Monday, November 08, 2021 | | | 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 bulls have been in overdrive since the pandemic hit. (Tutti Frutti/Shutterstock) | | | | |  | | Stock markets have set all new records again. Will North American markets continue their bull run when they open on Monday morning? | | | | | | The debate over inflation will surge once again. U.S. CPI numbers come out on Wednesday. | | | | | | Tuesday will mark the third conference on Diversity and Inclusion in Economics, Finance and Central Banking. Bank of Canada governor Tiff Macklem will give the closing remarks. | | | | | The whole idea of this newsletter is to look ahead to upcoming events and try to help decipher how they’ll shape the news and our world and our pocketbooks.
But every now and then it's good to pause and look at where things stand.
I haven’t mused about stock markets in a while and they had a helluva week last week, so I thought now would be a good time to take a snapshot and try to figure out what we’re looking at.
But first, a reminder: the stock market is not the economy and the economy is not the stock market.
The COVID-19 crisis gave us a shining example of that, as the economy tanked and stock markets took off.
Since then, markets have been on an absolute tear. | | |  | | | That last punch through the 36,000 mark by the Dow Jones Industrial Average came after the U.S. central bank, the Federal Reserve, announced it would begin to scale back bond purchases.
Central banks have largely done a good job of telegraphing these kinds of decisions, so they don't spook investors.
I stared at that chart for longer than I should have — like one of those weird paintings that eventually reveal themselves to be a sailboat or something.
But I couldn't decipher any deeper meaning, so I reached out to someone who could.
Bank of Nova Scotia's deputy chief economist Brett House says it depends on what you're looking for.
"Is the steepness of the increase in the indices since the March 2020 shutdown crazy?" he asked rhetorically. "I’d say no, not when the world has been flooded with liquidity and interest rates are so low — policies designed to push investors into riskier assets."
More to the point, he says compare those sharp increases to something more volatile, like, say, housing. Or even GDP, which isn't as steep.
"And [GDP] shouldn’t be, since some parts of the economy aren’t fully re-opened," he told me in an email. "It is above pre-pandemic levels and [set] to close in early next year on where the economy would have been on our forecasts if the pandemic hadn’t happened."
The thing to watch now is how markets will track as monetary policy supports are withdrawn. Will investors focus on corporate earnings?
How will real economy indicators like inflation factor into those calculations?
We'll get U.S. CPI data this week. Canada's inflation numbers come out next week (Wednesday, Nov. 17 to be precise).
One last thing to watch for this week is the conference on Diversity and Inclusion in Economics, Finance and Central Banking.
The central bankers of Europe, the U.S., England and Canada will all attend. Bank of Canada governor Tiff Macklem will make the closing remarks.
I'm sure he has it, but someone should send him this chart, just to be sure. | | |  | | | That chart comes courtesy of economist and Atkinson fellow Armine Yalnizyan. She's put in tireless work tracking the pandemic's impact on women in (and out) of the workforce.
She tweeted out the latest incarnation of the data after the jobs numbers came out on Friday. Read the whole thread here — it's typically smart and easy to understand.
"The labour force has grown, but slower for women than men," she tweeted. "Twice as many women (152K) as men (77K) have left the labour force entirely."
So is the "she-cession" over? asks Yalnizyan. No, it isn't and we need to keep a keen eye focused on the data so we can get those who remain out of work back on the job. | | | | | Three things to read, watch and listen to this week | | |  | Frances Donald offers up a crystal-clear, no-holds-barred assessment of the state of the economic recovery in the latest Herle Burly podcast. (AirQuotes Media) | | | 1. Just listen to Frances | | | If you click on one link in this newsletter, make it this one. Of all the things anyone of us should read and watch and look at, this episode of The Herle Burly podcast is an absolute must.
Frances Donald is one of the best economic thinkers and communicators in this country. In this episode, she walks you through where we are and what's going on with inflation and supply chains.
But more than all that, she arms you with a better understanding of how the economy fits into your life and how you are an integral part of it.
