Federal Reserve Chairman Jerome Powell said the coronavirus “poses evolving risks” to the U.S. economy and signaled the central bank is prepared to cut interest rates if necessary to sustain the country’s longest-ever expansion.
The rare statement issued Friday by Powell before the financial markets closed for the U.S. weekend came as stocks posted their seventh-straight daily loss, a slump which earlier prompted a string of Wall Street banks to predict the Fed would start reducing rates at its meeting next month, if not sooner.
Yields on U.S. Treasury securities, one of the world’s safest assets, this week fell to record lows as investors turned increasingly concerned that the deadly virus would damage U.S. and global economic growth.
“The fundamentals of the U.S. economy remain strong,” Powell said in the four-sentence statement Friday. “However, the coronavirus poses evolving risks to economic activity. The Federal Reserve is closely monitoring developments and their implications for the economic outlook. We will use our tools and act as appropriate to support the economy.”
The missive recalls previous instances when the Fed changed course or had to address a budding crisis. When credit markets began to seize up in August 2007, the central bank issued a statement saying it was “prepared to act as needed.” Just last June, Powell said the Fed would “act as appropriate” to sustain the expansion.
The Fed cut rates at its meetings in July, September and October, but has since been on hold and indicated it planned to be so long as there was no “material change” to the outlook. The virus may now deliver such a shift in the economy amid mounting concern it’s already hurt the Chinese economy and now threatens to damage supply chains, demand, tourism and trade elsewhere.
The S&P 500 pared losses after the statement was remained lower for the day, closing down 0.8 per cent on Friday and 11.5 per cent lower over the week, the largest drop since 2008.
‘Squarely on the Table’
Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York, said Powell has put an interest-rate cut “squarely on the table” for when the Federal Open Market Committee meets March 17-18 in Washington.
“This is a step in the right direction to help calm some of the concerns,” he said. “This is important in that they’re saying they’re not going to be stubborn here.”
Fed officials spent the week pushing back somewhat on the need for emergency rate cuts, saying there was too much uncertainty about the virus’s economic impact despite its spread from China. There is also doubt over what lower rates would achieve given they may not prompt consumers or companies to spend if they’re uncertain about the future or scared for their health.
But stocks kept sliding and economists started slicing their forecasts for the U.S. economy. Some started to warn of the weakest global expansion in a decade as the impact of the virus outbreak rippled from China to Europe and the Americas.
“I hope the Fed gets involved and I hope they get involved soon,” President Donald Trump, who’s repeatedly pressured the Fed to cut rates, told reporters later on Friday.
The debate now is whether central bankers will wait until their March meeting or act quicker, as well as the size of a potential move.
Buys Time
“The statement buys some time with the caveat that they follow through with a rate cut,” said Derek Tang, an economist at LH Meyer/Monetary Policy Analytics in Washington. “The question is, will it buy them enough time to reach mid-March? That is less clear.”
The statement released Friday was from Powell, not the full Fed Board nor from the FOMC, which has the ultimate say on rate moves in normal circumstances.
U.S. data are published with too much of a delay to make a strong case for a Fed move based on current economic reports. But officials could look at the crashing markets, fall in private-sector forecasts, earnings warnings by companies and the rise in the dollar to argue the virus has delivered a shock to demand that could slow inflation at a time when they are already striving to hit their 2 per cent target.
Demand Shock
“Financial markets are suggesting that a very substantial demand shock is under way,” said Laura Rosner, a senior economist and partner at MacroPolicy Perspectives LLC, which sees cuts in March and April. “We are starting at a low base of inflation, so that certainly helps make the case as well.”
Goldman Sachs Group Inc. economists said Friday they now expect the coronavirus to inflict a “short-lived global contraction” on the world economy that forces the Fed to slash interest rates by 75 basis points over the first half of this year. Bank of America Corp. forecast a half-point cut at the Fed’s March meeting to “stem the panic in markets.”
“While the statement is surely intended to calm markets and bridge to the scheduled March meeting it would allow the Fed to move earlier on an intermeeting basis if necessary,” said Krishna Guha, vice chairman at Evercore ISI in Washington.
TORONTO – Canada Goose Holdings Inc. says it has signed a deal that will result in the creation of its first eyewear collection.
The deal announced on Thursday by the Toronto-based luxury apparel company comes in the form of an exclusive, long-term global licensing agreement with Marchon Eyewear Inc.
