The Federal Reserve will announce its latest decision on interest rates when it concludes its meeting on Wednesday, with investors widely anticipating the central bank to cut rates again. After the announcement, Fed Chair Jerome Powell will take media questions and will likely provide more details on the economy.
On Friday, the personal consumption expenditures (PCE) report will show whether inflation remains above the Fed’s target level. Revisions to third-quarter gross domestic product (GDP) are also scheduled this week, and investors will be watching reports on retail sales, existing home sales, and consumer sentiment.
Nvidia (NVDA) partner Micron Technology (MU) will issue its quarterly earnings this week, with reports also coming from footwear leader Nike (NKE), business advisors Accenture (ACN), delivery giant FedEx (FDX), and cruise operator Carnival (CCL).
FHSA Year-End Contribution Deadline:
December 31, 2024
The First Home Savings Account (FHSA) is a powerful tool for first-time homebuyers, offering tax-free growth, tax-deductible contributions, and the flexibility to combine with the Home Buyers’ Plan. With a yearly contribution limit of $8,000 and a lifetime maximum of $40,000, it’s the ultimate way to save for your dream home.
Year-End Deadline: Contribute by December 31, 2024, to maximize your savings this year.
💡 Ready to start? Contact AimStar Capital Group Inc. for guidance on opening your FHSA and choosing the right investments to grow your savings.
*The viewpoints are attributed by Vikki Zhao
Ex-Bank of Canada Official Predicts Rate Cuts to 2.75%
Former Bank of Canada Deputy Governor Paul Beaudry anticipates the central bank will reduce its key interest rate to at least 2.75%, starting with a 25-basis-point cut in January. Following two consecutive half-point cuts, Beaudry views these actions as deliberate efforts to return to the neutral rate range of 2.25%-3.25%, with restrictive policies no longer necessary. He emphasized that inflation has stabilized within the target range, reaching 2% in October, reinforcing confidence in further easing. Beaudry, now an economics professor at the University of British Columbia, argues that these measures are not signs of panic but strategic adjustments to neutral borrowing costs.
Small Businesses Brace for GST Holiday Challenges
With the federal government’s GST holiday set to begin, small businesses are gearing up for what could be a period of confusion and operational challenges. The tax break applies to items like children’s clothing, toys, prepared foods, and Christmas trees, offering potential sales boosts during the holiday season. However, retailers are struggling with reprogramming systems, interpreting which items qualify, and handling possible returns from customers seeking retroactive savings. Industry leaders and economists have criticized the rushed implementation, warning of logistical issues and inflationary pressures. Many small business owners feel the burdens of compliance and potential errors outweigh the benefits of this short-term measure.
Canada Considers Export Taxes Amid Potential US Trade War
Canada is evaluating export taxes on uranium, oil, and potash as a last resort if President Donald Trump imposes broad tariffs. While retaliatory measures like tariffs on US goods are more likely, export taxes could pressure US industries reliant on Canadian resources, such as oil refiners and nuclear power plants. However, the proposal faces strong opposition from western provinces and industry groups, citing economic risks and political tensions. Canada supplies critical materials like high-grade uranium and potash, making the move potentially impactful. Prime Minister Trudeau aims to avoid a trade war but faces challenges balancing economic stability, regional politics, and negotiations with the US.
Trump’s Tax Cuts Unlikely to Deliver Substantial Economic Boost
President-elect Donald Trump’s plan to renew tax cuts for households, estimated to cost $4.6 trillion over a decade, is drawing skepticism from economists. Analyses by the Committee for a Responsible Federal Budget (CRFB) and the Congressional Budget Office suggest that the cuts would have minimal impact on economic growth while exacerbating fiscal deficits, which already hit $1.83 trillion in 2024. Critics argue that the benefits are skewed towards individuals and lack meaningful corporate incentives. Trump has proposed offset measures, including spending cuts and tariffs, but doubts remain over their feasibility. Economists stress that today’s fiscal conditions differ significantly from 2017, adding uncertainty to the potential outcomes of these policies.
US and China Renew Science and Technology Cooperation Pact
The US and China have renewed a longstanding Science and Technology Cooperation Agreement, originally established in 1979, to enable limited government-to-government collaboration. The updated five-year pact introduces safeguards to protect US interests, including mechanisms for dispute resolution and termination if violations occur. Excluding critical and emerging technologies, the agreement emphasizes transparency and reciprocity to address concerns over past one-sided data sharing and intellectual property theft. Despite ongoing tensions between the nations, US officials noted that allowing the pact to lapse could have negatively impacted American interests, underscoring its strategic importance.
