Facing down a stubborn $20 chicken
Low inflation is confusing, Ronald Reagan was a teamster, greedflation isn't what you think it is, Threads does numbers, movie strikes hit home.
Hi there!
So today the inflation rate fell to 2.8%! For context, last June, the inflation rate was 8.1%. Didn’t the Bank Oh Canada say that they wanted to hit the 3% mark by year end?! So we did it guys! We beat inflation! Didn’t we?
As we mentioned in past editions of this glorious news dispatch, this increasingly ‘low’ inflation rate is being ‘influenced’ in weirder ways than the current home-grown NPC Streaming TikTok influencer trend (“Ice Cream So Good!”). Ways which mean that someone who eats actual food and has a house to live rather than say, in an RV eating tree bark, will be subject to incredibly high living costs. Which is pretty much everyone. So what’s a low inflation rate doing in a market that is staring at a $20 chicken?
What’s still driving this low inflation rate is cheaper gasoline (although those paying provincial Carbon Tax might not realize it at the pump). Gas prices are down 21% from last year. Cheaper internet and cellular costs are also helping, down 14% from last year (something we’ve reported on in The Data Room before).
On the flip side, food is 20% higher in cost. Mortgages (and the connected rental rates) are 30% higher, in part thanks to the Bank of Canada’s efforts to reign in the same inflation they’re inadvertently causing. As Pete Evans at CBC noted:
“If gasoline is stripped out of the data, the headline inflation rate would have been four per cent. If food is stripped out, the inflation rate would have been 1.7 per cent. If mortgage costs aren't counted, the rate would have been two per cent.”
So really what this all means is…we’re in a bit of a pickle. It’s VERY dangerous to think we’re done here when it comes to wrestling the inflationary beast. Internet, Cellular and Gasoline are market priced commodities and they can fluctuate in price. Sure they’re low right now, but they’re not going to stay low forever. What happens when they inevitably rebound?
This all leads to nice looking low-inflation headlines today - but a Bank of Canada that hasn’t really resolved the core issues fuelling inflation tomorrow - namely the cost of living, with food being the main culprit.
If you’re kicking yourself for moving to a fixed rate, don’t worry. Many are betting we’ll see more rate rises in the near future as Tiff Macklem faces down that stubborn $20 chicken with more expensive lending.
And finally…
Writers and Actors strike in unison - the first time since 1960 when…Ronald Reagan was the….President of the Screen Actors Guild…what? Link
This summer is now 100% officially land coded. Link
Greedflation - a deep dive. Link
Inside Threads. Link
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The Data Room 🤖
The Data Room is still starry-eyed in Hollywood.
Hollywood North takes a hit
As writers and actors in the US have banded together in their dissatisfaction towards an industry they feel is gouging them, Canadians in film and television are bracing for things to get slower than a William Shatner monologue.
More than 50% of all film and TV activity in Canada is directly coming from US productions – they’re interlinked even tighter than Barbie and Oppenheimer, so, it goes without saying that the ramifications of this strike will be huge. Almost all film and television activity is centred around Toronto (38%) and Vancouver (39%) providing jobs for over 244,000 people and contributing $12.2 billion to the Canadian economy.
Estimates on the ripple effects of the industry point to 347,000 jobs and $23 billion on the whole. Canada has long since been the choice for the discerning producer, “Hollywood North’' is seen as a cost-effective alternative to filming in the US which becomes important for smaller budget productions that can’t afford to cover every single detail in a little bit of CGI magic.
The impacts of Covid brought a lurch to the industry, as productions saw a 20.2% increase in operating revenue from 2019 due to US productions flocking to Canada when film and television in the States was basically incapacitated. All the added flourish in production didn’t transfer over to the big screen, however. In 2021 revenues at the box office were only a third of what they were pre-pandemic: by mid-2021 only 30% of Canadians had been to a theater in the last 12 months. Theaters are basically deader than the plot to the new Avatar, about 80% of films are watched at home in Canada – but at least Cineplex doesn’t have to worry about competition, they already own 75% of all our nation’s theaters.
The film and television industry has been on an emotional rollercoaster akin to a 10 film Vin Diesel franchise, and hopes of a return to stability could all be dashed by this new shutdown. After years of stop-and-go the entire industry is looking far less fast and less furious, but the outcome of the US strike will set the pace going forward.
Market at-a-glance 📈
BOC Indicators (Link):
BOC Prime Rate: 6.95%
BOC Unemployment Rate: 5.4%
BOC CPI Inflation Rate: 3.4%
BOC $USD Exchange Rate (Link):
Low: 1.3128 CAD [0.7617 USD]
Average: 1.3189 CAD [0.7582 USD]
High: 1.3260 CAD [0.7541 USD]
Best GIC Rates (Link):
1-year GIC: 5.60%
3-year GIC: 5.34%
5-year GIC: 5.05%
Best 5Y Mortgage Rates (Link):
Variable: 5.85%
Fixed: 4.94%
Prime Rates (Link):
TD Bank: 6.95%
BMO: 6.95%
RBC: 6.95%
Scotiabank: 6.95%
CIBC: 6.95%
National Bank: 6.95%
CRA Canadian Pension Plan Rate: 5.95%
CRA Employment Insurance Rate: 1.63%
CRA Minimum Wage per Province: Link