 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 | | |  | Bank of Canada governor Tiff Macklem will decide whether to cut interest rates this week. (Justin Tang/Canadian Press) | | | Here we go.
On Wednesday, the Bank of Canada will make its latest interest rate policy announcement.
Millions of Canadians are waiting with bated breath.
It can be easy to lose connection between the statistics and the people. But all those stats, GDP numbers, jobs numbers, inflation data, are all just a snapshot.
They all tell the story of individual households, people, businesses.
Households with variable-rate mortgages are hoping for a break. Mortgage holders staring down the barrel of a loan renewal are desperate to avoid a higher payment. Same for a business that is looking to expand its fleet of trucks.
They'll all be waiting to hear what central bank governor Tiff Macklem says at 9:45 a.m. on Wednesday.
Markets are split, but a slim majority of economists polled by Bloomberg believe the Bank of Canada is poised to cut its key overnight lending rate for the first time since March 2022.
At the bank's last decision on April 10, Macklem was asked point blank if he thought a rate cut at the June meeting was in the "realm of possibility."
He said sure, it's possible. But that the bank was "looking for evidence that the recent further easing in underlying inflation will be sustained."
Earlier this month, the inflation numbers provided a bit more evidence. | | |  | | | That tweet comes via the University of Calgary's Trevor Tombe.
Those lines show how the various core measures the central bank likes to focus on have behaved over the last few months.
That sure looks like evidence that the easing in underlying inflation has been sustained. The question is: is it enough evidence?
I think it's a fair bet the Bank of Canada would like to see another cycle of inflation, jobs and GDP numbers before it cuts.
The central bank has had issues with messaging through this inflationary period.
In July 2020, Macklem told Canadians not to worry about rate increases.
“Our message to Canadians is that interest rates are very low and they’re going to be there for a long time,” he said.
The bank dismissed the early wave of inflation as "transitory."
So it wants to be sure before it starts bringing down interest rates.
Last week's GDP numbers probably nudge the bank a little more in the direction of a cut. | | |  | | | GDP came in flat for March. The quarterly numbers posted some meagre gains (1.7 per cent annualized). Statistics Canada also revised down previous releases.
In short, the economy is weak.
"There are respectable arguments on both sides of the decision, but we believe the balance of evidence points to a cut — we've been calling for a June cut since late last year, and will stand by that call," wrote BMO's chief economist Douglas Porter in a note to clients.
Given the weakness, many economists think the real debate isn't whether the central bank cuts on Wednesday, but rather how many times it will cut over the next year or two.
"We think they might have to cut rates as much as eight times in the next two years. That's a really different story than do they start now or in six weeks?" said Frances Donald, global chief economist and strategist at Manulife Investment Management.
For now, we wait and see what the bank does. And perhaps, more importantly, listen to what the bank says.
What do you think the Bank of Canada will do?
As always, send me a note.
My email is: peterarmstrong@cbc.ca | | |  | | The Bank of Canada will make its latest interest rate policy announcement on Wednesday. Economists are split on whether the central bank will cut rates. | | | | | | The latest jobs numbers will be released on Friday. Economists expect the Canadian economy added about 5,000 jobs in May. | | | | | | Canada's merchandise trade balance numbers will be released on Thursday. They are expected to show a slight narrowing in the country's trade balance. | | | | | Three things to read, watch and listen to this week | | |  | Jeff Rubin's new book, A Map of the New Normal, is in stores now. (Penguin Random House) | | | 1. A new economic map | | | I've written a lot in this space about the fairly dramatic ways in which the economic landscape has changed. Globalization is ending (or at least this iteration of it is ending).
Plenty of people have done a remarkable job explaining that those changes aren't just coming, but are already upon us.
What I like about Jeff Rubin's new book is how he delineates what all these changes are going to mean for Canada going forward.
A Map of the New Normal lays out what has happened and what is currently happening in the world. The biggest change is that the global order built in the wake of the Second World War is coming apart.
The economic system we called globalization was built on the assumption that the U.S. and its allies were big enough and rich enough to get the rest of the world to follow a "rules-based order."
Russia, China and India have independently and collectively shown that Western hegemony no longer prevails.
"Two tectonic plates [are] clashing against each other and that is creating fault lines, be they in Ukraine, the Taiwan Strait or Gaza, and there may well be other fault lines that will emerge," Rubin told Piya Chattopadhyay in an interview on CBC Radio's Sunday Magazine.
But as I say, Rubin takes that extra step to try to figure out what these changes will look like in practice.
"Canada and all other economies are going to change fundamentally," he said.
The biggest driver of those changes, he says, is sanctions. Western sanctions on Russia were supposed to slow Vladimir Putin's war efforts in Ukraine. But this year, the Russian economy is set to grow faster than any G7 country.
Rubin says the current series of sanctions did not bring down the Russian economy. More to the point, he says, they have weakened the world trading system.
And that has real consequences.
"If international trade makes everyone better off, which was the dictum of globalization, then sanctions make everyone worse off," he told Chattopadhyay.
The potential upside to this weakening of global trade is that countries like Canada will have to produce more stuff closer to home.
