April 13, 2022

• The markets think the rate of US core cost increases have peaked. (I.e., not including food and energy.)
• Headline inflation, however, does not seem to be as tame. Housing, oil, and food are still much higher than core measures.
• "Headline" here meaning higher cost increases on what people spend two-thirds of their wage on right now.
• The question is, is it price or is it inflation?
• The central banks think it is inflation and so are going to drive rates up
• Canada poised to increase rates by 0.5% to 1%

• This decline in core inflation is inline with the optimistic numbers released in the Financial Accountability Office of Ontario (FAO).

• The overly optimistic Ontario FAO outlined just how bad the Progressive Conservatives under Ford are being to the general population.
• Spending in each sector will be well below the historical average – even as we come out of a pandemic and into a global recession.
• Spending does not keep up with population growth.

• Program spending is declining in all sectors except health (and areas where they are spending new federal money like childcare).
• Almost all new growth in spending (except hospitals and LTC) is from federal government transfers – in fact, the federal government is subsidizing the cuts.

• FAO predictions for Ontario are rapid economic expansion, budget surpluses, and excellent private sector growth.
• FAO completely ignores (and admits it) the US and global economy.
• It also admits it was wrong about inflation and wrong about growth last time. But, this time it is definitely correct (especially since there is an election coming).

• The take-home? The Tories plan on gutting the public sector over the next few years with below population growth and below inflation increases to spending.

• The announcement is about privatization.
• It is the fifth-largest nuclear power producer in the world.
• 26 per cent of electricity generation is nuclear.
• coal accounted for 42%, natural gas 25%

“One of the largest obstacles is the majority state-owned utility Kepco, which has a de facto monopoly over the power sector and has vested interests in maintaining its legacy fossil fuel assets.”

• Manchin Says Keystone Revival Could Curb Reliance on Russian Oil
• “The brand for the XL pipeline is probably gone,” Manchin said. “Can it be re-branded? Can it be rerouted? We need this product. You all have a product that we have to have.”

• Multiple-property owners accounted for 31% of all homes in Ontario as of early 2020 and almost the same share in British Columbia.
• 40% in NB, NS
• British Columbia: top 10% of owners control 29% of the total value of residential properties in the province.

• The effect of interest rate increases remain unclear:

  • Markets see policy rate being raised to 3% over next year
  • But, nation’s debt burden complicates BoC tightening path

• Harvard Business Review has the data.
• Have fewer meetings.
• There is no downside to eliminating 80% of meetings – unless you are a crap manager.