A cross-party group of federal lawmakers is backing a call for climate-focused rules on how Canada’s banks, insurers and pension funds invest their money. Ryan Turnbull, the Liberal MP leading a new push to bring the country's financial system in line with its commitment to reduce carbon emissions, made a call for Canada's financial system to be aligned to the Paris Agreement. Turnbull's motion does not explicitly support Senator Rosa Galvez's Climate-Aligned Finance Act (CAFA).
Fed’s Powell in spotlight as pressure mounts to ‘fish or cut bait’ on rates
The Globe and Mail
23-05-19 13:51
The Federal Reserve’s June policy meeting might not result in an interest rate hike, as many traders and analysts would expect, according to this commentary. Policy makers are divided over whether to take a break in their rate increase cycle, or whether to carry on the hikes if inflation does not decrease. Much will depend on Fed chair Jerome Powell, but he may be constrained by the uncertainty surrounding debt ceiling funding.
Statistics Canada reports retail sales down 1.4% in March, but core sales up 0.3%
The Toronto Star
23-05-19 13:00
Retail sales in Canada fell 1.4% to $65.3bn in March, according to Statistics Canada, but the agency says core retail sales, which exclude gasoline and automotive sales, rose 0.3% during the month. Sales at motor dealerships saw a much sharper decline, down 4.4%, as new car sales slumped 4.8%. Sales of building materials and garden equipment rose 1.6%, while sales at sporting goods, hobby, musical instrument, book and miscellaneous retail outlets gained 1.6%. In volume terms, retail sales fell 1% in March.
UK Chancellor Rishi Sunak has spoken out against pessimistic reports over the country’s future prospects. Sunak defended the Conservative government, stating bold action taken to prevent recession and protect small businesses led to one of the biggest upward revisions for the UK economy by the Bank of England and the strongest surge of confidence amongst finance directors since 2020. Sunak also made direct reference to post-Brexit growth rates and said the country’s plans to boost its economy and trade with other nations had led to significant inward investment.
Talks between US House of Representatives Republicans and President Biden’s administration on raising the debt ceiling stalled, leaving little time for agreement before the federal government risks catastrophic default. The Treasury Department warned it may be unable to pay its bills by 1 June. Representative Garret Graves said the talks stopped until further progress is made, but the White House remained optimistic a deal could still be reached. Democrats have raised concerns over work requirements attached to the talks, delaying negotiations. Failure to resolve the issue would impact US stocks, Treasury yields, and the dollar.
The Quebec government has announced plans to spend CAD 1bn ($791m) on reducing the carbon footprint of buildings. Almost 10% of the province’s greenhouse gas emissions originate from buildings. The funding is part of the government’s green economy plan, which runs from 2023 to 2028. Thermal waste treatment will receive $215m of funding, while a rating system will assess the energy efficiency of large buildings. The new measures should enable the government to achieve 60% of its goal of reducing greenhouse gas emissions to 37.5% less than 1990 levels by 2030.
The recent AI frenzy sparked by chatbot sensation ChatGPT has driven the S&P 500's 9% rally so far this year, with Microsoft, Google parent Alphabet, Nvidia, Apple and Meta Platforms accountable for the index's returns, according to Jessica Rabe, co-founder of DataTrek Research. About 25% to 50% of these gains are owed to the buzz around artificial intelligence, Rabe added. A recent Societe Generale analysis showed that removing the 20 AI-related stocks widely owned by ETFs would reduce the S&P 500's performance by about 10 percentage points, putting stocks in negative territory for the year.
Despite being forced to borrow 256 billion euros from the International Monetary Fund and its Eurozone partners to balance its budget, Greece managed to do so in four years despite a quarter of its GDP being lost to recession. Half a million workers and a quarter of a million small enterprises collapsed, and behemoths like Viohalko, the country’s largest industrial group, shifted its headquarters abroad. Despite political upheaval Greece has reached a surplus in the first quarter of 2023 and is expecting to outperform the EU average in its return to AAA investment grade status. Half of the Greek workforce is made up of small companies and self-employed individuals, and though the government has been attempting to encourage mergers and farming co-operatives through tax breaks, many small businesses continue to struggle with Greece’s high energy inflation and dire bureaucracy.
Rishi Sunak, the UK's chancellor, has refused to reveal the level of legal migration that would be deemed "acceptable" and insists that the government must prioritise the economy over its pledge to reduce overall migration figures. Total migration numbers, which account for net migration, are set to reach a new high of over 700,000 from within the year of 2021 to 2022. Despite this, Sunak refused to specify when or how the UK's government expects to reduce the overall number. Sunak has said that the number of legal migrants is currently "too high."
This U.S. debt ceiling standoff isn’t like before – economic disaster could happen
The Globe and Mail
23-05-19 20:02
The US government is just weeks away from running out of money if the “X-date” when the so-called debt ceiling is not raised arrives. Although the White House is playing down the dangers, it is typically dismissed as posturing to put pressure on Republican congress members. However, current conditions differ considerably from earlier episodes of the debt-ceiling standoff and complacency could cause a dangerous storm. If the June 1 deadline passes and the debt-ceiling has still not been raised, the government will likely be forced to drastically cut spending which may cause a recession with disastrous effects globally.
