 Monday, November 18, 2024 | | | 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 | | |  | A falling Canadian dollar is making imports more expensive. (IhorStudio/Shutterstock) | | | The re-election of Donald Trump continues to dominate the business headlines, as we sort through what his policies will mean for trade, taxes, deregulation and, of course, tariffs.
Trump's return to the White House will surely monopolize water-cooler conversations among G20 leaders meeting in Rio de Janeiro starting Monday.
But our focus will shift back to regular programming on Tuesday, when we get Canadian inflation numbers.
The rate of inflation has worked its way back to the Bank of Canada's target, but the impact of high prices will continue to be felt for a long time.
Tell anyone at the gas pump or grocery check-out that inflation has been tamed. They'll laugh you out of the store.
We expect the rate of inflation ticked up slightly to two per cent last month. Still, that means we've had three straight months of inflation at or below the target. | | |  | | | | | Another key data point shows the breadth of inflation pressures has narrowed. In other words, fewer sectors have seen prices rising.
If that's where the numbers actually fall, most economists think that gives the Bank of Canada a green light to continue cutting rates when it meets in three weeks.
"Given the Canadian economy’s weak momentum, we continue to expect the BoC to cut the overnight rate by an additional 50 basis points in December," wrote RBC economists Nathan Janzen and Abbey Xu.
People keep asking me if the falling Canadian dollar will make things more expensive.
The loonie has fallen to a multi-year low. That drop accelerated after Trump's election win.
But zoom out and you can see the sell-off post-election was a mere blip in a longer-term trend. |  | | | My colleague Reid Southwick spoke with some importers who are already feeling the pinch.
One company that brings in fresh produce says the low dollar is forcing them to raise prices for a range of fruits and vegetables.
Matt DuPerrouzel, vice-president of procurement at Bondi Produce, told him the restaurants they sell to are already struggling with high costs.
"And now with this depreciating Canadian dollar, prices are just going to continue to rise. So, where we thought we were coming into an environment where prices were stabilizing and inflation was coming down, this is now going to have that counter-impact, and start driving costing up," DuPerrouzel said.
Reid also made the point that we will need a lot more data to see if these kinds of anecdotes match up with the broader price pressures.
I spoke with Karl Schamotta from the financial services firm Corpay, who says the exchange rate thus far should have a fairly minimal impact on inflation.
"Things like travel and small items on Amazon might get slightly more expensive, but for most things that consumers buy, there’s a fairly tenuous connection between the loonie’s value and the prices paid," Schamotta told me in an email.
What do you think will happen?
As always, send me a note.
My email is: peterarmstrong@cbc.ca | | |  | | Canadian inflation numbers will be released on Tuesday. Economists believe the rate of price growth ticked up slightly last month. | | | | | | G20 leaders will begin a summit in Rio de Janeiro, Brazil, on Monday. The leaders of the world's biggest economies have a lot to discuss since Donald Trump won the U.S. election. | | | | | | Retail sales numbers will be released on Friday. Economists expect sales likely rose 0.4 per cent in September. | | | | | Three things to read, watch and listen to this week | | |  | What can we learn about the economy by studying McDonald's? A lot. (rzoze19Shutterstock) | | | 1. Hamburger-nomics | | | I've been dying to write about this podcast.
Regular readers know how much I love finding projects that try to tell us important stories in clever and interesting ways.
Well, let me introduce you to Hamburger Business Review. Season 2 of the podcast series just dropped, and I absolutely love it.
The concept is quite simple. Mike Merrill and co-host Zach Rose got to talking about McDonald's one day. Specifically, they were talking about the sheer volume of case studies in the Harvard Business Review that focus entirely on McDonald's.
So, they launched a podcast, where they would go through a case study per episode to see what they could learn. And they learned a lot.
I reached out to Merrill to ask about his takeaway from doing the podcast.
"There's nothing in the world that McDonald's doesn't touch," he told me.
The company employs two million people. The case studies cover everything from currency speculation to labour law to supply chain management.
"It's the No. 1 toy distribution company in the world, via the Happy Meal. [McDonald's] touches everything, and it does it at such scale that it is mind-boggling," Merrill said.
Here's the best part, though. Leading up to the new season, Merrill came up with another idea.
He got himself a job at a certain hamburger restaurant. He doesn't want to name said restaurant because that might land him in hot water. So, he merely calls it The Hamburger Restaurant.
"What if I get a job at there as part of this exploration of this from the other end? So we're looking at it from that business school case study lens, but then I'm also just day in and day out grinding it out on the floor of the restaurant," he told me.
Working there has given him yet more insight into the megalithic structure of the company, but also about the people that work there.
"I've never loved my co-workers more in a job in any job that I've worked," he said. "The level of care and attention they give is amazing."