The terms and value of the agreement were not disclosed, but Marchon produces eyewear for brands including Lacoste, Nike, Calvin Klein, Ferragamo, Longchamp and Zeiss.
Marchon plans to roll out both sunglasses and optical wear under the Canada Goose name next spring, starting in North America.
Canada Goose says the eyewear will be sold through optical retailers, department stores, Canada Goose shops and its website.
Canada Goose CEO Dani Reiss told The Canadian Press in August that he envisioned his company eventually expanding into eyewear and luggage.
This report by The Canadian Press was first published Sept. 19, 2024.
Almost seven years since news broke of an alleged conspiracy to fix the price of packaged bread across Canada, the saga isn’t over: the Competition Bureau continues to investigate the companies that may have been involved, and two class-action lawsuits continue to work their way through the courts.
Here’s a timeline of key events in the bread price-fixing case.
Oct. 31, 2017: The Competition Bureau says it’s investigating allegations of bread price-fixing and that it was granted search warrants in the case. Several grocers confirm they are co-operating in the probe.
Dec. 19, 2017: Loblaw and George Weston say they participated in an “industry-wide price-fixing arrangement” to raise the price of packaged bread. The companies say they have been co-operating in the Competition Bureau’s investigation since March 2015, when they self-reported to the bureau upon discovering anti-competitive behaviour, and are receiving immunity from prosecution. They announce they are offering $25 gift cards to customers amid the ongoing investigation into alleged bread price-fixing.
Jan. 31, 2018: In court documents, the Competition Bureau says at least $1.50 was added to the price of a loaf of bread between about 2001 and 2016.
Dec. 20, 2019: A class-action lawsuit in a Quebec court against multiple grocers and food companies is certified against a number of companies allegedly involved in bread price-fixing, including Loblaw, George Weston, Metro, Sobeys, Walmart Canada, Canada Bread and Giant Tiger (which have all denied involvement, except for Loblaw and George Weston, which later settled with the plaintiffs).
Dec. 31, 2021: A class-action lawsuit in an Ontario court covering all Canadian residents except those in Quebec who bought packaged bread from a company named in the suit is certified against roughly the same group of companies.
June 21, 2023: Bakery giant Canada Bread Co. is fined $50 million after pleading guilty to four counts of price-fixing under the Competition Act as part of the Competition Bureau’s ongoing investigation.
Oct. 25 2023: Canada Bread files a statement of defence in the Ontario class action denying participating in the alleged conspiracy and saying any anti-competitive behaviour it participated in was at the direction and to the benefit of its then-majority owner Maple Leaf Foods, which is not a defendant in the case (neither is its current owner Grupo Bimbo). Maple Leaf calls Canada Bread’s accusations “baseless.”
Dec. 20, 2023: Metro files new documents in the Ontario class action accusing Loblaw and its parent company George Weston of conspiring to implicate it in the alleged scheme, denying involvement. Sobeys has made a similar claim. The two companies deny the allegations.
July 25, 2024: Loblaw and George Weston say they agreed to pay a combined $500 million to settle both the Ontario and Quebec class-action lawsuits. Loblaw’s share of the settlement includes a $96-million credit for the gift cards it gave out years earlier.
Sept. 12, 2024: Canada Bread files new documents in Ontario court as part of the class action, claiming Maple Leaf used it as a “shield” to avoid liability in the alleged scheme. Maple Leaf was a majority shareholder of Canada Bread until 2014, and the company claims it’s liable for any price-fixing activity. Maple Leaf refutes the claims.
This report by The Canadian Press was first published Sept. 19, 2024.
Companies in this story: (TSX:L, TSX:MFI, TSX:MRU, TSX:EMP.A, TSX:WN)
TORONTO – TD Bank Group, which is mired in a money laundering scandal in the U.S., says chief executive Bharat Masrani will retire next year.
Masrani, who will retire officially on April 10, 2025, says the bank’s, “anti-money laundering challenges,” took place on his watch and he takes full responsibility.
The bank named Raymond Chun, TD’s group head, Canadian personal banking, as his successor.
As part of a transition plan, Chun will become chief operating officer on Nov. 1 before taking over the top job when Masrani steps down at the bank’s annual meeting next year.
TD also announced that Riaz Ahmed, group head, wholesale banking and president and CEO of TD Securities, will retire at the end of January 2025.
TD has taken billions in charges related to ongoing U.S. investigations into the failure of its anti-money laundering program.
This report by The Canadian Press was first published Sept. 19, 2024.
