, most of them without jobs or recently forced out of jobs by the deadly combination of recession and austerity, turned central Athens into a gigantic bonfire on several occasions.

Many other cities in Europe - Rome, Madrid, Barcelona and Paris, among them - were paralyzed by mass protests and strikes.

This anger and tension have helped to fuel the rise of the populist parties, including France's Front National, Germany's Alternative fuer Deutschland and Movimento 5 Stelle (5 Star Movement, or M5S), which is Italy's second-biggest national party and Europe's biggest elected anti-establishment party. The Brexit and Donald Trump victories have emboldened the supporters and leaders of these parties, one or two of which could form governments as Europe embarks on a series of elections, including the French presidential vote in April.

An October report by Mediobanca Securities analyst Antonio Guglielmi notes that nearly 50 per cent of voters in the 18-to-24 age group support M5S and that support for M5S among those age 54 or younger is 10 percentage points higher than it is for prime minister Matteo Renzi's ruling Partito Democratico, the centre-left Democrats whose power base is older workers and pensioners.

Italy is not so much divided by the traditional left-right political split as by age - wealthy oldsters versus the poor young.

"The country is rather split in the young-versus-old-people dichotomy," stated Mr. Guglielmi.

"Older people have secured their benefits, jobs and pensions and tend to preserve the status quo, voting [for] pro-establishment and traditional parties.

Younger generations are sitting on large economic uncertainty ... It is not just an Italian situation."

Indeed, a July Foreign Affairs magazine article by UniCredit's euro zone economist, Edoardo Campanella, said the young-old divide threatens to rip Europe apart. "As the young are pushed to the margins of society, Europe's gerontocracy is becoming not only financially unsustainable but morally unbearable," he wrote. "Striking a balance between the conflicting interests of the old and the young is therefore necessary to ward off explosive intergenerational tensions."

Italy, the euro zone's thirdlargest economy, is on the front lines of the youth unemployment crisis. Sustained economic recovery in Western Europe, let alone in Italy, is unlikely unless the Italians get their youth off the sofa and into the work force. Italy, whose economy is still substantially larger than Canada's, has been in recession or flat-lining since 2008.

Italian youth unemployment is about 38 per cent, almost double the pre-crisis level, though down from its peak of about 43 per cent. The regional disparities are extreme. The rate in Bolzano, the wealthy mountain area in Italy's far north, is only about 12 per cent, less than a third of the national rate and less than a quarter of the Sicilian rate. Italy's southern regions, collectively known as the Mezzogiorno, could be on a different planet.

Last year, the overall employment rate in Sicily - measured as the number of adults age 20 to 64 who were in the work force - was reported at only 42.4 per cent. That was the lowest in Europe, even worse than in perennial basket case Greece.

It seems that every young adult in Sicily is unemployed, or underemployed.

"I have a Sicilian friend who has a PhD in molecular biology and she does quality checks on food," said Roberta di Mauro, 30, who has a biology degree from the University of Palermo.

She fled Italy to find a job and surfaced in Brighton, England, where she works at the retailer Marks & Spencer. "I knew I had to leave or, at some point, I would be 35 and living at home."

Mariangela Salamone, 33, who has an industrial engineering degree from the same university, has bounced from one temporary job to another, all of them unrelated to her expertise and all poorly paid. Since Italy does not have a minimum wage, pay for unskilled or semiskilled labour is often heinously low.

She has not had work since last spring and says employment prospects for Italian mothers - she has a two-year-old son - are particularly grim. "The state does not pay for child care," she said. "In Italy, the grandparents are the child-care system and if you don't have willing grandparents who live close, you're in trouble."

The saddest story of Sicilian unemployment belongs to Norman Zarcone, whose suicide in 2010 instantly made him the face of Italy's lost youth generation. His death is still mourned in Palermo at public gatherings and in concerts dedicated to his memory.

Mr. Zarcone was a musician and PhD student at the University of Palermo. His specialty was the philosophy of quantum mechanics. In an interview, his father Claudio, a freelance political journalist, said his son grew increasingly frustrated by the failure to find any research work in the philosophy department; nepotism and budget cuts conspired against him. On the morning of Sept. 13, 2010, he flung himself out of a window at the top of the university's philosophy faculty.

"He killed himself at the university, not at home, to deliver a message," Claudio Zarcone said.

"He became the symbol of the generation without work, who have no opportunities because of nepotism. They are called the 'Norman generation.' " The tragedy is that the "Norman generation" is not limited to Sicily or even to southern Europe, where three countries - Greece, Portugal and Spain - sued for international bailouts during the height of the debt crisis (Spain's bailout was directed at the banks) and Italy came close.

Prospects for youth employment first started to deteriorate in the 1970s, as baby boomers flooded into the job market, greatly increasing the labour supply. At the same time, the wage gap between young and old workers began to widen.

After 2008, when the Great Recession hit, youth employment went into crisis mode pretty much everywhere, though less so in Canada and the United States than in Europe.

The youth jobless rates in the rich industrialized world in 2009, a year after the start of the crisis, climbed to shocking levels. France's went to almost 23 per cent, Italy's to 25 per cent, Spain's to 37 per cent, Sweden's to 25 per cent, Britain's to 19 per cent and the United States' to 17 per cent. For the 35 generally wealthy member states of the OECD, youth unemployment reached to 16.7 per cent in 2009, up from the pre-crisis level of 12 per cent.

The good news is that youth unemployment in almost every European country is off its peak, dramatically so in a few countries, notably Ireland, Czech Republic, and Iceland, according to Eurostat. Germany has been the standout winner. Its youth unemployment has actually decreased since the crisis and now stands at only 7 per cent, thanks to fortunes thrown at vocational training, an aggressive economic stimulus program and an export boom, which was fuelled by the cheap euro and which offset relatively weak domestic demand.

The bad news is that the decline in most countries has been modest, partly because the economic recovery itself has been underwhelming and young people, many of them on temporary contacts or no contracts at all, are easier to fire than the entrenched older workers.

In Norway, which is under pressure from the oil price collapse, youth unemployment has actually edged up in recent years. In Spain, the rate has dropped 10 percentage points in two years, but at 43 per cent, is still solidly in crisis territory.

France's youth jobless rate was 24 per cent in 2014. The figure today is unchanged. No wonder the popularity ratings of President François Hollande are on a Titanic run, reaching 4 per cent in November, a record low for a president since the Second World War.

David Bell, economics professor at Scotland's University of Stirling, said countries where consumer demand has bounced back as their economies did the same, such as Ireland and Britain, have seen the greatest reductions in unemployment. A flexible labour market - the ability to hire and fire easily - helps. "Southern Europe does not have flexible labour markets," he said. "Lack of demand in those countries was also made worse by austerity."

John Springford, director of research at the Centre for European Reform, a London thinktank, said countries that underwent painful internal devaluations - a wage-crunching exercise - have had better luck in reducing their jobless rates (Greece is the exception). In Britain, where overall unemployment hit an 11-year low of 4.8 per cent in October, real wages are down about 8 per cent since 2008. Real wages have not fallen in Italy, which helps to explain its terrible, post-crisis job-creation record and rapid de-industrialization.

Youth unemployment's pernicious factor is that the longer you're out of a job, the chances of finding a job diminish. It also means that any job you do find can carry a wage penalty. This is called the "scarring effect" and it can trigger depression, ill health and even suicide. "There is a wealth of literature showing that unemployment is a stressful life event that directly reduces individual wellbeing," Mr. Bell and David Blanchflower wrote in a 2011 report called Young People and the Great Recession.

"Unemployment increases susceptibility to malnutrition, illness, mental stress and loss of self esteem, and increases the risk of depression."

There is no easy solution to the high levels of European youth unemployment, since each country is burdened by made-at-home conditions that can impede job creation. Greece is still gripped by austerity. Italy is hopelessly weighed down by excess bureaucracy and regulations, a dysfunctional judiciary that makes contract enforcement nearly impossible, and the Mafia's influence in the south.

France also suffers from deadening bureaucracy and has had enormous problems integrating its immigrant populations, in which unemployment is rife.

Empty factories that will never be reopened litter northern Europe. Norway's prime source of income - oil revenue - is in rapid decline.

All hope is not lost. The European Central Bank's 80-billiona-month quantitative easing program is, finally, nudging up growth and inflation rates in the euro zone countries, suggesting that unemployment will not get worse. Austerity is in decline in some countries, such as Spain.

But there is no guarantee that youth employment will return to normal. Mr. Springford, of the Centre for European Reform, said governments "should end austerity and make guarantees into training or government-subsidized jobs."

Governments are running out of time. The United Nations' International Labour Organization (ILO) has drawn a direct line between social unrest and high unemployment; the memories of the riots and mass protests of 2011 and 2012, a few of them deadly, are still fresh. Recent images of unemployed youth in nearby Tunisia engaged in violent protests brought home the message again.

The populist parties have expertly exploited the lack of opportunity among millions of young people.

Beppe Grillo, the firebrand former comedian who leads Italy's M5S, which is polling at 30 per cent, wants a referendum on the euro in good part because he thinks the currency is killing Italian jobs. He has Italian prime minister Matteo Renzi on the run. Ahead of Italy's Dec. 4 referendum on constitutional reform, Mr. Renzi has been campaigning hardest in the job-free zones of the Italian south, where his support is crumbling while M5S's surges. "Those who dare, the stubborn, the barbarians will carry the world forward, and we are the barbarians," Mr. Grillo said, predicting that Mr. Renzi would lose the referendum and go on to lose the next election to M5S.

In Sicily, young people seem to be losing hope that the job market will revive. Almost every day, there is news of another employer shutting down.

Five years ago, Fiat (now Fiat Chrysler Automobiles), closed its Termini Imerese factory in Sicily, killing 1,600 jobs. For a while, call centres were coming on strong. "Sicily has 20,000 people in call centres, but now they're closing and going to cheaper places such as Albania and Tunisia," said Andrea Gattuso, the youth employment representative in Palermo for CGIL, the acronym for Italy's biggest trade union.

Adam Asmundo, chief economist for Fondazione RES, a Sicilian economic and civil research institute, says some smart young Sicilians are becoming entrepreneurial and launching tech companies but almost anyone with ambition is hitting the road. "The only thing they can do is get away, take a flight and go," he said. "The problem is that the ones who flee are the most creative and dynamic."

In Palermo, Fabrizio Augugliaro, the engineer who became a musician, is making his peace with his freestyle life on the street, playing his accordion for tourists and picking up musicteaching gigs here and there. His rent and meals are cheap and stress levels are low, he says, even if he often finds his work tiresome. "We are of the generation whose parents told us to get a university degree and all our problems would be solved," he said. "You know what? It wasn't true."

Associated Graphic

Fabrizio Augugliaro, a mechanical engineering graduate from the University of Palermo, became a street musician when he couldn't find work in his field. 'We are of the generation whose parents told us to get a university degree and all our problems would be solved,' he says. 'You know what? It wasn't true.'


A changing media landscape and a bid for an ad-free CBC
Saturday, December 3, 2016 – Print Edition, Page B1

At 4:29 p.m. last Tuesday, CBC News pushed out an e-mail alert notifying Canadians that they could watch Prime Minister Justin Trudeau announce his historic pipeline decision on But in a ritual familiar to frustrated consumers of online video everywhere, viewers who clicked on a link in the alert were taken to the website - and promptly shown a 30-second ad for Tim Hortons before being granted access to the news conference feed.

Ads have been embedded in CBC programming since its radio network came into existence in the 1930s, but this week the public broadcaster made a blockbuster proposal: It would happily leave the commercial sphere to its privately owned competitors.

All it wants is for Parliament to jack up its annual funding by a whopping 34 per cent, from $1.215-billion (in 2017-18) to an unprecedented $1.633-billion.

At a parliamentary hearing on Tuesday, Conservative MP Kevin Waugh said the proposal "blindsided everyone." And while critics were agog at the broadcaster's perceived chutzpah, CBC/RadioCanada insisted it was only responding to Heritage Minister Mélanie Joly, who said last spring that "everything was on the table" in a massive review of the country's $48-billion broadcasting, media and cultural industries.

"This proposal really focuses our work back to being a strong public service broadcaster who is completely different in its content and programming from everything else you have out there," said Hubert Lacroix, CBC/ Radio-Canada's president and chief executive officer, in an interview with The Globe and Mail this week.

The Canadian Heritage review comes as media organizations are in turmoil: Ad revenues are plummeting for traditional broadcasters and news organizations, while audiences are flocking to foreign-based online offerings that funnel relatively little money into domestic production. With a friendly government in office that has already increased annual funding by $150-million after years of cuts by the Conservatives (and their Liberal predecessors), CBC/RadioCanada has sniffed the wind and determined that now is the time to make its move.

The public broadcaster argues going ad-free will allow it to take bold creative risks akin to its well funded U.K. counterpart, the British Broadcasting Corporation, and create high-quality flagship TV programs for Canadians that can be exported to the rest of the world.

But while the Platonic ideal of an ad-free CBC has its champions, even among some of its most dependable critics, the size of the proposed bill has many doing a double-take. And some are warning the unintended consequences could be disastrous, particularly in Quebec. Advertising on CBC has a long and prickly history. A Senate report last year noted that, in the 1930s, the chairman of the then-new Canadian Radio Broadcasting Commission (which preceded the CBC) realized his "budget was far less than the $2.5-million that had been recommended [by the government] and he reluctantly turned to advertising to help make up the difference." Decades later, CBC executives still argue they do not get enough government support to fulfill their mandate.

This has led them to beat the drums for their ad business. In 2007, former CBC/Radio-Canada president Robert Rabinovitch told a parliamentary committee that "advertising plays a very important role in keeping your nose to the grindstone in terms of your relationship to your audience." In 2011, Mr. Lacroix said there "is no good public policy reason to eliminate or seriously reduce advertising on the TV services of CBC/RadioCanada. It does not detract from its public-broadcasting mandate."

But in recent years, with the business models of traditional media cratering and CBC expanding aggressively into online news and other digital services, executives at CBC's competitors have renewed calls for it to get out of the ad business.

(Last month, Globe and Mail publisher Phillip Crawley, among others, told a Canadian Heritage committee that CBC's online news business amounted to unfair competition for a struggling sector.)

So, this week, Mr. Lacroix adjusted his long-time position on ads, noting that he made his 2011 comments at a time when the political landscape precluded additional government funding.

Now, he says the pursuit of advertising is a corrosive influence. "Even if it's not the major driver of decisions we make, with respect to programming, initiatives, partnerships, there is a genuine concern that everything we do has a commercial aspect to it and has to contribute to the revenue line of CBC/ Radio-Canada in order for us to balance our budget and reinvest in the content we create every day."

Over the phone this week, Mr. Lacroix painted a picture of a public broadcaster that would be free to experiment in new forms - to be a leader in technological and creative innovation for the country's media sector.

(CBC is asking for an extra $418-million annually: $253-million in current ad revenue minus the $40-million it currently spends on ad sales, $105million for content to fill the time currently taken up by ads and $100-million to fund what it calls "new investments to face consumer and technology disruption.") "The radio environment could change substantially," Mr. Lacroix suggested, citing experiments in podcasting and other storytelling forms.

Though CBC programs dozens of TV, radio and online services, the greatest changes would likely be to its traditional TV networks, where it spends the bulk of its money.

"When you do a story on a 30minute window, a 60-minute window, you need crescendos, ups and downs, you need these peaks and valleys because you have ads and you have to exit and come back to it," Mr. Lacroix noted. Freed of those requirements, CBC can "challenge the authors to tell more complicated and different stories."

The binge-watching phenomenon has been driven by shows that rarely conform to the old models. Episodes of HBO's popular Game of Thrones, for example, run from 50 to 68 minutes rather than the conventional 44 minutes an hour, while Aziz Ansari's Netflix comedy series Master of None runs as long as 33 minutes, giving creators 50per-cent more time to develop story and character. "I think we can actually move storytelling," Mr. Lacroix said.

Still, not even CBC's supporters are uniformly in favour of the new proposal.

Last month, a group of longtime former CBC employees calling themselves Public Broadcasting in Canada for the 21st Century submitted a report to Canadian Heritage with a series of recommendations that includes a ban on ads.

But this week, one of the members said CBC doesn't need any additional government money. "They need to figure out what their priorities are, make some hard choices, learn to live within their budgets and then provide the programming that serves Canadians as citizens, not just as consumers," said Jeffrey Dvorkin, formerly the managing editor of CBC Radio News.

And the Association of Canadian Advertisers, an industry group representing companies that buy ads, has long opposed the notion of CBC going ad-free.

Its position has not changed.

"It is a no-win situation. It's no-win for taxpayers, and it's not a win for advertisers," ACA president and chief executive Ron Lund said.

Like Mr. Rabinovitch, he believes advertising keeps CBC accountable for producing quality programming, since attracting ad revenue depends on people actually watching the shows. "If they don't have the eyeballs, those programs die. They wouldn't die if the money just comes from taxpayers."

Mr. Lund also praised CBC's sponsorship activities, such as Kraft Hockeyville, which integrate advertisers within programming.

The ACA expects that some revenue would flow to other media companies, but not all.

"If there is not programming that is going to give you incremental reach - just taking that money and putting it into more ads on the same programs [where advertisers are already investing] on other broadcasters' channels - all you're doing is increasing frequency [of ads seen by the same people], you're not actually increasing reach [to more people within the targeted audience,]" Mr. Lund said.

Judy Davey, a former media buyer and long-time marketing executive at Molson Coors Brewing Co., is concerned the impact would be particularly acute in Quebec, where media companies would suddenly face less competition in selling their airtime. "You're taking away the second-largest [audience] share advertising vehicle," said Ms. Davey, who is now vice-president of media policy and marketing capabilities at the ACA.

"That would have a significant impact."

Broadcasting in Quebec is already more concentrated than in the rest of Canada. Frenchlanguage TV stations owned by Quebecor Media Inc. accounted for roughly a third of the francophone TV audience in Quebec in 2014-15, according to the CRTC's latest Communications Monitoring Report. Bell Media Inc. has about an 18-per-cent share through its French specialty stations, but CBC/Radio-Canada is the second-largest conventional network by audience share, with also close to 18 per cent. The closest competitor after that is Remstar Corp., which owns the Frenchlanguage network V as well as MusiquePlus, with an 8.7-percent share.

Not only would advertisers miss out on big-ticket shows such as Bye Bye - an annual satirical year-in-review show on Radio-Canada that drew almost four million viewers last year - but also the unique local and regional reach across the network. "An advertiser could only get the certain reach through some of the programs that they have in Quebec," Ms. Davey said.

Mr. Lacroix, though, is bullish.

Asked to rate how essential the proposal is, on a scale of one to 10, he said simply: "It's the most important piece of strategy and vision that we've put out in a very long time."

And if the government doesn't go along with that vision? "Then we will continue pushing for the public broadcaster, supporting it and trying to bring everybody back to the funding model for conventional broadcasters in this country - not only ours, CTV, TVA, V, Global, City - everybody has the same challenges right now. And unless you bring a solution to the whole of the market, Canadians are not going to be as well served as they are now."

Associated Graphic

Hubert Lacroix, president and CEO of CBC, responds to a question from Carmel Smyth, national president of the Canadian Media Guild, in Winnipeg at the 2015 CBC annual public meeting.




Surging pay for directors draws criticism
Companies paying more to attract top talent, but scrutiny of compensation lacking
Monday, November 28, 2016 – Print Edition, Page B1

There has never been a more lucrative time to be a corporate director in Canada.

Director compensation has soared over the past five years, outpacing the rate of chief executive officer pay growth. Yet unlike the intense focus on executive pay in recent years, director compensation has drawn almost no scrutiny during the same period.

Median pay for directors at 300 public companies in Canada climbed 30 per cent between 2010 and 2015, according to new data from Korn Ferry Canada and Patrick O'Callaghan and Associates. The rate of increase was highest at mid-sized and smaller companies, where median pay climbed by 98 per cent and 50 per cent, respectively, during the same period, while directors of large companies with over $10billion in assets saw a 24-per-cent raise.

Directors and board experts - even some major shareholders - say pay levels have risen to keep pace with growing workloads as directors face demands for tougher oversight in a growing array of areas.

But critics are starting to question whether the workload for the part-time jobs has grown enough over the five-year period to justify such large pay increases. Some worry board pay is being subjected to the same forces driving CEO compensation higher, including a desire to attract U.S. talent and a ratcheting up effect as companies compare pay with others and raise theirs to keep up.

