| | Close
Aug 28 | Close
Aug 21 | Weekly
Change | Net Weekly
Change % |
DJIA | 53,559.99 | 53,277.01 | +282.98 | +0.53% |
Nasdaq | 26,402.42 | 26,180.45 | +221.97 | +0.85% |
S&P 500 | 7,711.76 | 7,674.37 | +37.39 | +0.49% |
| S&P TSX | 36,553.92 | 36,620.23 | -66.31 | -0.18% |
Source: Globe & Mail
BoC: Know When to Hold ’em
Robert Kavcic
BMO Senior Economist
The Bank of Canada is expected to remain on hold at its
September 2 meeting, extending the prolonged period on the sidelines. While
policy rates are expected to remain unchanged for the rest of the year, that
shouldn’t lull us into thinking that all is quiet on the central bank front.
Far from it.
Growth has gathered momentum through the middle of the year,
but an amped-up trade dispute likely warrants caution. After the prior
quarter's small contraction was revised up to a modest expansion, the economy
cranked out 3.3% annualized growth in Q2. Consumer spending has been sturdy,
fiscal policy is adding to growth, and even much-maligned business investment
has shown signs of life. Enter the trade war. The truly unfortunate aspect of
the latest breakdown in trade talks is that it comes just as Canada’s economy
was showing real signs of firming. But, we judge that he new round of tariffs,
along with the hit to business confidence more broadly, will carve roughly 0.5
ppts from growth if in place for a full year. For an economy working to close
an output gap, this will clearly be read as dovish by the Bank, a risk that policymakers
have already pointed to many times. Note that the Bank had forecasted 2.5% a.r.
growth for Q2 in the latest MPR, so the economy outperformed handily there. The
third quarter was pegged at 1.5%, which is largely in line with our current
view.
Meantime, headline inflation has been running above target,
at 3.0% y/y as of July. But, the array of core inflation measures are running
right around target. Indeed, the average of the big four (Trim, Median, CPIX
and ex-F&E) was right at 2% y/y in July. While the 3-month annualized rates
were on the firmer side, it’s not enough to open up serious inflation concerns.
Meantime, the breadth of inflation across the CPI was similarly well-behaved
with a relatively even distribution in the sub-2% and above-3% buckets.
Retaliatory tariffs by Canada are, technically, inflationary, and the Bank has
a history of respecting the associated upside risk. They are an
inflation-targeting central bank after all. We judge that the retaliatory
tariffs slated to go in effect on September 8 will add 0.2-to-0.3 ppts of
upside risk to inflation if left in place for a full year.
All in, new tariffs and the deterioration in the Canada-U.S.
trade relationship at minimum scrubs out any upside risk that might have been
building in the Canadian growth outlook, and could weigh further if the dispute
persists. We judge that any upside risk to the inflation outlook from Canada’s
retaliation will ultimately be overwhelmed by the softer growth profile. This
should leave the Bank of Canada firmly on hold for the remainder of the year,
and eventually tamp out any remaining rate hikes still priced in the market.
Frank and Mark.
Source: Globe & Mail, BMO Capital Markets, Bank of Canada, Bloomberg.
Canada
Canada looks to post a sizeable merchandise trade surplus of $4.0 bln in July, in
line with the June figure. Exports remain well-supported by elevated energy prices,
although a pullback in gold from last month’s surge could provide some offset. Exports
are also subject to upside risk on front-running after the U.S. threatened 50% tariffs
on Canada, although that should reverse in August. Meantime, we expect softness
in imports, partially due to an unwinding of electronic equipment after some major
data centre construction projects made a mark in June. The revamped trade war will
play a significant role in the data in the months ahead, although we expect energy to
continue supporting the trade balance as long as activity through the Strait of Hormuz
remains restricted. Altogether, net exports could be a drag on Q3 growth after adding
about four percentage points to Q2 alone.
YTD, the TSX is up 15.27%, and the benchmark 10-year yield ended the week to yield 3.72%.
U.S. & Global
The ISM Services PMI is expected to climb 0.4 pts to 54.5 in August, signalling that
activity remained firmly in expansion territory. Service providers may have benefitted
from solid gains in new orders and business activity. The one area to watch remains
the Prices Index, which has stayed elevated and may continue to point to lingering
inflation pressures across service industries. Overall, the August report is expected to
reinforce the view that the services sector remains a key pillar of economic growth,
with underlying demand proving strong enough to offset policy and geopolitical
headwinds.
YTD, the DJIA is up 11.44%, the NASDAQ is up 13.60%, and the S&P 500 is up 12.65%. The 10-year Treasury yield ended the week to yield 4.72%.
Source: BMO Capital Markets
The Good:
Real GDP +3.3% a.r. (Q2); Monthly Real GDP +0.3% (June)—but
StatCan estimates July was flat; Current Account swung to an $8.8 bln surplus
(Q2); Ottawa posted a budget deficit of $0.4 bln (Apr.-to-June)—vs. $6.3 bln
hole in same period last year; Province of Alberta now projects a $2 bln
surplus (FY26/27)—vs. a $9.4 bln deficit.
The Bad:
Job Vacancy Rate stuck at 2.8% (June).
