BOC Turns Down the Heat

Wealth Awesome December Newsletter [+ Wealth Awesome premium]

Author

Qayyum Rajan
December 12, 2024

Welcome to the December edition of the Wealth Awesome newsletter. Thank you to the 15,000+ 🇨🇦 subscribers who join us today!

Summary

BoC Turns Down the Heat: Smaller Cuts on a Cooler Economic Forecast

In November, the Bank of Canada (BoC) announced a 50 basis points (bps) cut in the overnight rate to 3.25%, marking its approach to the upper end of its neutral range.

This reduction follows an earlier 50 bps cut in October and smaller reductions beginning in June, totaling a 175 bps decrease. BoC Governor Macklem highlighted a shift towards a more gradual monetary policy adjustment, anticipating future 25 bps cuts in 2025.

Economic conditions including slow GDP growth, a rising unemployment rate, and soft labor market indicate a likelihood of further rate cuts down to a stimulative 2%. Additionally, concerns like decreased immigration and potential trade disruptions could impact economic dynamics, while a GST tax holiday is expected to temporarily lower headline inflation but potentially boost underlying price growth.

⏱️ TLDR: We are heading towards normalized rates, but there a few factors that could add some bumps along the way.

Key Takeaways 💡

1. Cautious BOC: The BoC is transitioning to a more cautious approach in monetary policy, signaling smaller rate cuts ahead as it navigates a weakening economy and aims to stimulate growth.

2. Known Unknowns: External factors such as immigration trends and trade uncertainties, along with domestic tax changes, could complicate the inflation and economic outlook.

Canadian stocks over the last 30 days (Nov-Dec 2024)

Shopify continued to get the majority of gains over the last month - it is now up +61.2% YTD with extremely positive sentiment. We will be breaking down its business model as part of the premium section below.

One thing to note is that Shopify is now the 2nd largest public company in Canada ($196B) right after RBC ($248B). Warranted or is this the Canadian version of tech overvaluations ?

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Largest Canadian Companies by Market Capitalization

List of the largest Canadian companies by market capitalization, Canada's top publicly traded companies by market cap.

wealthawesome.com/largest-canadian-companies-by-market-capitalization

50 Richest Canadians: A Look at Canada's Wealthiest People (2024)

This list of the top 50 richest Canadians includes everything from inherited wealth, divorce settlements, and smart investments. 

wealthawesome.com/richest-canadians

Wealth Awesome Premium content continues (monthly stock to watch, deep dive and premium resources).

In this premium section, we go DEEP into the business model of Shopify, and reveal our stock to watch - one of the ‘boring’ AI picks and shovels companies, with a wickedly strong foundation.

Subscribe to Wealth Awesome Premium to read the rest.

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