<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Monday, March 16, 2020” data-reactid=”16″>Monday, March 16, 2020
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe” data-reactid=”17″>Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe
<h2 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Zero rates, quantitative easing, and a signal to lawmakers” data-reactid=”18″>Zero rates, quantitative easing, and a signal to lawmakers
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="In a shock statement posted at 5:00 p.m. ET, the Fed announced its second emergency rate cut in as many weeks and a new quantitative easing program.” data-reactid=”20″>In a shock statement posted at 5:00 p.m. ET, the Fed announced its second emergency rate cut in as many weeks and a new quantitative easing program.
The Fed is now clearly on crisis footing. The central bank’s actions on Sunday night send a clear signal to financial institutions around the globe: lend.
In this period of growing economic and public distress, the Fed wants to make clear the broader economic and public health response will not be hamstrung by a lack of liquidity in the banking system.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="“While the primary response to this challenge will come from our health care providers and policy experts, economic policymakers must do what we can to ease hardship caused by the disruptions to the economy and to support a swift return to normal once they have passed,” Fed chair Jerome Powell said in a teleconference on Sunday evening.” data-reactid=”23″>“While the primary response to this challenge will come from our health care providers and policy experts, economic policymakers must do what we can to ease hardship caused by the disruptions to the economy and to support a swift return to normal once they have passed,” Fed chair Jerome Powell said in a teleconference on Sunday evening.
The target range for the Fed’s benchmark interest rate now stands at 0%-0.25% for the first time since 2015 and this move is the Fed’s first cut to zero since December 2008.
Additionally, the Fed will purchase at least $700 billion worth of assets in a new quantitative easing program, comprised of at least $500 billion worth of Treasuries and $200 billion worth of agency mortgage-backed securities by at least $200 billion purchased “over the coming months.”
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content=""The coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States," the Fed said in a statement Sunday night.” data-reactid=”26″>”The coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States,” the Fed said in a statement Sunday night.
“Global financial conditions have also been significantly affected… The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.”
Writing Sunday night, Paul Ashworth at Capital Economics said “we have the entire crisis playbook enacted before Asian markets open — with the Fed doing everything in its power, not just to support economic activity, but to keep the financial system afloat and keep credit flowing to affected households and businesses.”
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="The Fed, along with The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, and the Swiss National Bank, also announced a coordinated move to lower the price on dollar liquidity swap lines by 25 basis points, a move aimed at assuring investors there will be dollars available to any institution that needs them.” data-reactid=”29″>The Fed, along with The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, and the Swiss National Bank, also announced a coordinated move to lower the price on dollar liquidity swap lines by 25 basis points, a move aimed at assuring investors there will be dollars available to any institution that needs them.
View photos
Federal Reserve Chair Jerome Powell. (AP)
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="In a separate announcement, the Fed cut the rate at its discount window to 25 basis points, cut reserve requirement ratios at banks to 0% as of March 26, encouraged banks to use the Fed’s intraday credit lending facility, and encouraged banks to use their liquidity buffers to lend to businesses and households.” data-reactid=”50″>In a separate announcement, the Fed cut the rate at its discount window to 25 basis points, cut reserve requirement ratios at banks to 0% as of March 26, encouraged banks to use the Fed’s intraday credit lending facility, and encouraged banks to use their liquidity buffers to lend to businesses and households.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="As Bespoke Investment Group strategist George Pearkes noted Sunday night, “This is really shock-and-awe.”” data-reactid=”51″>As Bespoke Investment Group strategist George Pearkes noted Sunday night, “This is really shock-and-awe.”
And the Fed’s actions, of course, do not come in isolation.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="“We think the Fed has acted now to try to get ahead of what likely will be terrible news on the spread of the virus, both inside and outside the U.S., over the next couple of weeks,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.” data-reactid=”53″>“We think the Fed has acted now to try to get ahead of what likely will be terrible news on the spread of the virus, both inside and outside the U.S., over the next couple of weeks,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
“The lesson of Hubei and Korea is that lockdowns and social distancing measures take two or three weeks to bring about a clear downshift in case trajectory, with deaths then following.”