"Part of the problem is companies are buying credibility through recruiting directors who have a certain pedigree," said Don Gray, chairman of the board of Peyto Exploration & Development Corp., who believes many large companies have raised pay levels too high.

"The problem is that pedigree typically means they are not big shareholders, and they are not terribly interested or capable in standing up to management."

More than 40 per cent of large Canadian companies have adopted a flat-fee pay model for director pay, most of them making the conversion over the past five years. In theory the model has the potential to limit payouts, but in practice many boards have seen pay rise under the system.

Under the flat-fee model, directors are paid a base retainer but are not given additional fees for each meeting they attend, which means pay is capped no matter how many meetings the board holds.

Canadian National Railway Co. introduced a new allinclusive retainer in 2015, paying a base of $235,000 (U.S.) in cash and shares, plus additional fees for sitting on committees. The railway company raised its base board and committee retainers in 2015 "given that they now apply regardless of the number of meetings attended by the directors."

The result is that total pay per director - excluding the board chair - rose 22 per cent in the first year under the new system, to an average of $378,363 (Canadian) a director in 2015 from $311,303 in 2014. CN said much of the increase was due to the falling Canadian dollar because it pays its directors in U.S. dollars, but reports compensation in Canadian dollars. In constant U.S. dollar terms, the company said pay rose 6.5 per cent.

CN corporate secretary Sean Finn said the new retainer was designed by an independent consultant after comparing compensation trends across North America.

"That review took into account our U.S. presence, the need to attract directors with extensive U.S. business experience, and trends in director pay in the U.S. and Canada," he said.

Mr. Finn said the flat-fee model streamlines and improves predictability of compensation while increasing transparency for shareholders.

Royal Bank of Canada introduced a flat-fee model in 2010, initially paying directors base compensation of $185,000 (Canadian) in 2011, then raising it to $210,000 in 2014 and to $250,000 in 2016 for a 35-per-cent increase between 2011 and 2016.

RBC board chair Kathleen Taylor said more than ever, board members have to be fully engaged, and said the flat-fee model simplifies compensation.

She said the model has worked well to reward the responsibilities of each director.

"Over the last decade, the workload, time commitment and expertise required of directors has definitely increased," Ms. Taylor said.

Canadian boards hold an average of nine meetings a year, according to Korn Ferry data, while directors on key audit and compensation committees meet an average of five times a year.

Committee meetings are often held in advance of board meetings so directors do not need to travel twice.

A 2014 survey of 120 corporate directors in Canada found they estimated they work an average of 304 hours a year, with most of the work coming outside of the boardroom in meeting preparation or in attending other functions.

With large Canadian companies paying a median of $180,000 a director in 2016, the pay works out to just under $600 an hour, assuming 304 hours are worked.

The amount is in line with pay for top board advisers such as senior lawyers, argues independent board consultant Patrick O'Callaghan.

"Directors are spending more time for sure, and they are definitely getting paid more, and as far as I'm concerned that's absolutely fair," Mr. O'Callaghan said.

"They're working much harder and I don't think it's out of whack at all."

Some major shareholders, including the Canada Pension Plan Investment Board, have pushed for higher pay levels for directors to professionalize the role.

Former CPPIB chief executive officer Mark Wiseman, who is now an executive at investment giant BlackRock Inc., has strongly advocated for current average pay levels to rise, saying shareholders should expect more from directors and should pay them more as a result.

"We keep saying people shouldn't be overboarded, that we should have people who are on fewer boards, not more boards," he recently told an audience of major investors at a Toronto event.

"Well guess what? We also have to pay them if we want high-quality directors and we want them to be aligned with our interests and we want them to make long-term decisions."

Other investors, however, are watching current trends with concern, warning that excessive pay can make directors fearful of rocking the boat and losing their coveted positions.

The Canadian Coalition for Good Governance, which represents most of Canada's largest institutional investors, has guidelines warning that director pay should not be so high "as to potentially compromise the independence of directors," said executive director Stephen Erlichman.

Mr. Erlichman said directors must be willing to resign on a matter of principle, and that freedom can be jeopardized when pay is too high or when pay programs contain retention provisions, such as share units that only vest if directors remain on the board for at least three years.

"What is reasonable depends on the circumstances," Mr. Erlichman said. "But it shouldn't be so high or structured in some way that it interferes with a director's ability to be independent and forthright and challenge management."

Pay levels have risen most rapidly at mid-sized and smaller firms over the past five years, and compensation consultant Ken Hugessen believes it is because they "are not so much on the radar screen," taking advantage of a lower profile to raise pay without garnering scrutiny from major activist investors.

Directors at "micro" companies (defined as having less than $1.5billion in assets) earned median pay of $110,500 in 2015, while directors of mid-sized companies earned $140,000 and directors at large companies with more than $10-billion in assets earned $180,000, according to Korn Ferry data.

The pay differences are not large considering there is often a major gap in workload, Mr. Hugessen argues.

"Smaller companies can have as few as four or five meetings a year, and there's a lot less work," he said. "It's probably a better deal to be a director on a smaller company than a big one."

Michelle de Cordova, director of corporate engagement and public policy at ethical mutual fund firm NEI Investments, said her firm does not typically invest in or monitor smaller companies, so pay trends at that level can be hard to spot. She believes there should be more discussion about creating say-on-pay votes specifically for director pay, giving shareholders an ability to protest unpopular practices.

The only other option, she said, is for shareholders to vote against board members themselves to protest inappropriate director pay decisions, a move she calls "the nuclear option."

"The issue with director pay is that they're actually paying themselves," she said. "There isn't really anybody beyond the shareholders who have oversight of directors pay."

Associated Graphic

Director pay has surged across Canada in recent years without an attendant increase in scrutiny applied to board remuneration.


First Nations turn to the courts
After Ottawa approves pipeline expansion, opponents still hope to stop it with legal arguments
Monday, December 5, 2016 – Print Edition, Page B1

OTTAWA -- When it comes to resource development and First Nations in Canada, it's usually not over until the Supreme Court sings.

Aboriginal communities in British Columbia are turning to the courts in hopes of succeeding where they failed with the Liberal government to block Kinder Morgan Inc.'s $6.8-billion Trans Mountain pipeline project.

Kinder Morgan and the government insist they are confident that the National Energy Board's review and Ottawa's broader consultation process will withstand court challenges. However, First Nations leaders and some lawyers say there are plenty of grounds to argue the Crown did not live up to its constitutional responsibility to consult and accommodate indigenous communities.

Several B.C. First Nations have applications pending before the federal court to quash the NEB's report recommending approval of Trans Mountain, and now they are reviewing their legal options regarding the federal cabinet decision itself and have until the end of this month to challenge it.

"There are multiple directions we can go along the legal routes," Rueben George, director of the Tsleil-Waututh First Nation's sacred-trust initiative to stop the Kinder Morgan project, said in an interview. "We're ready and confident. It's far from over."

Federal approval of the Trans Mountain proposal last week was greeted with elation in Alberta, as it gives the oil industry the prospect of finally gaining direct access to Asian markets for its crude exports. Combined with OPEC's deal last week to cut oil production in order to bolster prices, the Trans Mountain decision provided a glimmer of hope in an industry and a province that have been bludgeoned by the 30month-old oil price slump.

But the optimism is tempered by the knowledge that what the federal cabinet has given, the courts can take away.

Last week, the Supreme Court of Canada heard arguments in two cases involving indigenous communities that feel the government wrongly relied on the NEB to carry out consultations with them on resource projects. A ruling in those cases - expected in six months or so - could weigh heavily on Trans Mountain legal challenges.

In announcing the federal decisions last week, Prime Minister Justin Trudeau and Liberal cabinet ministers indicated the government had fulfilled its duty to consult and accommodate indigenous communities whose traditional territories will be affected by the project.

Kinder Morgan Canada president Ian Anderson said he expects legal challenges but is confident the company can break ground on the project by next September.

The company has agreements in place with First Nations covering more than 80 per cent of the pipeline's route.

"There'll be voices in every community that are going to have their opposition. First Nations communities are no different," he said.

Some First Nations leaders are vowing to take up direct action if their legal appeals fail. Thousands of "coastal protectors" will "do what needs to be done to Kinder Morgan," Stewart Phillip, president of the Union of BC Indian Chiefs, said in an open letter to the Prime Minister published in The Globe and Mail on Friday.

Indigenous people have long relied on the Supreme Court of Canada to protect their rights recognized in Section 35 of the Canadian Constitution even when the government does not, said Perry Bellegarde, National Chief of the Assembly of First Nations.

Mr. Bellegarde said he expects the courts to take into consideration the fact that the federal government has endorsed without qualification the UN Declaration on the Rights of Indigenous Peoples, which recognizes the right of aboriginal communities to exercise free, prior and informed consent over resource projects in their traditional territories.

The current standard in most cases is that the Crown has a duty to consult and accommodate indigenous communities over resource projects.

In assessing that duty, the courts have adopted a test of "reasonableness" in terms of the effort made by the NEB and the Crown, and have deferred to government in finding the appropriate balance between the rights of the indigenous communities and national interest, Thomas Isaac, a partner specializing in aboriginal law at Cassels Brock & Blackwell LLP, said in an interview.

He pointed for guidance to the federal Court of Appeal decision last June that quashed the former Conservative government's permit to allow Enbridge Inc. to build the Northern Gateway pipeline. In that ruling, the court said consultations conducted by Enbridge and the NEB had been adequate but that the federal cabinet failed to ensure indigenous rights were respected and accommodated after the NEB had made its recommendation to the government.

The court said the federal government could fix the problem by re-engaging with the First Nations along the Northern Gateway route, but the Liberals decided to kill the project because of environmental risks to the Great Bear Rainforest and northern B.C. coast. Ottawa had that Gateway case to guide its consultation efforts on Trans Mountain.

Some lawyers argue there are legitimate grounds to overturn the federal approval of the Trans Mountain project.

The Tsleil-Waututh live on the Burrard Inlet, which is also home to the Kinder Morgan terminal that would receive nearly 900,000 barrels a day of heavy crude from the oil sands and fill on average 24 crude tankers each month. Along with several other local First Nations bands, the Tsleil-Waututh argue the NEB process was seriously flawed because, among other things, the board did not allow cross-examination of Kinder Morgan experts on the likely environmental impacts that could devastate their communities that rely on local flora and fauna.

The government may have trouble proving it accommodated First Nations' concerns, given that it failed to make any changes to the 157 conditions recommended by the board despite ongoing complaints from communities, said Jessica Clogg, executive director and senior counsel at West Coast Environmental Law, a non-profit legal office.

And then there's the issue of consent. Courts have said that where indigenous communities have established clear title to the land through a treaty, they must consent to projects. Ms. Clogg suggested the Tsleil-Waututh and other First Nations may argue that they have effective title, and therefore must consent to the Trans Mountain project for it to proceed.

Associated Graphic

Jackie Andrew of Lil'wat First Nation burns sage during a march in Vancouver against Kinder Morgan's Trans Mountain project. Ottawa approved the pipeline proposal last week.


Fears of a domino effect if Italian bank's overhaul fails
Wednesday, December 7, 2016 – Print Edition, Page B1

ROME -- Italy's political turmoil could not have come at a worse time for Banca Monte dei Paschi di Siena, the big Italian bank whose overhaul seems on the verge of destruction, potentially spreading contagion throughout the fragile European banking industry.

The failure of the restructuring plan for the world's oldest bank - born in 1472 - became a distinct possibility, according to sources and several published reported, as soon as Italian Prime Minister Matteo Renzi announced his resignation early Monday, shortly after his resounding defeat in the referendum on constitutional change.

On Tuesday night, Reuters reported the Italian government is preparing to inject 2-billion ($2.8-billion) into the bank through the purchase of its subordinated, or junior, bonds. The move that would make the government the bank's controlling shareholder, with a 40-percent stake - once the bonds are converted into equity - an effective nationalization.

Reuters said bonds held by retail investors would be bought at face value so they would not suffer losses. Those bonds trade at a substantial discount to face value.

MPS, as the bank is known, had been negotiating with Qatar's sovereign-wealth fund to stump up about 1-billion, through a rights issue, of the 5-billion in new capital required to shore up the bank, which is Italy's third-largest lender. "MPS needs a cornerstone investor, but I doubt they exist any more," said Francesco Galietti, chief executive of Policy Sonar, a political risk consultancy in Rome.

Failure to find a private-sector solution could trigger a European bailout or outright nationalization, both highly costly scenarios.

MPS shares lost more than 4 per cent on Monday, the day after the referendum, taking their one-year loss to 87 per cent.

They rose slightly on Tuesday on the prospect of a potential bailout.

Mr. Galietti said it seems highly unlikely the Qataris or any other big-name investor would pump capital into the bank as the Italian government launches into the political unknown.

Italian President Sergio Mattarella on Monday asked Mr. Renzi, 41, the Leader of the centre-left Democratic Party, to remain in office until Italy's 2017 budget law is passed, expected by the end of the week.

After Mr. Renzi goes, Mr. Mattarella will seek an interim prime minster as the populist, Euroskeptic Five Star Movement, the opposition party that had encouraged a No vote in the referendum, lobbies for a snap election that could fulfill the party's ambition to form a government.

Five Star and the Democratic Party are polling roughly equally, at 30 per cent. Analysts and economists say the No vote and the political spasms it triggered will make it hard for any of the troubled Italian banks, including UniCredit, one of the world's biggest international banks, to raise capital. "We think a No vote makes it more difficult for Monte dei Paschi to find an anchor investor," Morgan Stanley said in a note.

The fear among bank investors and bank bosses is that MPS's recapitalization problems could damage other Italian and European banks. The Italian banks are already hobbled by weak profitability and 360-billion in troubled loans, equivalent to more than 20 per cent of gross domestic product, the highest level in Europe.

"The result of the constitutional referendum in Italy is a harbinger of renewed turbulence that could spill over from the political arena to the economy, with Europe particularly endangered," John Cryan, CEO of Deutsche Bank, said in a letter to employees that was widely published on Tuesday.

UniCredit alone wants to raise 13-billion in new equity. Its shares have lost 59 per cent in the last year, although they bounced up on Tuesday after Monday's postreferendum selloff.

MPS, which has endured more than five centuries of on-and-off plague, war and regime change from its base in Tuscany, has been in trouble since the 2008 crisis year and was the standout failure in the European bank stress tests of 2014 and 2016. In the past four years, it has burned through 8-billion in capital.

Wall Street's JPMorgan Chase and Italy's Mediobanca, along with Italian Finance Minister Pier Carlo Padoan, who may become the caretaker prime minister, have been trying to persuade the Qatar Investment Authority to prop up the bank's 5-billion recapitalization plan.

The plan included shifting some of the non-performing loans off MPS's balance sheet and the voluntary swap into equity of subordinated debt into bank equity. MPS, which is not commenting on the potential Qatari investment, said on Friday the voluntary debt swap had raised about 1-billion.

If the Qatari investment falls apart, which now seems likely, a bail-in or bailout, or a combination of the two, might be required. The former would see the remaining holders of the subordinated debt take substantial losses, or "haircut," on their holdings. The latter would see the Italian government ask the European Stability Mechanism (ESM), Europe's permanent bailout fund, for loans to recapitalize MPS and other poorly capitalized Italian banks. The ESM was used to support Spanish banks at the height of the financial crisis.

Megan Greene, Manulife's chief economist, said a bail-in "would be incredibly politically toxic for the government" because 65 per cent of MPS's subordinated debt is held by retail investors. The bail-in last year of four small Italian banks triggered a political backlash and the widely reported suicide of a retail investor in Banca Etruria, a Tuscan lender.

If all options fail, Italy might be forced to nationalize MPS, Ms. Greene said. "One thing is for sure - if I were Renzi, I would be happy to be far away from government when these decisions have to be made," she said.


LEAGUE OF ITS OWN Banca Monte dei Paschi's shrinking market cap belies the high number of non-performing loans it is struggling to clear. Here is how it compares to the much larger UniCredit and Intesa Sanpaolo:

Weak business investment casts cloud over strong GDP growth
Thursday, December 1, 2016 – Print Edition, Page B1

Canada's third-quarter gross domestic product report couldn't have come at a better time for the Bank of Canada, shining some light into some frustratingly foggy corners of the economy just as it begins wrestling with next week's interestrate decision. And while the central bank's confidence was surely lifted by the strong growth numbers, the report crystallizes that there's one critical economic battle that the country is still losing: How to awaken comatose business investment.

Economists went into Wednesday's GDP announcement from Statistics Canada believing the economy had bounced back strongly from a second-quarter slump that was widely seen as a temporary aberration, and they weren't disappointed: Real GDP grew at a 3.5-per-cent annualized pace in the quarter ended Sept.

30, the strongest quarter-toquarter expansion in more than two years. Statscan also upgraded its GDP estimates for each of the previous two quarters: The second-quarter contraction was revised to 1.3 per cent from 1.6 per cent, and first-quarter growth was raised to 2.7 per cent from 2.5 per cent. Putting the cherry on top, September GDP grew a better-than-expected 0.3 per cent month over month.

All of which was certainly welcome news for the Bank of Canada, which slashed its growth forecasts in October and had mused about an interest-rate cut, before deciding that the band of uncertainty surrounding its forecasts was so unusually wide, due to a litany of unresolved variables, that it needed clearer evidence. Among its list of uncertainties that were placing flashing asterisks on its forecasts: The new, tighter federal rules on mortgages; the impact of Ottawa's infrastructure stimulus and enhanced child benefits; the stalled recovery of exports; and the U.S. presidential election.

Since that time, only one of these big question marks received an answer - the result of the U.S. election. And if uncertainty was your problem, the election of Donald Trump was about the furthest thing from a solution to that problem.

In a news conference following Bank of Canada governor Stephen Poloz's speech in Toronto earlier this week - his last public comments before next Wednesday's interest-rate announcement - he intimated that the flow of economic data this week, especially the quarterly GDP report, might narrow that unusually wide band of doubt around the bank's forecasts. In some respects, anyway, the governor got some answers that he will like.

By pure arithmetic, the strong quarter, coupled with the prior quarters' upward revisions, put the economy ahead of where the Bank of Canada believed it would be at this point. Third-quarter growth alone was 0.3 percentage points higher than the central bank had estimated in mid-October. The central bank's GDP growth forecast for all of 2016, at 1.1 per cent, looks like a considerable undershoot; real GDP is already 1.2 per cent above its end-of-2015 level. And given the strength of the economy in September, it entered the fourth quarter with more momentum than anyone had expected; the bank's tepid 1.5-per-cent forecast for the quarter suddenly looks overly pessimistic.

All of this may mean that the output gap - the difference between what the economy is actually producing and what it is capable of producing at full capacity - may be meaningfully narrower than the Bank of Canada has estimated. Which would mean a return to full capacity, and thus a need to increase interest rates, may come sooner than we previously thought. Unquestionably, the bank still faces a long list of uncertainties; but at the very least, an economy that now looks to be ahead of the bank's pace will give it more of a cushion against the potential downside risks to its outlook, and significantly ease the case for a near-term rate cut.

Mr. Poloz will also take solace in the fact that the third-quarter growth rebound was driven in large part by exports, a perplexing sore point for the economy for much of the year. And the surprisingly strong householdconsumption numbers suggest that the federal government's increased child-benefit cheques, which kicked in for low- and middle-income families in July, are stimulating consumer spending.

But the business-investment picture casts one enormous cloud over all this sunshine.

Business gross fixed-capital formation fell 0.5 per cent from the second quarter, its eighth consecutive quarterly decline. Investment in machinery and equipment slumped 3.2 per cent, its biggest decline in five years. In September, wholesale sales of machinery and equipment slumped 3.7 per cent.

This persistent investment weakness, and the wide band of uncertainties that Mr. Poloz talked about earlier this week, are intertwined. Businesses remain hesitant to commit money to a future they can't adequately see. That has been the case throughout most of the post-recession era, and the numbers suggest that the latest set of uncertainties are feeding that reluctance.

With this in mind, perhaps the next key indicator for the Bank of Canada will be in the bank's next quarterly Business Outlook Survey, to be published in January.

The critical information now for Mr. Poloz will be not so much statistics but business sentiment - how the country's corporate sector is choosing to perceive the uncertainties, especially those surrounding the incoming Trump presidency. That will signal whether we can expect a round of business investment to reinforce and sustain the economic upswing - or whether the growth is doomed to stall from the chronic lack of corporate fuel.

Canada's path to Cuba: a new era, but old obstacles
Wednesday, November 30, 2016 – Print Edition, Page B1

The last of the fatigues-wearing Marxist revolutionaries may finally have shuffled off the stage, but Fidel Castro's death doesn't mean Cuba is poised to become a capitalist playground any time soon.

