If the summer heat doesn’t get you, inflation will
Canadians hoping for rate of interest relief will likely must wait a bit longer. The consumer price index (CPI) for May was 2.9%, in line with Statistics Canada.
The money markets are forecasting a 45% probability that the Bank of Canada (BoC) will cut rates of interest at its July 24 meeting. Cutting rates after a month of fresh inflation concerns would pose a serious credibility risk to the BoC after it raised rates so quickly to revive confidence that it will contain inflation in the long run.
CPI Highlights May 2024
Here are some notable findings from the CPI report:
- The overall CPI increase in May was 2.9 percent, 0.2 percent higher than the CPI increase in April, which was 2.7 percent.
- Renters in Canada proceed to be severely affected, with rents increasing by 8.9% year-on-year.
- Mortgage rates of interest also rose massively, by 23.3 percent.
- The core CPI (excluding volatile items corresponding to gasoline and food) was 2.85%.
- Travel costs also rose sharply: flight prices rose by 4.5 percent and round trips by 6.9 percent.
- Gasoline costs rose by 5.6 percent.
- The barely higher news is that food prices are up just one.5% year-on-year, but 22.5% since May 2020.
- A vivid spot within the deflation continues to be mobile services, whose prices have fallen by 19.4% since May 2023.
We are sure that the BoC had hoped for an inflation rate near 2.5%, which might allow it to justify rate cuts and point to a stronger downward trend in inflation. It won’t get any easier any time soon for BoC Governor Tiff Macklem and his team to proceed to strike a balance between long-term growth and full employment and controlled inflation.
For now, savers will proceed to learn from higher rates of interest, corresponding to those on guaranteed investment certificates (GICs) and high-yield savings accounts (HISAs), while borrowers will proceed to hope for relief. And in fact, you possibly can read our article on ways to speculate in a high-inflation world: best low-risk investments at MillionDollarJourney.com.
FedEx delivers, Nike just doesn’t
This week, US earnings saw two extremes: While FedEx shareholders were extremely satisfied, Nike investors were depressed.
US earnings highlights
This is the results of this week’s quarterly reports. Both Nike and FedEx report in US dollars.
Nike CFO Matthew Friend found himself in an odd position during his earnings call with analysts on Thursday. On the one hand, Nike’s efforts to chop costs by cutting 1,500 jobs are paying off, and earnings per share got here in significantly higher than experts had forecast. On the opposite hand, falling sales in China and “increasing macroeconomic uncertainty” were cited as reasons for a forecast 10% decline in sales next quarter. Investors preferred to see the glass half empty, as shares fell greater than 12% in after-hours trading.
Friend tried to place the downward forecast into perspective: “Although our outlook for the near term has clouded, we remain confident in Nike’s long-term competitive position in China.” Nike highlighted running, women’s apparel and the Jordan brand as growth areas to look at in the long run.
FedEx had a a lot better day, with shares rising greater than 15 percent after Tuesday’s earnings announcement. Future earnings forecasts rose on news of increased cost-cutting measures that can save the corporate about $4 billion over the following two years. FedEx touted possible higher profit margins because of this of consolidating its air and ground services.
Bankrupt consumers weigh on Couche-Tard
Canada’s thirteenth largest company, the gas station and convenience store empire Alimentation Couche-Tard, announced its financial results on Tuesday.
