This file photo taken on October 12, 2011, shows Blackberry mobile phones in Rennes, France.DAMIEN MEYER/AFP/Getty Images
Ottawa will review the US$600-million sale of BlackBerry Ltd.’s BB-T legacy smartphone patents to a Delaware-registered company, dragging out its exit from the handset business it pioneered years after the company recast itself as a cybersecurity business with an interest in connected cars.
Industry Minister François-Philippe Champagne said Monday that the federal government will scrutinize the deal through the Investment Canada Act, which it routinely does with such acquisitions “to ensure they are likely to have a net benefit to the Canadian economy, and do not pose a risk to our national security.” Last March, his department updated the Act to include reviews on transactions that might involve “potentially sensitive technologies.”
The sale, which has been in the works since 2020, was also announced Monday. Buyer Catapult IP Innovations Inc., which was formed was formed specifically to buy the assets, was created last June, and its registration documents do not list any directors or shareholders.
Catapult is paying for the deal with a US$450-million senior secured loan and a promissory note for the balance, secured by a second lien on the patents payable in five installments starting three years after the closing date.
The debt financing is being led by Toronto’s Third Eye Capital and Catapult has secured US$400-million of conditional commitments from a syndicate that includes an unnamed Canadian pension fund, BlackBerry said in a regulatory filing with the U.S. Securities and Exchange Commission. The filing added that Catapult will also need to complete a US$90-million equity financing in order to access the loan and complete the transaction.
Third Eye did not return a request for comment Monday.
The company once known as Research in Motion Ltd. has spent the last decade, much of it under the guidance of chief executive John Chen, building on the strength of the secure messaging its BlackBerry handsets were once known for. Securing data transmission, particularly for enterprise customers, is now one of the company’s core business lines – as is connected-car technology, which itself requires increasing data security with each passing year as automakers continue to refine technology for self-driving cars.
The company said the transaction would not impact its customers’ use of any of the company’s current products, solutions or services in areas such as technology to power connected cars or cybersecurity, and that it had obtained a license to the patents being sold. The transaction is expected to take up to seven months to complete.
BlackBerry earlier this month further distanced itself from its legacy as a smartphone pioneer by shutting off software support for its legacy BB7 and BB10 devices, which it hasn’t made for years. (Some overseas manufacturers have licenced the brand for phones that typically run Google’s Android operating system.)
The company has struggled to reignite its share price under the leadership of Mr. Chen, and last year became one of a handful of so-called “meme stocks” to temporarily spike up in value.
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Stocks rose Monday amid a rally in Chinese technology shares, while U.S. equity futures stabilized as some of the angst over the prospect of tighter Federal Reserve monetary policy eased.
Asia-Pacific equities rose for a second day, helped by a rally in a Hong Kong tech index on bets that the worst of Beijing’s crackdown on the sector may be over. A clutch of markets, including on mainland China, are closed for the Lunar New Year holiday.
Vancouver and Quebec recently banned certain kinds of fossil fuel-based heating in new home construction. Similar — and, in some cases more extensive — bans are happening around the world, from Norway to New York City. The goal? To cut CO2 emissions from buildings by replacing fossil fuel burning with electric heating. But are such bans necessary? And what impact will they have on people who live in those cities? Here's a closer look.
Where are fossil fuel heating bans happening in Canada so far?
At least two jurisdictions have implemented recent restrictions on fossil fuel heating:
This map shows the energy sources used for heating in different provinces in 2015. (CER/Statistics Canada)
Why are fossil fuels for heating being banned now?
During the recent United Nations COP26 climate summit in Glasgow, Canada and more than 80 other countries signed a Global Methane Pledge to cut emissions of methane — a greenhouse gas far more potent than carbon dioxide — by at least 30 per cent below 2020 levels by 2030.
WATCH | Joe Biden promises major global cut to methane:
Biden promises major global cut to methane
3 months ago
Duration 4:55
U.S. President Joe Biden pledged a 30 per cent global cut in methane by 2030, an effort to reduce a huge source of greenhouse gases. (Evan Vucci/The Associated Press) 4:55
How would banning fossil fuel heating help Canada and the world reach net zero?
In 2019, buildings were the third largest source of greenhouse gas emissions in Canada, after oil and gas and transport.
Space and water heating represent about 85 per cent of residential greenhouse gas emissions and 68 per cent of commercial emissions.
A 2021 report from the Canadian Institute for Climate Choices on different ways to get Canada to net zero said its modelling consistently shows "electrification of heating as a necessary part of the transition to net zero in Canada's building sector."
It's a strategy endorsed by the International Energy Agency (IEA), an intergovernmental organization affiliated with the Organization for Economic Co-operation and Development that's focused on secure and sustainable energy.
The IEA recommended in May that bans on new fossil fuel boilers need to start being introduced globally in 2025 and that most old buildings and all new ones must comply with zero-carbon-ready building energy codes. That's because the lifetime of heating equipment can be a couple of decades.
Local/municipal gas bans and state laws prohibiting restrictions on gas in the U.S. as of Jan. 29, 2022. (S&P Global Market Intelligence)
How would banning fossil fuel heating help to cut methane emissions?
Methane is emitted in the production of all fossil fuels, including coal and heavy oil, even if it isn't collected for use in the process.
It's also the main component — 95 per cent — of natural gas, the source of 52 per cent of the energy used to heat Canadian homes in 2018.