Bank of Italy Predicts Modest 0.5% Economic Growth in 2024
The Bank of Italy forecasts a modest 0.5% growth in GDP for 2024, slightly improving to 0.7% when adjusted for seasonal and calendar effects, but below the government’s 1% target. Weaker growth complicates Finance Minister Giancarlo Giorgetti’s efforts to meet EU fiscal rules while maintaining voter-focused tax cuts. Italy faces EU pressure to reduce its deficit to 3% by 2026 and start lowering debt in 2027. After an unexpected stall in Q3, the central bank anticipates moderate expansion in Q4 and stronger growth in late 2025, supported by recovering exports and consumption. Investments from the EU’s pandemic recovery fund are expected to bolster growth, with GDP projected to rise 0.8% in 2025 and 1.1% in 2026.
AI’s Insatiable Demand Sparks Resource Race and Efficiency Challenges
The rapid expansion of artificial intelligence, driven by resource-intensive models like ChatGPT, is straining global resources, from electricity and water to real estate and internet bandwidth. AI systems require vast energy, consuming up to ten times the power of traditional technologies, and demand significant quantities of high-quality data, chips, and infrastructure. Companies are investing billions in renewable energy, nuclear reactors, and advanced data centers to meet AI’s needs. However, concerns over environmental impact, supply chain bottlenecks, and biased models loom large. While AI presents unprecedented opportunities, questions remain about whether this explosive growth is sustainable or if efficiency-driven advancements will redefine the industry’s trajectory.
Imperial Oil Stock Drops Amid Higher-Than-Expected 2025 Spending Plans
Imperial Oil’s shares fell 6.72% on Thursday, closing at $97.03, after the company announced 2025 capital spending plans exceeding analyst expectations by 16% at the midpoint. The Calgary-based company projects spending between $1.9 billion and $2.1 billion, focusing on bitumen recovery technology at its Kearl oil sands site, expanded drilling at Cold Lake, and completing its Strathcona renewable diesel project by mid-2025. Despite higher spending, Imperial forecasts increased production, with guidance for 2025 set at 433,000 to 456,000 barrels per day, up from 2024 estimates. CEO Brad Corson reaffirmed the company’s commitment to dividend growth and efficient capital use. Peer companies Suncor and Cenovus also released plans in line with expectations, experiencing smaller stock declines.
Judge Approves $2.6M Dollarama Class-Action Settlement
A $2.6-million class-action settlement against Dollarama has been approved by a Quebec Superior Court. The lawsuit alleged that Dollarama failed to properly display eco fees on products such as batteries, electronic toys, and light bulbs. Eligible class members who purchased these products between December 11, 2019, and July 4, 2023, in Quebec, or between May 29, 2021, and July 4, 2023, elsewhere in Canada, can claim an Interac e-transfer of up to $10. Claimants must submit their requests online and declare the purchase location under penalty of perjury. An earlier settlement offer involving gift cards was dismissed in April.
Colombia Aims to Accelerate Offshore Gas Production Timeline
Colombia is seeking to expedite gas production from its largest deepwater discovery, Sirius-2, as the country faces a looming natural gas shortfall. The Sirius-2 well, a joint project by Ecopetrol SA and Petrobras, could triple Colombia’s gas reserves if proven viable, with production initially expected in 2029. Energy Minister Andrés Camacho is working to bring production online sooner, emphasizing streamlined permitting processes. Domestic gas demand is projected to exceed production by 5% in 2025 and 17% in 2026, but Camacho is optimistic about avoiding significant imports through increased efficiency, new exploration agreements, and strategic measures. Meanwhile, Colombia is preparing contingency plans, including LNG import capacity expansion, to ensure energy stability.
Sri Lanka Secures Support for $12.6 Billion Debt Restructuring
Sri Lanka has gained 96% creditor support for restructuring $12.6 billion in international bonds, marking a major step toward resolving its 2022 default. The agreement involves a 27% haircut on the bonds’ nominal value, extended maturities, reduced interest rates, and the introduction of macro-linked bonds tied to the nation’s economic performance. A governance-linked note offers potential interest reductions if Sri Lanka meets specific reform targets. The deal aligns with the conditions of a $3 billion IMF loan and follows successful restructuring agreements with bilateral creditors like China, India, and Japan. The finalized restructuring is expected by year-end under President Anura Kumara Dissanayake.
