In this edition:
Housing market continues to cool
U.S. Federal Reserve hikes rates 75 basis points
Canadian dollar down slightly following Fed rate hike
Housing market continues to cool
Statistics released today by the Canadian Real Estate Association (CREA) show national home sales fell by 8.6% on a month-over-month basis in May. This built on a larger drop recorded in April, leaving monthly activity at pre-COVID levels recorded in the second half of 2019 and only slightly above the 10-year average. Actual (not seasonally adjusted) monthly activity came in 21.7% below the May record set in 2021, although the number of newly listed properties was up 4.5% month-over-month.
“May picked up where April left off, with sales activity continuing to slow and softening prices in many parts of the country,” said Jill Oudil, Chair of CREA. “Inventories are finally beginning to rebuild from record lows just a few months ago, although we still have major supply shortages almost everywhere.”
U.S. Federal Reserve hikes rates 75 basis points
United States Federal Reserve officials raised their main interest rate by three-quarters of a percentage point — the biggest increase since 1994 — and signalled they will keep hiking aggressively this year, resorting to drastic measures to restrain the rampant inflation they failed to forecast.
Slammed by critics for not anticipating the fastest price gains in four decades and then for being too slow to respond to it, Chairman Jerome Powell and colleagues on Wednesday intensified their effort to cool prices by lifting the target range for the federal funds rate to 1.5 per cent to 1.75 per cent.
They projected raising it to 3.4 per cent by year-end, implying another 175 basis points of tightening this year.
Canadian dollar down slightly following Fed rate hike
The Canadian dollar moved lower Wednesday against the U.S. dollar after the Federal Reserve hiked rates by 75 basis points.
The loonie recently traded at 77.01 cents U.S. Wednesday afternoon, down from a peak of about 77.41 cents U.S. earlier in the day. The Canadian currency has fallen by 2.6 per cent since the beginning of the month amid a flight to safety that saw investors plow into the U.S. dollar.
The U.S. dollar spot index recently traded at 105.29, paring its losses in midday trading but still hovering around its highest level since 2002. The greenback has been in significant demand as traders weigh how to trade currencies in an aggressive interest rate hike environment.
Reading Recommendations
How the crypto crash exposed the sector’s lies – and left retail investors in the lurch
The Globe & Mail
The best sales pitches are built around stellar stories, and the crypto sector concocted one for the ages: Buy bitcoin or any other digital asset, investors were told, or risk missing out on the future of finance. Maybe even of humankind.
Crypto.com, a major trading hub, filmed a Super Bowl commercial to caution viewers that “fortune favours the brave,” while Wealthsimple went more meta with its approach, hiring actors to play a primitive community that calls the invention of the wheel a Ponzi scheme. The message: Anyone who doubts crypto will eventually look just as foolish.
That retail investors believed the hype, helping send the amount invested in digital assets to US$3.2-trillion in November, 2021, isn’t all that surprising. They’re unsophisticated buyers. But it all grew so feverish that major institutional investors started taking the bait, too.
Why free stuff makes us irrational
The Hustle
If you’ve ever wondered just how passionate people are about free samples at Costco, look no further than these 2 incidents:
- 2015: At a Southern California Costco, a 78-year-old was punched in the face after accusing a 24-year-old of hogging too many Nutella waffle samples. An arrest was made.
- 2018: At a South Carolina Costco, 2 septuagenarians on a cheeseburger sample binge got into a spat over line etiquette that ended in a hat-flying slap to the face.
It may seem odd that a few small nibbles on toothpicks would incite violence. But this conduct is rooted in behavioral psychology.
In short, free stuff makes us do very strange, irrational things.
We’ll look at how “free” affects consumer behavior across 3 different areas: grocery store samples, shipping, and online content.
Through the Daily Updates, the GNCC aims to deliver important business news in a timely manner. We disseminate all news and information we feel will be important to businesses. Inclusion in the Daily Update is not an endorsement by the GNCC.