LISTEN | Cooking without gas: Why cities are cutting methane from homes:
What On Earth29:58Cooking without gas: why cities are cutting methane from homes
Some municipalities are taking natural gas out of buildings in a shift to a greener future. Laura Lynch checks in on two towns on either side of Lake Ontario, both leading the way. 29:58
Chris Bataille is an associate researcher with the Institute for Sustainable Development and International Relations (IDDRI), a think-tank based in Paris, and an adjunct professor at Simon Fraser University in British Columbia who researches decarbonization of the economy.
Bataille said the entire system is leaky right from the production wells to consumers' stoves and furnaces. Eliminating methane from people's homes would reduce leaks throughout the system.
WATCH | The first step in cutting methane emissions is better ways of measuring them:
The first step in reducing methane emissions are better ways of measuring them, researchers say
10 months ago
Duration 1:57
The federal government has made big investments in reducing methane emissions from oil and gas operations, but researchers say you can’t reduce what you can’t measure, and there are better ways to measure methane. 1:57
What is replacing fossil fuel heating?
In most cases, fossil fuel combustion is being replaced with electric heating. That can include more traditional but less efficient options, such as baseboard heaters and electric furnaces. However, there has been a big push to instead choose more efficient heat pumps. The Canadian Institute for Climate Choices report found that to drive deeper emissions cuts, the switch to heat pumps "would play an essential and growing role."
Are similar bans being implemented in other parts of the world?
Yes. They're most widespread in Europe,which imports 90 per cent of its gas, mostly from Russia, representing a strategic vulnerability beyond climate change itself.
Some of the leaders include Denmark, which banned installation of oil-fired boilers and natural gas heating in new buildings in 2013, and is now subsidizing the electrification of older buildings, and Norway, which banned the use of oil heating in 2020 and has almost completely electrified its building heating.
Breaking News: The U.S. plans to arrange alternative fuel sources for Europe, in case Russia cuts off gas and crude oil supplies as tensions over Ukraine continue to rise. <a href="https://t.co/QVmQVIl697">https://t.co/QVmQVIl697</a>
Meanwhile, in the United States, there are bans in dozens of municipalities. The largest is in New York City. It passed legislation in December that bans fuel-burning systems in new buildings and major renovations. The ban includes heating, hot water and cooking appliances, although there are exceptions for laundromats and commercial kitchens. It goes into effect on Dec. 31, 2023, for buildings fewer than seven storeys, and on July 1, 2027 for taller buildings.
Mike Henchen is the principal of the carbon-free buildings program at RMI, a U.S.-based think-tank focused on the clean energy transition. He said such policies are popular at the municipal level in the U.S. because cities want to take climate change action, and building codes are something over which they have jurisdiction.
Why is new construction being targeted?
New construction is being targeted largely because electrification of a new home is cheap and relatively simple, Bataille said. He estimates it would add between $5,000 and $20,000 to the cost of a home, which is "virtually nothing" on the scale of the total average Canadian home price of $720,850.
In comparison, retrofitting an older home could cost up to $100,000, he estimates.
Henchen said targeting new buildings also stops the emissions problem from getting worse by preventing the installation of new fossil fuel infrastructure. And it helps to expand the market and industry expertise for solutions such as heat pumps.
What is the natural gas industry's response to bans?
The industry has lobbied hard against them. There are now state laws pre-emptively outlawing municipal gas bans in close to 20 U.S. states, eliminating one option for local climate action, Henchen said.
"These are certainly backed and encouraged by the gas industry, which is concerned about losing some of their market and especially some of their growth with new customers," he added.
The Canadian Gas Association says it disagrees with bans on energy sources "because they take away customers' ability to choose what is best for them, based on their needs and circumstances." It told CBC's What On Earth that they also kill opportunities for developing solutions such as renewable natural gas (RNG), hydrogen and carbon capture. RNG is derived from biological sources such as food waste from plants that absorbed carbon as they grew and therefore can be theoretically carbon-neutral.
LISTEN | FortisBC is proposing renewable natural gas for every home connected to the gas system:
5:23FortisBC is proposing "renewable natural gas" for every new home connected to the gas system
FortisBC is proposing "renewable natural gas" for every new home connected to the gas system. But what would that mean for carbon emissions? And is it in line with Vancouver's emissions targets? 5:23
Enbridge Inc. says the company sees itself as a "bridge to a cleaner energy future," and its approach is "to continue to provide people with the energy they need while taking steps to reduce the carbon content of the natural gas we distribute" through technologies such as RNG and hydrogen.
FortisBC, which delivers natural gas and electricity to customers in British Columbia, successfully lobbied for Vancouver to allow an exception for renewable natural gas in its new regulations. Doug Slater, the utility's vice-president of external and Indigenous relations, said that will allow customers to gradually decarbonize using existing gas infrastructure. It aims to have 15 per cent of its gas supply from renewable sources by 2030.
Are these gas bans working? And are they enough?
"They definitely work in eliminating the burning of fossil fuels in new buildings," Henchen said.
But both he and Bataille acknowledged that they're not enough to decarbonize cities.
Henchen said governments also need to stop allowing gas companies to subsidize the expansion of gas infrastructure and the connection of new customers through existing customers' bills (something that's happening in Ontario). He said there are already proposals in Colorado and California that will require customers to pay the full cost of new gas connections.
Policies are also needed to electrify existing buildings, and gas bans alone aren't the right solution, given the cost of retrofits, Bataille said. "We do need some sort of federal and provincial support for people to switch," he said.