The Good:
Real GDP confirmed at +1.5% a.r. (Q2 S)—but consumer
spending stronger than initial estimates; Core Durable Goods Orders +0.2%
(July)—but slowed; Initial Claims -4k to 203k (Aug. 22 week); ADP Employment
+11,750 (4-wk avg. to Aug. 8); Wholesale Inventories +1.3%; Retail Inventories
+0.7% (July A); U of M Consumer Sentiment revised up to 51.7 (Aug.)—but still
subdued.
The Bad:
Real Personal Spending unch (July); Core PCE Price Index
+3.3% y/y (July)—still elevated; Dallas Fed Trimmed Mean PCE Inflation picked up
to +2.28% y/y (July); S&P Cotality CS Home Prices +2.1% y/y; FHFA Home
Prices +2.3% y/y (June); New Home Sales -10.5% to 607,000 a.r. (July); Goods
Trade Deficit widened to $118.8 bln (July); Chicago Fed National Activity Index
-0.08 (July); Conference Board Consumer Confidence Index -0.8 pts to 89.4
(Aug.).
Source: Associated Press
How this Massachusetts sanctuary takes in hundreds of guinea
pigs from across the US
SALISBURY, Mass. (AP) — Kimie Smothermon begins each day
greeted by the squeals, chirps and purrs of nearly 400 guinea pigs.
Depending on who you ask, tending to the daily barrage of
guinea pig needs can be either a fairy tale or a horror show. For Smothermon,
it’s often a mix of both.
“If I could figure out how to get out of this at this point,
I probably would,” Smothermon joked. “But I do believe that to a certain
extent, I probably wouldn’t get out of bed if I didn’t have this.”
Smothermon is the owner of the Guinea Pig Sanctuary, in
Salisbury, Massachusetts, roughly 40 miles (64 kilometers) north of Boston. On
any given day, 350 to 400 guinea pigs are housed in a modest workspace, split
into cages stacked from the floor to ceiling.
The space is cramped and chaotic as volunteers and visitors
squeeze past each other between the rows of cages in a converted office space.
People constantly move throughout the space cleaning out cages and checking on
any sick animals.
But there’s also joy. The squeals from the little piggies
about to eat lettuce and other vegetation often spark laughter, while others
cuddle and comfort some of the guinea pigs. Each animal has a name prominently
displayed outside their cage, as volunteers tick off their personalities.
Maui is friendly and gives kisses. Gritty is older, but shy.
Rio has spunk and likes to run around. They all remember the smell of their
caretakers and gravitate toward their favorites.
“They’re very sensitive animals,” said Janet Woodman, a
volunteer at the nonprofit. “I personally think they are probably the best
therapy animal next to a horse.”
Smothermon’s operation is one of the handful of animal
rescues in the U.S. devoted solely to taking in abandoned guinea pigs — filling
a need as people become overwhelmed with the responsibilities required to take
care of these pets. The sanctuary additionally offers boarding for guinea pigs
when their owners are traveling, as well as encouraging rehoming of the animals
when they can.
Measuring between 8-10 inches (20.32-25.4 centimeters) long,
these small beasts originally came from South America derived from the Cavia
porcellus species, according to the Smithsonian’s National Zoo. After being
domesticated in 5,000 B.C., there are now 13 different breeds that are
distributed as both pets and for food.
According to Smothermon, guinea pigs often need to be
adopted in pairs. They’re social and can’t be kept in cages full time.
Within minutes of opening the sanctuary earlier this year,
an older woman walked through the door carrying two cages needing to
“surrender” her guinea pigs. The woman’s husband had become sick, she explained
to Smothermon, and she couldn’t properly take care of both him and her pets.
Smothermon hugged the woman and waived the usual fee.
“I tell people, just bring them here,” she said. “If that’s
what you need to do, I’ll take on the responsibility.”
Other days, Smothermon is fielding calls from across the
U.S., asking if she can take 11 piggies from Illinois, seven from Texas, and 97
from New York — where nearly half are expected to have babies.
It’s a constant stress that Smothermon never imagined would
consume her life. It initially began when her grandson, Alex, brought home a
guinea pig. Alex had fallen into a fire as a child and experienced health
problems, causing him to avoid most animals up until he was 12, when he
discovered it was safe to interact with guinea pigs.
From there, Smothermon said, her family became a resource to
take in abandoned guinea pigs. The family ran the rescue out of their New
Hampshire house until a fatal fire burned it down in 2019. The fire resulted in
the loss of Smothermon’s other grandson, two dogs and dozens of guinea pigs.
The tragedy sent Smothermon into a depression, but when her
family was living out of a hotel as they looked for a new home, people still
kept dropping off guinea pigs that needed help.
Seeing the need gave Smothermon and her family the focus and
motivation to continue Alex’s dream, and eventually they relocated to
Massachusetts.
Smothermon says the work is hard. She only gets a handful of
days off a year, but the constant drumbeat of needing to take care of hundreds,
if not thousands, of guinea pigs keeps her grounded.
“If I don’t get up, they don’t eat and they can die. So even
though it’s not a choice, I have to,” she said.