Proxy voting giants investigated by Missouri AG for misleading clients about their DEI and ESG priorities
Bailey argued in civil investigative demands sent to Glass Lewis and Institutional Shareholder Services (ISS) that they are violating state consumer protection law by assuring their customers that their proxy voting recommendations are based solely on data and research – and are entirely neutral. But, simultaneously, Bailey argues that publicly available documents from the firms show that their proxy voting recommendations are designed to advance DEI and environmental causes regardless of whether they undermine investor returns.
Glass Lewis and ISS are two foreign-owned powerhouses that control roughly 97% of the U.S. proxy advisory market, according to an April report from the House Financial Services Committee. The firms specialize in providing voting recommendations to institutional investors – such as pension funds, retirement systems and mutual funds – on how to vote during corporate shareholder meetings. These votes frequently include decisions related to board member elections, executive compensation, company policies and other proposals.
"Missourians deserve answers as to why the unseen power brokers, controlling much of corporate America, are pushing a leftist worldview at the expense of millions of honest investors," Bailey said. "These are foreign-owned actors manipulating the U.S. economy, and we will not let them thrive any longer. We are going after the source. These proxy advisors have held corporate America hostage with their radical ideologies. We are putting them on notice: Missouri will not tolerate ideological coercion disguised as investment guidance."
In an enforcement petition Bailey sent to the state circuit court in an effort to compel the companies' compliance with the new probes, the attorney general points to statements on both ISS and Glass Lewis's websites, respectively, that insist they provide "objective and impartial offerings" that are "based on research and data." At the same time, Bailey points to internal company documents, such as a document titled "2025 Benchmark Policy Guidelines" from Glass Lewis, which includes numerous sections on the importance of advancing DEI and ESG causes.
"This means that Glass Lewis's statement that it provides 'research and data' that allows its customers to 'make informed investment decisions' is false," Bailey wrote in his enforcement petition against Glass Lewis.
Similarly, at ISS, Bailey points to company statements claiming it provides customers with "objective and impartial offerings," while simultaneously producing internal company reports that include commitments to recommending votes in favor of proposals "calling for the reduction of [greenhouse gas] emissions."
In addition to allegedly misleading consumers about their company priorities, Bailey is accusing Glass Lewis and ISS of omitting or failing to disclose material information about how it weighs DEI and ESG standards when recommending votes.
Bailey's investigation is requesting a range of internal documents and communications to help determine whether Glass Lewis or ISS violated state consumer protection laws through its allegedly misleading claims and lack of transparency.
"ISS and Glass Lewis have been harming consumers and misleading institutional investors by promoting a radical political agenda instead of focusing on maximizing returns. By taking legal action against both firms, Attorney General Bailey is doing the right thing and holding them accountable for selfishly prioritizing racist DEI quotas, climate activism, and other outdated ESG nonsense," Will Hild, Executive Director at conservative nonprofit Consumers' Research said in a statement to Fox News Digital.
"Such deception is not just financially reckless but also illegal and must be met with consequences," Hild continued. "This necessary investigation will aid in exposing these activist proxy advisors for deliberately ditching fiduciary duty in the name of furthering the ESG scam."
Neither Glass Lewis nor ISS responded to repeated requests from Fox News Digital for comment.
Earlier this year, Glass Lewis was served with a similar civil investigative demand by Florida's Republican Attorney General. That move followed another similar request for information in 2023 by 21 state attorneys general, including Bailey at the time.
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"The outlook for the economy under the current tariff regime shows a modest recovery starting in the third quarter, but with an economy expanding below trend," Hencic wrote in a report on Wednesday. "This leaves the door open for future rate cut(s) under stable inflation." Fixed and variable mortgage rates expected to stay in low-to-mid 4 per cent range: Mortgage expert Canada's housing market remains largely unchanged since the Bank of Canada's last rate hold in June, according to mortgage and real estate expert Victor Tran of 'Mortgage rates remain sticky,' he said. Canadians holding floating rate products, such as HELOCs or adjustable variable-rate mortgages, won't be experiencing payment relief in the near-term. Canadians taking out new mortgages or renewing can expect mortgage rates for fixed and variable-rate mortgages in the low to mid 4 per cent range, Tran says. 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Desjardins' Mendes: BoC 'setting up to deliver more monetary easing as early as this September' Although Macklem noted 'a clear consensus to hold' the overnight rate this time, two of the BoC's three scenarios in the MPR 'hint at a need for further rate cuts down the road,' says Desjardins Group economist Royce Mendes in a note to investors. The BoC's current tariff scenario projects core inflation to stay around 3.1 per cent in the last two quarters, Mendes says. However, data on retaliatory tariff collection suggests that number may be too high, he says, 'leaving room for core inflation to undershoot, particularly in the fourth quarter.' With that in mind, he writes, 'it looks like central bankers are setting up to deliver more monetary easing as early as this September.' 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Because the BoC expects the economy to contract in Q2, he says, 'we will likely need two friendly CPI reports ahead of the next rate decision in September to meaningfully increase the chances of a cut at that time.' However, he cautions, two consecutive months of acceptable inflation data 'may be a tall hurdle, so those looking for cuts may need to pack their patience." Porter also says the BoC's escalation and de-escalation scenarios are 'a nice way to handle the current either/or' of the trade war. 