In the meantime, Bataille urges homeowners to think ahead about decarbonization of their heating systems. He suggests they look at hybrid gas and electric heat pump systems now and take the option to use renewable natural gas if the option is offered.
"Those kinds of things really do help — and they help build the market in the long run."
TORONTO - The $14.2 million dollar jackpot in Saturday's Lotto 649 draw will be shared by two winning ticket holders -- one in Ontario and the other in Quebec.
Each winning ticket is worth $7.1 million.
The draw's guaranteed $1 million prize also went to a lottery player in Ontario.
The jackpot for the next Lotto 649 draw on Feb. 2 will be an estimated $5 million.
Vancouver and Quebec recently banned certain kinds of fossil fuel-based heating in new home construction. Similar — and, in some cases more extensive — bans are happening around the world, from Norway to New York City. The goal? To cut CO2 emissions from buildings by replacing fossil fuel burning with electric heating. But are such bans necessary? And what impact will they have on people who live in those cities? Here's a closer look.
Where are fossil fuel heating bans happening in Canada so far?
At least two jurisdictions have implemented recent restrictions on fossil fuel heating:
Why are fossil fuels for heating being banned now?
During the recent United Nations COP26 climate summit in Glasgow, Canada and more than 80 other countries signed a Global Methane Pledge to cut emissions of methane — a greenhouse gas far more potent than carbon dioxide — by at least 30 per cent below 2020 levels by 2030.
WATCH | Joe Biden promises major global cut to methane:
Biden promises major global cut to methane
3 months ago
Duration 4:55
U.S. President Joe Biden pledged a 30 per cent global cut in methane by 2030, an effort to reduce a huge source of greenhouse gases. (Evan Vucci/The Associated Press) 4:55
How would banning fossil fuel heating help Canada and the world reach net zero?
In 2019, buildings were the third largest source of greenhouse gas emissions in Canada, after oil and gas and transport.
Space and water heating represent about 85 per cent of residential greenhouse gas emissions and 68 per cent of commercial emissions.
A 2021 report from the Canadian Institute for Climate Choices on different ways to get Canada to net zero said its modelling consistently shows "electrification of heating as a necessary part of the transition to net zero in Canada's building sector."
It's a strategy endorsed by the International Energy Agency (IEA), an intergovernmental organization affiliated with the Organization for Economic Co-operation and Development that's focused on secure and sustainable energy.
The IEA recommended in May that bans on new fossil fuel boilers need to start being introduced globally in 2025 and that most old buildings and all new ones must comply with zero-carbon-ready building energy codes. That's because the lifetime of heating equipment can be a couple of decades.
How would banning fossil fuel heating help to cut methane emissions?
Methane is emitted in the production of all fossil fuels, including coal and heavy oil, even if it isn't collected for use in the process.
It's also the main component — 95 per cent — of natural gas, the source of 52 per cent of the energy used to heat Canadian homes in 2018.
LISTEN | Cooking without gas: Why cities are cutting methane from homes:
What On Earth29:58Cooking without gas: why cities are cutting methane from homes
Some municipalities are taking natural gas out of buildings in a shift to a greener future. Laura Lynch checks in on two towns on either side of Lake Ontario, both leading the way. 29:58
Chris Bataille is an associate researcher with the Institute for Sustainable Development and International Relations (IDDRI), a think-tank based in Paris, and an adjunct professor at Simon University in British Columbia who researches decarbonization of the economy.
Bataille said the entire system is leaky right from the production wells to consumers' stoves and furnaces. Eliminating methane from people's homes would reduce leaks throughout the system.
WATCH | The first step in cutting methane emissions is better ways of measuring them:
The first step in reducing methane emissions are better ways of measuring them, researchers say
10 months ago
Duration 1:57
The federal government has made big investments in reducing methane emissions from oil and gas operations, but researchers say you can’t reduce what you can’t measure, and there are better ways to measure methane. 1:57
What is replacing fossil fuel heating?
In most cases, fossil fuel combustion is being replaced with electric heating. That can include more traditional but less efficient options, such as baseboard heaters and electric furnaces. However, there has been a big push to instead choose more efficient heat pumps. The Canadian Institute for Climate Choices report found that to drive deeper emissions cuts, the switch to heat pumps "would play an essential and growing role."
Are similar bans being implemented in other parts of the world?
Yes. They're most widespread in Europe,which imports 90 per cent of its gas, mostly from Russia, representing a strategic vulnerability beyond climate change itself.
Breaking News: The U.S. plans to arrange alternative fuel sources for Europe, in case Russia cuts off gas and crude oil supplies as tensions over Ukraine continue to rise. <a href="https://t.co/QVmQVIl697">https://t.co/QVmQVIl697</a>
Some of the leaders include Denmark, which banned installation of oil-fired boilers and natural gas heating in new buildings in 2013, and is now subsidizing the electrification of older buildings, and Norway, which banned the use of oil heating in 2020 and has almost completely electrified its building heating.
Meanwhile, in the United States, there are bans in dozens of municipalities. The largest is in New York City. It passed legislation in December that bans fuel-burning systems in new buildings and major renovations. The ban includes heating, hot water and cooking appliances, although there are exceptions for laundromats and commercial kitchens. It goes into effect on Dec. 31, 2023, for buildings fewer than seven storeys, and on July 1, 2027 for taller buildings.
Mike Henchen is the principal of the carbon-free buildings program at RMI, a U.S.-based think-tank focused on the clean energy transition. He said such policies are popular at the municipal level in the U.S. because cities want to take climate change action, and building codes are something over which they have jurisdiction.
