THE WEEK IN MARKETS
- Hina Khosa
- Mar 25, 2024
- 2 min read
Powell keeps the rate-cut dream alive
Yet another heater of a week: all the major U.S. and Canadian markets were up about 1% last week, and now even Canada’s exchanges are approaching all-time highs. Why the gains? It was mostly thanks to optimism about rate cuts: U.S. Fed chair Jerome Powell signaled that not one, not two, but three rate cuts are still coming fairly soon, despite stubbornly high inflation in the States. That news added to investors’ enthusiasm about corporate profits and productivity that has been building for months. According to Bank of America’s closely monitored fund-manager survey, investors haven’t been this bullish since November 2021, but they’re not crazily, stupidly bullish. They’re trying not to get ahead of themselves, and for that reason maybe stocks aren’t overheated and racing toward a painful reversal. Let’s hope!
WHAT HAPPENED LAST WEEK
IMPORTANT
Inflation inches down. Canada’s annual CPI slowed from 2.9% in January to 2.8% in February, which came as a pleasant surprise to economists, who were expecting an increase to 3.1%. But does the inflation slowdown mean we’ll all feel a little richer, or at least a little less poor? Probably not, unfortunately! Hourly wages in Canada have risen by about 10% since 2019, but inflation has risen by 12% over that time, and wage growth now seems to be slowing. Has Canada gotten too popular? A population boom is typically great for an economy — it boosts the labour force, and the children of immigrants tend to over-deliver relative to native-born citizens. Economists worry, though, that for Canada gaining almost a million people in less than a year is too much of a good thing. (Ottawa seems to agree, announcing last week that it’s reducing the number of temporary residents it lets in.) It takes time to absorb new arrivals into an economy, and Canada’s swelling population may be deepening the housing crisis and straining hospitals and schools. The bright side? In about 20 years, our economy should be absolutely crushing it. |
INTERESTING |
Amazon shows MrBeast the money. The YouTube über-creator known for his outlandish, and debatably “icky,” stunts has struck a US$100-million deal with Amazon Prime to produce a competition show called Beast Games. Is this just a ploy by Amazon for eyeballs? Almost certainly! MrBeast’s YouTube channel sometimes gets two billion views a month and has 246 million followers. And Prime, like other streaming platforms, needs dedicated followers now more than ever as it shifts into its ad-supported era. If dropping US$100 million on a YouTuber’s contest show seems like a big gamble, consider the fact that US$100M is US$615 million less than what Prime squandered on that Lord of the Rings series. Nvidia wants to be the Apple of AI. And it doesn’t want to be the next Cisco, the router maker that was briefly the world’s highest-valued company in 2000 until the competition started copying its core product. To avoid the same fate, Nvidia is following a two-pronged, Apple-aping strategy. Step one: make hardware, like the iPhone, that no one else can duplicate; last week the US$2-trillion chipmaker teased its new flagship AI processor, the Blackwell B200 GPU, due out later this year, which it promises will be 30 times speedier than its predecessor. Step two: diversify revenue streams by creating tightly integrated software for its hardware. Which explains why last week Nvidia also announced a new software platform called NIM for designing and deploying AI models. NIM is to the B200 what iOS is to the iPhone. Or so Nvidia and its investors hope. —Srivindhya Kolluru & Abigail Covington |
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Source: Wealthsimple Media Inc.
80 Spadina Ave Suite 400
Toronto, ON, M5V 2J4
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