The Cuban leader's passing has removed only one impediment to doing business in the island's antiquated economy. Dilapidated infrastructure, from crumbling highways to wonky phone systems, remains an obstacle.

So does the country's stifling bureaucracy, fierce nationalism and odd dual-currency system, as well as a worrisome level of corruption. On top of all that, no one knows how hard a line U.S. president-elect Donald Trump will take on Cuba and what that may mean for its tourism industry.

A handful of Canadian companies, including miner Sherritt International Corp. and tour operator Sunwing Vacations, have demonstrated it is possible to make money in Cuba. But the hard reality is that CanadianCuban merchandise trade is barely a blip after decades of effort.

Canada imports copper and aluminum scrap, cigars, rum and frozen lobsters from Cuba. It exports wheat, legumes, chemicals, fertilizers and auto parts to the island. But in 2015, the total amount of merchandise trade between the two countries totalled only about $1-billion, less than 1 per cent of Canada's international trade.

While spending by Canadian tourists in Cuba may add another $700-million to that total, the bottom line is that anyone hoping to cash in on post-Fidel Cuba should brace for a long slog.

"There are [Canadian] companies that have been doing very profitable business here since the mid-1990s," said Gregory Biniowsky, a Havana-based lawyer for Canadian law firm Gowling WLG.

"But it takes patience to handle the bureaucracy and a willingness to negotiate."

While Mr. Biniowsky believes Cuba will see significant improvement over the next two to five years, others are more cautious.

"The business climate remains challenging," according to Export Development Canada, a Crown corporation that provides credit to exporters.

Gary Hufbauer of the Peterson Institute for International Economics in Washington, the coauthor of a book on how the United States can normalize relations with Cuba, predicts the Caribbean country will move only gingerly toward liberalizing its society so long as Raul Castro, Fidel's younger brother, remains in power.

Raul's "preferred option is to do the Chinese-style game of having more market forces but with one party remaining firmly in power and keeping political control," said Mr. Hufbauer, a former U.S. trade official.

The regime's desire to maintain control probably implies a continuation of Cuba's monetary scheme, in which most domestic workers earn non-convertible pesos while foreigners swap their dollars and euros for a parallel currency known as convertible pesos. The convertible pesos are pegged at parity to the U.S. dollar while the nonconvertible pesos trade for a fraction of that value.

The system "is completely wacko," Mr. Hufbauer said. "It amounts to a big tax on labour."

It's also a red flag to protectionist politicians like Mr. Trump, because it tilts trade in Cuba's favour by making U.S. goods very expensive for ordinary Cubans while simultaneously making Cuban labour very cheap from a U.S.-dollar perspective.

Other opportunities in Cuba also come with question marks.

For instance, foreign companies hoping to get in on the ground floor of key industries should ponder the fact that the Cuban military controls important sectors of the economy ranging from major hotels to electric power.

"It's essentially a state-owned economy with military people having the leadership positions," Mr. Hufbauer noted. "If there is ever a privatization, [the military leaders] would be poised to take over the firms in some kind of bargain-basement deals."

Mr. Hufbauer acknowledges that Cuba could receive a big boost if the United States ever allows its citizens to vacation freely in the country.

However, he says Cuban business remains highly inefficient, with a level of corruption higher than in most developed countries. "I think it's very hard to do business in Cuba without greasing some important palms," he said.

Transparency International, a non-profit group that tracks official dishonesty around the globe, rates Cuba's level of public-sector corruption as No. 56 in the world, just above Greece and just below Kuwait. That is well above some Latin American countries such as Brazil (No. 76) but far below others such as Chile (No. 23).

For his part, Mr. Biniowsky insists the level of corruption in Cuba is not all that different from other countries in its immediate vicinity. "If you're patient, and you're prepared to deal with the bureaucracy, you can do successful business here."

He argues that it's important for companies to establish a position in Cuba now, before rivals get there. Among the country's advantages are the highest level of literacy in Latin America as well as a low crime rate.

A lifting of the U.S. embargo could, practically overnight, provide a major boost to the country's fortunes, he says.

"Cuba is a very difficult country to do business in, but if you look at the per capita potential for growth ... it's one of the most promising of the emerging markets."

Associated Graphic

Business carries on as usual in Havana and Canadian companies should continue taking the same precautions they would before Fidel Castro's passing Friday night, as the trade climate retains its challenges.



'Crazy idea' to rent boardrooms turns Breather into startup star
Thursday, December 8, 2016 – Print Edition, Page B1

OTTAWA -- As he was getting his startup off the ground in early 2013, Julien Smith asked digital marketing expert Mitch Joel what he thought about his plan: to rent office meeting space by the hour over smartphones, like an Airbnb for boardrooms.

"I said, 'I have young kids, I can't invest in that,' " Mr. Joel said of his friend's idea. Mr. Joel thought the service would attract drug dealers and pornographers: "I thought it was a crazy idea, he'd never get insurance, what landlords would ... want that type of potential client coming in and out by the hour?

He proved me [wrong]."

On Wednesday, Montreal-based Breather Products Inc. established itself as one of Canada's pre-eminent startups, securing $40-million (U.S.) in a venturecapital financing led by Menlo Ventures, one of Silicon Valley's leading early-stage investors.

Menlo's $25-million contribution represents its single largest investment since it backed Uber five years ago.

The funding will enable Breather to keep building its rapidly expanding network of about 290 professional meeting spaces in 10 cities across North America that it rents on-demand via a mobile app.

"When Breather first [launched] ... people were giggling because predominantly when they think by-the-hour, they think motels," Menlo managing director Venky Ganesan said. "But what Breather has shown is some of the biggest companies in the world are using them" for meetings, including repeat customers Royal Bank of Canada, IBM, Apple and Google.

"It's offering a new alternative to people between their home and their work. Instead of going to a coffee shop or hotel lounge they can have a third comfortable space to have a professional meeting."

Mr. Ganesan added Breather's "net promoter score" ratings, reflecting customer satisfaction, are on par with those of Costco, Amazon and Apple.

But Breather faces hurdles not faced by other sharingeconomy services, raising questions about just how big its potential market could be.

Unlike Uber or Airbnb, which don't own or operate the cars and homes used by customers, Breather leases most of its spaces. That suggests the company will likely require continued heavy investment as it scales up, accumulating the kinds of costs that don't typically weigh on other software-based firms. In addition, the company cleans rooms after each use, amounting to an added staff expense.

It typically selects smaller spaces than standard corporate offices that are harder for commercial landlords to lease. "We just make them more rentable and way more efficient," Mr. Smith said.

Breather designs its spaces to look bright and contemporary, equipping them with standard features such as Wi-Fi, whiteboards and projectors. Customers get into the electronically locked spaces with unique access codes sent when they order. Space in Toronto - where Breather has 15 downtown locations after entering the market in April - rents for an average of $60 to $65 an hour.

Most Breather locations are in New York and San Francisico.

Despite the high sunk costs to build out its network, Mr. Smith said Breather can break even at occupancy rates well below 50 per cent. "It looks like a joke if I were to write it down" because that rate is so low, he said. He declined to share specifics other than to say the company is earning "a material number of millions" of dollars in revenue.

Before starting Breather, Mr. Smith, 37, was a self-styled trendspotter who had built an unlikely career as a podcaster, tech writer and business book author. "I was basically faking it til I made it," he wrote in a 2014 blog post.

His early expertise in socialmedia marketing made him a rising star on the corporate circuit, where the tattoo-covered, brashly confident Mr. Smith charged Fortune 500 clients $10,000-plus for speeches after the 2010 publication of the bestselling Trust Agents: Using the Web to Build Influence, Improve Reputation and Earn Trust, which he co-authored.

While travelling, Mr. Smith often found he had nowhere to go other than downtown Starbucks. "Sometimes, I wanted to be out of my home but not in a coffee shop," he said. "I wanted that [other] space to be wherever I am." Thus, the idea behind Breather was born.

He co-founded Breather with Caterina Rizzi, a friend and professional designer who developed the look of the spaces.

Breather tested its concept in Montreal before opening in New York in 2013 and raised $33-million in venture backing prior to Wednesday's announcement from investors including Real Ventures, RRE Ventures and Peter Thiel's Valar Ventures.

Other startups in the ondemand meeting-room-rental business have emulated Airbnb by getting existing office leaseholders to let out unused meeting rooms. Mr. Smith said he shunned that approach as Breather would be constrained by the tenants' own needs for its meeting spaces. Breather also competes against publicly traded meeting-room rental firm Regus Group PLC as well as WeWork Cos., which has raised close to $1.7-billion in venture financing.

While Breather uses a range of marketing tools, "by far the most powerful driver is word of mouth," Mr. Smith said.

Associated Graphic

Breather founders Caterina Rizzi and Julien Smith tested out their company's concept in Montreal before opening in New York in 2013.

Oil patch mulls return to spending
Friday, December 2, 2016 – Print Edition, Page B1

CALGARY -- The oil industry's new-found optimism is about to be put to the test as one of Canada's biggest producers decides whether to revive a stalled oil sands project.

Cenovus Energy Inc. will decide next week if it will go ahead with an expansion at its Christina Lake project in northeastern Alberta, which it shelved as oil prices collapsed in 2014.

The decision comes in the wake of two big changes seen as highly favourable to a downtrodden industry - Ottawa's approval of pipeline expansions to the B.C. coast and U.S. Midwest and a deal among members of the Organization of Petroleum Exporting Countries to cut production from record levels.

The developments point to increases in transport capacity and access to new markets for Canadian crude, and big jumps in corporate revenues, assuming OPEC members stick to their new output allocations to keep global oil prices rising. They follow two years of contraction that have taken a heavy toll on corporate fortunes and employment levels in Western Canada.

Calgary-based Cenovus is due to announce its 2017 budget on Dec. 8. Chief executive officer Brian Ferguson has indicated a modest capital spending increase from this year's $1.05-billion is in the offing. It is also expected to decide on the fate of the 50,000-barrela-day Christina Lake expansion.

A company spokesman declined to say whether the project is a go, but suggested conditions are improving. It is one of 13 backers of the Trans Mountain expansion from Alberta to British Columbia. "One pipeline project alone doesn't make a market, but it is a very positive step forward for sure," spokesman Brett Harris said on Thursday.

U.S. oil prices have surged 14 per cent since Monday as markets cheered OPEC's return to discipline on production levels.

West Texas Intermediate settled up $1.62 (U.S.) at $51.06 a barrel on Thursday.

"The oil price being higher is a positive thing. I would just say that it's a ways off before we understand if this cut's actually going to happen and how long it's going to be sustained," said Jackie Forrest, vice-president at ARC Financial Corp. "So I wouldn't say it takes the uncertainty from prices or the concerns around volatility. You're still going to be cautious as the CEO of a company."

This week's federal approval of Kinder Morgan Canada Inc.'s $6.8-billion (Canadian) Trans Mountain expansion and Enbridge Inc.'s $7.5-billion Line 3 replacement project to the United States promises to solve long-standing export snarls that have weighed on prices for Canadian oil - assuming the projects are built.

Ms. Forrest and others said pipeline approvals are potentially positive for future developments, but the route to new markets is still a long one, given the risks of legal challenges by First Nations or environmental groups as well as other delays.

"Until you see that pipeline under construction, you've still got uncertainty," she said.

Still, even if the oil-price rally sputters, oil sands projects currently under construction stand to add more than 300,000 barrels a day of new capacity over the next two years, according to consultancy group Wood Mackenzie.

Few are predicting a return to bumper budgets. Overall capital spending in the sector is pegged in the $9-billion (U.S.) to $10billion range next year, down sharply from about $29-billion in 2013, when oil topped $100 a barrel, according to the consultancy.

Some producers are focused on finishing partially completed projects. Last month, Canadian Natural Resources Ltd. said it would revive its Kirby North development. It had shelved the 40,000-barrel-per-day project last year, despite spending $700million (Canadian). Remaining costs are pegged at $650-million, with startup targeted for 2020.

More such projects will see the light of day once U.S. crude prices find stability around $50 (U.S.) a barrel, with expansions to existing steam-driven plants requiring prices closer to $60 to generate healthy returns, Royal Bank of Canada said this week in a research note.

The industry has benefited from falling development costs and a weakening Canadian dollar even before the recent developments added new optimism, said Samir Kayande, analyst at RS Energy Group in Calgary.

"You combine those two and relative to where we were in 2014, you get a 25-per-cent lift on your revenue and maybe a 10-per-cent or 20-per-cent reduction in your costs. All those things are material and they significantly reduce the break-even oil price that you need to make a new investment decision," Mr. Kayande said. "This is absent of commodity price and absent of pipelines."

However, light crude prospects, such as those in the Permian area of Texas, offer quicker payouts and fatter margins than anything available in the oil sands, so for many companies those will be much more attractive to develop, he said.

Saturday, December 3, 2016 – Print Edition, Page F1

VIENNA -- At the start of it all, before the uprising and the civil war - and the refugee exodus and the terror and the hatred that have sprung from it - a 14-year-old boy stood giggling with a can of black spray paint, pointing it at the wall of his school in southern Syria. Naief Abazid had no inkling that he was about to launch a revolution, or anything else that has followed. He was just doing what the bigger kids told him to. Trying to make them laugh. "It's your turn, Doctor Bashar al-Assad," he painted, just under the window of the principal's office of the all-boys al-Banin school in his hometown of Daraa. The date was Feb. 16, 2011

It was an incendiary political idea - suggesting that Syria's Baathist dictatorship would be the next to fall after the Arab Spring revolutions in Tunisia and Egypt, written by an apolitical teenage prankster. Painted on a cool and dry winter evening, it would improbably set in motion a chain reaction of events that continue to rock the Middle East - and the world.

"It was something silly," Naief told me as we sat in a McDonald's at the train station in Vienna, more than 3,000 kilometres away from where it all began. It was his first retelling (other than his interview with Austrian immigration authorities) of what happened that day in Daraa, and his life in the five harrowing years since. "I was a kid. I didn't know what I was doing."

A neighbour who came to the school that night to see the graffiti calls those words - combined with the regime's violent reaction - "an explosion." The fallout is still landing all around us.

By most estimates, more than 400,000 people have been killed, and the war in Syria rages on, the Assad regime now obliterating large swaths of the city of Aleppo.

Millions more have been driven from their homes, with hundreds of thousands - including Naief - seeking refuge in Europe, inducing an epic clash of cultures on the continent and the startling rise of politicians from the antiimmigrant far right. The so-called Islamic State, the ugliest outgrowth of Syria's conflict, has battered the West's confidence with attack after murderous attack.

And the initial hope generated across the Middle East and North Africa by the Arab Spring uprisings has been strangled by a violent new reality born in Syria.

Naief's graffiti has had an effect on our world similar to the assassin's bullet fired in Sarajevo at the outbreak of the First World War.

Without Naief's act of teenage impetuousness - and the Assad regime's violent reaction to it - would the extremist caliphate have been declared? Would the refugee crisis be on the scale it is now? Would the United Kingdom - spurred by campaign posters of streams of refugees heading north - have voted to leave the European Union? Would the antiimmigrant message of Donald Trump - who has spoken, without evidence, of possible "Trojan horses" among the Syrian refugees accepted into the United States - have resonated quite so deeply with the American electorate?

In an effort to understand the moment that we're in, I set out to find the teenagers who were at the al-Banin school the night it all began. It became a months-long odyssey that would take me to a half-dozen countries as I tried to gradually earn the trust of key figures, and to corroborate their stories as much as is now possible.

Naief himself was arrested, tortured for weeks, released from prison, celebrated as a hero, shot in the arm, and then whisked into exile - all in the first year after he spray-painted that school wall. His life since has been no less terrifying: He and his family lived in poverty as refugees in Jordan, returned for a time to a shattered Daraa, and then Naief fled north via checkpoints that brought him face-to-face with fighters of Islamic State. He anonymously joined the hundreds of thousands of Syrians who fled to Europe in 2015, and was recently granted permanent residency in Austria.

But he still wonders out loud whether a teenager from a devoutly Muslim and conservative province of Syria can ever fit into the sexually liberal, porkand alcohol-consuming society around him.

Meanwhile, Austria and the rest of Europe are increasingly wondering the same thing.

And Naief was not alone in paying directly for his act of adolescent defiance. Determined to stamp out what it saw as a revolutionary spark, the Assad regime would arrest 22 other boys in connection with the graffiti. The Globe and Mail has learned that at least three of them are now dead, and only half remain in Syria.

Their story provides a grim snapshot of the unparalleled damage that five years of war have done to the country and its future - as do the tales of other Syrian refugees I interviewed for this piece. Among them: Abu Fuad, a friend of Naief's who joined him at the school that night, and who has since found his way to Germany; Ahmad Abazid, a jeweller, now living in Sweden, related to several of the 23 boys; and a young man named Jamal, himself a thorn in the side of the regime, and now settled with his family in Jordan.

Naief Abazid - a short, thin young man with slicked-back black hair and a stubbly beard - is stunned by all that's resulted from his impulsive act five years ago. "I was the youngest one in the crowd. They told me what to write," Naief recalled, sipping on a coffee and sharing a McDonald's pie.

"I only realized it was serious when I got to prison."

Naief went to school as usual on Feb. 17, 2011. He was sitting in class when he heard the hall monitor take a call asking for Naief to be brought to the principal's office. When he got there, he was introduced to a man who said he was from the Education Ministry. Naief says he immediately knew from the man's accent that he was from Mr. alAssad's home province of Latakia.

In fact, Naief was in the hands of Syria's feared internal security service, the mukhabarat.

The officer said he wanted to talk to Naief about some graffiti on the school wall, and told the boy to follow him outside. (Naief later realized that he had written his name a year earlier on another part of the school property; that sample of his handwriting was all the evidence the security forces would need.)

The boy was pushed into a waiting car and handcuffed. As soon as the car left the school grounds, three other men started to hit him. "They were so harsh," he says, cringing at the memory.

"They punched me, slapped me, elbowed me."

It was only the beginning. At the mukhabarat office, Naief was hung by his wrists from the ceiling, his feet dangling several inches off the ground. Then, the security men started to whip the wispy 14-year-old with thick cables. Through his pain, the boy counted 40 strokes.

Next, his body was folded into the inside of a tire - a particularly cruel piece of torture already made infamous by the Assad regime's interrogators - and rolled forcefully down a hallway until the tire slammed into a concrete wall with Naief inside.

For the next 10 days, he was kept in an isolation cell that he remembers as a metre and a half long and just a half-metre wide. Every hour or half-hour, he was subjected to another session in the tire, or another round of lashes.

"I kept saying, 'I don't understand,' " Naief tells me across the table, hunching his shoulders together as he recounts his torment. "They just said, 'Don't worry, you will.' " After several hours, he gave in and confessed that he had indeed written the words about Mr. al-Assad on the wall of al-Banin school.

"They said, 'Do you know what it means?' "I said, 'No.' " Eventually, he gave his torturers the names of five boys who had been in the crowd that urged him to write the graffiti. Those five would in turn be arrested and tortured into giving up the names of others who had been at the school that night, as well as some who weren't, until there were 23 boys in custody.

After he had given the five names, Naief and the other boys were driven to another security office, this time in the nearby city of Suwayda. Ten days later, they were transferred to a building that all Syrians had heard horror stories about, the Palestine Branch mukhabarat headquarters in the Syrian capital of Damascus (the same place that Canadian citizen Maher Arar was held for 10 months and tortured into a false confession almost a decade before).

Naief remembers a sign on the wall of the Palestine Branch: "Those who enter here are missing. Those who leave are newborn."

Inside, the "interrogation" of Naief Abazid and the other boys began anew. He says he was forced to beat other political prisoners with his fists. "If I didn't beat them," he says, "they would beat me."

Naief felt scared and alone. He remembers an encounter with an elderly prisoner who burbled nonsense. The man had been in the Palestine Branch so long that other prisoners whispered that the guards had forgotten when or why he had been arrested. Naief despaired that he might also never see the outside of the prison again.

But, despite his despair, the disappearance of so many of Daraa's children into the hands of the security apparatus was something residents - though used to living in fear of the regime - proved unwilling to tolerate.

While Naief and his friends were being tortured, a movement to set them free was stirring outside the prison walls.

The uprising had begun.

The modern Syria in which Naief and his fellow students grew up is the creation of a secret 1916 deal between Britain and France that divided up the southern territories of a crumbling Ottoman Empire between the two European powers. The Sykes-Picot Agreement, as it's known, paid little heed to the ethnic and religious groups that lived inside the new borders it created.