'There's simply too much lingering trade uncertainty for the BoC to be decisive on the outlook for now.' Macklem on protectionism: The world is fragmenting The uncertain state of global trade was once again front-and-centre in the Bank of Canada's latest rate announcement and Monetary Policy Report on Wednesday. Speaking to reporters in Ottawa, Governor Tiff Macklem addressed the issue of rising protectionist sentiment in the United States and other countries. "The world is fragmenting, and you know, that is going to have an impact," he said. "Some segments of society feel like they've lost out. That is having political consequences." "President Trump has dramatically increased U.S. protectionism. The effective U.S. tariff rate with the agreements that have been reached has increased significantly, and that's going to have an impact on the world economy," Macklem added. "Even before President Trump was elected, trade has been shifting." Rogers says defence spending boost could support Canada's productivity Canada's substantial increase in defence spending will likely, in the long run, help productivity in Canada, says BoC Senior Deputy Governor Carolyn Rogers. Prime Minister Mark Carney has committed to raising defence-related spending to the equivalent of five per cent of Canada's gross domestic product by 2035. 'What we want to see is those investments in our own economy so that they build our own capacity, [and] they generate some economic activity within Canada,' Rogers said. She noted the effects won't be immediate but said she's optimistic it will be net positive to productivity. Macklem: 'Trust is going to be hard to restore' ahead of 2026 CUSMA renegotiation North America's trilateral trade deal, known in Canada as the Canada-United States-Mexico Agreement (CUSMA), is due for review in 2026. Under current Canada-U.S. tariffs, a vast swath of goods compliant with this deal are exempt from levies. In its "current tariffs scenario" outlined in its newly released Monetary Policy Report, the Bank of Canada estimates CUSMA-compliance at 95 per cent for non-energy exports. "There is a sense that U.S. policy may well remain unpredictable. There is a sense that trust is going to be hard to restore," BoC Governor Tiff Macklem told reporters on Wednesday. "I think some level of uncertainty will continue, and in the scenarios, particularly the current tariff scenario, and the escalation scenario, we do have a fair amount of uncertainty through much of the projection. It does diminish over time, but it's not falling off quickly." U.S. President Donald Trump signed CUSMA during his first presidency in 2018. Macklem stays cautious on future of rate cuts Bank of Canada Governor Tiff Macklem remains cautious on commenting whether there will be a rate cut this year. "Our future decisions are going to depend on what happens in the future," he said, adding: "We continue to proceed carefully." "Given the unusual amount of uncertainty, we're continuing to put more weight on the risks, and we're ready to respond to new information," Macklem said. 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'The Bank is inching closer to a cut': CIBC CIBC economist Andrew Grantham sees hints the BoC is "inching closer to a cut" in the central bank's Monetary Policy Report released on Wednesday. He points to a weaker estimate for economic growth in the second quarter from the Bank's policymakers. "The Bank appears to be getting a little more comfortable with the notion that the Canadian economy will need the support from further interest rate cuts in the future," Grantham wrote in a report following today's rate announcement. "However, it is clearly not there yet, and upcoming data will remain more important than today's slight change in language in determining if that support comes at the September meeting as we currently forecast." Bank of Canada to cut rates twice more in 2025, bringing overnight rate to 2.25%: Vanguard Canada The Canadian arm of mutual fund and exchange-traded fund giant Vanguard now expects the Bank of Canada to cut rates twice more in 2025, following Wednesday's decision to hold. "Despite leaving rates unchanged, we expect the BoC to reduce its policy rate to 2.25 per cent by the end of the year, given a lower growth environment,' Vanguard Canada chief investment strategist Ashish Dewan stated in a news release after Wednesday's announcement. "Although the 'uncertainty tax' has already shown signs of impacting the Canadian labour market and business investment, a 2.9 per cent year-over-year increase in CPI-median data in March, one of the BoC's preferred measures of inflation, coupled with uncertainty around the economic outlook from U.S. tariffs, gave the central bank reasons to pause rate cuts." Key takeaways from Macklem's opening statement On Canada-U.S. trade war: "Some tariff agreements have been negotiated between the United States and its trading partners, and that has reduced the risk of a severe and escalating global trade war. Unfortunately, the tariffs in those agreements also suggest the United States is not returning to open trade." No normal forecast: "U.S. tariffs are still too unpredictable to be able to provide a single forecast for the Canadian economy." The BoC once again opted against a conventional forecast due to ongoing U.S. tariff uncertainty. Today's Monetary Policy Report includes three scenarios. A "current view," and two more looking at an escalation or de-escalation. Optimism on inflation: "There are reasons to think that the recent increase in underlying inflation will gradually unwind. The Canadian dollar has appreciated, which reduces import costs. Growth in unit labour costs has moderated, and the economy is in excess supply." "At the same time, tariffs impose new direct costs, which will be gradually passed through to consumers. In the current tariff scenario, upside and downside pressures roughly balance out, so inflation remains close to two per cent." A clear consensus to hold, for now: "There was clear consensus to hold our policy rate unchanged." "If a weakening economy puts further downward pressure on inflation and the upward price pressures from the trade disruptions are contained, there may be a need for a reduction in the policy interest rate." Potential implications of fiscal outlook missing from BoC: Holt The Bank of Canada's lack of clear forward guidance or a base case forecast suggests 'they haven't a clue what to do next,' said Scotiabank analyst Derek Holt. 