'The Fed talking about 2024 is almost a joke': CIBC deputy chief economist on inflation
Canada has been dubbed one of “the world’s frothiest housing markets” in a new report from Bloomberg Economics that leaves no room for misunderstanding. “Gauges of risk are flashing warnings at an intensity not seen since the run-up to the 2008 financial crisis,” according to Bloomberg Economist Niraj Shah, who puts Canada in the number two spot, behind only New Zealand, in his bubble rankings based on sky-high price-to-rent and price-to-income ratios.
AWAITING THE FED
It’s been almost a month since the S&P 500 moved more than one per cent; with futures little changed, there’s no sign that’s about to change ahead of tomorrow’s policy statement from the U.S. Federal Reserve. Will Chair Jerome Powell indicate his central bank is prepared to finally start talking about tapering stimulus? Let’s just keep in mind what CIBC Deputy Chief Economist Benjamin Tal told us yesterday: “I think the Fed talking about [raising rates in] 2024 is almost a joke.”
LET THE BIDDING BEGIN
The long awaited 3500MHz wireless spectrum auction finally gets underway today. It's a process that will shape the future of telecommunications, and 5G more specifically, in this country. Twenty-three applicants will compete for the airwaves, that’s one fewer than initially anticipated after TekSavvy pulled out in the wake of recent CRTC decisions. So many storylines to track, like what Rogers will do as it works on closing its takeover of Shaw. And will Cogeco and/or Videotron make a big splash? On top of that, there's the underlying issue of what the spectrum will mean for consumers as 5G takes hold.
MEME STOCK DRIVERS
We’re going back to the source on where the frenzy started this morning when we speak with WallStreetBets Founder Jaime Rogozinski. If you want to understand what’s motivating the day traders who’ve flocked to Reddit, this is a can’t-miss interview. Catch it live at 8:40 a.m. or later at BNNBloomberg.ca
BLACKBERRY, WATSA BLASTED OVER COMPENSATION
Glass Lewis is recommending investors reject BlackBerry’s executive compensation structure in what will be a symbolic advisory vote. The firm is also urging investors to withhold support for Prem Watsa's re-election to BlackBerry's board as a result of its concerns about pay practices. "It appears that the (compensation) committee may not effectively be serving shareholders," according to Glass Lewis. Watsa chairs BlackBerry's compensation committee.
OTHER NOTABLE STORIES
- Some important news flowing out of Brussels as Canada and the European Union announced, in very broad strokes, a strategic partnership on raw materials that EU leaders said is all about diversifying the bloc away from China. The EU leaders also spoke about wanting to “solve the issues” that are slowing the full implementation of CETA. Meanwhile, the EU is expected to formally unveil an agreement with the U.S. to end the long-standing dispute over subsidies provided to Airbus and Boeing.
- The price of lumber sagged below US$1,000 in Chicago trading yesterday for the first time in more than two months, and is now down 40 per cent since early May. I see our Bloomberg partners are pointing out this feeds right into the Fed’s hands with its messaging on inflation being transitory.
- VerticalScope Holdings is about to start trading after raising $125 million in an initial public offering that was priced near the top end of the target range. IPO paperwork shows this is a profitable software company catering to so-called "enthusiast communities" (1,200 of them, according to the prospectus), and proceeds from the offering are earmarked for M&A. We'll explore that strategy and competitive threats when we speak with President and Chief Operating Officer Chris Goodridge at 10:40 a.m.
- Aritzia is expanding into menswear with an agreement to purchase Vancouver-based athletic apparel maker Reigning Champ, whose wares don’t come cheap (a quick scan of its website shows a tie dye t-shirt will set you back $145). We’re hoping to speak with Aritzia CEO Brian Hill this morning.
- Shopify is branching out. It announced this morning it will make its Shopify Pay checkout service available to all retailers who sell products via Facebook and Google. This is a new strategy for Shopify, which had previously limited use of the service to sellers that use its core platform.
- British Columbia enters the next step of its reopening plan today, allowing for recreational travel within the province, later liquor service at bars and restaurants, and expanded fitness services.
- Notable data: Canadian housing starts, existing home sales, and industrial product price index flash estimate (May); U.S. retail sales, producer price index, and capacity utilization
- 10:00: Federal auction of 3500 MHz wireless spectrum scheduled to begin
- Notable earnings: Oracle