The defining feature of the map that diplomats Mark Sykes and François Georges-Picot created is a long, almost ruler-straight line stretching east from the River Jordan to the mountains of northwestern Persia. Everything north of the line - today's Syria and Lebanon - was called Area A, and put under French control.

Everything to the south - Iraq and Jordan - became the Britishrun Area B.

Despite the insensitive mapmaking, the French colonists arrived in Syria with a more nuanced understanding of the lands they were inheriting. They created five mini-states, each with a separate administration.

Critically, Sunni Muslims - who then made up three-quarters of Syria's population (Naief and his family are Sunnis, as were the other boys at the al-Banin school) - were appointed to rule over the mini-states of Damascus and Aleppo.

Meanwhile, a separate Alawite State was created in the coastal Latakia region, where the minority Alawi sect, an offshoot of Shia Islam, was predominant. (There were also other states for the country's Druze and Turcomen minorities - the latter mini-state is now part of Turkey - as well a multiconfessional entity that became today's Lebanon.)

The divisions within Syria disappeared when the country gained independence after the Second World War, the old sectarian lines seemingly erased by a pan-Arab nationalism that swept through the region.

But independence was followed by six military coups over the next 22 years.

The last of those, in 1970, brought Bashar's father, Hafez alAssad, to power. Although a member of the supposedly secular (and pan-Arabist) Baath Party, Mr. al-Assad brought an end to those two decades of turmoil by appointing loyalists to all key positions in the military and security services - nearly all of them members of the al-Assad family's Shia-offshoot Alawite sect. In effect, the Alawite State had taken over the whole of Syria.

The fundamentally sectarian nature of the Baath Party regime, and thus its opponents, was something I and many Western analysts had badly underestimated until the recent civil war began. Although I had been banned from reporting in Syria back in 2007, following a trip to Damascus during which I had written about dissident writer Michel Kilo, I nonetheless saw the regime as badly atrophying, an edifice that would collapse if given a good shove. As the Arab Spring spread from Tunisia to Egypt, I privately predicted to friends that Syria's government would be the next to fall - and swiftly.

What I miscalculated was how hard Mr. al-Assad and his fellow Alawis - terrified of the fate they expected under Sunni rule - would be willing to fight for what they had. (Many Christians and other minorities, meanwhile, unnerved by the appearance of extremist Sunni groups - most notably the Islamic State - have also backed the Assad regime.)

Critically, Iran and Saudi Arabia - the great Shia and Sunni powers of the Middle East - also saw Syria through sectarian lenses of their own.

Predominantly Shia Iran viewed the Assad regime as critical to its ability to supply Lebanon's (Shia) Hezbollah militia, and thus keep pressure on its most-hated enemy, Israel.

The Saudi rulers in Riyadh, by contrast, feared the "Shia Crescent" that they saw emerging across what had long been a Sunni-dominated Middle East - a belt stretching from Hezbollah's heartland in the suburbs of Beirut; through Damascus; to Baghdad, where pro-Iranian forces had emerged dominant following the 2003 U.S. invasion to topple Iraq's Sunni dictator, Saddam Hussein. The rise of a Sunni-led government in Syria would empower Saudi Arabia's friends in Lebanon and Iraq as well.

The Saudi monarchy, along with Sunni allies Turkey, Qatar and Jordan, began sending money and weapons to anyone willing to fight against Mr. al-Assad's army. In this war, all those amenable to fighting for the Sunni side against the Shias were initially seen as friends, even if those new "friends" were affiliated with alQaeda, or the nascent Islamic State.

The interventions of Iran and Saudi Arabia (along with halfhearted U.S. aid to anti-Assad rebels whom the Americans believed were sufficiently "moderate") would quickly turn the 2011 uprising into a bloody struggle for the future of the entire region.

Beyond its brazen poke at a paranoid dictator, it was the timing that made Naief's graffiti so inflammatory.

Two months earlier, on Dec. 17, 2010, a young Tunisian street vendor named Mohamed Bouazizi had been accosted by a policewoman, who confiscated the fruits and vegetables he was selling because Mr. Bouazizi lacked a vendor's permit. Usually, Mr.

Bouazizi would have paid a bribe, and carried on with his day. But that morning the 27-year-old had no more money. He bought a canister of gas, doused himself with it, and lit himself ablaze outside the local governor's office.

Arab youths across the region - frustrated with and bored by the corrupt dictatorships they had grown up under - immediately understood the rage and hopelessness that Mr. Bouazizi expressed with his gruesome final act.

The regime in Tunisia, which would collapse when President Zine El Abidine Ben Ali fled into exile after four weeks of protests, was only the first domino to fall. Demonstrations soon erupted across much-larger Egypt, with tens of thousands marching in Cairo and other cities against the repression and torture of Hosni Mubarak's military regime. "They were the best days of my life," Hossam el-Hamalawy, an Egyptian activist and journalist, said of the brief period when positive change seemed possible across the Arab world.

But soon after Naief Abazid's spray-painting of that school wall, the Arab Spring began to darken into a renewed winter.

Feb. 17 - the day Naief was seized and beaten by the mukhabarat in Daraa - was dubbed a Day of Rage in Libya, the Moammar Gadhafi dictatorship flanked by Tunisia to the west and Egypt to the east. A small crowd of protesters assembled in the eastern city of Benghazi, and were immediately confronted by the regime's police. By the end of the day, 14 people were dead. Police opened fire again the next day at funerals for the Feb. 17 martyrs, and Libya's revolution slid quickly into civil war.

That day also saw the first small protests in the Syrian capital of Damascus. A crowd gathered near the city's ancient covered market to protest the beating of a shopkeeper by police. "The Syrian people will not be humiliated!" the people chanted. Anyone watching would have recognized the case as similar to Mr. Bouazizi's, and the chants as borrowed from Tunisia and Egypt.

The demonstration in Damascus lasted only a few hours before it peacefully dispersed following the arrival of the interior minister, who promised an investigation of the event. In the weeks that followed, the regime would promise more changes, and even an end to the country's 48-year-old state of emergency, which had been introduced following a 1963 coup, stripping citizens of most basic rights and handing wide powers to the security services.

The proposed reforms, had they been introduced earlier, might have set Syria on a very different course. But on the ground in Daraa, it was too late for political promises.

As days turned into weeks, the parents of Naief and the other boys became frantic, their requests to see their sons met with a stony and horrifying silence.

A delegation of local elders demanded, and eventually were granted, a meeting with Atef Najib, a cousin of Mr. al-Assad's who was in charge of the regime's security apparatuses in Daraa. Spooked by events in Tunisia and Libya, he had set up extra police checkpoints in the city even before Naief wrote his daring graffiti.

What Mr. Najib said to the elders on Feb. 26 was at least as provocative as the words Naief had painted on the school wall.

"Najib told the people, 'Forget about your children. Go have new kids. If you can't, send us your wives and we will get them pregnant for you,' " recalls Ahmad Abazid when I speak with him in early September. A 32-year-old jeweller who worked at his family shop in the centre of Daraa before the conflict, Ahmad is another of the hundreds of thousands of Syrians who have fled their country in the five years since. (Abazid is a very common family name in southern Syria and northern Jordan; Ahmad and Naief are only distantly related, though Ahmad has closer family ties to some of the other graffiti boys.)

It took another three weeks for the anger to boil over into action.

On March 18, residents of Daraa gathered at the city's Omari Mosque for a protest march that came to be dubbed Daraa's own Day of Rage. (There were also small demonstrations in Damascus and other cities that day.)

After Friday prayers, the crowds headed toward Mr. Najib's fortified office in the centre of Daraa, chanting for the release of the 23 boys, as well as of other political prisoners.

Their grievances, then, were still local: There was no talk yet of challenging the regime. Along with freeing the students and other prisoners, "we just wanted to get rid of Najib," says Abu Fuad, a student at the school and a friend of Naief's who joined the demonstrations. He was 18 when it all began. When we meet, he's a frustrated young adult in faraway Germany.

But everyone knew what the alAssad clan was capable of when it felt its grip on power under threat. The city of Daraa and the surrounding province were inhabited by deeply conservative Sunni Muslims, a population naturally hostile to the Baathist regime with its Alawi leadership.

The last time that Syria's Sunnis - spearheaded by the Muslim Brotherhood, a transnational movement that pushes for government based on the Koran - had risen up against the regime was in 1982, in the central city of Hama. Bashar al-Assad's father ended that rebellion by obliterating much of the city with warplanes and tanks, killing upward of 10,000 people.

Three decades later in Daraa, the regime would again resort to heavy-handed force. Soon after marchers demanding the release of Naief and the others began hurling rocks, police snipers opened fire, killing two protesters and giving the nascent Syrian Spring its first martyrs.

"It just made us angrier," says Abu Fuad, who was only metres away when the first protesters were shot.

"The kids were so brave," says Ahmad Abazid. He had gone to al-Banin school the first night to see Naief's graffiti, an event he describes as "like an explosion."

A former conscript in the Syrian army, Ahmad says he stayed away from the protests out of fear learned over a lifetime living under dictatorship, a fear he and others in his generation trace back to the Hama Massacre.

But the kids, he says, didn't know enough to be afraid.

At a funeral march for the first two "martyrs," police again shot into the crowds, killing several mourners and spawning a cycle of more funeral marches, and much more violence.

Hoping to keep events from spiralling out of control (and perhaps with an eye on Libya, where a full-blown civil war was now under way), the al-Assad regime decided to offer Daraa an olive branch.

On March 20, the 23 boys being held in the Palestine Branch prison were gathered together and addressed by an intelligence officer. They had disrespected the president, they were told. But - after a month of torture and isolation - they would now be pardoned by Mr. al-Assad.

The boys were put on a bus and driven back to the Daraa mukhabarat headquarters, still uncertain of their fate. It was only there - during a chance encounter with some other prisoners being held for taking part in the protests to free the boys - that Naief and his friends began to understand what had been happening in their city and their country while they were in custody.

They were then bused to the local Baath Party headquarters, where they were met by relatives who quickly escorted them to the Omari Mosque. The boys were shocked to see what looked to be the entire city lining the streets and cheering as they passed.

"It was like a wedding," Naief recalls, with a smile. Men shouted that the boys were heroes.

Women ululated from balconies and rooftops. It was overwhelming. "I didn't understand why they were calling us heroes," Naief says. "I just wanted to go home and see my mother."

But that quiet evening at home wasn't to be. The family's neighbours had prepared another celebration, specifically for Naief, on their street. "They were calling us heroes because, in the past, people had been afraid to say anything about Bashar al-Assad or the regime or the police," he recalls. "After this, nobody was afraid any more."

Decades of fear and deference had given way to a defiant rage.

The stories - and the evidence on their bruised and blackened bodies - of how the 23 boys had been tortured added to the mounting fury. The day of the boys' release, protesters in Daraa torched the Baath Party building.

Angry demonstrations were by now a near-daily affair, and had spread across the country to the cities of Damascus, Homs, Hama - even Mr. al-Assad's home province of Latakia.

But in each place, the marchers were met by force, and the death toll rose. On March 23, security forces stormed the Omari Mosque, prompting a bloodbath that left at least 37 people dead.

(The plaza in front of the mosque has since been renamed "Dignity Square" by the rebels.)

On April 1, the crowds in Daraa found a new focal point for their anger. As they converged on the city centre, some began to yank with their bare hands at a statue of Hafez al-Assad that had stood there for decades. Others, including Naief's friend Abu Fuad, joined in.

To their surprise, the statue proved easy to topple. "We expected it would be very sturdy.

We always believed it was made of bronze," Abu Fuad says when we meet near his home in exile in Dusseldorf. "But it was very cheap material - just two metal poles in the legs."

On YouTube videos of the moment the statue was pulled down, laughter can be heard in the crowd. Abu Fuad still smiles broadly when recounting how it happened.

The mirth was momentary. Regime soldiers responded by again opening fire on the crowd.

Shortly afterward, regime tanks were sent to encircle Daraa - intending to crush the uprising by isolating the revolutionary population from the rest of the country. The city had prepared for the moment by smuggling Kalashnikov assault rifles in from nearby Jordan. Many rank-and-file Sunni soldiers who had grown up in Daraa deserted, unwilling to take part in an assault on their hometown. It was the beginning of what would come to be known as the Free Syrian Army.

Syria's civil war had begun.

"If [the regime] had behaved differently, if they had treated the people well, maybe none of this would have happened," says Ahmad Abazid, the jeweller related to several of the 23 boys. "We arrived here because of how they behaved in 2011."

He was speaking of his own family's new place in exile, in small-town Sweden. But he could have been speaking about the entire planet, which has spun slightly differently since the events in Daraa.

For the first year of the conflict, Naief Abazid and his family stayed in Daraa even as the Tunisia-style revolution the youths had hoped to see slid ever more quickly into unchecked violence.

Each day, the regime's army erected more checkpoints in the city, and arrested more people.

Each night, the increasingly wellarmed rebels fought back.

Naief never took up arms, he says, unless you count the cans of spray paint that remained his weapon of choice. He doesn't claim to be a great artist, but says he became expert at making stencil portraits of Mr. al-Assad on the streets - portraits that Daraa residents could step on or drive over, the ultimate insult in the Arab world.

Despite his young age, Naief's early role in the uprising gave him the credentials to join the revolutionary organizing committee for his neighbourhood, which helped plan and co-ordinate protests against the regime.

They were exciting times.

"We had this hope, that this week or next week Assad would be gone," Naief recalls. "After a year, the hope disappeared."

Eventually, the regime banned the sale of spray paint, forcing the young rebels to come up with creative solutions.

Naief's friend Abu Fuad worked at a restaurant that bought supplies from Jordan, and used those contacts to begin a spray-paint smuggling operation. Meanwhile, the youths devised new tactics to keep the peaceful protests going: a group of them would start a demonstration in one part of town - drawing police there - while another group would hit unguarded government buildings with a fresh layer of graffiti.

"It was like Tom always chasing Jerry," Abu Fuad says with a laugh, referring to the cartoon cat and mouse.

His favourite slogan was the iconic "The people want the fall of the regime" that had appeared on walls first in Tunis, then Cairo.

But Syria's president proved far nastier and more tenacious than his Egyptian and Tunisian counterparts. Like his father before him, Bashar al-Assad was willing to do anything it took to remain in power.

Naief learned to avoid the security forces that had invaded his city, something that eventually became impossible when the Syrian army set up a checkpoint just outside his family home. One day, while leaving his house, he heard a regime soldier tell his commander on walkie-talkie: "I have Naief." The soldier raised his Kalashnikov, and Naief started to run. A bullet tore through his left biceps. He kept running until he found anti-regime rebels, then collapsed into unconsciousness.

The next day, he was whisked across the border to a hospital in the Jordanian city of Ramtha.

Shortly afterward, his parents and his four siblings joined him in Jordan. It was the beginning of Naief's first stint in exile.

By the autumn of 2011, Bashar alAssad had reason to be desperately worried.

The fighting in Daraa had spread to the entire country.

Syria's Sunni neighbours, Jordan and Turkey, had thrown their support behind the Free Syrian Army. The northern cities of Homs and Hama seemed beyond the regime's control. In Damascus, the Baath Party headquarters - once a fear-inducing symbol - was hit by rocket-propelled grenade fire.

For the Syrian leader, the situation around the region would have been even grimmer to contemplate. Tunisia's Ben Ali was in exile; Hosni Mubarak was in jail; and a member of the longbanned Muslim Brotherhood, Mohammed Morsi, had been elected president of Egypt.

In Libya, Moammar Gadhafi had decided to fight rather than stand aside. It was a decision that brought NATO warplanes (acting under a UN Security Council mandate) into the war against him, accelerating the advance of his armed opponents. On Oct. 20, he was discovered hiding in a drainage pipe near his hometown of Sirte. Nauseating video shows armed rebels dragging the man who had ruled Libya for 42 years out of his ignominious hidey-hole, and parading him before a celebrating crowd. The man Libyans had been trained to call their "Brother Leader" was then sodomized with what appeared to be a bayonet, before his life was ended with a bullet to the brain.

A few months earlier, U.S. President Barack Obama had declared that "the time has come for President Assad to step aside."

But in Tehran, Ayatollah Ali Khamenei had come to a very different conclusion. Mr. alAssad, he determined, could not be allowed to fall. Weeks after Mr. Gadhafi's death, reports began to surface of Persian-speakers working with the Syrian regime's security forces. Soon, battle-hardened Hezbollah fighters, always an Iranian-supported force, were crossing the border from Lebanon to aid their fellow Shiites.

Other players were also getting set to join the burgeoning proxy war. In Moscow, Russian Prime Minister Vladimir Putin reportedly watched the video of Mr. Gadhafi's grisly death three times before issuing an angry statement calling the execution "repulsive" and Americanorchestrated.

Mr. Putin - infuriated by what he saw as the West's deceit over Libya (he considered Mr. Gadhafi a Kremlin ally) - had just announced he would switch jobs with his protégé Dmitry Medvedev and return to the presidency, a post Mr. Putin had previously held for eight years. He would return to the job haunted by the idea that the Arab Spring, left unchecked, could inspire similar protests in Moscow.

Those close to the Kremlin say that Mr. Putin's second rise to the presidency was partly motivated by a conviction that Mr. Medvedev had made an enormous strategic error by not using Russia's veto to block the UN Security Council resolution that enabled NATO warplanes to attack Libya.

Mr. Putin believed the West had tricked Mr. Medvedev into standing by as yet another Kremlin ally was toppled - just as Boris Yeltsin had been sidelined while NATO bombed Slobodan Milosevic's Yugoslavia in 1999, and Mr. Putin himself had been ignored while the U.S. invaded Iraq to oust Saddam Hussein in 2003.

Syria had been a Russian ally since the Cold War, when U.S.

support for Israel made Syria a natural Soviet ally. In 1971, Hafez al-Assad granted the USSR use of a Mediterranean Sea naval base at Tartus - near the al-Assad family's hometown of Latakia - and thousands of Syrian military personnel were sent to Moscow for training.

Mr. Putin returned to the Kremlin determined not to allow the West to topple another one of Russia's dwindling number of friends. He would back Mr. alAssad, come what may.

Daraa and the city of Ramtha, its neighbour just across the border in Jordan, would probably have grown into a single city by now, if not for the whims of Sykes-Picot.

That solid line separating areas A and B cut right between Daraa and, just 15 kilometres to the south, Ramtha. The colonists didn't care that the two desert cities were inhabited by many of the same tribes, including members of the extended Abazid clan.

Ramtha, now a city of 120,000 people, would provide a ready rear base for the Free Syrian Army in the early months of Syria's war. It would also function as a welcoming - if uncomfortable - escape hatch for Naief and his friends, nearly all of whom would spend time on its dusty streets, as well as those of the nearby Zaatari refugee camp.

Among those who passed through both was a 12-year-old boy named Jamal, whom I arranged to meet in Ramtha after being told he was one of the original 23. In fact, I discovered, he was not: Jamal went to a different school in Daraa than Naief and the others, and says he knows them only by reputation.

But his story is depressingly similar.

One day in February, 2011 - he doesn't remember the exact date - Jamal was goofing around with some of his classmates after school. Thrilled by the exciting scenes of protest and revolution they had seen broadcast from Tunisia and Egypt, as well as what was starting to unfold in Syria, Jamal and his friends grabbed a couple of cans of spray paint that he had bought to decorate his bicycle.

They headed to the al-Quneitra school, where Jamal (who, like Naief, was the youngest in his crowd) painted slogans borrowed from the television news, including "al-Assad looted the country," on the outer wall, while the older kids laughed and cheered.

The police arrived at al-Quneitra the next day, and asked every student to give a handwriting sample. It didn't take long to narrow their focus to Jamal: On both the wall and the sample he submitted, Jamal misspelled Mr. alAssad's name as "al-Ssad," leaving out one "A." "I wasn't very good in school," Jamal shrugged when we met this fall in the Jordanian capital of Amman.

Although Jamal was not one of the original 23 arrested in Daraa, Syrian refugees in Ramtha told me that he and his own cans of green and red spray paint had played a galvanizing role similar to that of Naief and his schoolmates.

His torment at the hands of the mukhabarat was also much like Naief's, except that Jamal took to shouting out the names of imagined accomplices under torture.

"I gave them whatever names came to mind," he says. Now a wiry 17-year-old who wears a white ball cap pulled low enough in the stark Jordanian sun to cast shade on his long unibrow and striking blue eyes, he bites his fingernails as he recounts his time in the custody of Syria's mukhabarat.