Merrill is a super-interesting character. In 2008, he sold shares in... himself. Seriously. He did an interview with Wired magazine explaining the process.
"He divided himself into 100,000 shares and set an initial public offering price of $1 a share. Each share would earn a potential return on profits he made outside of his day job as a customer service rep at a small Portland, Oregon, software company," wrote Wired's Joshua Davis.
He sold nearly 1,000 shares and made a tidy little profit.
"He kept the remaining 99.1 percent of himself but promised that his shares would be non-voting: He’d let his new stockholders decide what he should do with his life," wrote Davis.
Merrill still holds shareholder meetings and asks his shareholders to weigh in on decisions.
The point is, the podcast is fascinating, very fun and every time I listen to an episode, I learn something interesting.
Check out Hamburger Business Review here. | | | 2. Trump's trade policy | | | I've spent a lot of time these past couple of weeks thinking about Donald Trump's trade policy. I wrote a piece last week that made some people very angry.
In the piece, I said we all know the arguments that lay out what will happen if Trump is wrong on trade. His tariffs could blow a hole in Canadian GDP, his aggressive China policies could drag the world into a recession and potentially conflict.
But what if he's right? (Or maybe more accurately, what if he has a point on some parts of his trade policy?) Public opinion around free trade has been fundamentally altered in these past 10 years.
People in Canada and the U.S. are less convinced than ever that the benefits of free trade (cheaper stuff) outweigh the harms (collapsed manufacturing sectors).
If you want to understand Trump's point of view (which, even if you disagree with it, is important), the best and easiest way to do that is to read Robert Lighthizer's book No Trade Is Free.
Lighthizer was Trump's trade representative in his first term. He was the man behind the renegotiation of NAFTA and one of the driving forces behind the overall Trump trade worldview.
He has some tough words for Canada in his book.
"Although outwardly supportive of free trade and internationalist in orientation, Canada is in reality a quite parochial and at times quite protectionist country," he wrote.
After tackling NAFTA and car parts in their first term, Lighthizer makes it clear one thing he's interested in this time.
"For years, Canada has operated a dairy supply chain management program that would make a Soviet commissar blush," he wrote.
But he saves his real scorn for China.
Lighthizer excoriates China and successive American governments that have made deals even while, he says, China has repeatedly broken trade rules, stolen IP and gained control of global raw materials.
And it's clearly not just the Trump administration that feels that way. Joe Biden's trade policy kept Trump's China tariffs in place. Canada just slapped new tariffs on Chinese EVs and introduced more limits and regulations on Chinese steel.
The trade landscape has changed in clear and important ways since Trump first ran for president.
Lighthizer's book is a crucial read for anyone hoping to understand what comes next.
Check out Robert Lighthizer's No Trade Is Free here. | | | 3. The shopping conspiracy | | | As we await the generalized lunacy of Black Friday shopping mobs storming the gates of their local Walmarts, allow me to suggest a new documentary.
"Buying new stuff feels great, right? The problem is that every year we're consuming more, producing more and there's a flip side to that," says the narrator in this trailer for the Netflix film Buy Now! The Shopping Conspiracy.
The film tackles what happens to all the excess stuff that is being made to satiate our endless desires for new things.
"This subversive documentary unpacks the tricks brands use to keep their customers consuming — and the real impact they have on our lives and the world," reads the promotional blurb on Netflix.
The trailer shows piles of stuff being dumped into landfills, the packaging waste we build up shipping so much stuff and the power some of the world's biggest companies are employing to encourage us to buy their stuff.
The documentary drops on Wednesday.
I usually wait to see how films like this pan out before plugging them here, but this one looks like a doozy and its timing is impeccable, with Black Friday sales already clogging up my inbox.
Watch the trailer for Buy Now! The Shopping Conspiracy here. | | | How the economy looks beyond Bay Street | | | Insolvency alarm bells | | | When I worry about debt and consumers and insolvency, I look to Scott Terrio, who has a finger on the pulse of consumer proposals in Canada.
He's a manager of consumer insolvency at the firm Hoyes Michalos.
When Scott says there's cause for concern, I sit up and take notice.
"I am busier than I've ever been, talking to people every day about their debt problems that they can no longer manage," he wrote. | | |  | What stands out here is that Terrio is seeing a subtle but crucially important change in the finances of those seeking his help.
"The striking thing to me is that many of them are making decent money — life is just too expensive for them to get to grips with debt," he wrote in a post.
That comes back to a point we've been discussing here for months. Sure, the rate of inflation is back down to target. But prices are still higher than they've ever been.
And yes, interest rates are coming down, but they, too, are way higher than they've been.
And consumers are still being squeezed. | | | Share this newsletter | | or subscribe if this was
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