It’s a busy day in Canada today, with the Bank of Canada’s update on the economy. To the south, numbers are expected on the American housing market, with housing starts and housing permits out today – but the big news will be follow-up from Obama’s State of the Union address last night, where he focused on policies to even out the vast gap between the wealthy and the middle class.
On the world stage, today marks the official start of the World Economic Forum in Davos – though the forum has been making headlines all week – and the frenzied pre-cursor to the European Central Bank’s meeting tomorrow, which is widely expected to come with news of quantitative easing for the sluggish eurozone economy. European markets are treading gingerly this morning, and questions linger on whether QE, a vast bond-buying stimulus used by the U.K. and the U.S., will actually work.
The Bank of Japan and Brazil’s central bank are also meeting.
The Canadian economy gets a check-up. Today marks the Bank of Canada’s update on their forecasts for growth, as well as an interest rate update. The interest rate is expected to remain at one per cent – where it has been since 2010 – but there are rising questions about how the oil rout is affecting the economy at large, and whether expectations for a rate hike could now be pushed back (or whether the rate could even be cut.) Last year, the Bank’s governor, Stephen Poloz, warned that household debt and housing prizes presented the primary risks to the economy and international events representing the biggest risk over all. But falling oil prices have already begun to rout revenues for oil-patch companies, as the federal government puts off announcing the budget, so the Bank’s take makes today a day to watch.
The loonie takes a dive. The dollar dropped more than a cent yesterday, as weakening manufacturing numbers were released in the lead-up to the Bank’s policy announcement. The dollar lost 1.1 cents, settling at 82.6 cents, which puts the loonie at a more than five year low.
Manufacturing sales slip, wholesale numbers out. Yesterday’s release of manufacturing numbers for November saw sales fall by 1.4 per cent – a steeper than expected drop. The slowdown was fairly widespread, across 16 of 21 industries, with the sales slowest in chemicals and auto sales, down by 5.9 per cent – erasing gains the previous two months – as inventories inched down and unfilled orders increased.
Today will see wholesale sales numbers for November. October’s sales increased for the second month in a row, with strong sales in farm products outweighing a decline in household and personal goods. But estimates expect December to see a decrease in sales.
The rumours about Blackberry are true – sort of. Remember last week when Blackberry shares spiked, on a report from Reuters that Samsung was going to buy the beleaguered smartphone maker? While both companies ended up denying the claims, yesterday Samsung said there’s some truth to tales of a partnership: the company is interested instead in expanding their use of Blackberry software, known which is known for being particularly secure. One of Samusung’s work systems already runs on Blackberry servers.
Netflix goes global. The movie streaming service is already international, but plans to expand the company to 200 new countries by next year would mean almost anyone can spend Saturday nights binging on movies. Netflix says it’ll fund the expansion by raising $1 billion in debt, as shares jumped 15 per cent in after-hours trading. The company expanded to 50 new European markets last year, and the “first wave” of international markets – including Canada – are now profitable, as the service has found success with custom TV shows like Orange is the New Black. But the bulk of the market is still in the U.S., where investors have worried that slowing subscriber growth and high licensing costs could slow the service down.
Need to know:
TSX: 14,308.44 (-4.06 points), Tuesday
loonie: 82.6 cents (-1.1 cents), Tuesday
Oil (WTI): $46.66, Wednesday morning