Why is new construction being targeted?
New construction is being targeted largely because electrification of a new home is cheap and relatively simple, Bataille said. He estimates it would add between $5,000 and $20,000 to the cost of a home, which is "virtually nothing" on the scale of the total average Canadian home price of $720,850.
Local/municipal gas bans and state laws prohibiting restrictions on gas in the U.S. as of Jan. 29, 2022 (S&P Global Market Intelligence)
In comparison, retrofitting an older home could cost up to $100,000, he estimates.
Henchen said targeting new buildings also stops the emissions problem from getting worse by preventing the installation of new fossil fuel infrastructure. And it helps to expand the market and industry expertise for solutions such as heat pumps.
What is the natural gas industry's response to bans?
The industry has lobbied hard against them. There are now state laws pre-emptively outlawing municipal gas bans in close to 20 U.S. states, eliminating one option for local climate action, Henchen said.
"These are certainly backed and encouraged by the gas industry, which is concerned about losing some of their market and especially some of their growth with new customers," he added.
The Canadian Gas Association says it disagrees with bans on energy sources "because they take away customers' ability to choose what is best for them, based on their needs and circumstances." It told CBC's What On Earth that they also kill opportunities for developing solutions such as renewable natural gas (RNG), hydrogen and carbon capture. RNG is derived from biological sources such as food waste from plants that absorbed carbon as they grew and therefore can be theoretically carbon-neutral.
LISTEN | FortisBC is proposing renewable natural gas for every home connected to the gas system:
5:23FortisBC is proposing "renewable natural gas" for every new home connected to the gas system
FortisBC is proposing "renewable natural gas" for every new home connected to the gas system. But what would that mean for carbon emissions? And is it in line with Vancouver's emissions targets? 5:23
Enbridge Inc. says the company sees itself as a "bridge to a cleaner energy future," and its approach is "to continue to provide people with the energy they need while taking steps to reduce the carbon content of the natural gas we distribute" through technologies such as RNG and hydrogen.
FortisBC, which delivers natural gas and electricity to customers in British Columbia, successfully lobbied for Vancouver to allow an exception for renewable natural gas in its new regulations. Doug Slater, the utility's vice-president of external and Indigenous relations, said that will allow customers to gradually decarbonize using existing gas infrastructure. It aims to have 15 per cent of its gas supply from renewable sources by 2030.
Are these gas bans working? And are they enough?
"They definitely work in eliminating the burning of fossil fuels in new buildings," Henchen said.
But both he and Bataille acknowledged that they're not enough to decarbonize cities.
Henchen said governments also need to stop allowing gas companies to subsidize the expansion of gas infrastructure and the connection of new customers through existing customers' bills (something that's happening in Ontario). He said there are already proposals in Colorado and California that will require customers to pay the full cost of new gas connections.
Policies are also needed to electrify existing buildings, and gas bans alone aren't the right solution, given the cost of retrofits, Bataille said. "We do need some sort of federal and provincial support for people to switch," he said.
In the meantime, Bataille urges homeowners to think ahead about decarbonization of their heating systems. He suggests they look at hybrid gas and electric heat pump systems now and take the option to use renewable natural gas if the option is offered.
"Those kinds of things really do help — and they help build the market in the long run."
(Kitco News) -The Federal Reserve's push to raise interest rates "soon" has awakened gold bears and sent the bulls into hiding as the precious metal sees its worst selloff since mid-November.
The bearish sentiment among Wall Street analysts comes as gold prices have dropped nearly 3% this week since Wednesday's Federal Reserve monetary policy meeting, which set the stage for a rate hike in March. At the same time, Federal Reserve Chair Jerome Powell made a case for aggressive action this year to deal with the rising inflation pressure.
"There's quite a bit of room to raise interests without threatening the labor market. This is by so many measures a historically tight labor market — record levels of job openings, quits, wages are moving up at the highest pace they have in decades," Powell said.
Gold prices have dropped as markets have started to price in the potential for five rate hikes this year. However, some analysts have said that markets and the Fed are too aggressive.
"Gold could go lower, but I'm still buying because the Fed is going to overtighten and get too hawkish and they will ultimately have to backtrack," said Phillip Streible, chief market strategist at Blue Line Futures.
This week 14 Wall Street analysts participated in Kitco News' gold survey. Among the participants, 4, or 29%, called for gold prices to rise. At the same time, seven analysts, or 50%, saw gold prices dropping next week and three analysts or 21% saw sideways price action.
Meanwhile, 495 votes were cast in online Main Street polls. Of these, 270 respondents, or 55%, looked for gold to rise next week. Another 158, or 32%, said lower, while 67 voters, or 14%, were neutral.
While retail investors remain bullish on gold, participation in this week's survey was at its lowest point since September.
According to some analysts, there is room for gold prices to move lower in the near term with $1,750 an ounce as the new target; however, other analysts note that the market is oversold and could be due for a bounce in the near term.
Adrian Day, president of Adrian Day Asset Management, said that he is neutral on gold in the near term but looks for an ultimate rebound in the price.
"The fundamental argument is that at some point the Federal Reserve will lose its newly found inflation-fighting demeanor and gold will then do what it has done every time in the last 20 years that the Fed tried to tighten," Day said. "They may not retreat at the first sign of trouble in the markets, but when it is a choice between a slowing economy, troubled debtors and sliding markets on the one hand or inflation and the dollar on the other, they will let inflation go."