"I would give them a name so that they would stop torturing me, and leave me alone in my cell for 24 hours. Then they'd find out that the name I gave them was worth nothing, and the beatings would start again until I gave them another name." It was a cycle that lasted an entire week.

Five years after his act of preteen rebellion, Jamal is among the estimated 750,000 school-age Syrian refugee children scattered around Jordan, Syria and Lebanon who are not attending classes of any kind. Aid workers have been warning for years of a desperate "lost generation" of Syrian refugee kids - some of whom are now young adults - growing up traumatized and poorly educated around the Middle East. For now, the chief concerns are child labour for the boys, and prostitution and early marriage for the girls. The longterm concern - for the Middle East and the world - will be radicalization.

Jamal and his family settled first in the Zaatari camp, a sprawling collection of tents in the desert that, since it opened in 2012, has grown into the fourthlargest "city" in Jordan. It is an intentionally grim place - built to host Syrian refugees without making them feel welcome enough to want to stay in Jordan. Syrians are denied legal work permits, or any path to citizenship.

Intended to be temporary, the camp now feels increasingly permanent, as the canvas tents I saw when I first visited in 2013 have been slowly replaced by metal caravans, and the refugee settlement develops an economy and culture of its own. It is now home to roughly 80,000 people, a disproportionate number of whom hail from Daraa. (Naief registered before he and his family settled in Ramtha.) Though such organizations as Unicef and Save the Children run tented schools inside the camp, drop-out rates are sky high.

"I haven't been to school since the day I was arrested," says Jamal. He shrugs and looks confused when I ask what his dream job might be.

Naief, too, says he hasn't been in a classroom since the day he was pulled out of school by the mukhabarat.

If the Arab Spring had a final act, it might have been the Jordanian opposition's attempt at a Day of Rage - mimicking those in Tunis, Cairo and Daraa - in November, 2012. The Hashemite monarchy had just hiked fuel taxes, and thus the cost of living, in a country where most residents were already struggling to get by. Anger was high.

"Gadhafi, Ben Ali and Mubarak all left," chanted a crowd of several thousand as it moved that fall through the streets of Amman, roadways that are framed by limestone buildings and usually choked with honking cars. "Go, Abdullah, go," they shouted at the country's long-ruling King Abdullah II.

The crowd started out small compared to those that had toppled Mr. Mubarak in Egypt. Still, the organizers expected that many more would quickly join in. But Jordanians could see, looking at neighbouring Syria, what challenging their own regime might mean. Most stayed home: choosing stability, poverty and continued authoritarianism over the uncertainty of revolution.

An awkward opposition coalition that had been formed in 2011 - bringing together Jordan's liberal intellectuals, communists and members of the local arm of the Muslim Brotherhood, under the name "National Front for Reform" - soon crumbled over internal divisions created by the fighting in Syria. The Muslim Brotherhood wanted the National Front to stand with the demonstrators in Daraa, and to make an outright call for regime change in Damascus. But, with one eye on the escalating bloodshed in Syria and the other on the rise of an Islamist government in Egypt, the secularists were no longer sure that challenging the Jordanian regime in the streets would lead to something better.

"The National Front was paralyzed, and then dissolved over Syrian and Egyptian issues, not Jordanian ones," Labib Kamhawi, an outspoken intellectual and political analyst in Amman who emerged as a spokesman for the group, told me. "One day we simply stopped meeting."

Mr. el-Hamalawy, the Egyptian activist, also says the Arab Spring's collapse began in Daraa.

Egypt's 2011 revolution came undone a year later when General Abdel Fattah el-Sisi toppled the Muslim Brotherhood government, returning Egypt to de facto military rule and political repression. To Mr. el-Hamalawy's dismay, many of those who had fought to oust Mr. Mubarak stood aside when the army moved to seize control again in 2012.

"Syria is now the bogeyman that the counterrevolutionaries use in Egypt and elsewhere," he says, adding that the message is "'If you continue with the Arab Spring and with the protests, the country will collapse into war.' The events in Syria were used to scare Egyptians into accepting the military coup and accepting the repressions."

Mr. el-Hamalawy, who now lives in exile (he asked The Globe and Mail not to specify where he is), believes the Arab Spring is over - at least for the time being.

"We were defeated. I'm not saying this is the end of the story, but we have to be realistic."

In 2013, videos of hundreds of children, women and men lying dead and dying in the wake of a sarin gas attack on the Ghouta neighbourhood of Damascus sent an unexpected ripple of hope through Naief and the other refugees living in Jordan: Mr. alAssad's forces, presumed culpable in the attacks, had now crossed the only "red line" that Mr. Obama had laid down in the otherwise lawless Syrian conflict.

Surely now the outside world would act to punish the Syrian leader.

But the refugees' hopes were soon dashed; it seemed that Westerners no longer had the desire to try putting out a fire they had come to accept as blazing out of control. Instead, under a deal crafted in the Kremlin, Mr. al-Assad would promise to give up his chemical weapons, and the U.S. and its allies would stay out of the war. Although today allegations of chemical-weapons use by all sides continues, by 2014 it was clear that there were no more "red lines" in Syria's war.

And so, after two "hopeless" years in Jordan, Naief Abazid and his family took the difficult decision to return to Syria. By late 2014, their neighbourhood in Daraa was under the relatively stable control of the Free Syrian Army. The Abazids' home had been damaged in the fighting, but was still intact enough to live in once the holes were patched up.

Naief was shocked when he witnessed what had happened to his city. "I didn't expect what I saw. I had seen videos on YouTube, but I still wasn't ready for it. Everything was destroyed, knocked down," he says, closing his eyes as though replaying an image in his head. "It was awful. If someone told me how bad it really was, I wouldn't have believed them."

For seven months they remained in Daraa, despite the fact that Naief's father - a cross-border truck driver before the war - no longer had work. It was a terrifying existence. Naief describes the near-constant rain of artillery shells and bombs dropped from the air by Mr. al-Assad's air force.

"People were surprised," he says, "if there was a day without any bombing."

Like the northern city of Aleppo that is the focus of much of today's fighting, Daraa has been cut effectively in half by the war.

At the time of the family's return, the Abazids' neighbourhood was under the control of the FSA - as was the route in from the Jordanian border - but regime forces were only a few blocks away.

Chunks of the city were no-man's lands where anyone or anything that moved got shot at.

On their TV, which still received Al Jazeera by satellite, Naief's family saw images of the swelling tide of people - Syrians and others - fleeing to Europe. It was the middle of September, 2015. The tiny body of Alan Kurdi, a three-year-old boy, had just washed ashore on a beach in the Turkish resort of Bodrum, briefly generating an outpouring of sympathy for refugees - in Europe and as far away as Canada.

Naief says he didn't know the name Alan Kurdi until he was already in Europe. But his family heard and saw Angela Merkel's declaration that her country would welcome any Syrian refugees who reached Germany's borders.

Germany was more than 3,500 kilometres from Daraa. But the family decided that Naief, along with one of his older brothers and a cousin, should try to get there. They scrounged up as much money as they could and gave it to Naief and his brother so that they could pay the people-smuggling network they would need to use along the way.

"There was no future in Daraa any more," Naief says with a shrug. "There were two options: get killed, or become homeless."

It wasn't just Alan Kurdi who died trying to cross the Mediterranean Sea last year. The International Organization for Migration says at least 3,771 people - most of them refugees, some of them economic migrants - perished trying to reach Europe on tiny craft pitted against the unpredictable Mediterranean Sea. That bleak figure has been exceeded in 2016.

But as fraught as the sea passage promised to be, it was not what scared Naief most about the journey before him. "I can swim," he explained to me, illustrating his point by windmilling his arms in a chaotic-looking impression of a front crawl.

The hard part would be getting to Turkey.

While his parents remained in Daraa, Naief and his travelling companions (he asked me not to name his brother and cousin) took a minibus that was arranged by smugglers to transport 50 refugees from Daraa to Syria's border with Turkey. It was a thousand-kilometre journey in a cramped vehicle, one that took them first east, past the ruins of ancient Palmyra, and then north into the heart of the territory controlled by the Islamic State.

The journey was horrifying, and occasionally surreal. At an IS checkpoint near the de facto capital of Raqqa, the minibus was turned back by a pair of camouflage-clad fighters, who told the refugees to drive several hours in the direction they had just come, to an Islamic State office in the city of Madan. Naief and the others would go no farther, they were told, unless the bureaucrats there approved.

As their minibus circled a roundabout, Naief and the other refugees caught a revolting glimpse of the way Islamic State simultaneously deals with its enemies and terrifies those who live under its rule: A corpse lay in the centre of the traffic circle with the dead man's head placed, gruesomely, between his knees.

"We were so scared," he says, his voice dropping almost to a whisper.

At a nondescript building in Madan that the extremists had made into something of a passport office, the refugees were given a stern warning. "They told us we shouldn't go to the infidel countries, to Europe." With little choice but to lie, Naeif and the others promised they had no such plans. Only then was the bus granted permission to travel back toward Raqqa.

In a taste of how quickly the landscape can shift amid Syria's gruelling war, the Islamic State checkpoint was no longer there by the time the refugees returned with their permission papers. So the bus cautiously proceeded west toward battle-ravaged Aleppo - Syria's largest city before the war - and the Turkish border beyond.

Naief says the trip across Syria cost $1,000 (U.S.) a person, an enormous sum that his family gave to him, his brother and his cousin in hopes they would later be able to bring the rest of the family to Europe. Much of the cash, Naief assumes, was paid onward by the smugglers as bribes at the various military checkpoints they encountered during their trip through Syria.

A month later, Naief's friend Abu Fuad would head north along the same route. "Everybody said, 'Go to Germany, it's the best place,' " he said to me.

He remembers the Islamic State checkpoints as being as strictly controlled as the Assad regime's.

"They would take your identification card and check your name against a list on their computer," he says, adding that the IS fighters he saw were wearing armystandard desert camouflage uniforms as they stood under the black flags of their "caliphate."

And if anyone was on their list?

Abu Fuad drew a line across his throat.

When Naief and the other refugees reached the Turkish border, they were transferred to another smuggling network. After handing over another $1,100 a person (conveyed by Naief's parents to the Turkish smugglers via a system of remittances), the refugees were put onto a bus to the port city of Izmir, one of the main hubs of the wild exodus to Europe last fall.

That price included space on a black rubber dinghy that took them to the Greek island of Lesbos. By Naief's count, he was one of 40 people on the flimsy craft, which took two harrowing hours to cross the narrow stretch of dark, choppy waters.

From Lesbos, he paid 60 euros (just over $60) for space on a special refugee ferry to Athens arranged by the Greek government, and then took a bus to the Greek border with Macedonia.

There, he joined tens of thousands of bedraggled Syrians, Iraqis, Afghans, Pakistanis and Africans who trudged north through the country, using the railway tracks for guidance.

From there, it was a blur. Naief remembers passing through Serbia - sometimes walking, sometimes taking a bus, checking a map on his mobile phone to see where he was on the unfamiliar terrain. Belgrade was then a major transit hub; refugees could be found camped in parks and bus stations, waiting for news of the safest and fastest ways north.

The border between Serbia and Hungary, he says, was a particular challenge. Hungarian border guards were turning back any asylum-seekers they caught; as a result, refugees were camping on the Serbian side until they got the signal from smugglers that it was safe to cross the densely forested frontier.

The Hungarian government, reflecting its hostility to refugees, put them quickly onto a train bound for Vienna. There, finally, Naief exhaled.

Though they had begun the journey aiming for Germany, he and his cousin decided that Austria - where the refugees were greeted by volunteers handing out food and bottled water - felt as if it could be home. "We felt it was beautiful," he says, "and safe." Naief's brother decided to press onward to Germany.

About a month later - and decidedly less cocky about his own chances of surviving if his boat capsized, Abu Fuad followed in his friend's footsteps. "I can swim, but no one is stronger than the sea," he says grimly as we sit in a café across from the main train station in Dusseldorf, more than 4,000 kilometres from his home.

Abu Fuad's trip followed a nearly identical route through Syria, though his own overcrowded dinghy from Turkey would land on the Greek island of Samos.

From there, he took the ferry to Athens, then headed north, via Macedonia, to Belgrade, taking buses when that was an option, walking when it wasn't. But he faced an additional potential obstacle that Naief did not: By October, 2015, the Hungarian government had completed a four-metre-high fence along its southern frontier with Serbia, topped with razor wire and patrolled on the far side by armed police sometimes backed with armoured vehicles. Hungarian Prime Minister Viktor Orban, who led the way among the continent's populist politicians in whipping up anti-immigrant rhetoric, said the measures were necessary "to keep Europe Christian."

Yet the barrier proved merely a rock in the stream, one Abu Fuad and thousands of other refugees simply skirted. The exhausted masses marched on foot through the farmlands of western Serbia and eastern Croatia - past signs warning of unexploded munitions left over from the Balkan wars of two decades earlier - then onward, via tiny Slovenia, into Austria.

Unlike Naief, Abu Fuad didn't stop there, but proceeded on to Germany, which had been mythologized that fall as a haven for refugees. Indeed, scores of Germans flocked to train stations to cheer and welcome the arrival of the first refugees, just before Abu Fuad arrived on his own train from Vienna.

But the warm reception was not to last.

A short 12 months after Abu Fuad arrived, relations between Germans and the new arrivals from the Middle East are much frostier, unspooled by what happened in the first hours of 2016.

If the graffiti in Daraa was what tipped Syria into civil war, and the image of Alan Kurdi convinced Europeans to keep their straining borders open to the tide of refugees, it was the events of last New Year's Eve in Cologne that propelled a brewing anti-refugee backlash into the mainstream.

On New Year's Day, the world awoke to the news that hundreds of German women had been sexually assaulted by a mob of men - police described them as being of "Arab or North African appearance" - outside the central train station in Cologne, the country's fourth-largest city, directly beneath the dark Gothic spires of its famed cathedral. More than 1,000 criminal complaints, ranging from groping to rape, were filed in the aftermath.

Ten months later, the shock still lingers here. A police van is usually now parked on the plaza outside the train station, staffed by a half-dozen watchful officers in reflective yellow vests.

It's not just the police who have shifted their posture since the sex assaults in Cologne, but an entire society. "It changed the atmosphere a little bit. There was concern about what kind of society we are in," says Douglas Graf von Saurma-Jeltsch, president of Malteser International Europe, a non-governmental organization that provides aid and eduction to refugees in Germany and around the world.

Abu Fuad says he first heard about the sex attacks several days later, when television journalists arrived at the refugee camp near Cologne where he was living. There were only two Syrians among the first 120 suspects that German police arrested in connection with the assaults; but about half of the alleged perpetrators - including four Algerians living in the same camp as Abu Fuad - were found to have arrived among the 2015 refugee influx.

As Germans began asking themselves whether Ms. Merkel's open-door policy had been a good idea, their government stopped processing asylum applications at the camps near Cologne, leaving thousands of asylum-seekers, including Abu Fuad, in prolonged limbo.

He now has a one-year permit to stay in Germany, but Abu Fuad feels his host country has become inhospitable to refugees and other immigrants since New Year's Eve. "There are people who hate refugees, more and more," he says, clutching his arms to his chest. "People say Merkel will fall, and the radicals, the Nazis, will take over."

Before the refugee crisis, the anti-immigrant Alternative for Germany (known by its German acronym, AfD) was a fringe party, one that few Germans - sensitive to even the tiniest echo of this country's Nazi past - would contemplate voting for.

But a mere nine months after that fateful night in Cologne, the party captured 22 per cent of the vote in regional elections in Ms.

Merkel's home state of Mecklenburg-Vorpommern, pushing the Chancellor's centre-right Christian Democratic Union into an unprecedented third place. Two weeks after that, AfD won 14 per cent of the vote in cosmopolitan Berlin, as the CDU saw its support fall to an historic low in the capital.

Maximilian Krah, a CDU member of the Reichstag, quit the party over Ms. Merkel's "crazy" policies toward refugees and migrants. In a subsequent interview, Mr. Krah told me he was leaning toward joining AfD ahead of federal elections next year that are suddenly anything but a sure win for Ms. Merkel and the CDU.

"I think the most dangerous person in the world right now is Angela Merkel and her policy of open borders," Mr. Krah says. He claims that the majority of the refugees and migrants who entered Germany in 2015 are poorly educated (although statistics from the UN High Commission for Refugees suggest that 86 per cent of Syrians arriving in Europe have secondary or postsecondary education), and thus unlikely to succeed in the labour market.

He predicts there will be more incidents like Cologne, and perhaps even terrorist attacks in the country on the scale of those carried out repeatedly in France over the past two years. "The old liberal way of life, of being fearless in a public space, of knowing everyone accepts the same rules of behaviour, is gone," Mr. Krah says. "People feel the country is changing fundamentally, and in a bad way."

Mr. Graf von Saurma-Jeltsch sees it somewhat differently: While the spirit of what Ms. Merkel called Germany's "welcome culture" still exists post-Cologne, he says, the optimists are currently being "outshouted" by the pessimists.

"There is growing concern, of course. But that's what's called fear of the unknown, because people just fear they don't know how it's going to turn out, and who these people are, and 'What about our cultural identity?' Xenophobia is basically the word."

Ms. Merkel's explicit welcome to refugees last fall may yet prove to be as dramatic a turning point as Naief Abazid's provocative graffiti. Her own political future is cloudy after announcing last month that she would lead her CDU into next year's election, seeking a fourth consecutive mandate from German voters.

Indeed, across Europe, it is antiimmigrant parties that appear to be on the ascent, including the Front National in France, the Freedom Party in Austria and the Party for Freedom in the Netherlands. In the country where Ahmad Abazid has now found refuge, backing for the oncefringe Sweden Democrats and their rallying cry to "Keep Sweden Swedish" has doubled in the wake of the arrival of 160,000 asylum-seekers (the highest percapita number of any country in Europe) in 2015 alone.

"If we don't really stand up quite soon and say 'There are some things we will not compromise on,' there will be some turbulent years," I am told by Paula Bieler, a prominent MP with the Sweden Democrats, when we meet in her parliamentary office.

"There is anger in our society."

In Austria, where Naief - who is studying German four hours a day - says he can sense a changing mood that he doesn't quite understand, voters go to the polls Sunday in a twice-delayed run-off of a presidential election that could see Norbert Hofer of the Freedom Party, a movement founded by ex-Nazi officers, elected as Europe's first far-right head of state since the end of the Second World War.

"Migration is changing the country," Mr. Hofer told me in an interview this fall.

He could just as easily have said "the continent" - or "the world."

It's when the topic turns to gender relations that interviewing Naief and his friends becomes awkward.

Before the war, Daraa was a city of roughly 100,000 people. Most were either farmers who tended the nearby olive groves, or shop owners who benefited from Daraa's position as a cross-border hub for trade with Jordan.

It was a conservative place. The Muslim Brotherhood - though banned by the Assad regime - had deep roots.

While prewar Syria was an officially secular state, and the nightclubs of Damascus were packed with young women and men dressing however they chose, it was uncommon in Daraa to see a woman not wearing a head scarf.

An unmarried young woman who spent time in the company of men would bring scandal to her family - to her entire neighbourhood.

When the tide of refugees began arriving in Europe in the summer and fall of 2015, many Europeans were perplexed by the overrepresentation of men among the new arrivals. Of the more than one million asylumseekers who arrived on the continent, the UN High Commission for Refugees reported that 69 per cent were men; only 13 per cent were women (children accounted for 18 per cent).

There was a perfectly logical reason for the imbalance: Many families in Syria, Iraq and beyond selected the young adult they believed had the best chance of surviving the long journey to Europe, and of finding work when they got there. The plan in the minds of many families was for that emissary to eventually bring his parents and siblings over once they were settled.

But the arrival of so many young men, and so few women, has created predictable problems.

Naief Abazid says he finds it shocking when he sees young women out late, often in the company of young men, on the streets of Vienna. "It is very difficult for me to find love here," he says as we walk past a young couple with arms wrapped tightly around each other's waists. "Austrian girls are very different from Syrian girls."

Ahmad Abazid, the jeweller from Daraa and distant cousin of Naief, now lives in the remote Swedish town of Anderstorp, where he met and married a woman from Damascus while taking Swedish-language classes.

Despite their new surroundings, old rules still apply at home.

Ahmad calls out to his wife - giving her time to duck behind a curtain - before inviting me into their house. While the men chat in the kitchen, he rises to hand a plate of vegetables through the curtain to her, so that she can continue preparing their dinner unseen.