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Markets are now anticipating drastic fiscal measures both in the U.S. and abroad. Late Friday, the House passed a measure that increased paid sick leave and unemployment benefits, though as of Sunday afternoon the Senate had not yet scheduled a vote on the bill.” data-reactid=”55″>Markets are now anticipating drastic fiscal measures both in the U.S. and abroad. Late Friday, the House passed a measure that increased paid sick leave and unemployment benefits, though as of Sunday afternoon the Senate had not yet scheduled a vote on the bill.
Following the Fed’s announcement Sunday night, stock futures went limit down within a half hour. The message from investors at this stage appears clear: it is time for governments to open up their coffers.
Limiting the economic fallout from the coronavirus will require action more than just loose monetary policy and reassurances from global central banks. As Powell said Sunday during a conference call, fiscal responses to the coronavirus-related economic slowdown are “critical.”
And the Fed’s message to lawmakers and investors is now crystal clear — we will not show restraint.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
Dollarama Inc.’s food aisles may have expanded far beyond sweet treats or piles of gum by the checkout counter in recent years, but its chief executive maintains his company is “not in the grocery business,” even if it’s keeping an eye on the sector.
“It’s just one small part of our store,” Neil Rossy told analysts on a Wednesday call, where he was questioned about the company’s food merchandise and rivals playing in the same space.
“We will keep an eye on all retailers — like all retailers keep an eye on us — to make sure that we’re competitive and we understand what’s out there.”
Over the last decade and as consumers have more recently sought deals, Dollarama’s food merchandise has expanded to include bread and pantry staples like cereal, rice and pasta sold at prices on par or below supermarkets.
However, the competition in the discount segment of the market Dollarama operates in intensified recently when the country’s biggest grocery chain began piloting a new ultra-discount store.
The No Name stores being tested by Loblaw Cos. Ltd. in Windsor, St. Catharines and Brockville, Ont., are billed as 20 per cent cheaper than discount retail competitors including No Frills. The grocery giant is able to offer such cost savings by relying on a smaller store footprint, fewer chilled products and a hearty range of No Name merchandise.
Though Rossy brushed off notions that his company is a supermarket challenger, grocers aren’t off his radar.
“All retailers in Canada are realistic about the fact that everyone is everyone’s competition on any given item or category,” he said.
Rossy declined to reveal how much of the chain’s sales would overlap with Loblaw or the food category, arguing the vast variety of items Dollarama sells is its strength rather than its grocery products alone.
“What makes Dollarama Dollarama is a very wide assortment of different departments that somewhat represent the old five-and-dime local convenience store,” he said.
The breadth of Dollarama’s offerings helped carry the company to a second-quarter profit of $285.9 million, up from $245.8 million in the same quarter last year as its sales rose 7.4 per cent.
The retailer said Wednesday the profit amounted to $1.02 per diluted share for the 13-week period ended July 28, up from 86 cents per diluted share a year earlier.
The period the quarter covers includes the start of summer, when Rossy said the weather was “terrible.”
“The weather got slightly better towards the end of the summer and our sales certainly increased, but not enough to make up for the season’s horrible start,” he said.
Sales totalled $1.56 billion for the quarter, up from $1.46 billion in the same quarter last year.
Comparable store sales, a key metric for retailers, increased 4.7 per cent, while the average transaction was down2.2 per cent and traffic was up seven per cent, RBC analyst Irene Nattel pointed out.
She told investors in a note that the numbers reflect “solid demand as cautious consumers focus on core consumables and everyday essentials.”
Analysts have attributed such behaviour to interest rates that have been slow to drop and high prices of key consumer goods, which are weighing on household budgets.
To cope, many Canadians have spent more time seeking deals, trading down to more affordable brands and forgoing small luxuries they would treat themselves to in better economic times.
“When people feel squeezed, they tend to shy away from discretionary, focus on the basics,” Rossy said. “When people are feeling good about their wallet, they tend to be more lax about the basics and more willing to spend on discretionary.”
The current economic situation has drawn in not just the average Canadian looking to save a buck or two, but also wealthier consumers.