Colin Cieszynski, chief market strategist at SIA Wealth Management, said that gold prices could remain in a downtrend in the near term as more wage inflation in next week nonfarm payrolls report, could add further support to the Federal Reserve's hawkish posturing.
Ottawa gas prices have reached a record high, and one expert says they will increase further throughout the weekend.
The average gas price in Ottawa reached $1.50 per litre on Friday morning. They are expected to go up another penny on Saturday and yet another on Sunday.
"We're looking at $1.52, $1.53 at the high end," Dan McTeague, president of Canadians for Affordable Energy, told CTV Morning Live. "These are all record prices."
The rising gas costs come as prices of crude oil rises. A barrel of crude reached $90 U.S. on Wednesday, the highest it's been since 2014.
"They're not likely to slow down," McTeague said. "If we go to $100 oil, we could see that scenario of $1.60 a litre."
McTeague said supply chain constraints, tensions in Ukraine, the weakness of the Canadian dollar are also contributing factors.
Ottawa motorists were shocked to find prices at $1.50 a litre Friday.
"It's the first time I've seen that, for sure," said Martin. "I'm not going to fill it full."
Lara Nasrallah called gas prices, "insane."
"Gas prices are going up like crazy," said Nasrallah Friday afternoon. "Can't put the keys away, I have to work; so, I don't know what we can do."
The CAA offers several tips to cut down on fuel consumption, including getting all your errands done in one trip instead of several small trips.
“You want to make sure that the tire pressures are at proper inflation, we’re at the perfect temperature right now where they can fluctuate," said Mike Schmidt, CAA North-East Ontario operations manager.
"Plan your trips, we have all this amazing technology - we’ve got the Google maps, we’ve got the Waze, the Apple maps; we’ve got everything navigation in our cars. Those systems are designed to get you to the quickest, most efficient routes possible."
(Kitco News) - The gold market remains under significant pressure and is unable to catch a bid as inflation pressures rise in line with expectations.
On a monthly basis, the core Personal Consumption Expenditures index was up 0.5% last month, the U.S. Department of Commerce said Friday.
On an annual basis, core PCE jumped 4.9%, up from last month’s reading at 4.7%. Annual inflation came in slightly hotter than expected as consensus forecasts called for an increase of 4.8%.
Similar to the Consumer Price Index, the PCE is at its highest level in nearly 40 years.
The core inflation strips out volatile food and energy prices and is the U.S. central bank's preferred inflation measure.
The gold market has been able to find any bullish traction seeing strong selling pressure in the last three days. February gold futures last traded at $1,786.1an ounce, down 0.41% on the day.
Along with hotter than expected annual inflation, the report also noted weak growth in personal income last month. The report said that personal income increased 0.3%; according to consensus forecasts, economists were expecting to see a 0.5% increase.
Personal consumption fell inline with projections, dropping 0.6% in December.
Although inflation is running hotter than expected, Adam Button, chief currency strategist at Forexlive.com said that the report did hold any major surprises for the U.S. Central bank.
“There's nothing here that would have spooked [Federal Reserve Chair Jerome] Powell this week,” he said.
Wednesday, the Federal Reserve signaled that it is ready to start raising interest rates “soon.” And Powell said at a press conference that the economy is strong enough to withstand interest rate hikes.
"There's quite a bit of room to raise interests without threatening the labor market. This is by so many measures a historically tight labor market — record levels of job openings, quits, wages are moving up at the highest pace they have in decades," Powell said.
Although the Federal Reserve appears to be pursuing aggressive tightening policies to reign in the rising inflation threat, some economists don't think it will be able to achieve its goals this year.
"The latest batch of data nearly illustrate the conundrum facing the Fed - with price and wage inflation running at 40-year highs, while at the same time underlying domestic demand growth is weakening," said Paul Ashworth, chief U.S. economist, at Capital Economics. "To our minds, despite the strength of price and wage inflaton, it is disappointingly weak real economic growth that will prevent the Fed from delivering a full-blown Ratemaggedon this year."
(Kitco News) - The gold market remains solidly in negative territory and can’t find any bullish traction even as fewer U.S. consumers start the process of buying a home, according to the latest data from National Association of Realtors (NAR).
U.S. pending home sales dropped 3.8% in December, following November’s drop of 2.2%, the NAR said on Thursday. The data was much worse than expected as consensus forecasts called for a decline of 0.9%.
For the year pending home sales are down 6.9%.
The gold market is not seeing much movement following the latest U.S. housing sales data. February gold futures last traded at $1,805 an ounce, down 1.35% on the day.
This was the second consecutive month pending home sales declined, the report said.
"Pending home sales faded toward the end of 2021, as a diminished housing supply offered consumers very few options," said Lawrence Yun, NAR's chief economist. "Mortgage rates have climbed steadily the last several weeks, which unfortunately will ultimately push aside marginal buyers."
Looking ahead, Yun said that the housing market could struggle as rising interest rates wil push mortgages higher.
Bank of Canada Governor Tiff Macklem attends a news conference in Ottawa on Dec. 15, 2021. On Wednesday, policy makers decided to keep the central bank’s key interest rate at its record-low 0.25 per cent, where it has been since the early days of the pandemic.Justin Tang/The Canadian Press
If the degree to which the Bank of Canada has rolled up its sleeves is indicative of how intensely it’s about to get to work on quelling the inflation problem, then brace yourselves. Those sleeves are balled right up to the shoulder after Wednesday’s interest rate decision.
