Dear valued client,
Markets are on track to finish relatively flat this week as the Bank of Canada cut interest rates by 50 basis points to 3.25% reflecting ongoing efforts to stimulate the economy amid shifting conditions. While this marks the second consecutive jumbo-sized cut, economists suggest a shift in strategy going forward. Stephen Brown of Capital Economics anticipates smaller rate reductions, with the rate-cutting cycle likely ending at 2.5%, citing early signs of recovery in consumer spending and housing. Royce Mendes of Desjardins Group predicts a pause after another 25-basis-point cut in early 2025 to evaluate the impact of past cuts, with rates potentially reaching 2% by 2026. Meanwhile, David Rosenberg of Rosenberg Research argues for continued aggressive rate cuts, emphasizing the economy’s “excess supply” and suggesting rates could fall below 2%. Overall, while further cuts are expected, the Bank’s cautious tone suggests a more gradual approach in navigating economic uncertainties.
Canada’s tobacco industry faces mounting challenges as smoking rates plummet and legal pressures intensify. Smoking prevalence has fallen dramatically, with only 12% of Canadians aged 15 and up now smoking, compared to 27% a quarter century ago. Among youth aged 15-19, the rate has dropped to just 2%. This decline coincides with legislative efforts to curb smoking, including potential bans on cigarette sales to those born after 2009 in provinces like PEI and Newfoundland and Labrador. Additionally, Canada’s three largest tobacco companies face a proposed $32.5 billion class-action settlement to compensate provinces, territories, and individual smokers for health-related costs, marking a global first. However, to fund such payouts, the industry relies on continued cigarette sales while diversifying into new nicotine products and wellness ventures. Products like nicotine pouches and hemp-based wellness items illustrate Big Tobacco’s pivot to maintain profits as cigarette consumption declines. Despite these shifts, the industry’s future remains tied to its most lucrative product—cigarettes—underscoring the tension between public health goals and corporate interests.
The annual inflation rate in the U.S. increased to 2.7% in November (compared to 2.6% in October and 2.4% in September). Donald Trump has stated he will retain Jerome Powell (the man responsible for interest rate decisions) as Federal Reserve Chair through the end of Powell’s term in May 2026, despite their fraught history during Trump’s first term. This decision may ease concerns about the Fed’s independence, a cornerstone of stable financial markets, although questions remain about their future relationship. Trump, who previously criticized Powell for resisting calls to lower interest rates, now intends to refrain from interfering with the Fed’s monetary policy decisions.
The sudden fall of Bashar al-Assad’s regime marks a pivotal moment in Syria’s history, ending over five decades of authoritarian rule by the Assad family. The rebel-led offensive swiftly seized key cities, including Damascus, forcing al-Assad to flee to Moscow, where he was granted asylum. This seismic event reshapes the geopolitical landscape, delivering setbacks to allies like Iran and Russia while boosting Turkey’s influence in the region. Despite the euphoria of Syrians hopeful for a freer future, the challenges ahead are immense. The country remains fractured, with rebel factions, Kurdish forces, and foreign powers vying for control. Meanwhile, over 500,000 lives have been lost, and millions remain displaced after 13 years of civil war. As Syrians grapple with rebuilding and reconciling, the international community watches cautiously, bracing for both opportunities and risks in the post-Assad era.
“Politics hates a vacuum. If it isn’t filled with hope, someone will fill it with fear.” – Naomi Klein
Have a terrific weekend,
PW
