 Monday, November 27, 2023 | | | Welcome to Mind Your Business ! Consider this your weekly guide to understanding what’s happening in the worlds of economics, business and finance. By Peter Armstrong | | |  | The road ahead is starting to look better. (ABCDstock/Shutterstock) | | | I'm still not entirely convinced what made the biggest news last week. We had the federal fall economic statement, the newest inflation numbers and a speech by the governor of the Bank of Canada.
All setting up another busy week with third-quarter GDP numbers on Thursday and the most recent jobs numbers on Friday.
The data keeps pointing in the direction of a soft landing (no recession) and an approaching turning point in the economy.
The CPI data released showed inflation knocking on the door of the central bank's target window of one to three per cent.
The next day, Bank of Canada governor Tiff Macklem said he believes interest rates may be high enough to get inflation back under control.
"This tightening of monetary policy is working, and interest rates may now be restrictive enough to get us back to price stability," said Macklem. "But if high inflation persists, we are prepared to raise our policy rate further."
The fall economic statement was more of an update than a mini-budget. You can read all the political analysis from my smart colleagues here and here and here.
I will leave them to break down the policy side and focus on what the numbers tell us. | | |  | | | But all anyone really cares about now is what happens next.
And this week will tell us quite a bit about where we are headed.
GDP numbers on Thursday will flesh out the picture of growth in the third quarter.
The second quarter was flat. Zero growth in April, May and June. We already have the data for July and August. This week, we'll finalize the third quarter with the September figures.
But Kevin Page, the former parliamentary budget officer and current president of the Institute of Fiscal Studies and Democracy at the University of Ottawa, says it's not going to be pretty.
"Weakness is a defining characteristic. We had no growth in the second quarter, we're likely to see no growth in this third quarter," he told me during the budget lock-up in Ottawa this week.
What meagre growth Canada will eke out this year came during the first quarter and things next year aren't exactly looking bright. | | |  | | | On the upside, the majority of forecasts now suggest that Canada will avoid an outright recession.
I wrote a piece last week highlighting how the fall economic statement was built on the clear hope that things will get better, not worse, and how that's by no means a sure bet.
But by the same measure, things could get better faster. If inflation continues to come to heel faster than expected, that could push the economy back on track. Now that the Bank of Canada has clearly signalled it thinks rates are high enough, the next step is communicating when and by how much rates can come back down.
Once that cycle starts, the economy has the potential to kick into gear again.
But those are an awful lot of "ifs" and if these past four years have taught us anything, it's that we never really know what's coming around the next corner.
What do you think will happen?
As always, send me a note.
My email is: peterarmstrong@cbc.ca | | |  | | Canadian GDP numbers will be released on Thursday. Most economists believe the economy didn't grow at all in the third quarter. | | | | | | Jobs data for November will be released on Friday. Canadian employers added 18,000 jobs in the previous month, but the unemployment rate rose to 5.7 per cent because of population growth. | | | | | | Canadian banks will release their quarterly earnings this week. Scotiabank reports on Tuesday. The rest will follow suit on Thursday and Friday. | | | | | Three things to read, watch and listen to this week | | |  | Money counterfeiter Frank Bourassa is the subject of a new documentary. (Crave) | | | 1. $250 million in counterfeit in Trois-Rivieres | | | I've been obsessed with the story of Frank Bourassa for years. I first heard the tale in whispered disbelief, then in the pages of La Presse.
GQ magazine did this amazing profile of the world's biggest counterfeiter and every single line of it is riveting.
"Nobody on this Earth has ever counterfeited more money than I did or better than I did," he says in a video on GQ's YouTube page.
Bourassa is a charming, affable storyteller. And his story is one for the ages.
He started out as a small-time pot dealer. Eventually, he was a not-so-small-time distributor. He made decent money, but it was no way to make a living.
So he took his cannabis money and spent $300,000 US on gear: high-quality Heidelberg printers, two platen presses, counting machines, an industrial paper cutter and everything else he needed to start his operation.
He spent months trying to find a paper mill either dumb or crooked enough to fill his order for a very specific kind of paper, with very specific watermarks and security features. Most asked if it was the kind of paper used to make money. Eventually he found one in Lenzburg, Switzerland, and had the paper shipped.
He watched the shipment arrive through binoculars, worried the police would find him out.
He eventually moved the paper to a lab he'd built on a farm outside of Trois-Rivieres, Que.
"Frank claims that his little shop in the farmer’s garage began pumping out tens of millions of dollars’ worth of flawless twenties a month," wrote GQ's Wells Tower.