Donald did this TEDTalk a while back and I still send it to people asking for advice on how to better understand the economic forces at play. (I mean, how many economists name-drop Taylor Swift in a speech on the economy?)
For all my hype of Donald, give me a moment here to praise The Herle Burly as well. Too many shows lean into the jargon and dense nature of economic analysis.
This podcast works really hard to keep the conversation accessible. This episode with Dr. Jennifer Robson (professor of political management at Carleton University) is one of my favourites. Listen here to how they wade through the dense and impenetrable rules around why we tax your salary differently than we tax your stock market earnings.
So stop what you're doing and listen to Frances Donald. You'll be smarter for it, I promise.
Listen to the whole interview here. | | | 2. Disney's big bet on Boba Fett | | | The latest trailer for The Book of Boba Fett dropped this week. It's a beautiful-looking show, and picks up where the successful Mandalorian left off (well, it's a prequel, but you get my meaning).
The show is set to premiere on Dec. 29. Smack-dab in the middle of one of the most lucrative streaming seasons of the year.
Last year, Netflix won the streaming wars with holiday binges like We Can Be Heroes (a kids' movie spun off from the Shark Boy and Lava Girl films) and Bridgerton.
Disney was clearly paying attention.
Its streaming service did much of the company's heavy lifting while its theme parks were closed during the pandemic. By the end of the third quarter, Disney+ had 116 million subscribers (up from 103.6 million in Q2).
Netflix is still well ahead, with about 214 million subscribers, but Disney is gaining ground.
And it's betting on Boba Fett to help it close the gap.
Watch the trailer here. | | | 3. It's too early to listen to Christmas carols (even Mariah Carey) | | | There is one sure sign Christmas is coming. No, it's not your neighbour's overwrought house decorations, nor the local Starbucks done up like the inside of a stocking.
No, the one sure sign comes in the form of Mariah Carey's All I Want for Christmas Is You.
Every November, the song begins to creep into your local shopping mall, radio station, dentist's office. It climbs up the charts and piles up an almost absurd number of streams.
It's already in the Top 30 of Canada's iTunes store. In other words, this 27-year-old song is already making more money than almost every other song out there right now, and it's not even December yet.
The Economist claims Carey has made a staggering $60 million US in royalties off that single tune.
This week on DAY 6, the radio show I'm hosting, producer Laurie Allan did a spectacular job of cobbling together a few raw facts about the song and made me listen to it on repeat.
My favourite tidbit she found was a bar that has banned the song from its jukebox during the month of November and will impose a one-play-per-customer rule after Dec. 1.
Listen to the song here.
Find our segment from DAY 6 here. | | | | | How the economy looks beyond Bay Street | | | Winter is coming (and gas supplies are low) | | | I've been watching the unfolding energy crisis in Europe and Asia and wondering what's going to happen here.
One key issue there is the soaring price of natural gas.
This tweet, from Martin Pelletier, a portfolio manager with TriVest Wealth, caught my eye. | | |  | Pelletier links to three charts looking at natural gas supply levels in Alberta. They all show the same thing: this year's supply levels are at or near the bottom of the five-year range.
And we are heading into a winter that is expected to be very cold in big chunks of the country.
I reached out to Pelletier to ask for his takeaway.
"We could be OK, especially if this above-normal weather continues," he responded, "but also in trouble should it be a cold winter."
Rory Johnston wrote a bit about this in his latest Commodity Context newsletter.
"The stage has been set: the evolution of prices over the next six months will mostly come down to weather trajectory and resulting inventory draws," Johnston wrote in his latest edition.
The question is how big the gap will be between a normal winter and a cold one. Johnston found it's substantial.
"The extent of the cold this winter means the difference between low but passable working inventories and critically low ones," he wrote.
Pelletier offers some advice:
"I would tell readers that it doesn’t hurt to protect themselves by locking in their home heating rates with their provider."
How are you preparing for winter? Drop me a line here and let me know. I love hearing from you. | | | That's it for this week. | | | Drop me a line anytime. Send ideas, comments, feedback and notes to peterarmstrong@cbc.ca. Problems with the newsletter? Please let me know about any typos, errors or glitches.
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