Ahmad says that he and his wife (he never mentions her name) are impressed with the tolerance of the society around them. No one, he says, causes any stir when his wife goes shopping wearing a hijab, and halal food is easy to come by.

But the couple recently had a baby daughter. And Ahmad says he's not sure he wants her to grow up in a country so unlike the place where he and his wife grew up: "Some of the habits are completely different here, like how they raise their kids. When girls go out at night with their friends - this is not normal in our culture."

Though Ahmad plans to stay as long as it takes to acquire a Swedish passport, he hopes his daughter will grow up a Syrian, back in Syria.

The end of Syria's torment is not yet in sight, but it seems increasingly clear that residents of Daraa won't get the regime change they were hoping for when they first rose up five years ago in the wake of Naief's teenage taunting of their dictator.

If early in the conflict Mr. alAssad's fate had seemed sealed, raising questions of who and what would replace him, it's now the Syrian army - along with its Iranian allies, and Shia militias from around the region - that is making slow but steady gains.

The focus of the war, for now, is the north, where the regime is laying siege to the rebel-held enclave of eastern Aleppo, home to some 275,000 people trapped in increasingly dire circumstances. The focus of the war will soon turn east, where many hope the Islamic State, surrounded by enemies on all sides, may implode.

The war in the south, where the Free Syrian Army still clings to much of the city of Daraa, but little else, is effectively on hold while those larger battles are fought. A victory in Aleppo would allow Mr. al-Assad to finally concentrate his army and his anger on Daraa, and those who dared to first challenge him.

A new siege of the city could be months or years away, or it may never come to pass. But no one doubts that it will be bloody if it happens.

The war turned in Mr. alAssad's favour on Sept. 28, 2015, when Vladimir Putin took to the podium at the annual meeting of the UN General Assembly. The Russian leader used the occasion to read out a lengthy "J'accuse" letter, listing off the U.S. and Western misdeeds that he believes led the world into the state it's in.

"Do you realize now what you've done?" he asked. Then came the core of his message: "We think it's a big mistake to refuse to co-operate with the Syrian authorities and government forces who valiantly fight terrorists on the ground."

Two days later, Russian warplanes were in action over Syria.

Ostensibly, their mission was to combat Islamic State and other "terrorist" groups. In reality, they pounded whatever force - Islamist or secular - that opposed Mr. al-Assad's army.

A map of who controlled what at the start of October, 2015, shows a country divided into four parts: the regime holding Damascus and the Mediterranean coast; Islamic State ruling in the east; and scattered other rebels, ranging from the Free Syrian Army to the al-Qaeda-linked alNusra Front, controlling stretches along the northern border with Turkey (including much of Aleppo) and the southern frontier with Jordan (including most of Daraa).

Today, Islamic State is on the retreat, but so are the other rebels. The only forces gaining significant ground are the regime and the Turkish army, which recently entered northern Syria to create a buffer zone along its border. It did so under an apparent deal with Russia, which controls the air space but has refrained from attacking Turkish units.

Three years after Mr. Obama stepped down from a confrontation over Mr. al-Assad's use of chemical weapons, it is Mr. Putin who makes the rules and sets the red lines in Syria's war.

And Mr. Trump, the U.S. president-elect, has made it clear that he sees the war the same way Mr. Putin does. "Assad's a bad guy," he said during the election campaign, "but they're all bad guys."

Such talk, Hadi al-Bahra, a senior rebel negotiator wrote to me shortly after Mr. Trump's election win, "will inflame [even] more an already disastrous situation."

Jamal, the youth who as a 12year-old misspelled Mr. al-Assad's name in spray paint, bringing torture at the hands of the mukhabarat, says he became "bored" with life in Zaatari camp, where he was neither attending school nor doing any kind of work. He started leaving as often as he could, spending more and more time lingering around Amman, a 90-minute drive south.

At his urging, his parents and three sisters left Zaatari in 2015 and rented a two-room apartment in Ramtha, the city just across the border from Daraa.

Before the war, locals in Daraa and Ramtha paid scant attention to the international frontier that often divided the two halves of the same extended family. They drove around the official checkpoints using back roads, often carrying cartons of cheap Syrian cigarettes that they could sell on the black market in Jordan. Stores along the main market street in Ramtha sold other Syrian wares: low-quality T-shirts and jeans, and hard candy produced at a factory in Daraa.

Today - despite the influx of Daraa refugees that roughly doubled Ramtha's prewar population - most shops on the main road are shuttered. The border has been tightly sealed by the Jordanian military, though the war had killed the cross-border trade even before that. In the stores that remain open in Ramtha, the cheap clothing on sale now sports "Made in China" tags rather than "Made in Syria" ones. Cigarettes in war-torn Syria are such a precious commodity that they reportedly sell for upward of $20 a pack. At night, residents can often see and hear the war next door.

A 23-year-old Jordanian student was killed last year when an artillery shell, fired from Syria, struck his family's house in Ramtha.

Five more shells fell on the Jordanian city earlier this year.

The other battle being fought on the streets of Ramtha is one that involves ideas, rather than weapons: It is over whether the revolution that began in their city was worth all the death and misery it has caused.

Jamal says he often hears comments on the street, from Syrian refugees who know about the role he and the other graffiti kids played in sparking the conflict.

He has also been interrogated by Jordan's secret police, who are sensitive to any hint of revolutionary activity on this side of the border.

"People are divided. Some say, 'Yes, Bashar was unjust, but at least we had our lives,' " Jamal recalls, as he nervously puffs his way through a packet of cigarettes over several cups of thick Arabic coffee in the restaurant of an Amman hotel.

We have met in the relative anonymity of the Jordanian capital at his request. He says he told his story once before, to a German TV crew, and the video brought him unwelcome attention in Ramtha from those who thought he should be ashamed rather than proud of his role in instigating the uprising. To avoid a repeat, he asks that I not use his real name.

"Some people come up to me and say, 'You ruined the country, you made us refugees.' Others tell me, 'You are a hero, and we praise the womb that carried you.' "

Abu Fuad also isn't a real name.

It's a nomme de guerre adopted by a now 23-year-old man who, even living in faraway Germany, is still tormented by the al-Assad regime.

Wiry, bearded, he pulses with an angry revolutionary vibe that neither Naief nor Jamal possess.

He is also still a wanted man in Daraa. He was jailed once, in October, 2011, after his spray-paint smuggling operation was discovered by soldiers. The police later found that he had a Jordanian mobile phone and, more incriminating still, a memory card full of videos he'd taken during the early protests against the regime.

After 12 days of being hung from his wrists, Abu Fuad admitted to having painted anti-regime graffiti, and to having helped organize demonstrations. Under torture, he also confessed to something he says he didn't do - shooting and killing a Syrian army soldier. "I was afraid they were going to kill me," he says.

The teenager was transferred to Damascus and spent several more days in prison before his father paid 1.5-million Syrian pounds (about $7,000 U.S.) - part bail, part bribe - to get his son released.

The whole family fled immediately to Jordan, except for Abu Fuad, who stayed to do what he could to help the revolution. He says that he never fired a weapon, but instead used his motorcycle to help transport Free Syrian Army fighters who were wounded in battle.

Still, by the summer of 2015, he says, the war started to feel unwinnable (he blames the West for not giving the FSA enough aid to "defend itself"). Jordan, overwhelmed by the arrival of more than a million Syrians since the start of the war, had closed its northern border, cutting Abu Fuad off from his family. So he joined the mass movement headed to Europe.

Syria still haunts him. Shortly after he arrived in Dusseldorf, Abu Fuad received word that one of his uncles had been jailed in Daraa. The arresting officer put word out that the uncle had done nothing wrong - he was simply serving time until Abu Fuad returned to Daraa to take his place in prison.

Abu Fuad believes he would be executed if he returned.

Perhaps that's why - thousands of kilometres away, and behind a screen of anonymity - he won't admit to a key point in Naief Abazid's story: Naief says it was Abu Fuad who led the crowd that encouraged him to write "It's your turn, Doctor al-Assad" on the wall of al-Banin school.

Abu Fuad agrees that it was Naief who wrote those words, and that someone else put them in his head. But he swears he wasn't at the school that day.

When Naief Abazid first arrived in Vienna after a month of travelling by car, foot, boat and train, he immediately felt that he'd found a new home. "I loved it. All of it," he says with a broad smile, as we walk through his new neighbourhood in the Austrian capital.

To make his point, he waves his arm around a street where traditional Viennese cafés sit alongside Middle Eastern shawarma restaurants and hookah-pipe houses. It's a brisk and sunny September afternoon. To complete the scene, a red streetcar rumbles by, as if on cue.

But 12 months after he first arrived, it's less clear that Vienna and Austria still love Naief and the other refugees in return.

"I cannot find a job," he sighs when we meet for a second time late last month. It's again a McDonald's; this time he orders a vanilla milkshake. He says he'd like to work with mobile phones in some way, though he has no formal training in the field.

Still apolitical, Naief says he doesn't pay attention to Austrian politics. He tells me he's unaware of Mr. Hofer and the policies - including a plan to deport many refugees - that have brought the Freedom Party politician to the verge of the presidency.

But Naief can sense that it's getting harder, rather than easier, to fit in to his adopted country. "It's difficult for me to think like them, to integrate," he admits.

Worryingly, Naief and his cousin were forced in October to move out of the small room they had been renting on the third floor of an apartment block in the southeast of the city. He says he's not sure why the landlord wanted the two Syrians to leave, other than that the issue wasn't about money.

More than a year after he arrived, Naief's life still looks transient. The two-bedroom apartment he now shares with a new roommate, also Syrian, is empty save for their beds, suitcases, a vacuum cleaner, a teapot and a single frying pan. The only decoration is a Guy Fawkes mask propped on the window sill above Naief's bed.

"Until three months ago, I was happy. But the last three months, I feel less comfortable," he says.

He's thinking of moving to Germany to join his brother some time in the new year.

Communications with his family back in Syria are difficult, but when he does get through, the news is almost always bad. A cousin in Daraa was killed by a rocket in late November. His parents have decided they want to leave Syria; but, with the Jordanian border closed and the fighting intensifying, they don't see a way out. "There's no path for them," Naief says.

He has lost contact with most of the friends who were with him that night at the al-Banin school.

He's still in touch with Abu Fuad and a few others, but when asked to list off where the original 23 graffiti boys are now, he asks to borrow a pen and paper so that he can do the math.

"Syria" is one column; he puts 12 marks in it. "Dead" is the next column; he puts two marks there for his classmates Bahar Khalifa and Akram Abazid, who were killed by regime shelling in 2013 and 2014. Four are living in Jordan, he thinks, and there are at least three, including Naief, in Europe. That's 21 out of 23. He doesn't know where the other two are. Naief gives a sad look and puts the pen down.

The bad news keeps coming.

Two weeks ago, another cousin, Jabar - who Naief was close to because they were the same age - was killed in yet another artillery strike.

I ask Naief how he feels now about the words he wrote on his school wall back in 2011.

There's a long pause before he answers. When Naief begins to speak, it's clear that guilt often weighs heavily on the 19-yearold's mind.

"I am of two opinions about it.

On one hand, I regret it, because of all the people who have been killed and sent to prison and all the people who are homeless or who have become refugees," he begins.

There's another long pause before he completes his answer.

"But on the other hand, this was God's will, and I'm proud of it. Something had to happen in Syria. Something had to change."

Mark MacKinnon is The Globe and Mail's senior international correspondent, based in London. @ markmackinnon

Associated Graphic

Naief Abazid, photographed in Vienna, November 24, 2016.



Zaatari refugee camp, just on the other side of the Syrian border, is now the fourth-biggest 'city' in Jordan, home to roughly 80,000 people. POOL/REUTERS

Millions of displaced Syrians are encountering an increasingly xenophobic Europe, where populist right-wing sentiment is on the rise.


The focus of the Syrian war, for now, is the north. Roughly 275,000 people remain in the city of Aleppo where, in recent weeks, Assad's forces have launched a renewed assault.


A year after arrival in Austria, Naief still has not found a job. He is thinking of joining his brother in Germany in the new year.


Best Books of the year
Saturday, December 3, 2016 – Print Edition, Page R15

Editor's Choice Mark Medley's Favourite Books of 2016

The Hidden Keys, by André Alexis (Coach House Books) A dying heroin addict enlists a young thief to steal four peculiar items from her siblings, items she believes will lead to their late father's hidden fortune, in Alexis's lively homage to adventure novels of old, which is also one of the most endearing appreciations of Toronto I've come across in fiction in recent years. The most fun I've had reading a book this year.

13 Ways of Looking at a Fat Girl, by Mona Awad (Penguin Canada) A brave and poignant collection of linked short stories, following a woman from adolescence to adulthood, Awad's debut deserves all the accolades - Scotiabank Giller Prize finalist; winner of the First Novel Award - it received. Often incredibly bleak, sometimes stomachclutchingly hilarious, always insightful.

King Baby, by Kate Beaton (Arthur A. Levine Books) I probably enjoyed Beaton's second picture book as much as I did because I have a baby of my own. The Cape Breton cartoonist perfectly captures the joy, humour and, let's be honest, insanity that accompanies the arrival of your own little dictator. The perfect Christmas gift for new, or expectant, parents.

The High Mountains of Portugal, by Yann Martel (Knopf Canada) My favourite passage in any book published in 2016 comes from Martel's fourth novel, when a pathologist named Eusebio Lozora performs a remarkable autopsy on a recently deceased man on New Year's Eve, 1938. Even if the rest of the novel - a meditation on solace and an investigation of faith - doesn't quite scale those same heights, it's still a beautiful work of imagination.

The Break, by Katherena Vermette (House of Anansi) A group of family and friends in Winnipeg's North End reacts, and must find resolve, in the face of a shocking act of violence. A debut novel brimming with grace and wisdom, that puts the spotlight on the systemic violence being committed in our country, it is both a wake-up call and a call-to-arms.


Commendable CanLit Best Canadian Fiction of 2016

Yiddish for Pirates, by Gary Barwin (Random House Canada) Barwin's Giller Prize-nominated debut novel, about a young pirate and his eloquent parrot, is a riotous celebration of language and the pleasures of story. It makes us wish Barwin, the author of countless books of poetry, had written a novel earlier in his career.

Stranger, by David Bergen (HarperCollins) Ten books into his career, the former Giller Prizewinner is still surprising us. Bergen's latest novel concerns a woman, working at a fertility clinic in Guatemala, who must quest northward for her stolen child.

The Wonder, by Emma Donoghue (HarperCollins) An 11-year-old girl, living on the outskirts of a small village in 1850s Ireland, refuses to eat, claiming the "manna from Heaven" she's receiving is nourishment enough. A nurse is sent to investigate. On the surface, Donoghue's latest novel is quiet, perhaps simple, but lurking beneath is a story of family secrets, the dangers of faith and, possibly, murder.

After James, by Michael Helm (McClelland & Stewart) Combining elements of horror, suspense and science fiction, Helm's globetrotting fourth novel - featuring a neuroscientist, a "literary detective" and a virologist - is as much a puzzle as a novel. The end result is ambitious and imaginative.

The Parcel, by Anosh Irani (Knopf Canada) In this finalist for both the Rogers Writers' Trust Fiction Prize and the Governor-General's Literary Award, a former sex worker is put in charge of a 10year-old girl, whom she must prepare for a similar fate.

News of the World, by Paulette Jiles (William Morrow) A gruff widower and an orphaned 10-year-old girl make their way across 1870s Texas in this finalist for the National Book Award.

We're All In This Together, by Amy Jones (McClelland & Stewart) In Jones's tender-hearted debut novel, a family comes together when its 63-year-old matriarch is left in a coma after going over Thunder Bay's Kakabeka Falls in a whisky barrel.

The Couple Next Door, by Shari Lapena (Doubleday Canada) A young couple arrive home from a dinner party to find their baby daughter has been snatched from her crib. This debut thriller, from a former finalist for the Stephen Leacock Medal for Humour, is one of the most un-put-downable books of the year.

The Party Wall, by Catherine Leroux, translated by Lazer Lederhendler (Biblioasis) The seemingly disparate strands that constitute Leroux's Giller Prizeshortlisted novel - a husband and wife discover they are closer than they ever realized; a woman's son returns home; two young sisters embark on a life-changing walk; siblings reunite at their mother's deathbed - come together to form something wonderfully strange.

The Fortunate Brother, by Donna Morrissey (Viking) The third in a series of novels about the Now family is as much a well-crafted whodunit as a portrait of a grieving family.

The Two of Us, by Kathy Page (Biblioasis) One of the most talented short-story writers working today delivered yet another knockout collection that is both darkly funny and terribly sad.

Willem de Kooning's Paintbrush, by Kerry Lee Powell (HarperAvenue) Already an acclaimed poet, Powell's debut book of short fiction, both gritty and funny, shows off her obvious gifts as a prose stylist.

By Gaslight, by Steven Price (McClelland & Stewart) An oldschool epic, filled with muscular prose and a propulsive plot, about an obsessive detective on the trail of a thief known as Edward Shade. Gritty and beautiful, Price's second novel is a stunning evocation of late-19thcentury London.

I'm Thinking of Ending Things, by Iain Reid (Simon & Schuster Canada) If you'd read Reid's previous two books - well-received memoirs about moving back in with his parents, and taking a road trip with his grandma, respectively - you likely weren't prepared for this. Reid's debut novel, about a couple on a road trip to visit the boyfriend's parents, was one of the most haunting and peculiar novels of the year.

Still Mine, by Amy Stuart (Simon & Schuster Canada) A photographer, on the run from her violent husband, arrives in a rural mountain town to investigate the disappearance of a woman whose life bears a striking similarity to her own.

Waste, by Andrew F. Sullivan (Dzanc) Sullivan's debut novel, about two men who make a string of bad, bad, bad decisions, reads like a lost Coen brothers screenplay. A novel as dark as midnight.

All That Man Is, by David Szalay (McClelland & Stewart) This is a bit of a cheat, as Szalay was born in Canada, but he left when he was a baby. Shortlisted for the Man Booker Prize, this linked collection of stories, set throughout Europe, examines what it means to be a man in today's world.

Mysterious Fragrance of the Yellow Mountains, by Yasuko Thanh (Hamish Hamilton) Thanh's Rogers Writers' Trust Fiction Prizewinning debut novel, loosely based on the Hanoi Poison Plot of 1908, is a skillfully drawn portrait of colonial Vietnam.

Do Not Say We Have Nothing, by Madeleine Thien (Knopf Canada) The year's most lauded novel, Thien's Giller Prize- and Governor-General's Award-winning saga, which explores the legacy of Mao Zedong's Cultural Revolution and the Tiananmen Square massacre, is powerful and beautifully crafted.

The Best Kind of People, by Zoe Whittall (House of Anansi) A community, and a family, comes apart after a beloved teacher is arrested for a string of sexual crimes. Timely, provocative and powerful.

True North Best Canadian Non-Fiction of 2016

Brown: What Being Brown in the World Today Means (To Everyone), by Kamal Al-Solaylee (HarperCollins) A nuanced, and essential, meditation and investigation into the complexities and challenges of being brown in the modern world.

Closer: Notes from the Orgasmic Frontier of Female Sexuality, by Sarah Barmak (Coach House Books) A blend of reportage, cultural criticism and essay, the Torontobased journalist's first book - which packs a ton into fewer than 200 pages - is an engrossing look at "the wild frontier of women's sexuality."

Epiphany: A Christian's Change of Heart & Mind Over Same-Sex Marriage, by Michael Coren (Signal) True, Coren doesn't deserve a medal for acknowledging gay men and that women deserve equal rights. But this memoir, of a man grappling with his faith, is full of humility and empathy.

Precious Cargo: My Year Driving the Kids on School Bus 3077, by Craig Davidson (Knopf Canada) Thinking his career as an author has ended before it really began, and in desperate need of money, Davidson takes a job driving a school bus for children with special needs. A touching, bighearted story of a man helped by the kids he's supposed to be helping.

The Marriott Cell: An Epic Journey from Cairo's Scorpion Prison to Freedom, by Mohamed Fahmy with Carol Shaben (Random House Canada) A chronicle of the former Al Jazeera reporter's nearly twoyear imprisonment in the notorious Egyptian prison, it is also a portrait of his country of birth, in the years after the promise of the Arab Spring.

Bad Singer: The Surprising Science of Tone Deafness and How We Hear Music, by Tim Falconer (House of Anansi) A music fan who can't carry a tune to save his life, Falconer digs into the science of singing, offering himself up as a guinea pig along the way. He might be a terrible singer, but he's a great writer.