'I don't find we learned anything new whatsoever about the policy bias from this set of communications,' he added. What was glaringly missing, according to Holt, was mention of the potential implications of the Fall budget or broader fiscal policy efforts outside of sector-specific reports. That might just be the BoC playing it politically safe, but it fails to acknowledge the clear risk posed by potentially large-scale fiscal stimulus that could be rolled out soon, building on the more modest measures announced this summer, he said. 'Fiscal easing could easily substitute for monetary easing if required, or pivot the monetary policy dialogue in the other direction pending what happens to the rest of the picture,' he said. While the threat of tariffs is a big deal for certain sectors, like metals, if tensions don't escalate and future deals follow the same pattern as past agreements with other nations, then the threat to Canada could be exaggerated, Holt added. 'If, say, we get a 15–20% tariff like the US imposed on Japan, the EU, and the UK's slightly lower rate among others, and the administration officials continue to indicate that it's likely to apply only to non-CUSMA/USMCA compliant trade, then 15–20% on 5–10% of our trade is frankly peanuts,' Holt said. The Bank of Canada's lack of clear forward guidance or a base case forecast suggests 'they haven't a clue what to do next,' said Scotiabank analyst Derek Holt. 'I don't find we learned anything new whatsoever about the policy bias from this set of communications,' he added. What was glaringly missing, according to Holt, was mention of the potential implications of the Fall budget or broader fiscal policy efforts outside of sector-specific reports. That might just be the BoC playing it politically safe, but it fails to acknowledge the clear risk posed by potentially large-scale fiscal stimulus that could be rolled out soon, building on the more modest measures announced this summer, he said. 'Fiscal easing could easily substitute for monetary easing if required, or pivot the monetary policy dialogue in the other direction pending what happens to the rest of the picture,' he said. While the threat of tariffs is a big deal for certain sectors, like metals, if tensions don't escalate and future deals follow the same pattern as past agreements with other nations, then the threat to Canada could be exaggerated, Holt added. 'If, say, we get a 15–20% tariff like the US imposed on Japan, the EU, and the UK's slightly lower rate among others, and the administration officials continue to indicate that it's likely to apply only to non-CUSMA/USMCA compliant trade, then 15–20% on 5–10% of our trade is frankly peanuts,' Holt said. Tariff shock must amp up to justify rate cuts: RBC RBC senior economist Claire Fan says the BoC delivered a "nuanced" message on Wednesday, balancing concern about slower growth so far in 2025, with optimism on inflation under U.S. tariffs. In a research report on Wednesday, Fan says the BoC signalled a rate cut is in play if inflation falls due to a weaker economy. The question is, how much weaker? "It would likely take a significantly larger international trade shock than is currently in place to prompt that reaction, and the central bank will also need to continue to take into account fiscal policy loosening, which is better suited to deliver targeted relief to trade impacted sectors than interest rate policy," she wrote. "A significantly more negative outlook, one that resembles spring [2025 forecasts] remains a downside risk," Fan added. "Barring such deterioration and following our base case, we expect the BoC will maintain current rates going forward." RBC senior economist Claire Fan says the BoC delivered a "nuanced" message on Wednesday, balancing concern about slower growth so far in 2025, with optimism on inflation under U.S. tariffs. In a research report on Wednesday, Fan says the BoC signalled a rate cut is in play if inflation falls due to a weaker economy. The question is, how much weaker? "It would likely take a significantly larger international trade shock than is currently in place to prompt that reaction, and the central bank will also need to continue to take into account fiscal policy loosening, which is better suited to deliver targeted relief to trade impacted sectors than interest rate policy," she wrote. "A significantly more negative outlook, one that resembles spring [2025 forecasts] remains a downside risk," Fan added. "Barring such deterioration and following our base case, we expect the BoC will maintain current rates going forward." Monex pencils in rate cut for October Nick Rees, head of macro research at Monex Canada, says he's penciled in a rate cut for October, albeit with little conviction. Rees called today's announcement "another placeholder decision" in the absence of further certainty over tariffs and the path for inflation, suggesting that further rate cuts may be "some time away." However, according to Rees, the BoC will likely resume cutting earlier than traders expect as the country faces increasing headwinds to growth. Given the lack of fresh guidance on the path for Canadian rates, it's no surprise USDCAD was little changed after the announcement, he added. Nick Rees, head of macro research at Monex Canada, says he's penciled in a rate cut for October, albeit with little conviction. Rees called today's announcement "another placeholder decision" in the absence of further certainty over tariffs and the path for inflation, suggesting that further rate cuts may be "some time away." However, according to Rees, the BoC will likely resume cutting earlier than traders expect as the country faces increasing headwinds to growth. Given the lack of fresh guidance on the path for Canadian rates, it's no surprise USDCAD was little changed after the announcement, he added. New BoC economic outlook 'better than originally feared': ATB Financial The Bank of Canada downgraded its base economic growth forecast to 1.3 per cent this year, and 1.1 per cent in 2026. That's a significant drop from the 1.8 per cent it projected for each year back in its January outlook. "In April, they offered no forecast at all - just scenarios, citing heightened tariff uncertainty. This time around they put out a forecast, but they call it a 'current tariff