Don’t misread the bank’s decision to not actually start that process for a few more weeks. Everything else about Wednesday’s announcement, and accompanying quarterly Monetary Policy Report (MPR), screamed the case to raise rates. Probably more quickly than many pundits were thinking.
“The Bank [of Canada] did a very good job at producing a ‘hawkish hold’ today,” CIBC Capital Markets strategist Ian Pollick said in an e-mail on Wednesday.
Indeed, we may have never seen a rate hold this hawkish before.
First, the obvious: The bank came right out and said that it plans to raise rates very soon – and that Wednesday’s announcement was, basically, clearing the tracks in preparation. This isn’t something central banks typically do. In this case, Bank of Canada Governor Tiff Macklem underlined the point in his post-announcement news conference. He wanted to make sure no one missed it. The bluntness had a certain “don’t say we didn’t warn you” feel to it.
Looking at the economic projections the bank laid out in the MPR, we can see why.
The inflation outlook for 2022 is now nearly a full percentage point higher than the bank’s forecast in October – a marked shift in its thinking about the temporary nature of price increases. After saying that inflation would peak in the fourth quarter of 2021, the bank now sees the rate averaging “close to 5 per cent” – actually slightly above the fourth-quarter pace – over the entire first half of 2022.
It said the supply woes that have been pushing up prices “have been larger, broader, and more persistent than originally anticipated.” Its base-case assumption is that supply-related price surges won’t reverse themselves when the strains ease.
The message has moved very, very far from “inflation is transitory.”
People shop for milk at a grocery store in Toronto on Dec. 8, 2021. The inflation outlook for 2022 is now nearly a full percentage point higher than the bank’s forecast in October – a marked shift in its thinking about the temporary nature of price increases.Christopher Katsarov/The Globe and Mail
But perhaps more pressing is the bank’s assessment of the economy: While supplies have been hamstrung, demand has grown much faster than anticipated. The result is an economy that is, for all practical purposes, running at full capacity – which is usually when the inflationary heat begins.
Given that the Bank of Canada expects economic growth to remain well above the typical pace of capacity growth over the next couple of years, the implication is that we’re heading into excess demand – an inflationary condition even in the absence of the price spikes that have already occurred.
The case for rate hikes is unquestionable. The argument for rapid ones is compelling.
The bank noted that for now, its surveys of consumers and businesses indicate that expectations for longer-term inflation remain “well anchored” around the bank’s target of 2-per-cent inflation. It seems at odds with the abundant anecdotal evidence that we’re more worried about inflation than we have been in a generation or more. To the extent that the surveys are accurate, that confidence is surely predicated on faith that the central bank will raise rates as necessary to wrangle inflation back toward the target.
The Bank of Canada itself suggested it’s a race against time to keep this faith intact.
The Bank of Canada noted that for now, its surveys of consumers and businesses indicate that expectations for longer-term inflation remain 'well anchored' around the bank’s target of 2-per-cent inflation.Adrian Wyld/The Canadian Press
“Until inflation moves significantly lower, there is an elevated risk that Canadians will start to believe that inflation will stay high over the long term,” the bank said in the MPR. “Higher inflation expectations could in turn lead to more pervasive labour costs and inflationary pressures and could become embedded in ongoing inflation.”
It’s a reasonable inference, then, that the bank sees value in using rates to hammer inflation down sooner rather than later.
The bank’s inflation forecasts may also contain a clue that the initial rate hikes could come fast and furious. Despite the higher inflation expectations for 2022, the bank sees inflation in 2023 to be precisely where it projected previously: 2.3 per cent. Although it’s not saying so, earlier and faster rate hikes are surely part of the equation for getting there.
How high could we go? Well, the good news for borrowers (and not so good news for savers), is probably not very high by historical standards. Economists and the bank itself see something around 2 per cent to be a roughly neutral level for the key rate – where it is neither slowing nor stimulating the economy. We can expect the Bank of Canada to take a step back to allow its rates to do their work, and assess the economic impact, well before then; the rate cycle could easily go on pause once we’re in the 1.5 per cent range, maybe even earlier.
But if inflation is going to cool, and long-term expectations are going to be preserved, then getting there may prove a faster trip than many financial market participants have prepared for. And frankly, the quicker the ramp-up, the less likelihood that the bank will have to go even higher to put inflation to rest. Hard work over the next few months could mean less work – and less pain – down the road.
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Never mind hockey, maple syrup or Tim Hortons. Canadians seem to have found a new national obsession in recent weeks: Documenting the state of affairs at their local grocery stores, to try to gauge whether or not the country is in the midst of a food-supply crisis.
Provincial premiers, federal MPs, members of various opposition parties and even members of the bastion of sober second thought that is Canada's Senate have weighed in on the matter, taking pictures of local grocery store shelves as evidence — or a lack thereof — of a looming crisis in Canada's food supply.
Since most of those doing the picture-taking have a particular agenda to push, as with anything political, the reality is likely somewhere between what partisans on either side are saying.
While no one can pretend there aren't a lot of empty shelves out there right now, it's also unfair to suggest there's some sort of slow-moving famine underway across the country.
Complex problem
Industry experts agree that the country's food supply is nowhere close to collapse.
"I don't think we're going to be running out of food at grocery stores," said Simon Somogyi, a professor who studies Canada's food industry at the University of Guelph.
Canada's food supply chain is always a delicate balancing act, Somogyi said, as a relatively short growing season, coupled with vast distances, makes maintaining and distributing supplies tricky under even ideal circumstances.
And the current ones are anything but, he said.
