Dear valued client,
**Another reminder that if you would like to discuss your 2024 tax situation and RRSP contributions, please get in touch with me.**
Markets finished in positive territory this week as Canada’s inflation rate dropped to 1.8% in December (compared to 1.9% in November and 2% in October). This decline was influenced by a temporary Goods and Services Tax (GST) break which lowered costs on various items, including restaurant meals and toys, affecting 10% of the items in the Consumer Price Index (CPI). Despite this overall cooling, shelter costs, particularly rent, continued to rise significantly, with an annual increase of 7.1% in December. The broader slowdown in the economy and falling energy prices have contributed to this trend of declining inflation, which peaked at 8.1% in June 2022. Consequently, markets are now anticipating further interest rate reductions by the Bank of Canada, with an 81% likelihood of a 25-basis point cut at their next meeting on January 29.
A ceasefire between Israel and Hamas began on Sunday morning, leading to the release of three Israeli hostages. Under the terms of the agreement, Israel also released 90 Palestinian prisoners early Monday. Over the next six weeks, in the first phase of this ceasefire, 33 hostages are expected to be freed as Israeli forces pull back from Gaza. The subsequent two weeks will involve negotiations for the second phase of the ceasefire. The third phase will focus on the reconstruction of Gaza and the repatriation of any remaining deceased hostages, a process that might extend over several years.
Netflix achieved a landmark by surpassing 300 million subscribers during its record-breaking fourth quarter, adding an unprecedented 19 million new subscribers. This surge contributed to the company earning $10.25 billion in revenue, exceeding what analysts had anticipated. Key to this success was Netflix’s strategic move into live sports broadcasting, including NFL games and the highly anticipated Tyson-Paul boxing match, which was declared the most-streamed sporting event in history. This will be the final quarter where Netflix publicly shares its subscriber numbers, as the company shifts its focus to emphasizing profitability over subscription growth.
On his first day as the 47th President, Donald Trump launched a series of executive actions aimed at fulfilling his campaign promises. He declared a national emergency at the U.S.-Mexico border, aiming to end illegal immigration with plans for mass deportations, the cessation of birthright citizenship, and the reimplementation of the “Remain in Mexico” policy. Trump also targeted climate policy by withdrawing from the Paris Agreement again, favoring fossil fuels over renewables. In trade, he ordered reviews of U.S. trade relations, hinting at future tariff impositions. The newly established Department of Government Efficiency (DOGE), intended to cut government waste, faced immediate leadership changes and legal challenges. Trump also moved to dismantle diversity, equity, and inclusion initiatives across federal agencies and proposed renaming significant geographical features like Denali back to Mount McKinley and the Gulf of Mexico to the Gulf of America.
Trump also announced a monumental $100+ billion investment in AI infrastructure named “Stargate,” a joint venture with OpenAI, SoftBank, and Oracle that could expand to $500 billion over four years. The initiative aims to construct new data centers, starting in Texas, to bolster AI computing capabilities in the U.S., creating 100,000 jobs and positioning the country to compete with China in AI technology. This announcement led to significant gains in tech stocks, with Oracle, SoftBank, and associated companies like Nvidia and Microsoft seeing substantial increases. However, the project has not been without controversy, as Tesla CEO Elon Musk has publicly questioned its feasibility. This marks a shift from the previous administration’s focus on AI regulation to a more expansive, infrastructure-centric approach.
Have a great weekend,
PW
