US stocks entered a bear market, Treasury yields spiked to levels not seen in a decade and the dollar rallied as the fallout from a hot inflation reading continued to rattle global trading already shaken by worries the Federal Reserve will plunge the economy into a recession.
Another brutal bout of selling sent the S&P 500 to the lowest since January 2021 and down more than 20 per cent from its January peak. Highly valued tech shares bore the brunt of the rout, with the Nasdaq 100 slumping about 4.5 per cent. The Cboe Volatility Index jumped above 30 and the futures curve inverted in a rare instance of traders pricing in more uncertainty in the here-and-now than in three months. Speculative areas of the market inflated by years of government largesse buckled. Profitless software firms, newly public companies and blank-check entities sold off. Bitcoin plummeted below US$24,000 after a lending platform ceased operations.
Credit markets continued their historic repricing of rate trajectories. Treasury 10-year yields climbed to the highest since 2011, while two-year rates jumped to levels last seen before the 2008 financial crisis. The cost to protect investment-grade debt from default soared as a closely watched segment of the US bond curve inverted. Only the dollar provided a respite from the selloff, rallying to a two-year high.
“It’s going to get a little uglier,” said Victoria Greene, chief investment officer at G Squared Private Wealth. “It’s going to be very hard for stocks to rally when the Fed continues to put hawkish pressure. There’s no way they can slam on the brakes with inflation without slamming on the brakes economically speaking. It’s funny we still have recession deniers.”
Money markets now see the Fed terminal rate at four per cent for the first time, and are pricing for it to get there by the middle of next year. Traders are now betting on 175 basis points of tightening by September — implying two half-point and one 75-basis-point hike. If that comes to pass, it would be the first time since 1994 the Fed resorted to such an aggressive pace. Officials are muzzled before the decision in two days and Chair Jerome Powell’s conference, where the characterization of inflation and long-term forecasts for the fed funds target — the so-called dot plot — will be critical.
As the Fed attempts to boost its credibility on inflation, it could reach for a more drastic increase if it’s compelled to demonstrate a “Volcker moment,” said Steven Englander, global head of Group-of-10 currency research at Standard Chartered Bank. He was referring to Fed Chair Paul Volcker, who crushed inflation with a series of historic rate increases, starting in 1979. With that possibility, Englander predicts there’s a 10 per cent chance of a 100-basis-point increase Wednesday — with his baseline still a half-percentage point increase.
The dramatic moves in the world’s biggest bond market spell further trouble for battered US equities. Recent history shows that stocks tend to swoon when the 10-year Treasury yield hits three per cent, as seen in early May and in late 2018, according to DataTrek Research’s Nicholas Colas. It hovered near 3.4 per cent Monday.
Equities still aren’t fully reflecting the risks facing corporate earnings, according to strategists at Morgan Stanley, Goldman Sachs Group Inc. and BlackRock Investment Institute. Weaker consumer demand and aggressive tightening by the Fed in an attempt to fight the hottest US inflation in four decades can do further damage to bottom lines and, in turn, share prices. For Evercore strategist Julian Emanuel, “what’s been missing the last several months is sort of what I would call a ‘cathartic flush out,’ where you get the VIX above 40, which is one of the things you need for at least a trading bottom.”
The last bulwark in stocks is in danger of shattering, if the mood of chief executive officers is any indication. A survey of sentiment among corporate stewards by the Conference Board showed that CEO confidence declined sharply in the second quarter of the year for the fourth straight time. Similar skepticism in the past has always coincided with a recession in profits, wrote Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management.
More comments:
The damage in the highly speculative crypto market took on staggering contours as the value of all assets sank below US$1 trillion, down by two-thirds from the heady levels reached in November. Bitcoin and its cousins have largely tracked risk assets, but the latest leg down — as much as 17 per cent for the world’s largest digital token — came with concern that the freezing of withdrawals at the Celsius lending platform might indicate systemic risk in the crypto world that could accelerate the meltdown.
“You can’t have these massive drawdowns without some real damage being done and real money being lost,” said Art Hogan, chief market strategist at National Securities.
What to watch this week:
Some of the main moves in markets:
Stocks
Currencies
Bonds
Commodities
Alberta’s minister of forestry and parks said the RCMP national security investigation team is involved in a probe looking into what caused a pipeline to rupture and catch fire west of Edmonton earlier this week.
On Tuesday, a wildfire was sparked following a natural gas pipeline rupture about 40 kilometres northwest of Edson, Alta. The fire has since been deemed under control.
“We have no indication of any kind of cause on that fire yet; the investigation is happening,” Forestry and Parks Minister Todd Loewen said at a wildfire-related news conference Thursday morning. “The national security investigation team of the RCMP are investigating the cause.
“My understanding, since the cause was unknown, that’s standard practice for them to come in on anything that’s unknown.”
RCMP said as of Tuesday, initial reports had shown no signs of foul play.
Global News has reached out to the RCMP for more information. On its website, the RCMP states it has a wide range of national security-related mandates and responsibilities. It says its national security criminal investigations program involves critical infrastructure protection and critical incident management.
