Business

The Fed’s Hawkish Pause; rates higher for longer with fewer rate cuts in 2024

Published

1 year ago

September 22, 2023

The rate hike pause by the Federal Reserve was already factored into market prices; but the hawkish tone almost assures that interest rates will remain elevated not only through the rest of this year but well into 2024 was not. The revision to the Federal Reserve’s monetary policy sent shockwaves through the financial markets at large.

The Fed is likely to raise rates one more time by ¼ % this year. This would take the Fed funds rates interest rate to between 5.5% and 5.75%. The new projections indicate that the Fed intends to keep its terminal rate above 5% throughout the entire calendar year of 2024.

The largest shockwave was that the Federal Reserve now intends to only implement two rate cuts next year rather than four. This means the American public and businesses can expect to see the cost of borrowing remain extremely elevated above 5% for the entire upcoming year. This was unexpected and took a day to sink in as seen in the financial markets across the board.

According to MarketWatch, “The Fed’s revised “dot plot” forecast released on Wednesday fortified a view that the potential path of interest rates could remain higher for longer, with the central bank’s policy rate pegged to remain above 5% for some time. That could put stress on companies and landlords with trillions of dollars of debt coming due, and could also weigh on stocks.”

U.S. equities sank to their lowest level in about a month trading sharply lower. The S&P 500 lost 1.6%, the NASDAQ composite dropped by 1.8%, and the Dow Jones industrial average fell by 1.1%.

U.S. Bond yields rose tremendously this week with the largest spike occurring in the 30-year government bond which gained 3.62% taking the yield to 4.578%. The 10-year US bond is now yielding 4.49%.

During Chairman Powell’s press conference, he stated that inflation appeared to be “well-anchored,” and that the fight was not over. “The process of getting inflation down to 2% has a long way to go,”

“What we have right now is what’s still a very strong labor market that’s coming back into balance. We are making progress on inflation. Growth is strong. Many, many forecasts called for growth to moderate over the course of next year. That’s where we are.”

Powell’s hawkish opening remarks as well as his answers during the Q&A session resulted in a much deeper understanding of the upcoming steps the Fed would take to get inflation to their target of 2%. This is what caused gold to sell off sharply once Powell took the podium. Gold futures had been trading higher hitting a high of $1968.90 after the release of the updated policy statement of the Federal Reserve. However, by the close today gold futures had lost $27.50, or a decline of 1.40% taking the most active December contract to $1939.60.

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Business

Cineplex reports $24.7M Q3 loss on Competition Tribunal penalty

Published

20 hours ago

November 6, 2024

Anne Joseph

TORONTO – Cineplex Inc. reported a loss in its latest quarter compared with a profit a year ago as it was hit by a fine for deceptive marketing practices imposed by the Competition Tribunal.

The movie theatre company says it lost $24.7 million or 39 cents per diluted share for the quarter ended Sept. 30 compared with a profit of $29.7 million or 40 cents per diluted share a year earlier.

The results in the most recent quarter included a $39.2-million provision related to the Competition Tribunal decision, which Cineplex is appealing.

The Competition Bureau accused the company of misleading theatregoers by not immediately presenting them with the full price of a movie ticket when they purchased seats online, a view the company has rejected.

Revenue for the quarter totalled $395.6 million, down from $414.5 million in the same quarter last year, while theatre attendance totalled 13.3 million for the quarter compared with nearly 15.7 million a year earlier.

Box office revenue per patron in the quarter climbed to $13.19 compared with $12 in the same quarter last year, while concession revenue per patron amounted to $9.85, up from $8.44 a year ago.

This report by The Canadian Press was first published Nov. 6, 2024.

Companies in this story: (TSX:CGX)

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Restaurant Brands reports US$357M Q3 net income, down from US$364M a year ago

Published

2 days ago

November 5, 2024

Anne Joseph

TORONTO – Restaurant Brands International Inc. reported net income of US$357 million for its third quarter, down from US$364 million in the same quarter last year.

The company, which keeps its books in U.S. dollars, says its profit amounted to 79 cents US per diluted share for the quarter ended Sept. 30 compared with 79 cents US per diluted share a year earlier.

Revenue for the parent company of Tim Hortons, Burger King, Popeyes and Firehouse Subs, totalled US$2.29 billion, up from US$1.84 billion in the same quarter last year.

Consolidated comparable sales were up 0.3 per cent.

On an adjusted basis, Restaurant Brands says it earned 93 cents US per diluted share in its latest quarter, up from an adjusted profit of 90 cents US per diluted share a year earlier.

The average analyst estimate had been for a profit of 95 cents US per share, according to LSEG Data & Analytics.

This report by The Canadian Press was first published Nov. 5, 2024.

Companies in this story: (TSX:QSR)

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Electric and gas utility Fortis reports $420M Q3 profit, up from $394M a year ago

Published

2 days ago

November 5, 2024

Anne Joseph

ST. JOHN’S, N.L. – Fortis Inc. reported a third-quarter profit of $420 million, up from $394 million in the same quarter last year.

The electric and gas utility says the profit amounted to 85 cents per share for the quarter ended Sept. 30, up from 81 cents per share a year earlier.

Fortis says the increase was driven by rate base growth across its utilities, and strong earnings in Arizona largely reflecting new customer rates at Tucson Electric Power.

Revenue in the quarter totalled $2.77 billion, up from $2.72 billion in the same quarter last year.

On an adjusted basis, Fortis says it earned 85 cents per share in its latest quarter, up from an adjusted profit of 84 cents per share in the third quarter of 2023.

The average analyst estimate had been for a profit of 82 cents per share, according to LSEG Data & Analytics.

This report by The Canadian Press was first published Nov. 5, 2024.

Companies in this story: (TSX:FTS)

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