scenario,' and still ran two alternate scenarios," Mark Parsons of ATB Economics wrote on Wednesday. "The current projections are clearly better than originally feared," he added. "Expect the next two inflation reports before the September announcement to carry extra weight. An easing in underlying inflation could tip the scale towards a cut." The Bank of Canada downgraded its base economic growth forecast to 1.3 per cent this year, and 1.1 per cent in 2026. That's a significant drop from the 1.8 per cent it projected for each year back in its January outlook. "In April, they offered no forecast at all - just scenarios, citing heightened tariff uncertainty. This time around they put out a forecast, but they call it a 'current tariff scenario,' and still ran two alternate scenarios," Mark Parsons of ATB Economics wrote on Wednesday. "The current projections are clearly better than originally feared," he added. "Expect the next two inflation reports before the September announcement to carry extra weight. An easing in underlying inflation could tip the scale towards a cut." BoC should cut rates twice this year to support economy, RSM economist says "The Bank of Canada can — and should — cut rates twice this year," said Joe Brusuelas, chief economist at business advisory firm RSM, following the BoC's July 30 rate pause. "Today's decision supports that view and we are confident that rate cuts during the final half of the year will bolster the economy and bring down unemployment." A possible recession depends on the outcome of current trade negotiations rather than the Bank's decision to hold rates, he added. "As the Bank of Canada moves to cut rates, we expect to lower that probability later this year." "The Bank of Canada can — and should — cut rates twice this year," said Joe Brusuelas, chief economist at business advisory firm RSM, following the BoC's July 30 rate pause. "Today's decision supports that view and we are confident that rate cuts during the final half of the year will bolster the economy and bring down unemployment." A possible recession depends on the outcome of current trade negotiations rather than the Bank's decision to hold rates, he added. "As the Bank of Canada moves to cut rates, we expect to lower that probability later this year." Small businesses already absorbing costs of U.S. tariffs: CFIB While the Bank of Canada announced its rate pause amid uncertainty around U.S. President Donald Trump's continually escalating trade war, the Canadian Federation of Independent Business (CIFB) says that Canadian small businesses have already been absorbing some or all of the costs associated with U.S. tariffs. On imports from the U.S., nearly seven in 10 small businesses paid the full Canadian tariff, with the median cost of $9,000, a recent CFIB survey shows. As for exports, 63 per cent covered costs directly or shared them with their customers in the United States, paying a median of $22,500. "With a limited financial capacity, SMEs likely won't be able to act in the long-term as a primary economic buffer against tariffs," said Simon Gaudreault, CFIB's chief economist and vice president of research. He warns that without any support, the costs will eventually trickle down to consumers. While the Bank of Canada announced its rate pause amid uncertainty around U.S. President Donald Trump's continually escalating trade war, the Canadian Federation of Independent Business (CIFB) says that Canadian small businesses have already been absorbing some or all of the costs associated with U.S. tariffs. On imports from the U.S., nearly seven in 10 small businesses paid the full Canadian tariff, with the median cost of $9,000, a recent CFIB survey shows. As for exports, 63 per cent covered costs directly or shared them with their customers in the United States, paying a median of $22,500. "With a limited financial capacity, SMEs likely won't be able to act in the long-term as a primary economic buffer against tariffs," said Simon Gaudreault, CFIB's chief economist and vice president of research. He warns that without any support, the costs will eventually trickle down to consumers. Slow growth 'leaves the door open' for rate cuts: TD Bank TD Bank economist Andrew Hencic sees inflation guiding Bank of Canada rate decisions for the rest of 2025. In his opening statement to reporters on Wednesday, Governor Tiff Macklem said, "If a weakening economy puts further downward pressure on inflation, and the upward price pressures from the trade disruptions are contained, there may be a need for a reduction in the policy interest rate." The BoC sees the economy contracting 1.5 per cent on a quarterly basis in the second quarter, before recovering later in the year. At the same time, the bank expects inflation to stay close to its two per cent target under its "current tariff scenario." Canada's annual inflation rate rose to 1.9 per cent in June from 1.7 per cent in May, according to Statistics Canada. "The outlook for the economy under the current tariff regime shows a modest recovery starting in the third quarter, but with an economy expanding below trend," Hencic wrote in a report on Wednesday. "This leaves the door open for future rate cut(s) under stable inflation." TD Bank economist Andrew Hencic sees inflation guiding Bank of Canada rate decisions for the rest of 2025. In his opening statement to reporters on Wednesday, Governor Tiff Macklem said, "If a weakening economy puts further downward pressure on inflation, and the upward price pressures from the trade disruptions are contained, there may be a need for a reduction in the policy interest rate." The BoC sees the economy contracting 1.5 per cent on a quarterly basis in the second quarter, before recovering later in the year. At the same time, the bank expects inflation to stay close to its two per cent target under its "current tariff scenario." Canada's annual inflation rate rose to 1.9 per cent in June from 1.7 per cent in May, according to Statistics Canada. "The outlook for the economy under the current tariff regime shows a modest recovery starting in the third quarter, but with an economy expanding below trend," Hencic wrote in a report on Wednesday. "This leaves the door open for future rate cut(s) under stable inflation." Fixed and variable mortgage rates expected to stay in low-to-mid 4 per cent range: Mortgage expert Canada's housing market remains largely unchanged since the Bank of Canada's last rate hold in June, according to mortgage and real estate expert