Pot of gold? After months of anticipation, Canada legalizes marijuana
Author: Portfolio Specialist Group
October 22, 2018
A recap of last week’s top economic news and what’s to come
- Consumers lined up and stocks slid down on the first day of cannabis legalization last Wednesday. With legalization, demand has been high but supplies have been hard to come by. Provinces are stepping in, encouraging producers to restock their shelves by speeding up shipments.
- Online retail is the only option in Ontario, where the legal framework for physical stores won’t be ready until next spring. But the latest threat of a Canada Post strike has left distributors scrambling to find other shipping options. The Canadian Union of Postal Workers warned last week that strike action could begin as early as next week.
U.S. home sales slump to lowest level in two years, retail sales also drop
- U.S. home sales fell in September by the most in over two years as the housing market continued to struggle despite strength across the broader economy. The National Association of Realtors said existing home sales dropped 3.4%, to a seasonally adjusted annual rate of 5.15 million units last month. Home sales have now fallen for six straight months with some analysts attributing the decline to a rise in interest rates. Sales dropped the most in the south and the decline in the west left sales there down 12.2% from a year earlier.
- Meanwhile, U.S. retail sales inched slightly higher in September, driven by a rebound in motor vehicle purchases. The Commerce Department said retail sales edged up 0.1% last month after a similar gain in August. However, analysts had anticipated an increase of 0.6% in September. Purchases at food-services and drinking establishments fell 1.8%, the most since 2016, while most other major retail categories showed gains.
Canadian inflation dips well below forecasts, retail sales slow
- Canadian inflation unexpectedly tumbled in September on a sharp reversal of price hikes in the travel industry, which should knock down concerns that pressures are building in an economy near full capacity. The consumer price index recorded an annual pace of 2.2%, the lowest in four months and a drop from 2.8% in August, according to Statistics Canada. Economists had expected inflation of 2.7%.
- Meanwhile, Canadian retailers recorded another weak month in August, ending what was a lackluster summer for the sector. Statistics Canada said retailers saw receipts decline 0.1% in August, falling for a second time in three months. Economists had been anticipating a 0.3% gain. The nation’s retailers have seen no growth in sales since the gauge hit a 2018-high in May, a summer pause that is consistent with a broader trend of slowing consumer spending this year as households cope with higher borrowing costs.
China’s economic growth drops to lowest level since 2009, U.S. most competitive economy
- The Chinese government reported economic growth slowed to 6.5% year-over-year in the third quarter of 2018. That was below expectations for a 6.6% growth. It was the weakest pace of economic growth since the first quarter of 2009 as the country’s trade war with the U.S. put pressure on growth rates.
- The United States was named the world’s most competitive economy by the World Economic Forum last week. In the WEF’s Global Competitiveness Index, the U.S. ranked as the most competitive of 140 economies, the first time the nation has reached the top spot in a decade. Singapore and Germany ranked second and third respectively, with researchers finding the European economy was now less competitive than those in East Asia and the Pacific.
What’s to come
Bank of Canada interest rate decision, and a slew of U.S. data
The Bank of Canada meets on Wednesday to announce its interest rate decision. The central bank has lifted rates four times since July 2017. In the U.S., economic data being released in the coming week will include durable goods orders, the consumer sentiment index and Q3 GDP numbers.
Source: BMO Economics, TD Economics, Reuters, Globe and Mail, CNBC as of October 19, 2018
Source: Bloomberg, as of October 19, 2018
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