Canada’s economy unexpectedly shrank in October as spillover from the stateside General Motors strike took a toll on the manufacturing sector. Overall gross domestic product fell 0.1 per cent in the month, the first contraction since February. It wasn’t universally negative — indeed, there was a strong showing by real estate agents in October, and 13 of the 20 sectors tracked by Statistics Canada showed growth. But today’s GDP news adds to a stretch of disappointing data in the country after Friday’s dismal retail sales report and the weak jobs data for November.
BOEING REPLACES CEO
Dennis Muilenburg is out as the chief executive of Boeing. He’ll be replaced by the planemaker’s current chairman, David Calhoun, on Jan. 13, and by CFO Greg Smith immediately on an interim basis. In a brief release, Boeing said its board decided the leadership change was “necessary to restore confidence” in the beleaguered company that’s been struggling to manage the fallout from global groundings of its 737 Max jet.
Aleafia Health reported a theft of its pot over the weekend. The Toronto-based cannabis firm said a vehicle belonging to a third-party carrier that’d been hired to haul recreational products to wholesale facilities was stolen. Aleafia says all relevant authorities have been notified and that the shipment’s value isn’t material. But it certainly raises important questions about safeguarding the country’s adult-use pot. Who’s shipping the stuff? What kind of insurance policies are available to producers? We’ll look into that.
CHINA CUTS TARIFFS
The Chinese government announced a sweeping round of tariff cuts overnight, affecting almost 900 products, including frozen pork and pharmaceuticals, whose import value last year totalled US$389 billion. The finance ministry touted the move as helping to open China’s economy.
We’ve got a holiday surprise coming up on BNN Bloomberg. Stay tuned for the return of a familiar face, who’ll be stopping by The Open today for a teaser this morning.
OTHER NOTABLE STORIES
-Shares of Lions Gate Entertainment jumped at the start of trading after NBCUniversal announced a long-term pact with the studio, including a licensing agreement for NBC’s Peacock streaming service.
-Cam Battley, who in many respects was the face of Aurora Cannabis, has stepped down from his role as the pot producer’s chief corporate officer. Separately, Aurora today said it has started shipping 2.0 products, which it expects to be on store shelves early next month.
-Brookfield Infrastructure is buying Cincinnati Bell in an all-cash deal worth US$2.6 billion, including debt. Cincinnati Bell is a telecom service provider operating in Ohio, Kentucky, Indiana and Hawaii.
-CI Financial is making good on its previously-stated plan to expand in the U.S.: This morning it said it’s buying a majority stake in One Capital Management, a California-based registered investment advisory firm with US$1.6 billion in assets.
Every morning BNN Bloomberg’s Managing Editor Noah Zivitz writes a ‘chase note’ to BNN Bloomberg’s editorial staff listing the stories and events that will be in the spotlight that day. Have it delivered to your inbox before the trading day begins by heading to www.bnnbloomberg.ca/subscribe.
UK economy slump not as bad as feared but still a record – 570 News
LONDON — The British economy did not contract as much as originally thought during the second quarter of the year when coronavirus lockdown measures were at their most intense — though the slump remained the worst on record and the biggest of all major economies.
The Office for National Statistics said Wednesday that the British economy contracted by 19.8% in the April to June quarter from the previous three-month period, slightly less than its previous estimate of 20.4%.
However, it said the British economy contracted by more than previously thought during the first quarter, when the virus started to affect business activity before the full restrictions on businesses were introduced on March 23. It now estimates that the economy shrank by 2.5% in the first quarter, against 2.2% previously.
“It is clear that the U.K. is in the largest recession on record,” the statistics agency said. “The latest estimates show that the U.K. economy is now 21.8% smaller than it was at the end of 2019, highlighting the unprecedented size of this contraction.”
That contraction is greater than those recorded by the other Group of Seven major advanced economies and more or less double the contractions seen in the United States and Germany.
Since May, when lockdown measures started to be eased, the British economy has managed to eke out three months of growth, which has helped it recoup around half of the output lost. However, with the virus spreading in the community once again and some lockdown measures re-imposed, there are worries that the British economy could start shrinking again.
Further risks relate to the lack of progress in post-Brexit trade discussions with the European Union. Though the U.K. left the bloc on Jan. 31, it is in a transition period that effectively sees it benefit from tariff-free trade until the end of this year. The discussions are about agreeing on the broad outlines of the trading relationship from the start of 2021.
The Associated Press
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Taiwan’s Central Weather Bureau said the magnitude 5.9 quake struck at a depth of 106 kilometres (66 miles).
There were no immediate reports of damage or casualties.
An Associated Press journalist said the office building where the AP bureau is in Taipei swung slightly for about 10 to 15 seconds.
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© 2020 The Canadian Press
U.S. housing market to remain a bright spot in a weak economy
By Hari Kishan and Richa Rebello
BENGALURU (Reuters) – U.S. house prices will continue to surge well into next year and beyond, outpacing inflation and the overall economy, a Reuters poll of property analysts found, making it a bright spot against an otherwise gloomy economic backdrop.
In a stark reversal, the U.S. housing market – at the epicenter of the global financial crisis more than a decade ago – was expected to extend a helping hand to an economy severely battered by the coronavirus pandemic.
Buoyed by record-low interest rates and strong pent-up demand from a segment of the workforce largely unaffected by pandemic-induced job cuts, house prices will continue to rise over the next two years, the Sept. 15-29 poll of over 40 analysts showed.
U.S. house prices were predicted to rise 4.0% this year and by an average 3.5% in 2021 and 2022. That suggests the trend since 2013 of house price rises outpacing consumer inflation would continue for the next three years at least, according to current inflation expectations.
Underscoring the view that the latest data showing a surge in house prices was not just a blip, over 60% of analysts, or 24 of 39 who responded to an additional question, said that trend would continue to hold for at least another year. The remaining 15 said less than a year.
“Three factors support relatively high home prices – undersupply after a decade of underbuilding, single-family housing attractiveness in a socially distancing world, and most importantly low interest rates,” said Nathaniel Karp, chief U.S. economist at BBVA.
“However, economic uncertainty remains elevated and the recovery after the pandemic could take time, which are the risks to the current valuations.”
U.S. house prices outlook: https://fingfx.thomsonreuters.com/gfx/polling/xlbvgjmgepq/Reuters%20Poll-U.S.%20house%20prices%20outlook.PNG
Already tight inventory levels have been squeezed to record lows after construction activity came to a grinding halt because of the coronavirus pandemic, and with no policy relief expected, home buyers may outbid each other and crank up prices.
Existing home sales reached a seasonally adjusted annual rate of 6 million units in August, the highest since the tail end of the previous housing boom in 2006, and were expected to average around 5.5 million units in the coming year.
“A surge in demand has put further strain on an already tight inventory. The latest supply of existing homes dropped below three months (of inventory) for the first time since records began in 1982, and that implies sales will ease back toward the end of the year,” said Matthew Pointon, property economist at Capital Economics.
When asked to rate the affordability on a scale of 1 to 10, with 1 as extremely cheap and 10 as very expensive, the poll gave a median of 7, up from 6 in the previous poll when predictions were for house prices to rise at a slower pace than currently expected.
“U.S. home prices are not yet at a level that is concerning,” said Matthew Gardner, chief economist at Windermere Real Estate. “That said, we need significant growth in the number of new homes built to meet current demand. If more units are not provided, we could see unsustainable upward price pressure in the resale market.”
(Reporting by Hari Kishan; Additional reporting and polling by Richa Rebello and Tushar Goenka; Editing by Ross Finley and Andrea Ricci)
Source:- Reuters poll – TheChronicleHerald.ca
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