Business

The Bad Economic Times Have Only Just Started for Canada

Published

7 months ago

2023-09-24

The Bad Economic Times Have Only Just Started for Canada

Canada’s economic woes have only just begun, despite recent signs of moderation in both GDP and job growth. The agony that Canadians are currently facing due to inflation is only going to intensify, thanks to Trudeau.

There will be a tough spell in the Canadian economy. The rate of expansion has slowed dramatically. Job creation has slowed down. The rate of inflation has not decreased. However, the suffering that families are experiencing now will only intensify.

In a note, Desjardins associate in macro strategy Tiago Figueiredo expressed pessimism about the future.

The economy held up better than predicted for a time there. The interest rate increases from the Bank of Canada accumulated. The economy and the number of available employment both improved even so.

The economy was bound to suffer, though. Rising loan rates and skyrocketing inflation have been devastating to families. Now, economists are seeing signs of instability in the data, and they anticipate this to worsen. the second quarter of this year saw a decline in GDP.

This week, economists will have a better idea of whether or not the economy shrank further in August after showing no growth in July. Reasons for this include natural disasters and labour disputes like the B.C. port strike.

Canada’s economy had already lost steam before that happened.

If that happens, Canada will officially be in a recession because the official definition requires two consecutive quarters of negative growth.

Manulife Investment Management’s global head economist and strategist Frances Donald has argued that we should stop discussing the name of this economic downturn and instead concentrate on how it will affect individuals.

“Even if there are technical factors that avert two quarters of negative GDP, this economy will feel like a recession to most Canadians, for the next year,” she said to CBC News.

Several variables, according to experts, are hiding the true severity of the economic downturn. As a first point, it takes the economy around a year and a half to fully reflect the effects of changes in interest rates.

Seventeen months ago, the Bank of Canada started its cycle of rate increases. That implies we haven’t seen the full effect of Canada’s fastest, most aggressive interest rate increasing cycle yet.

Second, the pandemic altered consumption habits, which have yet to return to pre-pandemic levels of predictability. Canadians made significant purchases during lockdowns due to pandemic fears. We scooped up exercise tools, televisions and hoover cleaners. These same families are now investing mostly on activities rather than material goods.

New data on retail sales shows an increase in July and a decline in August. When so many external forces are tugging at and pushing on consumers, it can be difficult to tell how much of what’s happening is cyclical or seasonal.

Inflation and rising borrowing costs are dampening discretionary consumer spending. Another evidence of slow growth for the Canadian economy at a time when the Bank of Canada is dealing with inflation that’s higher than expected, BMO senior economist Robert Kavcic Said.

An extraordinary increase in immigration looms over all the data and shifts. In just the past year, Canada has seen an influx of over a million new residents. This has boosted consumption, but it has also hidden some structural flaws.

According to Donald, those things have helped make the economy look better than it is.

We are in the time just after the Titanic struck the iceberg, but before it sank. When we’ve had a shock, but it hasn’t been too bad,” Donald explained.

The Bank of Canada has temporarily stopped raising interest rates. The central bank, however, cautioned that this would be conditional on continued inflation reduction efforts.

Canada

Fortunately, the Titanic economy isn’t the only one we can save by cutting interest rates.

Since then, inflation has surged to unprecedented heights. The price of everything went up, not just petrol and mortgage rates this time. All of the so-called core measures of inflation, which exclude more erratic factors like the cost of petrol, increased or remained stable.

Scotiabank’s vice president and head of Capital Markets Economics, Derek Holt, calls the breadth of August’s pricing pressures “astounding.” He claims that 52 percent of the items in the consumer price index basket are increasing by four percent on an annualised basis from one month to the next. Almost two-thirds have seen gains of more than 3%.

According to him, the most recent numbers cast doubt on the foundational beliefs individuals have held about the economy.

As the saying goes, “inflation is cooling.” They attribute it entirely to increases in the price of petrol and mortgage interest rates. They say the government’s (fuzzy) “plan” is successful.

They claim that it’s clear the Bank of Canada will not raise rates again. In a note to customers, he called it all “complete, utter, rubbish.”

According to Holt, “definitely ups the odds of a rate hike” at the next FOMC meeting in October because of the recent acceleration in inflation readings.

Sharon Kozicki, the Bank of Canada’s deputy governor, spoke publicly this week and described the central bank’s predicament.
“Rate reductions are still a ways off.”

If we don’t take action now, we’ll have to take even more action later. She warned attendees at a Regina luncheon that excessive austerity could have unintended consequences for the economy.

Some inflationary swings, she added, were “not uncommon,” and that previous rate hikes “will continue to weigh” on economic growth.

Nothing of it is novel. The central bank has spent the better part of the last year and a half discussing the trade-offs involved in preventing inflation from becoming entrenched, while also avoiding doing too much and creating more pain than is required.