Victor Tran of 'Mortgage rates remain sticky,' he said. Canadians holding floating rate products, such as HELOCs or adjustable variable-rate mortgages, won't be experiencing payment relief in the near-term. Canadians taking out new mortgages or renewing can expect mortgage rates for fixed and variable-rate mortgages in the low to mid 4 per cent range, Tran says. Canada's housing market remains largely unchanged since the Bank of Canada's last rate hold in June, according to mortgage and real estate expert Victor Tran of 'Mortgage rates remain sticky,' he said. Canadians holding floating rate products, such as HELOCs or adjustable variable-rate mortgages, won't be experiencing payment relief in the near-term. Canadians taking out new mortgages or renewing can expect mortgage rates for fixed and variable-rate mortgages in the low to mid 4 per cent range, Tran says. Era of synchronized central banks may be ending, IG Wealth Management strategist says "The market is waking up to the idea that the easy part of the cutting cycle is behind us," said Pierre-Benoit Gauthier, vice-president of investment strategy at IG Wealth Management. Markets predict a roughly 66 per cent chance there will be a single cut by the end of the year. Meanwhile, in the U.S., markets expect another two cuts in 2025. "With rate differentials potentially changing soon, the loonie has some room to stay firm," Gauthier said. While political pressure for the Federal Reserve to cut is building, it's largely speculated the U.S. will announce another pause later today. However, if markets are right, "the era of synchronized central banking may be coming to an end soon," he said. "The market is waking up to the idea that the easy part of the cutting cycle is behind us," said Pierre-Benoit Gauthier, vice-president of investment strategy at IG Wealth Management. Markets predict a roughly 66 per cent chance there will be a single cut by the end of the year. Meanwhile, in the U.S., markets expect another two cuts in 2025. "With rate differentials potentially changing soon, the loonie has some room to stay firm," Gauthier said. While political pressure for the Federal Reserve to cut is building, it's largely speculated the U.S. will announce another pause later today. However, if markets are right, "the era of synchronized central banking may be coming to an end soon," he said. Desjardins' Mendes: BoC 'setting up to deliver more monetary easing as early as this September' Although Macklem noted 'a clear consensus to hold' the overnight rate this time, two of the BoC's three scenarios in the MPR 'hint at a need for further rate cuts down the road,' says Desjardins Group economist Royce Mendes in a note to investors. The BoC's current tariff scenario projects core inflation to stay around 3.1 per cent in the last two quarters, Mendes says. However, data on retaliatory tariff collection suggests that number may be too high, he says, 'leaving room for core inflation to undershoot, particularly in the fourth quarter.' With that in mind, he writes, 'it looks like central bankers are setting up to deliver more monetary easing as early as this September.' Although Macklem noted 'a clear consensus to hold' the overnight rate this time, two of the BoC's three scenarios in the MPR 'hint at a need for further rate cuts down the road,' says Desjardins Group economist Royce Mendes in a note to investors. The BoC's current tariff scenario projects core inflation to stay around 3.1 per cent in the last two quarters, Mendes says. However, data on retaliatory tariff collection suggests that number may be too high, he says, 'leaving room for core inflation to undershoot, particularly in the fourth quarter.' With that in mind, he writes, 'it looks like central bankers are setting up to deliver more monetary easing as early as this September.' BoC rate pause may spur fall housing activity, says Royal LePage CEO Although today's BoC rate pause was driven by tariff-related uncertainty, Royal LePage CEO Phil Soper says it could provide some reassurance to prospective homebuyers. "For real estate markets, it's likely more people who need to upgrade their housing will decide they can wait no longer, spurring activity heading into the fall." "Economic fundamentals, from strong employment to much improved affordability, are supporting conditions for growth in the housing market, along with material demand waiting in the wings." Although today's BoC rate pause was driven by tariff-related uncertainty, Royal LePage CEO Phil Soper says it could provide some reassurance to prospective homebuyers. "For real estate markets, it's likely more people who need to upgrade their housing will decide they can wait no longer, spurring activity heading into the fall." "Economic fundamentals, from strong employment to much improved affordability, are supporting conditions for growth in the housing market, along with material demand waiting in the wings." BMO chief economist Porter: Those seeking cuts may need to be patient In a note to clients, BMO chief economist Douglas Porter says the BoC is 'keeping the door fully open to the possibility of future rate cuts.' But Porter doesn't see good odds of that happening in September. Because the BoC expects the economy to contract in Q2, he says, 'we will likely need two friendly CPI reports ahead of the next rate decision in September to meaningfully increase the chances of a cut at that time.' However, he cautions, two consecutive months of acceptable inflation data 'may be a tall hurdle, so those looking for cuts may need to pack their patience." Porter also says the BoC's escalation and de-escalation scenarios are 'a nice way to handle the current either/or' of the trade war. 'There's simply too much lingering trade uncertainty for the BoC to be decisive on the outlook for now.' In a note to clients, BMO chief economist Douglas Porter says the BoC is 'keeping the door fully open to the possibility of future rate cuts.' But Porter doesn't see good odds of that happening in September. Because the BoC expects the economy to contract in Q2, he says, 'we will likely need two friendly CPI reports ahead of the next rate decision in September to meaningfully increase the chances of a cut at that time.' However, he cautions, two consecutive months of acceptable inflation data 'may be a tall hurdle, so those looking for cuts may need to pack their patience." Porter also says the BoC's escalation and de-escalation scenarios are 'a nice way to handle the current either/or' of the trade war. 