*The viewpoints are attributed by Wallis Zeng.
As 2024 approaches its conclusion, critical economic updates and central bank decisions are set to shape the global and Canadian economic landscape. From major interest rate meetings to inflation data and market trends, this week will provide valuable insights into the year ahead. Below are the 10 most significant developments to watch:
1. Fed Expected to Cut Rates Again
The Federal Reserve will conclude its final policy meeting of the year on December 18, with a 25-basis-point rate cut widely expected. This would mark the third consecutive reduction. Market attention will focus on the Fed’s outlook for 2025, with the latest economic projections offering clues about future rate trajectories. Fed Chair Jerome Powell’s comments suggest a slower pace of cuts may be likely as the economy performs better than expected.
2. Canada’s Fall Economic Update
Canadian Finance Minister Chrystia Freeland will present the federal government’s fall economic statement on Monday. While she remains confident about meeting the projected 42.1% debt-to-GDP ratio for the 2023-24 fiscal year, Freeland has refrained from committing to achieving the $40.1 billion deficit target set last year.
3. Global PMI Data to Reflect Slowing Growth
November PMI data revealed that weakening manufacturing activity is increasingly affecting the services sector. This week’s global PMI releases, including those from the eurozone, the US, and Canada, will offer a broader perspective on economic activity amid mounting risks of a slowdown.
4. Oil Prices Surge Amid Sanctions and Rate Expectations
Oil prices surged last week, with Brent crude up 5% and WTI rising 6%, as Western sanctions on Russia’s shadow oil fleet intensified. Expectations of central bank rate cuts are also boosting demand prospects, with policies from the ECB, Fed, and Bank of Canada likely to further influence price trends.
5. Bank of Canada Governor’s Speech
Bank of Canada Governor Tiff Macklem will address the Greater Vancouver Board of Trade on Monday, following a year of significant rate cuts. The central bank has reduced rates by 50 basis points in its latest move, bringing the policy rate to 3.25%, as inflation stabilizes.
6. BlackBerry’s Financial Results
BlackBerry Ltd. will release its third-quarter results on Thursday after market close. The company has reported progress in cost reduction efforts, narrowing its net loss to USD 19 million in Q2 compared to USD 42 million a year earlier.
7. BOE to Hold Rates Amid UK Economic Woes
The Bank of England is expected to maintain its 4.75% interest rate during its December 19 meeting, despite a contracting UK economy. Any potential rate cuts are likely to be delayed until February 2025. Earlier, the BOE reduced its 2024 growth forecast to just 1%.
8. BOJ’s Policy Decision Could Impact USD/JPY Volatility
The Bank of Japan is expected to hold rates steady during its December 19 meeting. Policymakers are monitoring wage growth and global policy trends, with potential USD/JPY volatility if the Fed pauses its rate cuts.
9. Canadian Home Sales Show Strong Recovery
The Canadian Real Estate Association will release November home sales data on Monday. October’s figures showed a 30% year-over-year increase in transactions, marking a significant recovery in the housing market after months of stagnation.
10. Canada’s Inflation Data for November
Statistics Canada will release November’s Consumer Price Index (CPI) data on Tuesday. October’s inflation rate was 2%, up from 1.6% in September, signaling a potential stabilization of price pressures in the Canadian economy.
This week’s updates will provide a comprehensive view of global and domestic economic dynamics, offering key insights for policymakers, investors, and businesses as they prepare for 2025.
The most anticipated earnings releases for the week of December 16, 2024 are #RCAT #AMTM #MAMA #REE #MITK #QIPT #CMP #RICK16
Published by Vikki Zhao
December 16, 2024, 13:00 PM EST. 10 min read
AimStar Capital Group Inc. is a Canadian full-service Investment Dealer, regulated by Canadian Investment Regulatory Organization (CIRO) and a member of Canadian Investor Protection Fund (CIPF). As an independent firm, AimStar is built on a foundation of innovation, integrity, and client-centricity. They are committed to providing unbiased advice and dedicated to the client’s needs, helping them achieve their financial goals.
AimStar is recognized as a Wealth Professionals 5-star Wealth Management Firm for 2024, this award recognized AimStar has offered exceptional client experience, a proven investment track record, continuous innovation, and stringent regulatory compliance.