“When the entire economy is feeling slightly squeezed, we get more consumers who might not have to or want to shop at a Dollarama generally or who enjoy shopping at a Dollarama but have the luxury of not having to worry about the price in some other store that they happen to be standing in that has those goods,” Rossy said.
“Well, when times are tougher, they’ll consider the extra five minutes to go to the store next door.”
This report by The Canadian Press was first published Sept. 11, 2024.
TORONTO – The U.S. Consumer Financial Protection Bureau has ordered TD Bank Group to pay US$28 million for repeatedly sharing inaccurate, negative information about its customers to consumer reporting companies.
The agency says TD has to pay US$7.76 million in total to tens of thousands of victims of its illegal actions, along with a US$20 million civil penalty.
It says TD shared information that contained systemic errors about credit card and bank deposit accounts to consumer reporting companies, which can include credit reports as well as screening reports for tenants and employees and other background checks.
CFPB director Rohit Chopra says in a statement that TD threatened the consumer reports of customers with fraudulent information then “barely lifted a finger to fix it,” and that regulators will need to “focus major attention” on TD Bank to change its course.
TD says in a statement it self-identified these issues and proactively worked to improve its practices, and that it is committed to delivering on its responsibilities to its customers.
The bank also faces scrutiny in the U.S. over its anti-money laundering program where it expects to pay more than US$3 billion in monetary penalties to resolve.
This report by The Canadian Press was first published Sept. 11, 2024.
![Traders work at the Necton brokerage company in Sao Paulo, Brazil on March 13, 2020. - Brazilian stocks rebounded Friday after days of carnage caused by the coronavirus pandemic, following European markets higher to partially recover their losses. The Sao Paulo stock exchange's Ibovespa index surged more than 14 percent at opening, but then settled to a gain of about seven percent, after losing 14.78 percent Thursda (Photo by NELSON ALMEIDA / AFP) / The erroneous mention[s] appearing in the metadata of this photo by NELSON ALMEIDA has been modified in AFP systems in the following manner: [Traders work at the Necton Brokerage Company] instead of [Traders work at the Sao Paulo stock exchange]. Please immediately remove the erroneous mention[s] from all your online services and delete it (them) from your servers. If you have been authorized by AFP to distribute it (them) to third parties, please ensure that the same actions are carried out by them. Failure to promptly comply with these instructions will entail liability on your part for any continued or post notification usage. Therefore we thank you very much for all your attention and prompt action. We are sorry for the inconvenience this notification may cause and remain at your disposal for any further information you may require. (Photo by NELSON ALMEIDA/AFP via Getty Images)](https://s.yimg.com/g/images/spaceball.gif)
![Traders work at the Necton brokerage company in Sao Paulo, Brazil on March 13, 2020. - Brazilian stocks rebounded Friday after days of carnage caused by the coronavirus pandemic, following European markets higher to partially recover their losses. The Sao Paulo stock exchange's Ibovespa index surged more than 14 percent at opening, but then settled to a gain of about seven percent, after losing 14.78 percent Thursda (Photo by NELSON ALMEIDA / AFP) / The erroneous mention[s] appearing in the metadata of this photo by NELSON ALMEIDA has been modified in AFP systems in the following manner: [Traders work at the Necton Brokerage Company] instead of [Traders work at the Sao Paulo stock exchange]. Please immediately remove the erroneous mention[s] from all your online services and delete it (them) from your servers. If you have been authorized by AFP to distribute it (them) to third parties, please ensure that the same actions are carried out by them. Failure to promptly comply with these instructions will entail liability on your part for any continued or post notification usage. Therefore we thank you very much for all your attention and prompt action. We are sorry for the inconvenience this notification may cause and remain at your disposal for any further information you may require. (Photo by NELSON ALMEIDA/AFP via Getty Images)](https://s.yimg.com/ny/api/res/1.2/hT7CwjaRqcnvLwDFhoIGeg--~A/YXBwaWQ9aGlnaGxhbmRlcjtzbT0xO3c9ODAw/https://media-mbst-pub-ue1.s3.amazonaws.com/creatr-images/2020-03/ac898770-676a-11ea-97dd-acef7e796f4e)