'There's simply too much lingering trade uncertainty for the BoC to be decisive on the outlook for now.' Macklem on protectionism: The world is fragmenting The uncertain state of global trade was once again front-and-centre in the Bank of Canada's latest rate announcement and Monetary Policy Report on Wednesday. Speaking to reporters in Ottawa, Governor Tiff Macklem addressed the issue of rising protectionist sentiment in the United States and other countries. "The world is fragmenting, and you know, that is going to have an impact," he said. "Some segments of society feel like they've lost out. That is having political consequences." "President Trump has dramatically increased U.S. protectionism. The effective U.S. tariff rate with the agreements that have been reached has increased significantly, and that's going to have an impact on the world economy," Macklem added. "Even before President Trump was elected, trade has been shifting." The uncertain state of global trade was once again front-and-centre in the Bank of Canada's latest rate announcement and Monetary Policy Report on Wednesday. Speaking to reporters in Ottawa, Governor Tiff Macklem addressed the issue of rising protectionist sentiment in the United States and other countries. "The world is fragmenting, and you know, that is going to have an impact," he said. "Some segments of society feel like they've lost out. That is having political consequences." "President Trump has dramatically increased U.S. protectionism. The effective U.S. tariff rate with the agreements that have been reached has increased significantly, and that's going to have an impact on the world economy," Macklem added. "Even before President Trump was elected, trade has been shifting." Rogers says defence spending boost could support Canada's productivity Canada's substantial increase in defence spending will likely, in the long run, help productivity in Canada, says BoC Senior Deputy Governor Carolyn Rogers. Prime Minister Mark Carney has committed to raising defence-related spending to the equivalent of five per cent of Canada's gross domestic product by 2035. 'What we want to see is those investments in our own economy so that they build our own capacity, [and] they generate some economic activity within Canada,' Rogers said. She noted the effects won't be immediate but said she's optimistic it will be net positive to productivity. Canada's substantial increase in defence spending will likely, in the long run, help productivity in Canada, says BoC Senior Deputy Governor Carolyn Rogers. Prime Minister Mark Carney has committed to raising defence-related spending to the equivalent of five per cent of Canada's gross domestic product by 2035. 'What we want to see is those investments in our own economy so that they build our own capacity, [and] they generate some economic activity within Canada,' Rogers said. She noted the effects won't be immediate but said she's optimistic it will be net positive to productivity. Macklem: 'Trust is going to be hard to restore' ahead of 2026 CUSMA renegotiation North America's trilateral trade deal, known in Canada as the Canada-United States-Mexico Agreement (CUSMA), is due for review in 2026. Under current Canada-U.S. tariffs, a vast swath of goods compliant with this deal are exempt from levies. In its "current tariffs scenario" outlined in its newly released Monetary Policy Report, the Bank of Canada estimates CUSMA-compliance at 95 per cent for non-energy exports. "There is a sense that U.S. policy may well remain unpredictable. There is a sense that trust is going to be hard to restore," BoC Governor Tiff Macklem told reporters on Wednesday. "I think some level of uncertainty will continue, and in the scenarios, particularly the current tariff scenario, and the escalation scenario, we do have a fair amount of uncertainty through much of the projection. It does diminish over time, but it's not falling off quickly." U.S. President Donald Trump signed CUSMA during his first presidency in 2018. North America's trilateral trade deal, known in Canada as the Canada-United States-Mexico Agreement (CUSMA), is due for review in 2026. Under current Canada-U.S. tariffs, a vast swath of goods compliant with this deal are exempt from levies. In its "current tariffs scenario" outlined in its newly released Monetary Policy Report, the Bank of Canada estimates CUSMA-compliance at 95 per cent for non-energy exports. "There is a sense that U.S. policy may well remain unpredictable. There is a sense that trust is going to be hard to restore," BoC Governor Tiff Macklem told reporters on Wednesday. "I think some level of uncertainty will continue, and in the scenarios, particularly the current tariff scenario, and the escalation scenario, we do have a fair amount of uncertainty through much of the projection. It does diminish over time, but it's not falling off quickly." U.S. President Donald Trump signed CUSMA during his first presidency in 2018. Macklem stays cautious on future of rate cuts Bank of Canada Governor Tiff Macklem remains cautious on commenting whether there will be a rate cut this year. "Our future decisions are going to depend on what happens in the future," he said, adding: "We continue to proceed carefully." "Given the unusual amount of uncertainty, we're continuing to put more weight on the risks, and we're ready to respond to new information," Macklem said. Bank of Canada Governor Tiff Macklem remains cautious on commenting whether there will be a rate cut this year. "Our future decisions are going to depend on what happens in the future," he said, adding: "We continue to proceed carefully." "Given the unusual amount of uncertainty, we're continuing to put more weight on the risks, and we're ready to respond to new information," Macklem said. BoC's cautious tone, rate-cut readiness could push loonie towards 1.39 "There's light at the end of the tunnel for the Canadian economy and the loonie, but it remains far off in the distance," said Karl Schamotta, chief market strategist at Corpay, in response to the Bank of Canada's rate pause. In today's BoC announcement, Governor Tiff Macklem said that due to the unusual degree of uncertainty, the BoC has to put more weight on risks, consider a shorter horizon than usual, and be ready to respond to new information. Schamotta says this "far from optimistic" economic outlook, paired with the Bank's readiness to resume easing, should keep the Canadian dollar under pressure, "potentially putting it on course to challenge the 1.39 mark before September, especially if the greenback resumes its appreciation." "There's light at the end of the tunnel for the Canadian economy and the loonie, but it remains far off in the distance," said Karl Schamotta, chief market strategist at Corpay, in response to the Bank of Canada's rate pause. In today's BoC announcement, Governor Tiff Macklem said that due to the unusual degree of uncertainty, the BoC has to put more weight on risks, consider a shorter horizon than usual, and be ready to respond to new information. Schamotta says this "far from optimistic" economic outlook, paired with the Bank's readiness to resume easing, should keep the Canadian dollar under pressure, "potentially putting it on course to challenge the 1.39 mark before September, especially if the greenback resumes its appreciation." 