Happy Wednesday; you’re halfway through! There is a lot going on today, from the U.S. Fed’s rate announcement (or lack thereof) to the release of Facebook’s fourth-quarter earnings. In Canada, the big stories are unspecified job cuts to Tim Hortons’ head office, the yuan overtaking the loonie as a global currency, and the banks’ prime-rate cuts, which aren’t keeping pace with the Bank of Canada’s own rate cut last week.
But first, today’s mind-blowing fact: Blowing past even the highest expectations, Apple announced yesterday that in the last three months alone, it sold 74.5 million iPhones. Think about that for a second: That’s kind of like if everyone in Canada, including grandmothers and toddlers, went out and bought two iPhones over Christmas, except for the population of B.C., where almost everyone bought three. How did they do it? One word: China. This makes Apple, for the first time, the top smartphone brand in the country.
A moment of silence, please, to contemplate the world we live in.
Speaking of China . . . The Chinese yuan, also called the renminbi, has officially overtaken the loonie, jumping from seventh place to become one the world’s top-five traded currencies. Don’t be sad: It also overtook the Australian dollar! The top three spots are still held by the U.S. dollar, the euro and the British pound. The yuan is still not freely convertible, but that’s changing, as offshore trading surges; just months ago, Vancouver became an offshore renminbi trading hub.
Canada’s big six banks have cut their rates—but not as much as the Bank of Canada. The country’s best-known banks have now all cut their lending rates, a week after the Bank announced a quarter-percentage rate cut in response to the impact of the oil rout and slowing global growth. But, while the banks have typically mirrored the Bank in cutting or raising their prime rate, this time, they’ve come up short—by 15 basis points (0.15 per cent). RBC, for one, says the Bank’s rates are only one factor affecting their lending rates. But the limited moves raise questions about how effective the Bank’s cuts can be if they don’t translate to regular borrowers.
The Fed meets today—but don’t expect a rate change. In the last meeting by the U.S. Federal Treasury, Chair Janet Yellen pledged to be “patient” in raising rates, noting they did not expect to raise rates for “at least the next couple of meetings,” meaning, at least April. But small wording changes can have a massive impact: The “patient” comment spurred a market rally, and the meeting comes amid a very uneven picture for the world economy and even the U.S. Yesterday, American consumer confidence hit the highest point since the financial crisis, but there are also signs that the American economy isn’t immune to a global growth slowdown, especially in manufacturing. While Apple may have posted staggering profits, markets generally inched lower yesterday, on underwhelming numbers from Microsoft, as manufacturers from Boeing to Caterpillar have either reported or warned of lower than expected earnings. Durable-goods orders declined last month, amid slower global demand and a high U.S. dollar: The greenback has risen 17 per cent since the summer. And while the U.S. economy has undoubtedly picked up, rapid job growth has so far not translated to a strong boost in hourly wages, and inflation remains below the two per cent target.
Will Facebook’s earnings get a “like”? The company that runs your social life will report its fourth-quarter results today, and there are two things to watch for: expenses, and mobile advertising revenue. The company has said itself that revenue is expected to slow down, as expenses continue to rise after it bought WhatsApp and Oculus. But, on mobile advertising revenue, Facebook is proving a powerful force: Revenue more than doubled in the last quarter, and the growth has come less from an increase in ads than from an increase in their price.
Need to know:
TSX: 12,833.88 (+36.05), Tuesday
Loonie: 80.62 (+0.39 cents), Tuesday
Oil (WTI): $45.34, Wednesday