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Noah Zivitz

Managing Editor, BNN Bloomberg

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Canada’s annual inflation rate eased more than expected last month as the consumer price index rose seven per cent year-over-year. Based on the median estimate gathered by Bloomberg, economists were expecting 7.3 per cent. It’s the second straight month of cooling price pressure, after the 39-year-high of 8.1 per cent in June.

But if we dig below the headline, it’s a mixed picture. Take the two big pain points: gasoline prices fell 9.6 per cent sequentially. But food prices were a major inflationary force month-over-month. And on that note, we’ll point out Sylvain Charlebois’ Agri-Food Analytics Lab is out with a new survey showing a range of behavioural changes as Canadians cope with higher food prices — including one-third of respondents saying they’re using more loyalty points to feed themselves, and 11.5 per cent saying they’re buying food at dollar stores.

Where does this leave the Bank of Canada? We’ll have plenty of reaction throughout the day. Including as it relates to fears of an inflationary wage spiral; and on that note, a separate release today from Statistics Canada shows there were a record 997,000 job vacancies in the second quarter.

FEELING THE HEAT

Good timing for the National Payroll Institute to release its annual survey, which this morning showed all the strains you'd expect in these highly inflationary times. The data show a record 11 per cent of working Canadians said they're spending more than their net pay; nine per cent said they aren't able to save anything; and 18 per cent said they've used debt to cover essentials including shelter, food, or clothing this year.

A SUPPLY-CHAIN WAKE-UP CALL

We’ve heard plenty of comments recently about the easing of supply-chain pressures. Ford Motor Company is serving as a reminder that those pressures are a long way from being solved. It warned after yesterday’s closing bells that it’s expecting to have up to 45,000 vehicles (“disproportionately” skewed to “high-demand, high-margin” trucks and SUVs) sitting around at the end of the third quarter in need of parts that are in tight supply. As such, it said some revenue and adjusted earnings will drift into the fourth quarter, and it’s expecting an additional ~US$1 billion in third-quarter supply costs. Can’t help but wonder what this tells us about the negotiating power for parts makers … like the big three industry leaders in Canada.

FOLLOW THE MONEY ON NET-ZERO

Seventy-four institutional asset managers with a combined US$10.6 trillion under their belts (that’s a trillion more than last year) have joined an alliance that’s pledging to achieve net-zero emissions for their entire investment portfolios by 2050 to support the Paris Agreement’s global-warming target. Forty-four of those members (with US$7.1 trillion in assets) have set firm intermediate targets thus far. Only one of them is Canadian: Caisse de dépôt et placement du Québec. We’ll chase insight on the progress and the role for stewards of capital in the transition that’s sweeping across all sectors of the economy.

OTHER NOTABLE STORIES

  • Canfor announced last night it will slash about 200 million board feet of production capacity across British Columbia through the rest of this year due to reduced demand. Looks like the company is attempting to protect its employees by offering maintenance work.
  • Westshore Terminals yanked its outlook last night, saying it is no longer able to provide an operational forecast due to a strike that started over the weekend. Prior to that work stoppage, Westshore said it loaded 19 million tonnes of coal year-to-date at an average rate of $12.06. In a note to clients, RBC Capital Markets Analyst Walter Spracklin said those metrics were “largely in line” with his expectations and noted he doesn’t expect back-to-work legislation will be tabled to end the strike.
  • Walmart announced this morning it’s planning to invest $1 billion in this country this year, including the construction of a $100-million fulfillment centre near Montreal. Another $330 million is for store refurbishments across Canada. It should be pointed out this is not net new money; it’s part of a previously-announced $3.5-billion spending envelope. We’re speaking with Walmart Canada’s transformation officer around 4:20 p.m. EDT.
  • Amazon.com Inc. didn’t have to wait long for the payoff from its US$13-billion bet on the NFL. Our Bloomberg News partners obtained an internal email sent by Amazon’s VP for streaming services that proclaimed the initial broadcast “a resounding success” as it attracted a record number of new Prime subscribers for a three-hour timeframe. (Reminder/disclosure: our parent, Bell Media, is the NFL’s exclusive TV broadcast partner in Canada).
  • There’s no elegant transition to or from this one: Beyond Meat Chief Operating Officer Doug Ramsey was arrested Saturday night after allegedly getting into an altercation in which he is accused of biting someone’s nose. He was released from custody Sunday on a US$11,085 bond. Beyond Meat hasn’t commented.

NOTABLE RELEASES/EVENTS

  • Notable data: Canadian CPI, Teranet/National Bank home price index, and job vacancies; U.S. housing starts and building permits
  • Notable earnings: Aurora Cannabis
  • 1130: Associate Finance Minister Randy Boissonnault, Health Minister Jean-Yves Duclos, Housing Minister Ahmed Hussen, National Revenue Minister Diane Lebouthillier hold media avail on implementation of government’s affordability measures (GST credit, etc. N.B. there’s a technical briefing at 1015)
  • 1545: Bank of Canada Deputy Governor Paul Beaudry delivers speech "Pandemic macroeconomics: What we’ve learned, and what may lie ahead" (remarks on bank's website at 1530)