"The domestic market is not going to be supplied from some far-flung overseas global supply line coming from China. We’re going to make things ourselves," said Rubin.
On the one hand, that means things are going to cost a lot more money, and that will cause a whole new wave of inflationary issues that will haunt the Bank of Canada's target of two per cent price growth.
But he says there will be benefits as well.
"The plus side is an unexpected reprieve for a hollowed-out middle class. We’re going to see the return of factory jobs we thought were gone forever," he said.
Check out Jeff Rubin's book here.
Check out Rubin's interview on the Sunday Magazine here. | | | 2. MoviePass, MovieCrash | | | Do you remember the MoviePass?
It was an absolutely bonkers idea.
For $10 a month, you could see virtually any movie anywhere, on any day.
Back before streaming, I used to go see a film as often as a couple of times a week (I love going to the movies).
"It worked, for a while, and it was amazing. But it made positively zero sense," wrote the New York Times Alissa Wilkinson in a review of a riveting new documentary that tracks the wild rise and inevitable collapse of MoviePass.
Wilkinson actually spent much of 2018 reporting on MoviePass, trying to figure out what was going on.
Was it like a gym membership, where way more people pay for a membership than people who actually use the gym? Or was it some deal with the studios?
Wilkinson says the company was convinced they could monetize all their data if they could grow to a mere five million users.
Spoiler alert: they did not grow to five million users.
But the company kept spending. Executives threw lavish parties and paid to make the (awful) film Gotti.
"At the same time, if you were trying to actually use the service, it went from bad to worse to baffling: random blackout periods, strange requirements for purchasing tickets (like uploading photos of stubs) and near-constant changes to the terms and conditions," wrote Wilkinson.
Eventually, she says, the Federal Trade Commission came forward with accusations that MoviePass fraudulently deceived its customers.
But the documentary also highlights a huge and ongoing issue in business. MoviePass was originally founded by two Black men who knew they had a great idea they could grow.
But the documentary tracks how they were forced out by a team that never had a clear plan to grow the company into profitability.
"MoviePass is another story of Black entrepreneurs who, along with other underrepresented demographics, struggle to find investment capital and investor confidence in the market, creating something groundbreaking and then losing it to overconfident white men," wrote Wilkinson.
MoviePass, MovieCrash is streaming now on Crave.
Watch the trailer for MoviePass, MovieCrash here. | | | 3. How to save money | | | I'm not sure there is an individual in Canada who has done more to advance the cause of financial literacy than David Chilton.
Chilton is the author of The Wealthy Barber. He's a former host of Dragon's Den on CBC and a general advocate for consumers and savers everywhere.
In a video on YouTube, Chilton takes a mere three minutes and 25 seconds to make one of the most important points those of us trying to save money need to learn.
He says he always hears people saying they won't get anywhere cutting back on small things and saving a couple of bucks here and there.
"Bull. That's all so wrong. So dangerously wrong," says Chilton.
Chilton says that advice ignores a basic tenet of personal savings.
"Disposable income equals consumption plus savings. In other words, for every after-tax dollar we receive, we can either spend it or save," says Chilton.
He gives the example of someone with an after-tax income of $5,000 a month. That person is currently saving $250 a month and would like to sock away something closer to $750 every month.
Chilton says that person would say that's an impossible leap.
"Fine. But can you cut your spending rate by a mere 10.5 per cent? That's only $16 and change a day. Yes, I think I could do that," he says.
A 10.5 per cent change in spending means $500 less a month and just like that, the savings rate climbs to $750.
Now, how does he save the $16 in change a day? You've got it: he watches the little things.
"No more lunches out. One fewer beer on weekends. No dumb $10 bets on the Leafs. It can be done," says Chilton.
So, he says, sweat the small stuff. It adds up.
His best advice to getting started is to track your spending. Literally, just write down every penny you spend. Better yet, use an app. You'll be surprised how quickly you can find ways of cutting back and boosting your savings.
Check out David Chilton's video here. | | | How the economy looks beyond Bay Street | | | Billion-dollar weather disasters | | | The number of natural disasters is growing. The ferocity with which they hit is also growing.
You don't have to be a scientist to see that. But when Visual Capitalist puts it all together like this, the picture in the U.S. looks pretty stark.
"Since 1980, there have been 383 extreme weather or climate disasters where the damages reached at least $1 billion US. In total, these disasters have cost more than $2.7 trillion," writes the team at Visual Capitalist.
This chart comes via a partnership with the National Public Utilities Council. | | |  | That looks bad. Then you remember, it's only 2024. We aren't even halfway through the decade. Already, the number of disasters is more than 70 per cent of the number seen during the entire 2010s.
The most common disasters come in the shape of severe storms. Half of the billion-dollar disasters were severe storms.
"In terms of costs, tropical cyclones have caused the lion’s share — more than 50 per cent of the total. Hurricane Katrina, which made landfall in 2005, remains the most expensive single event, with $199 billion in inflation-adjusted costs," wrote the Visual Capitalist team. | | | Share this newsletter | | or subscribe if this was
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