Economists like Donald, though, argue that things have changed as the central bank considers when and how it will have to look at bringing rates back down to lessen the burden on people.

“Rate reductions are still quite a ways off,” she said. However, the exit ramp was seen far off in the distance. And the Bank of Canada is working to broaden that exit ramp so they have some leeway if they ever need it.

In her opinion, rates will begin to drop again in the first half of 2019.

“But for a lot of Canadians, there’s… a lot of pain to get through,” Donald remarked.

Business

Microsoft Will Invest $2.2 Billion In Cloud And AI Services In Malaysia

Published

3 hours ago

2024-05-02

Kiara Grace

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KUALA LUMPUR, Malaysia — Microsoft CEO Satya Nadella announced Thursday that the company will invest $2.2 billion over the next four years in Malaysia’s new cloud and artificial intelligence infrastructure, as well as cooperate with the government to develop a national AI center.

It is Microsoft’s single greatest investment in Malaysia as the tech giant looks to increase support for AI development in the region and worldwide.

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Microsoft Will Invest $2.2 Billion In Cloud And AI Services In Malaysia

“We are committed to supporting Malaysia’s AI transformation and ensuring it benefits all Malaysians,” the prime minister added. Our investments in digital infrastructure and skilling will help Malaysian businesses, communities, and developers apply the latest technology to drive inclusive economic growth and innovation across the country.”

During a visit to Indonesia on Tuesday as part of his Southeast Asia tour, Nadella announced a $1.7 billion investment in cloud and AI services. On Wednesday, he announced that Microsoft would establish its first regional data center in Thailand.

In April, the IT behemoth announced a $2.9 billion investment in Japan and a $1.5 billion investment in Abu Dhabi-based AI business G42.

Microsoft promised to deliver AI training to 2.5 million people in Malaysia, Indonesia, the Philippines, Thailand, and Vietnam by 2025.

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Microsoft Will Invest $2.2 Billion In Cloud And AI Services In Malaysia

Nadella previously met with Prime Minister Anwar Ibrahim, who stated that the investment will be a critical support pillar for the government’s goal of increasing AI capabilities in Malaysia.

Anwar announced on Facebook that the new investment will involve:

AI training for another 300,000 individuals.
The construction of a national AI center of excellence.
The dancing the nation’s cybersecurity capabilities and ass.

Assistance with with Malaysia’s developer community.

Microsoft operates one of the world’s largest cloud computing operations and has ventured into artificial intelligence through its cooperation with OpenAI, the creators of ChatGPT.Since then, Microsoft has added an AI assistant called Copilot to its Microsoft Edge browser, which helped it increase revenues by 20% in the first quarter.

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Microsoft Will Invest $2.2 Billion In Cloud And AI Services In Malaysia

Microsoft sees Southeast Asia, a population of over 600 million people, as a developing market and a possible place for further AI product development. According to a study by multinational consulting firm Kearney, artificial intelligence might add over $1 trillion to Southeast Asia’s GDP by 2030. Indonesia is anticipated to receive $366 billion, followed by Malaysia with $115 billion.

Microsoft stated that the investment in Malaysia will supplement its 2021 agenda to promote equitable economic growth. It stated that the proposed national AI center will accelerate AI deployment in major businesses and the public sector while assuring AI governance and regulatory compliance.

“Together with Microsoft, we look forward to creating more opportunities for our (small and medium-sized enterprises) and better paying jobs for our people as we ride the AI revolution to fast-track Malaysia’s digitally empowered growth journey,” Zafrul Aziz, trade minister of Malaysia

SOURCE – (AP)

Business

Luxury Jewelry Maker Cartier Doesn’t Give Stuff Away, But They Pretty Much Did For One Man In Mexico

Published

8 hours ago

2024-05-02

Kiara Grace

Global - VOR News Image

MEXICO CITY — Cartier, the luxury jewelry brand, is not known for giving out gifts, but in the case of one Mexican guy, they pretty much did.

Rogelio Villarreal was browsing Cartier’s website when he stumbled upon an offer that appeared too good to be true. “I broke out in a cold sweat,” he posted on his X account, previously known as Twitter.

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Luxury Jewelry Maker Cartier Doesn’t Give Stuff Away, But They Pretty Much Did For One Man In Mexico

Cartier made a mistake and advertised gold-and-diamond earrings for 237 pesos ($14) rather than the exact price of 237,000 pesos ($14,000). Villarreal ordered two sets.

What ensued was months of back-and-forth, during which he claimed Cartier offered him a consolation gift instead of the jewelry, and Mexican officials supported his argument that the corporation should uphold the listed price.

