Dear valued client,
Markets see-sawed into positive territory this week as investors were caught between optimism of reduced interest rates in September and concerns of weak employment figures. Fed Chair Jerome Powell delivered a direct message from Jackson Hole today, confirming that the Fed will lower interest rates, a move anticipated by many but now explicitly stated. Powell emphasized the weakening labor market as a key factor driving this policy shift, indicating that the timing and scale of rate cuts will depend on upcoming data and evolving economic conditions. Investors reacted positively, expecting rate reductions to support continued growth in equities. However, analysts caution that the rate decline will be gradual, unlike the rapid increases seen over the past two years, suggesting a more measured approach moving forward.
On our side of the border, Canadian inflation continued its downward trajectory as StatsCan reported a CPI of 2.5% in July (compared to 2.7% in June and 2.9% in May). This signals another probable rate cut by the Bank of Canada during its next meeting.
News broke this week that Canadian convenience store giant Couche-Tard has made a “friendly, non-binding” bid to acquire Japan’s Seven & i Holdings, the owner of 7-Eleven, in what could become the largest foreign acquisition of a Japanese company in history. If successful, this deal would significantly expand Couche-Tard’s global footprint, adding to its already substantial portfolio of 17,000 stores under brands like Circle K. Seven & i, known for its innovative convenience stores in Japan that offer a wide array of services and food, has been on Couche-Tard’s radar since 2005. Despite past rejections, the changing landscape of mergers and acquisitions in Japan and Couche-Tard’s persistence might finally lead to a successful merger, potentially making it one of the largest retailers in the world.
New research shows that the rise of legalized sports betting is siphoning money away from traditional investments, with every dollar spent on sports wagers leading to a $2 decrease in household net investments. Since the Supreme Court’s 2018 decision to legalize sports betting, 38 states have embraced it, resulting in a surge of sports wagers from $1.1 billion in January 2019 to $14 billion in January 2024. This shift is particularly concerning for financially distressed households, who are increasingly diverting funds from stock portfolios to betting in hopes of quick gains, potentially worsening their financial vulnerability.
“The first task of the bargain hunter is to narrow the field and separate the solid prospects from the ones that are counting on hopes, prayers, and miracles.” – Peter Lynch
Have a terrific weekend,
PW