Pumpkinflowers: An Israeli Soldier's Story, by Matti Friedman (Signal) Part memoir, part travelogue, part sociopolitical commentary, this stark, thoughtful book chronicles Friedman's life as a soldier posted on the Israel-Lebanon border in the late 1990s, and his return, several years later, as a civilian.

In-Between Days: A Memoir About Living with Cancer, by Teva Harrison (House of Anansi) This profoundly touching memoir, told through comics and prose, chronicles the author's life after she was diagnosed with metastatic breast cancer.

Based on a True Story: A Memoir, by Norm Macdonald (Collins) Despite its title (and subtitle), Macdonald maintains this, his first book, is a novel. In any case, this is an absurdist romp through the former Saturday Night Live star and cult comedian's demented inner world.

A Good Death: Making the Most of Our Final Choices, by Sandra Martin (Patrick Crean Editions) The former Globe and Mail reporter explores society's relationship with death, and charts the fight of those who advocate dying with dignity. Timely and powerful.

The Candidate: Fear and Loathing on the Campaign Trail, by Noah Richler (Doubleday Canada) Informative, amusing and sometimes infuriating, this is a no-holds-barred account of Richler's (perhaps ill-advised) run for office during 2015's federal election.

The Revenge of Analog: Real Things and Why They Matter, by David Sax (PublicAffairs) What have we lost in the shift to a digital world?

From vinyl to print books, Sax's latest is an argument - perhaps a road map? - for a better way of life.

This Is Not My Life: A Memoir of Love, Prison, and Other Complications, by Diane Schoemperlen (HarperAvenue) Why do we fall in love with the people we do? In this graceful memoir, Schoemperlen recounts her years-long relationship with a man serving a sentence for second-degree murder. The book doubles as a critical investigation of our prison system.

Invisible North: The Search for Answers on a Troubled Reserve, by Alexandra Shimo (Dundurn) A young journalist travels to the First Nation community of Kashechewan, in Northern Ontario, to report on an E. coli crisis. A searing exploration of the legacy of colonialism and a brutally honest account of PTSD.

The Return of History: Conflict, Migration, and Geopolitics in the Twenty-First Century, by Jennifer Welsh (House of Anansi) This year's CBC Massey Lectures, which warn of the end of the liberal-democratic ideal cherished by the West, might turn out to be more prescient than even Welsh realized.

Come From Away Best International Fiction of 2016 .

Alice & Oliver, by Charles Bock (Random House) Not long after welcoming a baby, a married couple's life is upended when the wife is diagnosed with leukemia in Bock's harrowing and honest novel about cancer.

Moonglow, by Michael Chabon (HarperCollins) This delightful faux-memoir, which spans the 20th century, ostensibly about Chabon's grandfather but almost completely fictional, is an ode to the power of storytelling.

Zero K, by Don DeLillo (Scribner) At the behest of his father, a man arrives at a secret facility in the middle of the desert in an unnamed country, where the 1 per cent can attempt to cheat death by putting themselves into a state of suspended animation. A book about how we live and die, and his best novel since Underworld.

Heroes of the Frontier, by Dave Eggers (Knopf) A former dentist and her two children escape into the Alaskan wilderness in this story of finding oneself amid the chaos of the modern world.

Nutshell, by Ian McEwan (Knopf Canada) A peculiar and philosophical novel that features what is perhaps the most ingenious literary conceit of the year: a murder-mystery in which the lone witness is a nine-month-old fetus.

The Little Red Chairs, by Edna O'Brien (Little, Brown) This novel, about a strange doctor arriving in a small Irish village, might be O'Brien's best book yet, which is saying something.

Barkskins, by Annie Proulx (Scribner) A masterful centuriesspanning tale of two families that begins in the forests of New France and spreads out across the globe.

Swing Time, by Zadie Smith (Hamish Hamilton) Two childhood friends, who forge a bond through their shared love of dance, set out on different paths in life in a novel about music, social activism and friendship, among other things.

My Name is Lucy Barton, by Elizabeth Strout (Random House) An author, recovering in a hospital bed, looks back on her life after receiving an unexpected visit from her estranged mother in this heartbreaking and beautiful novel. A quasi-sequel arrives in 2017.

The Underground Railroad, by Colson Whitehead (Doubleday) There is little else that can be said about Whitehead's latest novel - a subversive, challenging, and wildly inventive speculative history of the United States' original sin. It is furious and fantastic.

Foreign Affairs Best International Non-Fiction of 2016 .

Substitute: Going to School With a Thousand Kids, by Nicholson Baker (Blue Rider Press) One of the most innovative writers alive spends a year working as a supply teacher. The result, an insightful observation of contemporary childhood and an inside look at America's school system, is a 700page memoir that never feels like homework.

The Art of Waiting: On Fertility, Medicine, and Motherhood, by Belle Boggs (Greywolf) A book about longing and fulfilment, this collection of intimate and always excellent essays revolves around the author's "failure" to become a mother. Generous and brave.

So Sad Today, by Melissa Broder (Grand Central) What began as an anonymous (and hugely popular) Twitter account eventually became a book of poignant personal essays, touching on issues of mental health, relationships, addiction and obsession.

White Trash: The 400-Year Untold History of Class in America, by Nancy Isenberg (Viking) and White Rage: The Unspoken Truth of Our Racial Divide, by Carol Anderson (Bloomsbury) Two books, both challenging, bracing and perceptive, investigate race in America.

Considering how the year turned out, they've become even more urgent and necessary.

When Breath Becomes Air, by Paul Kalanithi (Random House) A heartrending (posthumous) memoir about a neurosurgical resident diagnosed with Stage 4 lung cancer.

In Other Words, by Jhumpa Lahiri, translated by Ann Goldstein (Knopf Canada) After moving to Italy, the award-winning novelist decided to finally master Italian - her third language, after Bengali and English - something she had been attempting to do for many years. It's an investigation of language and explores what happens when you're a writer and don't have command of the tools of your trade.

The Lonely City: Adventures in the Art of Being Alone, by Olivia Laing (Picador) A nuanced and insightful meditation on isolation, happiness and the meaning of home.

A Field Guide to Lies: Critical Thinking in the Information Age, by Daniel J. Levitin (Allen Lane) An essential user's manual for wading through the swamp of "facts" and misinformation we face on a daily basis.

The Gene: An Intimate History, by Siddhartha Mukherjee (Scribner) After winning the Pulitzer Prize for his exhaustive history of cancer, The Emperor of All Maladies, Mukherjee's follow-up was equally ambitious: a biography of the things that makes us who we are.

City of Thorns: Nine Lives in the World's Largest Refugee Camp, by Ben Rawlence (Random House Canada) A superb portrait of the global refugee crisis centred on the sprawling Dadaab camp in eastern Kenya that is home to roughly 150,000 people. A remarkable and important work of journalism.

Born to Run, by Bruce Springsteen (Simon & Schuster) Who'd have guessed that one of America's greatest and most beloved songwriters would turn out to be a stellar, skillful memoirist as well?

All The Single Ladies: Unmarried Women and the Rise of an Independent Nation, by Rebecca Traister (Simon & Schuster) Part memoir, part cultural analysis, Traister's book looks at the rise of single women through the prism of economics, history, politics and art.

Shrill: Notes from a Loud Woman, by Lindy West (Hachette) A smart, funny, brash and thoughtful collection of essays - ranging on subjects from abortion to body-image issues - from a vital new voice.

The Attention Merchants: The Epic Scramble to Get Inside Our Heads, by Tim Wu (Knopf) In an age of constant distraction, Wu looks at the people and organizations attempting to monetize and exploit every moment of our lives.

Perfect Panels Sean Rogers's Favourite Comics and Graphic Novels of 2016 .

Peplum, by Blutch (New York Review Comics) Loosely inspired by sword-and-sandal flicks and the outlandish remnants of Petronius's Satyricon, Peplum is a picaresque plunge through the Roman Empire. Collected in 1997 in France, the book was a breakthrough for Blutch, who slings ink with lusty and furious brio, sketching out a quest that's part myth, part nightmare and part sorrowful romance.

Mary Wept Over the Feet of Jesus, by Chester Brown (Drawn & Quarterly) Many will disagree with Brown's iconoclastic conclusions about the role of prostitution in the Bible (it's something to do with Jesus' lineage), but the rhetorical power of the artist's logical, measured cartooning is impossible to shrug off. With visionary versions of the stories of Job, Cain and Abel, and others, Brown's stark images create eloquent arguments.

Band for Life, by Anya Davidson (Fantagraphics) This book knows a lot about being in a band, but it's the "life" part of that title that gets me. Juggling day jobs, lovers, kids and addictions, Davidson's motley crew of noise rockers still manage to land gigs and make art. Funny, impassioned, and idealistic, Band for Life is cartooning of rare empathy and blistering energy.

Carpet Sweeper Tales, by Julie Doucet (Drawn & Quarterly) In her first book of comics in years, the legendary Doucet takes 1970s Italian photo-novels, with their rigidly codified gender roles, and suggestively slathers jumbled-up bits of old ad copy over top. The resulting, joyfully Dadaist nonsense - leather-clad biker boys stuttering out "mmmamaidenform" - punches through the era's slick surfaces, making musical fun of patriarchal posturing.

After Nothing Comes, by Aidan Koch (Koyama Press) Comics as poetry, comics as painting, comics as dance - Koch's diaphanous, impressionistic work opens up vast and unexplored possibilities for the medium, all while attuned to minuscule details. The artist foregrounds fleeting instants, vague gestures, half-formed thoughts - all those little nothings whose elusive significance tugs at the heart.

Your Next Book Club Pick Marissa Stapley's Favourite Commercial Fiction of 2016

The Wangs vs. The World, by Jade Chang (HarperAvenue) While The Nest was the novel about the perils of privilege that was most talked about this year, it was this funny, wise and utterly compelling novel that won my heart instead. It tells the story of the financial crisis and the collapse of the American Dream from the other side: that of a Chinese immigrant and his first-generation family. As diversity in commercial fiction increases, we get more stories like this. I hope 2017 brings more of the same.

Faithful, by Alice Hoffman (Simon & Schuster) There are certain authors who make magic seem effortless, who so easily weave it into a story that you can't help but think: "Why not? Why can't the real world contain magic like this, too?" Hoffman is one of those authors, and this novel about a young woman traumatized by a car accident that took away her best friend's future is heartrending and hopeful.

Don't I Know You?, by Marni Jackson (Flatiron) This is the book I'm recommending to anyone who asks, "What should I read next?" It's a collection of linked stories about one woman's life told in relation to her interaction with celebrities - from Adam Driver, who shows up one day to shovel her snow, to Leonard Cohen, who serves her varying flavours of soft-serve ice cream out the window of his truck (Cone of Perpetual Longing, anyone?) and becomes just as entwined with her life as his music has always been. Enough said, right?

The Long, Hot Summer, by Kathleen MacMahon (Grand Central) When I recall this long, hot summer past, I imagine myself on a dock with this novel, being swept away at a delightful clip by a funny, diverting, and relevant story about family, love and art. I remember those instances when I paused and experienced those perfect moments of connection that can happen with good writing - those times when I smiled and nodded along with the words, as if the author herself were sitting there with me, telling me a story.

Today Will Be Different, by Maria Semple (Little, Brown) Semple's rollicking page-turner/graphic novel blend was one of the most original books I read this year.

Also, I liked that Eleanor Flood was an imperfect character who didn't have to commit chilling, unspeakable acts to turn the trope of the likeable female character on its head.

As Good As New Jade Colbert's Favourite Debuts of 2016

The Story of a Brief Marriage, by Anuk Arudpragasam (Flatiron) A young man deadened to life in a displaced persons camp is reborn to memory and feeling after receiving a marriage proposal in the final months of Sri Lanka's civil war. Arudpragasam's touching, evocative prose and original premise make for an unforgettable addition to the war novel. A new classic.

Pond, by Claire-Louise Bennett (Riverhead) "Spend five minutes beneath my skin ... feel the savage swarming magic I feel," the narrator implores in this teeming, riotous novel about a woman come undone who decamps to a house beside a pond in the Irish countryside. A book of wonder and ecstatic emotion shot through with hyperintelligent, skittish hilarity.

Homegoing, by Yaa Gyasi (Bond Street Books) A novel of the Anglo-American slave trade as you haven't read before, Homegoing follows two strands of one family down seven generations, spanning the Atlantic from present-day Ghana to the United States. Gyasi's remarkable ease with historical setting makes way for well-drawn characters in this formidable debut on family and inheritance.

Double Teenage, by Joni Murphy (BookThug) A fire burns root-toroot beneath Murphy's novel, on the surface about two girls growing up in 1990s New Mexico; underneath, a story of girlhood in NAFTAland, a continent set ablaze by a culture of femicide from the maquiladoras of Ciudad Juarez to Robert Pickton's pig farm. Brilliant, necessary reading.

Opium Eater: The New Confessions, by Carlyn Zwarenstein (Nonvella) An estimated 200,000 Canadians are addicted to legal opioid painkillers. Part memoir, part sociological study, Zwarenstein's personal, easily digestible update to Thomas De Quincey's Confessions takes us behind the headlines of overdose deaths to the myriad causes, which call for real political leadership. Urgent reading for an increasingly critical situation.

Indies Rock Jade Colbert's Favourite Canadian Small Press Books of 2016

An Intimate Wilderness: Arctic Voices in a Land of Vast Horizons, by Norman Hallendy (Greystone Books) Hallendy writes with selfawareness and humility in this, his study of presettlement Eastern Arctic Inuit history, culture and philosophy, the culmination of six decades of living among the Cape Dorset Inuit, studying the landscape and listening to elders' stories. An important record of a different way of seeing the world.

You Only Live Twice: Sex, Death and Transition, by Chase Joynt and Mike Hoolboom (Coach House Books) Joynt and Hoolboom have each lived twice. Joynt's second life began after transition; Hoolboom, after surviving HIV when many did not. Over a series of vignettes the two media artists discuss love and sex, death and life, art and memory. The result is both thought-provoking and emotionally affecting.

All That Sang, by Lydia Perovic (Esplanade Books) All-consuming desire is the subject of Perovic's novella about a Toronto opera critic who falls for France's leading female conductor. The genius of this book is how Perovic's refractive prose embodies that one-sided dispossession of the self that characterizes a lopsided affair. Too late we realize we are in love, too.

The Best of Writers & Company, by Eleanor Wachtel (Biblioasis) Few resources are as valuable for lifelong students of literature as CBC Radio's Writers & Company. For 26 years, Wachtel has brought her trademark responsiveness and expansive knowledge to interviewing the world's best writers.

Here she picks a diverse list of 15 favourites from the show's first quarter-century.

Rich and Poor, by Jacob Wren (BookThug) Wren's novel opens with a poor man planning to kill a rich one, but, with a crisis at the halfway mark, things get messy and the greater violence, the brutality of the economic system, reveals itself. Rich and Poor reminds us that art can be resistance, and our love, revolutionary.

Criminal Intent Margaret Cannon's Favourite Crime Fiction of 2016 .

The Letter Writer, by Dan Fesperman (Knopf) A small-town southern detective unites with an extraordinary old man to solve a murder and unlock a secret world hiding in plain sight. This brilliant evocation of New York during the Second World War is one of Fesperman's best.

Conclave, by Robert Harris (Random House Canada) The inner workings of the Vatican are explored as a new Pope is elected.

Conclave features brilliant characters and riveting suspense. This is intrigue at its finest.

The Trap, by Melanie Raabe, translated by Imogen Taylor (Spiderline) In this terrific debut, a reclusive author, who witnessed her sister's murder, spots the killer on TV years later and decides to seek vengeance. This is a gripping psychological suspense novel from a new German writer.

The Ashes of London, by Andrew Taylor (HarperCollins) A murdered man is found in the remains of St. Paul's Cathedral during the Great Fire of London. A novel about art, architecture, feminism, and a grand whodunit to boot.

Not to be missed.

The Night Bell, by Inger Ash Wolfe (McClelland & Stewart) The delightful Sheriff Hazel Micallef returns in this clever mystery, which flickers between past and present, in which the bones of children are discovered near what was once a foster home. This is one of the best Canadian mystery series of all-time.

Get the Picture Anna Fitzpatrick's Favourite Picture Books of 2016 .

The Moon Inside, by Sandra Feder and Aimée Sicuro (Groundwood Books) Ella is afraid of the dark, and this has turned bedtime into a nightly struggle. She prefers the daytime, with the bright yellow sun casting everything in a cheerful glow. This lushly illustrated bedtime story shines a new light on nighttime rituals and the beauty that thrives once the sun goes down.

We Found A Hat, by Jon Klassen (Candlewick) Klassen's hat trilogy (hat trick?) concludes with two turtle buddies who discover a hat in a beautiful desert setting.

There was a macabre sense of humour threaded through his earlier books, and though he deadpans his way through this one, the story takes a surprising turn for the sweet.

The Storm, by Akiko Miyakoshi (Kids Can Press) An anticipated trip to the beach gets sidetracked with an impending storm, trapping the book's young narrator inside. Miyakoshi is an expert at pacing: The frustration felt with the weather builds to a quiet awe as the storm bursts into the book in a chaos of charcoals.

School's First Day of School, by Adam Rex and Christian Robinson (Roaring Brook Press) Robinson has a gift for bringing out the adorable in every book he illustrates; here, he manages to make an anthropomorphized elementary school look cute and cuddly. First-day-of-school jitters get a fun twist in this story that's sure to be an instant classic with teachers looking to assuage the fears of new students in September.

Ooko, by Esme Shapiro (Tundra Books) The pudgy little fox at the centre of Shapiro's strong debut is having a very adorable identity crisis. With no best friend to call his own, Ooko decides he needs to fundamentally change himself in order to find a buddy to play with. There is, of course, a lesson to be learned here, but Shapiro lets it unfold at a gentle pace.

Young Adult Entertainment Shannon Ozirny's Favourite YA Books of 2016 .

Girl Mans Up, by M-E Girard (HarperCollins) Girard gets that life happens without labels and shows the complexity of figuring out who we are and what our hearts want. This is not the story of Pen, the lesbian, or Pen, the maybe trans guy. This is the story of Pen, the person.

Exit, Pursued By A Bear, by E.K.

Johnston (Dutton) Realistic fiction is not just a genre. It's also a rare accomplishment. The power of Johnston's rape survivor narrative is in its everydayness - working through trauma while also trying to recapture some kind of normalcy.

Once In A Town Called Moth, by Trilby Kent (Tundra Books) Ana immigrates to Toronto from a remote Bolivian Mennonite colony and her first experiences with winter, high school and cellphones bring the teen newcomer experience into a sharp, relatable focus. A GG nominee and one of the most beautiful, authentically Canadian books of the year.

The Female of the Species, by Mindy McGinnis (Katherine Tegen Books) Alex is in Grade 12. She's a murderer. She's a torturer. Some might call her a vigilante. Others might call her a serial killer in the making. Told from three perspectives, this is an explosive exploration of gender, violence and how they exist - in some degree - in the lives of all teen girls.

Anna and the Swallow Man, by Gavriel Savit (Knopf Books for Young Readers) Debut novelist Gavriel Savit tells a sparse, often surreal story of a young girl and a mysterious man trying to survive in Poland in 1939. The prose is both poetic and painful, building to a "what the heck was that!?" ending you'll agonize over for days.

Associated Graphic


Kate Beaton perfectly captures the joy, humour and insanity that accompanies the arrival of your own little dictator in King Baby.


In Mary Wept Over the Feet of Jesus, Chester Brown provides visionary versions of the stories of Job, Cain and Abel, along with stark images that create eloquent arguments.


The Moon Inside, by Sandra Feder and Aimée Sicuro, is a lushly illustrated bedtime story that shines a new light on nighttime rituals and the beauty that thrives once the sun goes down.


The pudgy little fox at the centre of Esme Shapiro's strong debut, Ooko, is having a very adorable identity crisis.


Thirty years from now, China's elderly population will vastly outnumber its younger citizens. In a country where assisted-living homes are scarce, and dementia is not widely understood, asks Nathan VanderKlippe, will people pay the price before the government does?
Saturday, November 26, 2016 – Print Edition, Page F1

QINHUANGDAO, CHINA -- The last time Liu Baoying got lost, she left her apartment on a rainy September morning in 2013. At 11 a.m., her son's phone rang. On the line was Ms. Liu's domestic helper, hired when the elderly woman's memory began to fail.

Ms. Liu had disappeared.

Zhang Feiran, her son, panicked. He sent out messages on social media and issued a call on local radio. He went to the local traffic police command centre in hopes street cameras might have caught something.