Officials say the investigation into what caused the TC Energy pipeline to break could take months or even years.
The Canada Energy Regulator had investigators on site on Wednesday. The Transportation Safety Board of Canada is also investigating the incident.
The rupture sparked a blaze that could be seen for kilometres, sending large flames and plumes of smoke into the air.
More on Science and Tech
No injuries were reported, and officials said the fire was never a threat to any surrounding communities.
“I want to commend the Yellowhead County Fire Department, industry and our wildfire team for the timely manner that this fire was brought under control,” Loewen said Thursday.
“Fast information sharing between all parties facilitated an effective wildfire response.”
The wildfire sparked by the pipeline rupture is located about 28 kilometres northeast of Obed Lake. More than 30 firefighters were expected to be in the area Thursday to continue working on the wildfire.
— with files from The Canadian Press
— more to come…
© 2024 Global News, a division of Corus Entertainment Inc.
A St. John’s woman says she won’t be paying many more visits to Tim Hortons, after an email from the coffee chain led her to believe that she’d won a new boat — when she hadn’t won anything at all.
“I go to Tim’s quite a lot, seven days a week. I’m afraid now that’s going to change to no days a week,” Carol Evans told CBC News on Thursday.
Evans said she received an email from Tim Hortons on Wednesday afternoon while on a break from her work as an licensed practical nurse.
The email recapped the prizes she’d won in the annual Roll Up the Rim to Win contest, but there was one extra prize included — a brand new boat and trailer, valued at about $55,000.
Unfortunately, the excitement was over by the time she got home from work.
“I was just so excited, really excited. I thought I really won a boat and a trailer, $55,000 worth, and to find out at five to six, I had an email from them come in telling me it was a technical error,” she said.
“I don’t get my boat and I don’t get my trailer.”
Carol Evans of St. John’s was elated when she got an email from Tim Hortons saying she won $55,000 worth of prizes. Another email from the coffee giant a few hours later, telling her it was an error, had her crushed — and fuming.
Evans said her win was the talk of her co-workers.
“I work with about a hundred people in the run of a day, and more than that outside the OR, and everybody was so happy for me. They couldn’t believe it, I finally won something in my life,” she said.
“But to find out a few hours later I didn’t, it was disappointing, very disappointing.… I cried, it was so sad.”
Although she may not have taken it out on the water, Evans said winning would have meant a lot to her, like helping fund her retirement after more than five decades in nursing.
“I could have sold the boat and trailer and had some money, paid off some bills, probably could have, who knows, retired after 55 years of work,” she said.
In an emailed statement to CBC News on Thursday, Tim Hortons said the message was meant to show what each customer won over the course of the contest — and the boat was included by mistake.
“We developed a Roll Up To Win recap email message with the best intentions of giving our guests a fun overview of their 2024 play history.
“Unfortunately there was a human error that resulted in some guests receiving some incorrect information in their recap message.”
The company didn’t disclose how many people across the country received the email, but CBC News spoke to another person in western Newfoundland who got it.
Others in Edmonton, Hamilton and Brampton, Ont., were also told they’d won the boat.
By Wednesday afternoon, a Facebook group had formed with more than 200 people expressing outrage about the mistake and threatening to file lawsuits.
Tim Hortons sent the affected customers a letter, telling them to disregard that winning email and that it was sent as a result of “technical errors.”
“Unfortunately, some prizes that you did not win may have been included in the recap email you received. If this was the case, today’s email does not mean that you won those prizes,” the letter read.
“We apologize for the frustration this has caused and for not living up to our high standards.”
It’s a familiar story for Tim’s, however, as last year, its app mistakenly informed users they’d won $10,000.
Evans said two years of big mistakes just isn’t fair. She’d like to see Tim Hortons move away from the Roll Up to Win smartphone app and back to paper cups.
“It’s not fair to the public who spend their hard-earned money to go into Tim’s and buy their coffee every day, buy their lunch, and then think they won a prize and all of a sudden you learn, three hours later, you didn’t win a prize, and it’s not fair.”
Download our free CBC News app to sign up for push alerts for CBC Newfoundland and Labrador. Click here to visit our landing page.
The new regulations will take effect in Bowen Island, Tofino, Pemberton and 14 other communities on Nov. 1
Published Apr 18, 2024 • Last updated 2 hours ago • 5 minute read
With less than two weeks before B.C.’s short-term rental restrictions take effect, visitors staying at an Airbnb, Vrbo or other short-term rental homes are told to check with their hosts to make sure they are not staying in illegal accommodations.
Guests should ask hosts if they are compliant with the new rules, said B.C.’s housing minister, even as he reassured guests they won’t be on the hook.
Advertisement 2
Article content
Article content
“The responsibility to comply with the rules fall with the hosts and the short-term rental platforms,” said Ravi Kahlon at a news conference with Premier David Eby in Langley on Thursday. “We encourage people to continue to explore beautiful British Columbia, and stay in legal short-term rental accommodations.”The new regulations set to take effect on May 1 would restrict short-term rentals to principal residences and either a secondary suite or a laneway home/garden suite on the property.