Villarreal eventually received the earrings last week at his price, and he posted a video online of himself unwrapping them. But he quickly grew tired of the public attention, realizing that not all that glitters is gold, and posted on Monday, “Alright already, talk about something else, I’m tired of the earrings being the only thing anyone knows about my personality.”

Villarreal’s case had become a lightning rod online during a particularly polarizing period in Mexico, ahead of the June 2 presidential elections.

Some onlookers chastised Villarreal for taking advantage of what they perceived as a genuine error by the high-end jewelry manufacturer. Some claimed he should return the earrings or pay taxes on them. Some called him a thief.

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Luxury Jewelry Maker Cartier Doesn’t Give Stuff Away, But They Pretty Much Did For One Man In Mexico

Villarreal, a doctor doing his medical residency, claimed he had to fight for months to get the company to deliver and that it offered to give him a bottle of champagne instead.

The corporation did not reply to inquiries for comment.

“I have the worst luck in the world, and I’ve never made any money, and what I do have is because I bought it,” Villarreal posted on social media. However, he could now purchase two $14,000 sets of earrings for only around $28.

He says he gave one of them to his mom.

“It feels great and it’s cool not to be the underdog for once in my life,” Villarreal said.

Profeco’s representative, Jesús Montaño, validated Villarreal’s account of his struggle.

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Luxury Jewelry Maker Cartier Doesn’t Give Stuff Away, But They Pretty Much Did For One Man In Mexico

“He filed a complaint in December,” Montaño explained. “There is a conciliation hearing scheduled for May 3, but the consumer already received his purchase.”

When asked about ethics, Montaño stated that corporations “have to respect the published price.” If an error occurs, “it’s not the consumer’s fault.”

SOURCE – (AP)

Business

Peloton Cutting About 400 Jobs Worldwide; CEO McCarthy Stepping Down

Published

9 hours ago

2024-05-02

Kiara Grace

AP - VOR News Image

Peloton is shedding approximately 400 jobs worldwide as part of a restructuring exercise, and its CEO, Barry McCarthy, is stepping down after two years as the company works to turn around its business.

Shares fell approximately 2% in morning trading to $3.16.

Peloton has been working on a major rebranding effort since last year, transitioning from a vendor of luxury workout bikes and equipment to a health technology provider for all.

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Peloton Cutting About 400 Jobs Worldwide; CEO McCarthy Stepping Down

During the coronavirus outbreak, the New York corporation enjoyed extraordinary sales growth. Its stock price increased by more than fivefold in 2020 as lockdowns made its expensive bikes and treadmills popular among clients who pay a monthly subscription to partake in interactive workouts.

However, sales began to decline in 2021 as vaccines permitted individuals to leave their houses more freely, including for gym visits.

The corporation lost $1.26 billion in the fiscal year ending in June, plus an extra $350 million in the six months ending in December. In fiscal 2023, free cash flow, or the amount left over after paying corporate expenses, was negative $470 million.

The losses continue. Peloton disclosed on Thursday that the company lost $167.3 million in the third quarter or 45 cents per share. While this is better than the $275.9 million loss, or 79 cents per share, announced a year ago, it is still below the 39 cent loss that Zacks Investment Research analysts had predicted. Revenue was $717.7 million, below Wall Street’s estimate of $719.9 million.

It decreased its full-year sales projection by $25 million to $2.675 billion to $2.7 billion, down from $2.8 billion last year.

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Peloton Cutting About 400 Jobs Worldwide; CEO McCarthy Stepping Down

Peloton Interactive Inc. announced Thursday that the job cuts represent around 15% of its global workforce. The restructuring initiatives, intended to reduce annual run-rate expenses by more than $200 million by the end of fiscal 2025, include continuing retail showroom closures.

The job losses are just the latest round for the corporation, which said in October 2022 that it would lose around 500 jobs in addition to the almost 800 layoffs it made in August of the same year.

McCarthy, who is also stepping down as president and board member, will continue to serve as Peloton’s strategic adviser until the end of the year.

McCarthy had taken over as CEO from founder John Foley to turn around a company that had endured multiple setbacks, ranging from marketing mistakes to recalls. At Peloton, he worked hard to change the company’s focus from expensive hardware to software and a fee-based app.

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Peloton Cutting About 400 Jobs Worldwide; CEO McCarthy Stepping Down

McCarthy wrote in an email to Peloton’s team this morning that the recently announced job layoffs were a time of “dealing with the world as it is and not as we want it to be.”

“Hard as the decision has been to make additional headcount cuts, Peloton simply had no other way to bring its spending in line with its revenue,” he said in a statement.

Peloton announced that Chairperson Karen Boone and Director Chris Bruzzo will serve as interim co-CEOs while it searches for its next CEO. Jay Hoag, a board member, will become the new chairwoman.

SOURCE – (AP)