Uncertainty persists over whether additional interest rate increases will be required in the US, according to the Federal Reserve’s chairman, Jerome Powell. The central bank needs to weigh the effect past rate hikes and recent bank credit tightening may have on the economy against the difficulties it faces in reigning in inflation. Powell said the Fed would have to go “meeting by meeting” in its approach but added that coming into this year it had “faced little restraint”. Policy makers will receive job and inflation data which could affect their decisions ahead of a meeting on 13 and 14 June.
UK Chancellor Rishi Sunak has spoken out against pessimistic reports over the country’s future prospects. Sunak defended the Conservative government, stating bold action taken to prevent recession and protect small businesses led to one of the biggest upward revisions for the UK economy by the Bank of England and the strongest surge of confidence amongst finance directors since 2020. Sunak also made direct reference to post-Brexit growth rates and said the country’s plans to boost its economy and trade with other nations had led to significant inward investment.
NASA has awarded a $3.4bn contract to Jeff Bezos’s company Blue Origin to build a spacecraft that will send astronauts to and from the moon. The project will require Blue Origin to test and develop a “lander” under the Artemis programme, NASA’s lunar exploration initiative. The agency intends to use the technology to send the first manned mission to the moon’s surface since the end of the Apollo moon landings in 1972. In April 2021, NASA awarded a $2.89bn contract to Elon Musk’s SpaceX to develop a human landing system for the Artemis programme.
Mexico’s government has used marines to occupy a section of railroad managed by a private conglomerate. The seizure has been deemed “temporary” and in the “public interest,” as the government works to update a rail-to-sea network on the Isthmus of Tehuantepec, a narrow area of land separating the Gulf of Mexico and the Pacific Ocean. The Inter-Oceanic Corridor intends to enable Mexico to bolster its economy and compete with the Panama Canal, which is seen as a major channel for regional trade. Transportation firm Grupo Mexico Transportes is to be compensated by the government for the seizure which took place on 8 October.
A federal judge in the US has ruled that American Airlines and JetBlue Airways must end their regional partnership in the country's north-east within 30 days. The Justice Department had sued in 2021 to block the “unprecedented domestic alliance” between the two carriers. “These two powerful carriers act as one entity in the northeast, allocating markets between them and replacing full-throated competition with broad cooperation,” said US District Judge Leo Sorokin in his decision. The two companies argued that their partnership would have allowed them to compete better in the region against Delta Air Lines and United Airlines. Both JetBlue and American Airlines saw a dip in their shares following the ruling, with a 1.8% and 1.5% dip respectively.
Many private jets that were owned by sanctioned Russian oligarchs and escaped seizure under “Operation Kleptocapture” have fallen off tracking services like FlightRadar, possibly because they have been re-registered under new tail numbers; data also reveals that there was a surge in private jet re-registrations last year. These aircraft have been connected to oligarchs who have been sanctioned for protecting the Kremlin, or for enriching themselves from the state. Earlier investigations identified planes associated with oligarchs and movement could be tracked via their original tail numbers. There is no law against jet owners re-registering them in different countries after they have been registered with a national authority, with processes not dissimilar to car registration. However, a consequence of re-registration is that it provides owners with a new level of anonymity. Analysts have said that some oligarchs appear to be enjoying frequent beach holidays, but flights to China, India and Iran are likely to be business-related as Russia considers these its largest markets for oil exports.
The southern Chinese economic hub of the Greater Bay Area, which includes Hong Kong, Macau and nine mainland cities in Guangdong province, has a combined gross domestic product (GDP) that is now comparable to Italy’s at close to $2tn. The GDP of the area climbed 25% from $1.65tn in 2019, according to Financial Secretary Paul Chan Mo-po. If considered as a standalone economy, the Greater Bay Area would have been the world’s ninth-largest economy in 2021, just below Italy, according to the IMF.
Services exports from the UK have grown by 17.8% from 2016 to 2022, according to data from the Organisation for Economic Co-operation and Development, marking the strongest growth in the G7. While goods exports fell in the last quarter of 2022, leading economist Sophie Hale has labelled the rise in services export as a "boom" and equating the UK's growing ability to provide high-skilled professional and business services. The Bank of England has also revealed that approvals by banks to households for house purchase loans were at the highest in February since April 2015. This activity shows signs of stability for the UK's economy, with market experts stating that the growth reflects the value of the country’s service-based industries, including travel, education and banking.
The French market for organic food began to decline in 2021, leading some farmers to give up or be discouraged from converting to organic because of soaring food prices and the cost of living crisis. The fall in sales has also been a result of a lack of visibility of organic products on supermarket shelves. Marc Fesneau, the agriculture minister, announced a €60m ($69.5m) aid package to support producers and a range of measures to boost demand, including raising the presence of organic food in state-funded canteens to 20% by year-end.
China has been strengthening its economic relations with Latin America as it seeks to build up a foreign trading network while ties with the US flounder. China is Latin America's second-largest trade partner after the US, with two-way commerce at a record high last year. Here are five ways China has recently made inroads in Latin America: a free-trade agreement with Ecuador; the cancellation of a Taiwanese free-trade agreement with El Salvador; 15 agreements made with Brazil, including the use of yuan to settle exchanges; Argentina's decision to pay for imports in yuan; and initial tariff cuts courted by Nicaragua.