They apply to more than 60 B.C. communities with populations of more than 10,000 people, as well as 17 smaller communities, including Bowen Island, Tofino, Osoyoos, Pemberton, and Gabriola Island, which have decided to opt in. For these communities, the rules will take effect on Nov. 1.
The new legislation carries penalties of $500 to $5,000 a day per infraction for hosts and reach as high as $10,000 a day for platforms.
Eby said the province’s principal residence requirement is meant to crack down on speculators while allowing homeowners to rent out spaces in their principal residences if they choose to do so.
Sunrise
Article content
Advertisement 3
Article content
He acknowledged the restrictions could put some property owners’ investment and retirement plans into disarray, but made no apologies, saying people with money to invest should put their money elsewhere.
“Do not compete with individuals and families who are looking for place to live with your investment dollars,” Eby said, adding the government will “tilt the deck every single time toward that family.”
The government has set up a provincial enforcement unit, currently staffed by four people, to conduct investigations into alleged non-compliant units.
The enforcement will be largely done digitally and includes the use of a short-term rental data portal that’ll help local governments monitor and enforce regulations.
Municipalities with their own short-term rental restrictions can upload non-compliant properties to the portal, said Kahlon. Platforms will have five days to verify whether the units are on their sites. Local governments without short-term rental licensing can report properties they believe are not compliant.
The platforms will be required to remove non-compliant listings at the request of local or the provincial governments and provide the province with a monthly update of short-term listings on their sites, said Kahlon.
Advertisement 4
Article content
Companies such as Expedia and Booking.com are working to get ready for the new rules, and he’s hopeful other platforms will follow suit by May 1.
Airbnb said it has been in discussions with the provincial government for months and plans to comply with the new rules, but predicts they will harm the province’s tourism sector by taking extra income away from residents and limiting accommodation options for people, while doing little to improve the housing crunch for residents.
“They’re doing this because they say there’s going to be an impact on housing, that this will free up more housing for people,” said Nathan Rotman, Airbnb’s policy lead in Canada. “That is just not true.”
Despite several years of Airbnb restrictions in Vancouver, for example, rents have gone up while vacancies stayed low, he said.
Kahlon said the pending rules are already having a positive impact on housing availability with short-term rentals being converted to long-term use or being put up for sale.
In March, more than 19,000 entire homes in B.C. were listed as short-term rentals for most of the year, said the province. Even if half of those units are returned to the long-term market, that’ll make a “substantial difference” in communities, said Kahlon.
Advertisement 5
Article content
Eby said there has been a “massive upswing” in hotel construction in key tourist areas as an unintended result of the new policies.
Bowen Island, a small community of 4,200 whose council voted in March to opt into the province’s short-term rental regulations, has seen increased pressure from tourists and housing demand in recent years.
The decision was council’s way “to balance what is appropriate use in residentially-zoned neighbourhoods while still allowing property owners to still do what they want with their properties,” said Mayor Andrew Leonard.
The principal residence requirement still allows for Airbnb and other short-term rentals on the island, he pointed out. “The vast majority of short-term rental operations are unaffected. This just keeps it in the homes of homeowners instead of speculators.”
Some communities, including Parksville’s Resort Drive area, were granted an exemption last month under the province’s exemption for strata hotel or motels. The area was purpose-built as tourism accommodation more than two decades ago.
The new legislation is being challenged in B.C. Supreme Court by Victoria-based groups and the Westcoast Association for Property Rights, who are calling for a review of the new rules and compensation for financial losses.
Advertisement 6
Article content
According to Airbnb, Airbnb bookings and related spending generated around $2.5 billion in B.C. in 2023 and created 25,000 jobs.
The company says that for every $100 spent on an Airbnb booking, guests also spent about $229 on other travel spending.
More than three quarters of hosts polled by the company say they use their Airbnb earnings to cover rising costs of living, especially housing.
Recommended from Editorial
Bookmark our website and support our journalism: Don’t miss the news you need to know — add VancouverSun.com and TheProvince.com to your bookmarks and sign up for our newsletters here.
You can also support our journalism by becoming a digital subscriber: For just $14 a month, you can get unlimited access to The Vancouver Sun, The Province, National Post and 13 other Canadian news sites. Support us by subscribing today: The Vancouver Sun | The Province.
Article content
UK Mulls New Curbs on Outbound Investment Over Security Risks – BNN Bloomberg
Auston Matthews denied 70th goal as depleted Leafs lose last regular-season game – Toronto Sun
BC short-term rental rules take effect May 1 – CityNews Vancouver
Collection of First Nations art stolen from Gordon Head home – Times Colonist
Benjamin Bergen: Why would anyone invest in Canada now? – National Post
Save $700 Off This 4K Projector at Amazon While You Still Can – CNET
'Kingdom Come: Deliverance II' Revealed In Epic New Trailer And It Looks Incredible – Forbes
Jeremy Hansen – The Canadian Encyclopedia
Comments