The Omicron wave of the COVID-19 pandemic has hit the food industry hard, particularly as labour shortages became acute as more workers either got sick or had to quarantine because of exposure. A lack of employees to keep shelves fully stocked has been a problem for a while now, even before the federal government's vaccine mandate for cross-border truck drivers dealt the industry another curveball, making it harder to get food to the loading dock in the first place.
"The Canadian food system rides on the back of a truck … particularly at this time of year, where it's cold and we have to import a lot of fresh food, like fruits and vegetables, into Canada," said Somogyi.
WATCH | Why some are blaming the vaccine mandate for empty store shelves:
Trucker vaccine mandate blamed for empty shelves as convoy heads to Ottawa
1 day ago
Duration 1:59
As a convoy of protesters heads toward Ottawa, the COVID-19 vaccine mandate for cross-border truck drivers has been blamed for empty grocery store shelves. But experts say there are numerous factors, including extreme weather, contributing to reduced supply. 1:59
Gary Sands, with the Canadian Federation of Independent Grocers, said there are indeed shortages of certain goods in certain regions. But on the whole, he said, they are expected to be temporary while the country rides out the "tsunami" of Omicron.
"We're absolutely seeing product delays and shortages," he said, especially of fresh fruits and vegetables — a large amount of which come from the U.S. this time of year.
"It doesn't mean the shelves are completely barren or anything like that. But we're already starting to see for some products … they're just not coming in time, or we're not getting them in the quantities that we need."
So it's not as if there are truckloads of food piling up at the border, waiting to be delivered but for a lack of vaccinated truckers.
Sylvain Charlebois, a professor who studies food distribution at Dalhousie University in Halifax, says the problem may be a bit more acute in Canada right now for a variety of factors — but the U.S. is seeing similar stresses to their food supply chain, too.
"We've also seen empty shelves in the United States," he said. "So this is not necessarily a [Canadian] issue."
Somogyi said the new rules for cross-border truckers are not the main issue, "but it's one big piece of the pie that is impacting the supply of food and the price of food."
"We may see some outages of certain products that are taken … a fair distance to get to us, but there will still be options," he said.
Sands said things like cereals, soups and spices are getting harder to find in Western Canada, while Charlebois said perishables are posing a bigger problem in Atlantic Canada and Northern Ontario.
But the message from both experts is the same: This, too, shall pass.
"The shortages that we're experiencing right now … are temporary, and I can't emphasize enough that we don't want to see a resumption or return to panic-buying," Sands said. "That helps no one and hurts everyone."
Remember this? Product shortages today have almost nothing in common with what caused the surge in demand for things like toilet paper back in March 2020, according to food distribution expert Sylvain Charlebois. (Richard Vogel/The Associated Press)
While empty grocery store shelves were briefly the norm in those early uncertain days of 2020, the situation today is quite different, Charlebois said. "Back in March of 2020, shortages were demand-induced," he said. "People panicked."
This time around, he said, this is "really an issue related to supply chains," that can and will be sorted out. "I don't think that Canadians will stop having access to food they need."
No need to panic
While there are some empty shelves across Canada right now, there was little evidence of panic buying at a Save-On Foods in Vancouver that a CBC reporter went to check out on Monday.
"There are always empty shelves, you know, but it's not too bad," shopper Thomas Markis said. "I can get by."
He graded the severity of empty shelves at a two on a scale of 1 to 10, adding that he was able to get all the food he came for, but couldn't find some other products, like cleaning supplies.
Shopper Tom Saare also managed to get everything he came for — but says that hasn't always been the case.
"Today's not too bad, but previous days, there were not the products I wanted," he told CBC News. "We've been given lots of notice that there are going to be some shortages.… And so we just kind of plan accordingly."
WATCH | Vancouver shoppers describe what the shelves look like:
Shoppers talk about empty grocery store shelves
18 hours ago
Duration 2:42
At this Save-On Foods in Vancouver, shoppers say there are indeed some empty shelves, but there's little evidence of panic buying. 2:42
That's good advice for everyone, Somogyi said.
"The most important thing is not to panic," he said. "The food supply chain is highly resilient … so those shortages, they'll probably be short term, but rest assured that those products will get back onto the shelves."
Charlebois agrees, saying that from rising costs to threadbare supply, the issues facing Canada's food supply chain are very real — but none of them rise to the level of widespread food insecurity.
"You shouldn't be expecting perfection when you walk into the grocery store," he said. "It will be messy for a while."
Economic eyes will be on the Bank of Canada this morning as the central bank is scheduled to make an announcement about its trendsetting interest rate.
Some economists are expecting the central bank to raise its key policy rate from its rock-bottom level of 0.25 per cent, marking the first of multiple hikes over the course of 2022.
Economists' expectations are tied to annual inflation rates that in December hit a 30-year high, and survey data from the Bank of Canada showing consumers believe price gains will stay higher for longer.
A rise in the bank's key policy rate would affect costs for loans like variable-rate mortgages and other borrowing linked to the benchmark rate.
If the central bank decides not to raise rates, governor Tiff Macklem may signal a potential increase in rates in March to give the bank time to see the economic fallout from the latest surge in COVID-19 cases due to the Omicron variant.
RBC senior economist Nathan Janzen says beyond the near-term risks from Omicron, the central bank is running out of reasons to keep interest rates at emergency low levels, adding that rates will rise soon.
This report by The Canadian Press was first published Jan. 26, 2022.
Never mind hockey, maple syrup or Tim Hortons. Canadians seem to have found a new national obsession in recent weeks: Documenting the state of affairs at their local grocery stores, to try to gauge whether or not the country is in the midst of a food-supply crisis.