'The Bank is inching closer to a cut': CIBC CIBC economist Andrew Grantham sees hints the BoC is "inching closer to a cut" in the central bank's Monetary Policy Report released on Wednesday. He points to a weaker estimate for economic growth in the second quarter from the Bank's policymakers. "The Bank appears to be getting a little more comfortable with the notion that the Canadian economy will need the support from further interest rate cuts in the future," Grantham wrote in a report following today's rate announcement. "However, it is clearly not there yet, and upcoming data will remain more important than today's slight change in language in determining if that support comes at the September meeting as we currently forecast." CIBC economist Andrew Grantham sees hints the BoC is "inching closer to a cut" in the central bank's Monetary Policy Report released on Wednesday. He points to a weaker estimate for economic growth in the second quarter from the Bank's policymakers. "The Bank appears to be getting a little more comfortable with the notion that the Canadian economy will need the support from further interest rate cuts in the future," Grantham wrote in a report following today's rate announcement. "However, it is clearly not there yet, and upcoming data will remain more important than today's slight change in language in determining if that support comes at the September meeting as we currently forecast." Bank of Canada to cut rates twice more in 2025, bringing overnight rate to 2.25%: Vanguard Canada The Canadian arm of mutual fund and exchange-traded fund giant Vanguard now expects the Bank of Canada to cut rates twice more in 2025, following Wednesday's decision to hold. "Despite leaving rates unchanged, we expect the BoC to reduce its policy rate to 2.25 per cent by the end of the year, given a lower growth environment,' Vanguard Canada chief investment strategist Ashish Dewan stated in a news release after Wednesday's announcement. "Although the 'uncertainty tax' has already shown signs of impacting the Canadian labour market and business investment, a 2.9 per cent year-over-year increase in CPI-median data in March, one of the BoC's preferred measures of inflation, coupled with uncertainty around the economic outlook from U.S. tariffs, gave the central bank reasons to pause rate cuts." The Canadian arm of mutual fund and exchange-traded fund giant Vanguard now expects the Bank of Canada to cut rates twice more in 2025, following Wednesday's decision to hold. "Despite leaving rates unchanged, we expect the BoC to reduce its policy rate to 2.25 per cent by the end of the year, given a lower growth environment,' Vanguard Canada chief investment strategist Ashish Dewan stated in a news release after Wednesday's announcement. "Although the 'uncertainty tax' has already shown signs of impacting the Canadian labour market and business investment, a 2.9 per cent year-over-year increase in CPI-median data in March, one of the BoC's preferred measures of inflation, coupled with uncertainty around the economic outlook from U.S. tariffs, gave the central bank reasons to pause rate cuts." Key takeaways from Macklem's opening statement On Canada-U.S. trade war: "Some tariff agreements have been negotiated between the United States and its trading partners, and that has reduced the risk of a severe and escalating global trade war. Unfortunately, the tariffs in those agreements also suggest the United States is not returning to open trade." No normal forecast: "U.S. tariffs are still too unpredictable to be able to provide a single forecast for the Canadian economy." The BoC once again opted against a conventional forecast due to ongoing U.S. tariff uncertainty. Today's Monetary Policy Report includes three scenarios. A "current view," and two more looking at an escalation or de-escalation. Optimism on inflation: "There are reasons to think that the recent increase in underlying inflation will gradually unwind. The Canadian dollar has appreciated, which reduces import costs. Growth in unit labour costs has moderated, and the economy is in excess supply." "At the same time, tariffs impose new direct costs, which will be gradually passed through to consumers. In the current tariff scenario, upside and downside pressures roughly balance out, so inflation remains close to two per cent." A clear consensus to hold, for now: "There was clear consensus to hold our policy rate unchanged." "If a weakening economy puts further downward pressure on inflation and the upward price pressures from the trade disruptions are contained, there may be a need for a reduction in the policy interest rate." On Canada-U.S. trade war: "Some tariff agreements have been negotiated between the United States and its trading partners, and that has reduced the risk of a severe and escalating global trade war. Unfortunately, the tariffs in those agreements also suggest the United States is not returning to open trade." No normal forecast: "U.S. tariffs are still too unpredictable to be able to provide a single forecast for the Canadian economy." The BoC once again opted against a conventional forecast due to ongoing U.S. tariff uncertainty. Today's Monetary Policy Report includes three scenarios. A "current view," and two more looking at an escalation or de-escalation. Optimism on inflation: "There are reasons to think that the recent increase in underlying inflation will gradually unwind. The Canadian dollar has appreciated, which reduces import costs. Growth in unit labour costs has moderated, and the economy is in excess supply." "At the same time, tariffs impose new direct costs, which will be gradually passed through to consumers. In the current tariff scenario, upside and downside pressures roughly balance out, so inflation remains close to two per cent." A clear consensus to hold, for now: "There was clear consensus to hold our policy rate unchanged." "If a weakening economy puts further downward pressure on inflation and the upward price pressures from the trade disruptions are contained, there may be a need for a reduction in the policy interest rate." Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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Is AI causing tech worker layoffs? That's what CEOs suggest, but the reality is complicated