Eventually, of course, the operation was busted. U.S. Secret Service agents and RCMP officers raided his house and charged him with crimes that could have landed him in prison for decades.
But Bourassa had other plans. He had stashed $200 million US in counterfeit money somewhere and was willing to give it back in exchange for a deal. The charges were eventually dropped and Bourassa walked away a free man.
The twists and turns are shocking. Bourassa is a charming and slightly ridiculous figure.
And now Bell's Crave TV has released a three-part documentary chronicling this tale.
Check out the GQ article here.
Check out the Crave series here. | | | 2. The economic time machine | | | At the end of her interview with my CBC colleague David Cochrane, Finance Minister Chrystia Freeland asked a question I've been thinking about for a while.
Freeland asked him to hop in a time machine and ask himself a question in the summer of 2020.
"The depths of COVID, the deepest recession since the Great Depression, 17 per cent economic contraction, three million people losing their job," she said.
"If someone had said to you and me, 'Three years from now, we're actually going to have a soft landing, we will have a million more Canadians employed and we will have no recession,' people would have said.... 'You're dreaming, that is going to be impossible to pull off,'" said Freeland.
Cochrane responded with his own question for the people of 2020.
"If you use that time machine and told [Canadians] what their mortgage payments would be [now], how do you think they'd react to that?"
I think that exchange gets to the heart of the question facing the economy today. Yes, the economy is in lousy shape. We haven't seen growth in months, consumers are beset by rising prices and ballooning debt payments.
In a lot of ways, this is the price we are paying for the supports that were put in place during the worst days of the pandemic.
And as angry or frustrated or hurt as you may be by the current state of things with inflation, interest rates and a slowing economy... how would you answer that question today?
If you had Freeland's time machine and you were presented with her question, how would you respond?
Listen to the whole interview with Freeland on the Power and Politics podcast here. | | | 3. What happened at OpenAI | | | I don't know about you, but I've been devouring every single article and interview I can find on the ongoing saga at OpenAI.
Bloomberg has a great wrap of what happened and who won. (Microsoft walks away as the very clear winner in this mess.)
The Wall Street Journal's Robert McMillan and Deepa Seetharaman have this must-read on what the blowup means for the future of artificial intelligence.
The two masterfully tie together how the OpenAI story collides with the FTX disaster and deals a blow to Silicon Valley's very way of thinking.
"The OpenAI meltdown delivered another blow to the movement, which believes that carefully crafted artificial-intelligence systems, imbued with the correct human values, will yield a Golden Age— and failure to do so could have apocalyptic consequences," they write in the piece.
Kara Swisher had an early sit-down with Microsoft CEO Satya Nadella about why he scooped up the ousted CEO of OpenAI, Sam Altman.
"There is no OpenAI without Microsoft leaning in in a deep way to partner with this company on their mission. We love their mission, we even love their independence," he said.
And that was before Altman was reinstated and Microsoft claimed seats on OpenAI's board.
The most recent shock to the story comes via Reuters, which reported that staff researchers wrote a letter to OpenAI's board of directors warning of a powerful artificial intelligence discovery that they said "could threaten humanity," according to sources who spoke with Reuters.
"The sources cited the letter as one factor among a longer list of grievances by the board leading to Altman's firing, among which were concerns over commercializing advances before understanding the consequences," reported the news agency.
It feels like the dust is settling, but this story has taken some wild twists and turns, so I thought it would be worth compiling some of the biggest elements here for a quick read if you need them.
Check out The Wall Street Journal piece here.
Check out Kara Swisher's interview with Nadella here.
Check out the Reuters scoop here. | | | How the economy looks beyond Bay Street | | | Holiday shopping | | | If you've been reading this newsletter for a while, you know I'm always looking for ways to celebrate entrepreneurs.
I have such admiration for the kinds of people that throw themselves out there and take risks and build a business and thus grow our economy.
I think the Americans do a much better job of celebrating their business leaders than we do (how many of us can name a famous Canadian entrepreneur?).
Every year, Harvey Finkelstein does a wonderful thing where he asks his followers to name-drop brands and products and businesses they love.
Finkelstein, of course, is the president of Shopify, a company built by and for Canadian entrepreneurs.
The idea here is to help him (and his followers) find some good ideas to finish (or start) their shopping lists. | | |  | Click on the tweet above and weigh in. Celebrate great brands, drive customers to your favourite shop and check out some of the amazing responses.
I've already found a few great places and ideas for my Christmas list and maybe, just maybe, I won't be rushing to the Dufferin Mall in Toronto's west end on Dec. 24 this year.
As always, drop me a line at peterarmstrong@cbc.ca. | | | Share this newsletter | | or subscribe if this was
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