I was on the CBC News’ Weekend Business Panel this Saturday speaking about the proposed Alberta Pension Plan (bad idea), the SBF trial (he was obviously guilty) and the future of Blackberry (lots of soul-searching needed). See the discussion below, and as always, comments are welcome!
Media
Now that the summer is over I was invited once again to the Weekend Business panel on CBC News. You can watch it below!
The TL;DW version is:
- Latest inflation numbers: Not very good news as inflation seems to be supply-side, so it is much harder to control. Gas prices will also negatively affect the price of food even more for the next quarter at least. This means that interest rates will remain high for a while, possibly even into 2025. Also, deflation is not a bad thing if it is transitory and aimed at first necessity goods, as opposed to affecting consumption in the long run.
- The UAW strike: Not really my topic, but my comment here was that the strike was expanded significantly and that can impact car prices in the future as it will now target in-demand cars. Also, some factories in Canada may be facing temporary work stoppages.
- Equifax report on the increase in lending application fraud: while this is a relatively minor issue, it mixes two different things. First, mortgage fraud is on the rise. Most of this type of fraud is misrepresentation of income, which may be considered a white lie by some borrowers (16% according to a relatively old survey), but it actually is fraud and can have serious consequences for borrowers. The second is auto and credit card fraud. This one is mostly done by criminals that steal identities. The recommendation here is clear: monitor your credit at least monthly and if you see anything that you don’t recognize, immediately contact your financial institution.
I’m on next on October 14 and November 4.
Another interest rate hike, another hit to Canadians to keep inflation in check, another time journalists reach out to the BAL for insights. I was on CTV national speaking about it. You can see the interview in this link. What’s cool about this link (active for 30 days) is that it also shows how many people viewed the interview. 3,520,000 persons. Wow, I’m amazed about the reach of these activities and humbled I get the chance to speak directly to so many Canadians. Thank you to everyone that tuned in and I hope I helped explain what’s going on!
The second coverage was at CTV London. This one did have a shareable link, and a piece of written news. The written news is in this link, and I’ve also embedded the interview below.
I had a bit of a slip that made the segment: what I wanted to say was that one of the factors within core inflation is service inflation, and that one hasn’t come down. Also, this round we had a surprisingly strong demand for goods. According to the BoC this is both due to savings from the pandemic that households are spending, and also because of very strong demand from the US for our goods.
The BoC is much more pessimistic about when they will control inflation, targeting now the second semester of 2025. This would come, however, with no recession. This is very uncertain though, as they themselves acknowledge. We’ll have to see.
In a more personal opinion, I believe the BoC is ok with a moderate recession as long as inflation comes back down, so they rather overdo it. Inflation expectations are really high both in consumers and businesses. These decisions are aimed at convincing everyone that they will keep hiking rates as long as necessary. I, for one, believe them.
Always fun to be on the CBC News’ Weekend Business Panel. This week I was asked to talk about the price fixing fine on Canada Bread, Equifax’s reporting small businesses have significantly increased their credit card debt (and reduced loans), and the most livable cities ranking from The Economist.
With respect to the second point, in general it is not a good sign. It is not clear why businesses are using more revolving debt (no good reason though), but the reduction in traditional lending does reflect lower investment in the future. I think the pinch of inflation plus high cost of debt is being felt more widely already. The FT called it the “pain phase” earlier this week: the period where rates are high, but inflation still hasn’t come down.
See my thoughts below!
The Bank of Canada raised the interest rate once again, shocking a section of the market. I honestly expected this as the fundamentals aimed at it, with inflation still high, a tight labour market, the US still very aggressively raising rates, and the time it takes for people to renew their mortgages and take higher rates. Also, relative to inflation interest rates are still around historical averages.
It sadly does mean higher debt costs for everyone. This will also mean a slowdown in the medium term, but how big will this be (either a recession or not) is anyone’s guess. Canada has a safer banking system, so interest rate risks are significantly lower, giving more runway to the BoC for future rises.
CTV News London interviewed me about this yesterday. I speak around 6 minutes in.
I had the opportunity to be at CBC News‘ Power and Politics on Friday speaking about the debt ceiling. First time in a TV studio! Time went so fast I didn’t even mentioned anything about the specific impact on the stock and bonds markets of either a shutdown or a default. As there is a deal now, my second point on the specifics of the deal are more important. Any deal could impact Canada’s bottom line for years to come. So far, it seems like a general reduction in spending growth to no more than 1% yearly, rather than specific programs cut, we’ll know in the next few days. These are good news for Canada in general, at least much better than cuts that could threaten specific strategic industries.
The interview is below, I start at 29:18.
Extending the coverage, the Canadian Press interviewed me about it. The interview was then featured at The Toronto Star, here. Also, CIXXFM here in London took a bit of a different path, focusing more on the personal finance side of it (don’t panic!!). This interview can be read here.
I was on the CBC panel again this weekend! This week we spoke about the BoC’s decision to keep the monetary policy rate steady, the Mercer report on Millennial renters needing 50% more upon retirement (not a fan of the study) and Amazon’s Bedrock & Titan, although my producer cut me off because we were running out of time. I had a lot more to say about AI!
What I didn’t say on Saturday: I believe we will end up in a three-tiered world: A first world of companies developing these models (having the technological capacities and data availability to properly train them). A second world of companies that can take outputs of these models, or available public models and fine-tune them over either private or public infrastructure (BloomberGPT for example and several research projects I am working on). And a third world of companies that will be technology takers and deploy these technologies either via live services (such as Amazon Bedrock) or via prepackaged assistants (such as LLM-powered Bing or Microsoft’s Copilot).
See the panel below.