If you read the typical 2025 mass layoff notice from a tech industry CEO, you might think that artificial intelligence cost workers their jobs. The reality is more complicated, with companies trying to signal to Wall Street that they're making themselves more efficient as they prepare for broader changes wrought by AI. A new report Wednesday from career website Indeed says tech job postings in July were down 36% from their early 2020 levels, with AI one but not the most obvious factor in stalling a rebound. ChatGPT's debut in late 2022 also corresponded with the end of a pandemic-era hiring binge, making it hard to isolate AI's role in the hiring doldrums that followed. 'We're kind of in this period where the tech job market is weak, but other areas of the job market have also cooled at a similar pace,' said Brendon Bernard, an economist at the Indeed Hiring Lab. 'Tech job postings have actually evolved pretty similarly to the rest of the economy, including relative to job postings where there really isn't that much exposure to AI.' The template for tech CEO layoff notices in 2025 includes an AI pivot That nuance is not always clear from the last six months of tech layoff emails, which often include a nod to AI in addition to expressions of sympathy. When he announced mass layoffs earlier this year, Workday CEO Carl Eschenbach invited employees to consider the bigger picture: 'Companies everywhere are reimagining how work gets done, and the increasing demand for AI has the potential to drive a new era of growth for Workday." Autodesk CEO Andrew Anagnost explained that a need to shift resources to 'accelerate investments' in AI was one of the reasons the company had to cut 1,350, or about 9%, of workers. The 'Why We're Doing This' section of CrowdStrike CEO George Kurtz's announcement of 5% job cuts said the cybersecurity company needed to double down on AI investments to 'accelerate execution and efficiency.' 'AI flattens our hiring curve, and helps us innovate from idea to product faster,' Kurtz wrote. It's not just U.S. companies. In India, tech giant Tata Consultancy Services recently characterized its 12,000 layoffs, or 2% of its workforce, as part of a shift to a 'Future-Ready organization' that would be realigning its workforce and 'deploying AI at scale for our clients and ourselves.' Even the Japanese parent company of Indeed and Glassdoor has cited an AI shift in its notice of 1,300 layoffs at the job search and workplace review sites. AI spending, not replacement, is a more common factor Microsoft, which is scheduled to release its fourth-quarter earnings Wednesday, has announced layoffs of about 15,000 workers this year even as its profits have soared. Microsoft CEO Satya Nadella told employees last week the layoffs were 'weighing heavily' on him but also positioned them as an opportunity to reimagine the company's mission for an AI era. Promises of a leaner approach have been welcomed on Wall Street, especially from tech giants that are trying to justify huge amounts of capital spending to pay for the data centers, chips and other components required to power AI technology. 'It's this sort of double-edged sword restructuring that I think a lot of tech giants are encountering in this age of AI, where they have to find the right balance between maintaining an appropriate headcount, but also allowing artificial intelligence to come to the forefront,' said Bryan Hayes, a strategist at Zacks Investment Research. Google said last week it would raise its budget for capital expenditures by an additional $10 billion to $85 billion. Microsoft is expected to outline similar guidance soon. The role of AI in job replacement is hard to track One thing is clear to Hayes: Microsoft's job cuts improve its profit margin outlook for the 2026 fiscal year that started in July. But what these broader tech industry layoffs mean for the employment prospects of tech workers can be harder to gauge. 'Will AI replace some of these jobs? Absolutely,' said Hayes. 'But it's also going to create a lot of jobs. Employees that are able to leverage artificial intelligence and help the companies innovate, and create new products and services, are going to be the ones that are in high demand.' He pointed to Meta Platforms, the parent company of Facebook and Instagram, which is on a spree of offering lucrative packages to recruit elite AI scientists from competitors such as OpenAI. The reports published by Indeed on Wednesday show that AI specialists are faring better than standard software engineers, but even those jobs are not where they have been. 'Machine-learning engineers — which is kind of the canonical AI job — those job postings are still noticeably above where they were pre-pandemic, though they've actually come down compared to their 2022 peak,' said Bernard, the Indeed economist. 'They've also been impacted by the cyclical ups and downs of the sector.' Economists are watching for AI's effects on entry-level tech jobs Tech hiring has particularly plunged in AI hubs such as the San Francisco Bay Area, as well as Boston and Seattle, according to Indeed. But in looking more closely at which tech workers were least likely to get hired, Indeed found the deepest impact on entry-level jobs in the tech industry, with those with at least five years of experience faring better. The hiring declines were sharpest in entry-level tech industry jobs that involve marketing, administrative assistance and human resources, which all involve tasks that overlap with the strength of the latest generative AI tools that can help create documents and images. 'The plunge in tech hiring started before the new AI age, but the shifting experience requirements is something that happened a bit more recently,' Bernard said. Matt O'brien, The Associated Press Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