Provincial premiers, federal MPs, members of various opposition parties and even members of the bastion of sober second thought that is Canada's Senate have weighed in on the matter, taking pictures of local grocery store shelves as evidence — or a lack thereof — of a looming crisis in Canada's food supply.
Since most of those doing the picture-taking have a particular agenda to push, as with anything political, the reality is likely somewhere between what partisans on either side are saying.
While no one can pretend there isn't a lot of empty shelves out there right now, it's also unfair to suggest there's some sort of slow-moving famine underway across the country.
Complex problem
Industry experts agree that the country's food supply is nowhere close to collapse.
"I don't think we're going to be running out of food at grocery stores," said Simon Somogyi, a professor who studies Canada's food industry at the University of Guelph.
Canada's food supply chain is always a delicate balancing act, Somogyi said, as a relatively short growing season, coupled with vast distances, makes maintaining and distributing supplies tricky under even ideal circumstances.
And the current ones are anything but, he said.
The Omicron wave of the COVID-19 pandemic has hit the food industry hard, particularly as labour shortages became acute as more workers either got sick or had to quarantine because of exposure. A lack of employees to keep shelves fully stocked has been a problem for a while now, even before the federal government's vaccine mandate for cross-border truck drivers dealt the industry another curveball, making it harder to get food to the loading dock in the first place.
"The Canadian food system rides on the back of a truck … particularly at this time of year, where it's cold and we have to import a lot of fresh food, like fruits and vegetables, into Canada," said Somogyi.
WATCH | Why some are blaming the vaccine mandate for empty store shelves:
Trucker vaccine mandate blamed for empty shelves as convoy heads to Ottawa
1 day ago
Duration 1:59
As a convoy of protesters heads toward Ottawa, the COVID-19 vaccine mandate for cross-border truck drivers has been blamed for empty grocery store shelves. But experts say there are numerous factors, including extreme weather, contributing to reduced supply. 1:59
Gary Sands, with the Canadian Federation of Independent Grocers, said there are indeed shortages of certain goods in certain regions. But on the whole, he said, they are expected to be temporary while the country rides out the "tsunami" of Omicron.
"We're absolutely seeing product delays and shortages," he said, especially of fresh fruits and vegetables — a large amount of which come from the U.S. this time of year.
"It doesn't mean the shelves are completely barren or anything like that. But we're already starting to see for some products … they're just not coming in time, or we're not getting them in the quantities that we need."
So it's not as if there are truckloads of food piling up at the border, waiting to be delivered but for a lack of vaccinated truckers.
Sylvain Charlebois, a professor who studies food distribution at Dalhousie University in Halifax, says the problem may be a bit more acute in Canada right now for a variety of factors — but the U.S. is seeing similar stresses to their food supply chain, too.
"We've also seen empty shelves in the United States," he said. "So this is not necessarily a [Canadian] issue."
Somogyi said the new rules for cross-border truckers are not the main issue, "but it's one big piece of the pie that is impacting the supply of food and the price of food."
"We may see some outages of certain products that are taken … a fair distance to get to us, but there will still be options," he said.
Sands said things like cereals, soups and spices are getting harder to find in Western Canada, while Charlebois said perishables are posing a bigger problem in Atlantic Canada and Northern Ontario.
But the message from both experts is the same: This, too, shall pass.
"The shortages that we're experiencing right now … are temporary, and I can't emphasize enough that we don't want to see a resumption or return to panic-buying," Sands said. "That helps no one and hurts everyone."
Remember this? Product shortages today have almost nothing in common with what caused the surge in demand for things like toilet paper back in March 2020, according to food distribution expert Sylvain Charlebois. (Richard Vogel/The Associated Press)
While empty grocery store shelves were briefly the norm in those early uncertain days of 2020, the situation today is quite different, Charlebois said. "Back in March of 2020, shortages were demand-induced," he said. "People panicked."
This time around, he said, this is "really an issue related to supply chains," that can and will be sorted out. "I don't think that Canadians will stop having access to food they need."
No need to panic
While there are some empty shelves across Canada right now, there was little evidence of panic buying at a Save-On Foods in Vancouver that a CBC reporter went to check out on Monday.
"There are always empty shelves, you know, but it's not too bad," shopper Thomas Markis said. "I can get by."
He graded the severity of empty shelves at a two on a scale of 1 to 10, adding that he was able to get all the food he came for, but couldn't find some other products, like cleaning supplies.
Shopper Tom Saare also managed to get everything he came for — but says that hasn't always been the case.
"Today's not too bad, but previous days, there were not the products I wanted," he told CBC News. "We've been given lots of notice that there are going to be some shortages.… And so we just kind of plan accordingly."
WATCH | Vancouver shoppers describe what the shelves look like:
Shoppers talk about empty grocery store shelves
15 hours ago
Duration 2:42
At this Save-On Foods in Vancouver, shoppers say there are indeed some empty shelves, but there's little evidence of panic buying. 2:42
That's good advice for everyone, Somogyi said.
"The most important thing is not to panic," he said. "The food supply chain is highly resilient … so those shortages, they'll probably be short term, but rest assured that those products will get back onto the shelves."
Charlebois agrees, saying that from rising costs to threadbare supply, the issues facing Canada's food supply chain are very real — but none of them rise to the level of widespread food insecurity.
"You shouldn't be expecting perfection when you walk into the grocery store," he said. "It will be messy for a while."
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