He came up empty.

Hours later, his phone rang again. His mother had been found, drenched, outside a newspaper office in Qinhuangdao, not far from the coast of the Bohai Sea. People inside had taken pity on her, dressing her in a warm coat and giving her cookies and hot water.

Mr. Zhang picked her up and, from then on, ensured the apartment was locked on the inside. Only a key would let her out again.

"A lot of my friends called to ask what happened," he said. He struggled to answer. His mother was exhibiting textbook symptoms of dementia. But in a country so poorly equipped to handle elderly mental illness that even basis diagnoses remain hard to come by, he had no way to be sure - not then, and not now, after years of symptoms that have grown more severe.

"I still don't know if her illness is Alzheimer's disease or something else. The doctor can't tell me clearly," Mr. Zhang says.

"As we ordinary people say, it's all a question of fate."

In many ways, it's a fate indistinguishable from that of Mr. Zhang's home nation, where a rapidly aging population, and the maladies and societal strains that come with it, stand as a signal challenge.

The cost of elder care threatens to strain government spending around the world. But in no country are more people entering old age faster than China. In coming years, a vast cohort of Chinese people will enter their twilight years and, barring a medical breakthrough, many millions of them will begin to experience dementia.

"The numbers are truly boggling - and the preparation for dealing with the onslaught that is coming is woefully inadequate," says Michael Phillips, a psychiatrist at the Shanghai Jiao Tong University School of Medicine.

Dementia in China presents one of Earth's largest and costliest public-health crises, a slowmoving calamity of human suffering that also portends economic and political danger.

As the fuel for China's industrial engines - cheap labour, hungry consumers, a burgeoning cohort of middle-class workers - slowly dwindles, so too does its ability to propel the global economy. Meanwhile, the cost to the nation of caring for the most vulnerable among the elderly will be staggering. In little more than a decade, some scholars predict, demographics will help drag China's economic growth rate below that of the U.S.

The fast-growing ranks of the elderly are already creating difficult and growing social problems.

This spring, Chinese President Xi Jinping acknowledged "significant deficiencies" that have left the majority of seniors unhappy with their lives in modern-day China. Loneliness is rampant among generations left behind in countrysides emptied of younger people, leading to an epidemic of old-age suicides. He called for the country "to make great efforts" to improve health care and social benefits for its elderly.

Yet the gaps in China's existing social-security system are so large that responsibility for parents with dementia often falls exclusively on the shoulders of their children, like Mr. Zhang, and grandchildren, who struggle to maintain traditions of filial duty when they are outnumbered by their elders.

"We haven't received any help from the government. I haven't heard of any local organizations that can support us," says Mr. Zhang.

He works at a department store, which often schedules meetings for the one day he has off work each week. When he's not at work, he cares for family.

In 2014, he briefly sent his parents to a private seniors home.

But it offered no specialized care for dementia patients, and his mother was so confused by the new environment that she could not sleep. A week later, he brought them back home, and hired a livein domestic helper.

"It's a feeling of extreme helplessness, because there is no other better option," he says. "This disease has completely interrupted everything. I barely have a personal life left."

Dementia and China's demographic disaster Late in the 1970s, as China's leaders prepared for dramatic reform to build a new economic future, they grew fixated on one metric: population and, specifically, how best to tame the country's exploding numbers. Their solution was to enforce a one-child policy. The reasoning was simple: Communist China wanted to get rich, and it is easier to make 10 people wealthier than 100.

The policy introduced countless horrors to China, and its effectiveness has been questioned by scholars who say rising standards of wealth and medical care had already prompted a sharp natural decrease in family sizes.

But at its core, the policy systemized an effort to cap the number of people in the country. Nearly four decades later, China has now nearly reached that goal. Government researchers have said they expect the country to reach the numerical peak by 2029. But census numbers released last week show China's fertility rate in 2015 fell to 1.05, the lowest in the world.

It's now possible China's population will crest - and subsequently begin to fall - in the next two or three years.

One group of people, however, will continue to grow for decades to come. Between now and 2030, the new members alone of China's 60-plus club will be equivalent in number to Russia today.

China is already, as a whole, older than the U.S. By 2050, if current birth and death rates hold, the average Chinese person will be 56 years old, according to an analysis of the new census data by Fuxian Yi, a scientist in the school of medicine and public health at the University of Wisconsin-Madison.

(Canada's current median age is 40.)

Demographic change is both foreseeable and, in relative terms, sufficiently slow-moving that savvy leaders can attempt to adapt. A dramatically older China is nevertheless likely to be one beset with problems, Prof. Yi warns. "In the future, China will have economic problems," he says, mooting the possibility of a financial crisis. China simply "cannot afford" the costs coming its way, he fears.

Take the new number now commanding attention in China: the worker-to-beneficiary ratio, which counts working-age people relative to each person 65 and over.

It's a measure that likens workers to locomotives. The fewer they are, the more weight - or, in this case, elderly - each has to pull.

As recently as 2010, China's number was 7.6, roughly double the U.S. figure, a measure of immense economic vitality. But unless China's new two-child policy produces a birth explosion - something that has not happened - its number will fall precipitously in coming years. By 2050, outside some unexpected shift, China will have just 1.7 workers for every person over 65. (If China follows the current trend, Prof. Yi adds, its population will fall from 1.35 billion today to 450 million at the turn of the next century.)

That's a problem for the economy, since a decline in workers will "act as a direct drag on headline economic growth," says Chua Han Teng, senior analyst for Asia country risk and financial markets at BMI Research.

But the effect is magnified in China because change is coming so fast that the country has yet to build up a sufficiently large store of national wealth or construct the vast care system it will take to look after all of its new elderly.

The way Dr. Phillips does the math, by 2050 China "will need six times the number of nursing beds currently in the U.S." Today, it has half as many.

A Canadian appointed to the Order of Canada last year, Dr. Phillips is among China's most prominent mental-health researchers.

In 2002, he published the first paper on Chinese suicide rates in an international journal. Lately, though, he has devoted his time to dementia, which affects roughly 10.5 million people in China today. But that number is expected to more than triple by 2050, even though the country currently has virtually "zero" specialized capacity to help, despite the likelihood that task will almost certainly fall to government. "People aren't willing to take care of old, demented people," Dr. Phillips said.

"I look at this and it gives me the willies, as a public-health doctor," he says.

Pain in the countryside, and the gilded other side China's rich can buy the best possible care, at a monthly cost that exceeds what many make in a year.

But most families struggling with dementia occupy a sprawling social-services desert, one most bereft of help in China's distant countrysides, like the rural Hubei province home where farmer Wu Jinfeng, 52, tends to her bedridden husband. Her children live in cities, leaving her alone to take care of her wheat, her cotton and his advanced dementia. Her days begin at 5 a.m., when she takes her husband to the toilet before cooking him breakfast, feeding him and helping him to lie down before going out to the fields. At noon, she returns to clean his incontinence and eat before returning to work and, later, coming back again to fix dinner. At night, she must wake several times to see if he has lost control of his bowels or bladder.

With no state support for the medicine he needs - China's public health-care system is replete with gaps, including coverage of certain drugs - Ms. Wu relies instead on her two children to send money. Her husband brought in about $2,000 a year.

His pills alone now cost nearly $5,000 a year. The financial burden has left her son uncertain he can marry, and her daughter desperate. But it's the best they can manage. An elderly care home would cost even more.

"I desperately wish mercy killing would be allowed for people with this kind of disease," said her daughter, Luo Shan. "It is such torture. And we are so helpless, just waiting for death to come. We look at the way our family suffers, but can do nothing."

It's a familiar tale for Wang Huali, a researcher in the Dementia Care and Research Centre at the Peking University Institute of Mental Health, the top such organization in China.

"We have so many people in need of help, but the service providers are very limited. The gap between the number of patients and the service supply quantity is too big," she said.

Even in senior care facilities, many "have not yet provided proper training to their staff," Dr. Wang said. It was only this year that her institute began dementia training for community doctors and nurses.

Hundreds of kilometres away, in a quiet neighbourhood on the outskirts of Beijing, lies a very different kind of place. Inside an apartment-style building are some of China's most successful people, their minds corroded by illness. A talented editor at a highprofile publishing house now eats rice fed by a nurse's chopsticks. A famous doctor of Chinese medicine walks around with a stuffed toy monkey wrapped around her neck, unable to speak.

Their mental loss is magnified by the extraordinary talent they once possessed.

They are nonetheless among China's most fortunate, housed in a hushed unit dedicated to their care.

The oval floor plan ensures no one gets lost in a back hall. A sitting room is stocked with decades-old brands of Chinese shampoo, to create a sense of comfort for those whose minds live in the past. Nurses trained overseas lead art and dance classes.

Every detail has been honed: furniture without sharp edges, lights that aren't too dazzling, anti-skid PVC floors and windows that reach to the floor to allow more natural light to flood in.

With some of the best care money can buy, it's a picture of dignity in the face of difficulty.

This Qingta facility in southwestern Beijing is the first dementia care ward built by Senior Living L'amore. It is a preview of plans to build far more, with 10 to 20 new senior care locations in the next two years, and 20,000 beds in five years. A small percentage of those will be devoted to dementia care.

"The need is there," says Christy Xu, the director of strategy and investment for the senior living business at Senior Living L'amore's parent company, SinoOcean Group.

This is the gilded other side of dementia care in China, where those with the means can buy a rare form of care unavailable to others. They get chefs, therapists - and a pair of Joy Ambassadors tasked with organizing events.

None of it is cheap: about $3,500 (Canadian) per month for a patient with advanced dementia, in a city with an average salary of $1,280.

"I don't think many people can afford this kind of facility," Ms. Xu acknowledges.

But outside it, there are few options. "There aren't very many other places that can take care of seniors with dementia," said Zhang Qingrui, 85, who lives here with his wife, Hou Qingyuan, 83, a former pediatric doctor.

Even with the elite pricing and clientele at Qingta, however, it's a tough business. Rent is expensive and wages have risen high enough that labour costs pose a financial obstacle to building more places like the Qingta location, which opened May, 2014.

The struggles at this place only reinforce the difficulty for China to build a national network of services for the masses unable to afford a gold standard of private care. "The need is there. And government wants more capital investment in this field, because government cannot take care of all of this," Ms. Xu says. But "it's still really hard."

Finding solace, in person and online Wei He leans over the bed where his mother is lying on her side, so still she looks asleep. "Get up," he urges gently. He wraps his hands around around her wrist. "Play a bit."

Wu Chunhua, 94, grunts.

"You can lie down at night," her son tells her. "Not during the day."

Ms. Wu rolls up, and Mr. Wei leans in close, still holding her hand as he begins to prod her with questions.

"What country was Norman Bethune from?" he asks. "Do you remember?" "China," she says.

"You've forgotten," he says softly.

Some research suggests an active mind can help slow the onset of dementia, although it's not clear how much that will change its progression. But Mr.

Wei is hopeful he can help his mother. If his country won't provide that kind of care, he will himself.

"Where is Canada?" he asks.

"By America," she answers. Mr. Wei smiles.

"Let's count in English," he continues. "One, two -" "Three," Ms. Wu replies.

"And then?" "Four."

She continues through 10, speaking a foreign language with a clarity that belies the damage that has accrued in her mind. Communication is laboured. She requires constant attention.

Mostly, that comes from her son.

He quizzes her every day, asking her basic math questions and singing songs, hoping he can keep the lyrics alive in her memory.

"I think she can feel my love. I often hug her," he says.

Life isn't easy. Mr. Wei, 58, himself has Parkinson's, so his own health is slipping. He has no children of his own, and no one to take care of him. Alone at home with his mother and a domestic helper, whose costs he covers through pension and old age payments, he draws comfort primarily from the Internet.

In online groups, he has found not only a place to exchange information, but somewhere to turn for mutual support from the indignities of dementia, particularly in a culture where traditional respect for the wisdom and civility of age can be difficult to square with the reality of a parent whose faculties are diminishing in unpredictable and sometimes embarrassing ways.

The common Chinese word for dementia, chidai, connotes stupidity and insanity. Those who suffer from the disease are stigmatized.

In years past, "we used medicine to sedate them," said Zhao Dan, the memory-care service director at Senior Living L'amore.

Online, though, users talk about parents who beat their children, pour urine on their heads, bite them and pull out their hair. Some family members have killed themselves. Others face punishing medical bills.

Families "need more care," said Chen Weihong, 48, who founded three popular dementia groups on social media site QQ.

For many, the Internet has become a better source for information than the medical system itself. Ms. Chen was working at a hospital when she noticed something wrong with her mother. She consulted doctors and read literature in the medical library. Even after her mother got lost twice, the professionals failed to pinpoint the problem.

"Her dementia symptoms had grown very serious, but doctors still couldn't make a proper diagnosis," said Ms. Chen, whose mother's symptoms first began to appear in 2000. She died in 2011.

One 2004 study found that only a quarter of Chinese patients with dementia who saw a doctor received the proper diagnosis.

"Most doctors do not know how to diagnose dementia - so going there is useless," said Wang Jun, the chair of Alzheimer Disease International in China. And many patients don't see a doctor at all. The same 2004 study found that half of Chinese families considered dementia symptoms a normal part of aging.

Ms. Chen has sought to counter the ignorance. Five years ago, she began inviting doctors and other experts to join the online groups.

Patients can ask questions, and book appointments to see professionals in person. Ms. Chen has invited wealthy entrepreneurs, too, hoping some might provide sponsorship, or perhaps even money for families in need. At the same time, she's directing people to resources that exist.

But it hasn't been easy. China's authoritarian leaders have sought to keep her from gaining too much influence, lest she draw more attention to failings in the system. Ms. Chen has been barred from registering an NGO devoted to dementia. Without proper documents, her ability to advocate and arrange public events is limited.

Still, she keeps trying.

"People like us are willing to serve others suffering the same disease our families endured," she says. "What we are doing is lightening the government's burden.

All I would like is for the government to consider our own burdens in life. I will continue working on it."

The way forward Yang Jianhua has the subdued look of a long-time government functionary, with rimless glasses and a striped collar peeking out over a dark sweater under a dark suit.

But put him in front of a crowd of seniors at a local community centre in Beijing, and he transforms into an amped-up professor. He zips through a PowerPoint, drawing on Ronald Reagan and Margaret Thatcher to discuss the basics of memory loss - stopping every once in a while to demand a quick memory test from his audience, before delivering a sobering warning.

"Some families of patients with dementia say living is even worse than death," he says, before offering strategies for keeping minds healthy. Learn a foreign language.

Practice calligraphy. Cook. Read the news. Eat well. Try your hand at Peking opera.

When it comes to dementia, "be brave to understand it," he says.

"Don't feel shame. Face it up front.

Share your experiences. Slow the advance of this disease."

When Mr. Yang began his career, the biggest crisis confronting Chinese leadership had nothing to do with the elderly. Beijing was, instead, most worried about babies. Enforcement and promotion of the one-child policy fell to the National Family Planning Commission, which grew into a sprawling bureaucracy.

It was there that Mr. Yang built a career. He rose to chief of the information, education and communication department, where it was his job to beat the national drum for birth restrictions. He was a leader in a bureaucracy that oversaw horrendous abuses in the name of limiting the country's population - part of the reason its demographics are so skewed today.

Then he had a second child himself, and quit. He moved to the U.S. and studied public health communication at Johns Hopkins University before returning to China, where he is now director of the Huaxia Population and Social Development Research Institute. It's a post that has him delivering propaganda of a very different kind, to counter a problem rooted, in part, in the work of his previous employer.

Now funded by a Chinese lottery, he travels around Beijing to tell the elderly about dementia, one small crowd at a time. Last year, he spoke with 1,800 people.

This year he is on track for more.

"The purpose of this is teaching people about what Alzheimer's disease is. That's very important," he said.

China's government, too, has made steps toward filling the breach. The country's National Mental Health Work Plan, released last year, recommends major change, including doubling the number of psychiatrists by 2020.

But the plan acknowledges widespread problems. "At present, our country's mental health services resources are truly insufficient and unevenly distributed," it says, pointing to widespread social prejudice against the mentally ill.

And as an editorial in The Lancet noted, the plan came with no budget, raising doubts it can be achieved, particularly given the scale of the need, and the degree to which government support is likely to be required.

Though China has a reputation as a nation of savers, its elderly have set little aside for their futures - of Chinese homes with people aged 55 and above, nearly 80 per cent had only enough of their own money to live for a year, Duquesne University professor Mark Haas wrote in A Geriatric Peace, a 2007 academic article.

"China's leaders will be faced with a difficult choice: allow growing levels of poverty within an exploding elderly population, or provide the resources necessary to avoid this situation," he wrote.

China may find a way forward by adopting creative solutions devised by other governments.

Japan, for example, has built community centres that function on a drop-in basis. It's a hybrid model that leaves families responsible for much of the care, while giving them the opportunity to give parents with dementia to caregivers for a few hours to rest or run errands - or even for a few nights so they can take a quick vacation.

Japan has problems, too. It recently announced plans to allow foreign workers in to understaffed elderly care homes.

The country's flexible approach nonetheless remains one "I think can be copied in China," said Chen Hongtu, a psychiatric researcher at Harvard Medical School who has studied dementia in Asian cultures.

Such systems, though, take time to set in place, and though time is something China lacks, government inaction continues. Karen Eggleston is part of a joint project with the Chinese Center for Disease Control and Prevention to evaluate chronic disease control efforts. "They focus on everything but mental health and dementia," said Prof. Eggleston, who is director of the Asia Health Policy Program at Stanford University.

Those issues have been "pushed to the back" because they are tough to solve.

But "China can't keep doing that, or it's going to come back to haunt it in multiple ways," she said.

In some places, though a conversation has begun. Last November, a local government office called to speak with Ms. Chen, the QQ group leader. They wanted to ask her about the needs for families who struggle with dementia and Parkinson's, a disease that afflicted her mother-in-law.

When she went in, she found herself face-to-face with experts and staff at branches of the Chinese Centre for Disease Control and Prevention. They described plans for a two-year pilot project in six Chinese provinces. Its goals include boosting hospital medical care, building a long-term hospital-based care system and blending government and community services.

Ms. Chen was asked to represent patients, and invited to make a half-hour speech before an audience of powerful researchers and officials. She spoke about the need for money, and a lot more of it. She spoke about the lack of knowledge among caregivers, or education for families. She spoke about companies that place a stranglehold on their employees' time, preventing them from properly caring for loved ones.

When she finished, she sat down and watched a senior government leader take the stage to describe a national effort to make care for dementia and Parkinson's into "major national projects."

"We must do it well," the official said. "To anyone who steps out of line, I will fire you."

It suggested to Ms. Chen that the state was preparing to step in.

In the meantime, researchers like Dr. Phillips are racing to test methods for early identification of people who will develop dementia. Figure that out, and suddenly a window opens to test ways to slow, or even prevent, its onset.

The work is taking place in China, because nowhere else is it more important.

Dementia "will consume a huge amount of resources - and they haven't even done research on how we are going to provide services for all these people," Dr. Phillips said.

"But it's a tidal wave that's coming."

For now, though, the families already caught up in the waters can do little but hope the disease doesn't ravage their own lives, too.

At his mother's house, Mr. Zhang seeks solace in old photos of happier times. He flips through the black and white images, reminded of the artistic skill his mother possessed, once painting a particularly vivid portrait of Lenin. His mother watches television in the background. Now, she sometimes puts both socks on one foot. "I bought a book, and learned that the next phase will bring difficulty swallowing and even walking," Mr. Zhang says.

His mother can still recognize many Chinese characters, and even hums along to Communist revolutionary songs when they come on TV, embers of memory sparking back to life. Mr. Zhang hopes those continue to last - but is determined to do what he can to give his mother dignity when even they begin to vanish.

"The current science says this disease is irreversible," he adds.

"What I can do is my utmost to provide her the best in life."

Nathan VanderKlippe is the Asia correspondent for The Globe and Mail.

With reporting by Yu Mei

Associated Graphic

Like a growing number of aging Chinese people, Liu Baoying suffers from dementia, an illness public health doctors say poses a crisis for China.


Dementia in China is only beginning to be properly diagnosed and understood. Senior Living L'amore is one of the few private facilities offering tailored care, but is prohibitively expensive.


The country's National Mental Health Work Plan, released last year, recommends major change, including doubling the number of psychiatrists by 2020, but acknowledges that the present resources are 'insufficient and unevenly distributed.'


By 2050, it's estimated, China will have just 1.7 working citizens for every person over 65. That number was 7.6 in 2010.


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