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Globe and Mail
15 hours ago
- Business
- Globe and Mail
Citi analyst puts ‘upside 90-day catalyst watch' on this U.S. megacap stock
Daily roundup of research and analysis from The Globe and Mail's market strategist Scott Barlow BMO senior economist Sal Guatieri is predicting a contraction in the domestic economy but the news isn't all bad, 'Don't count the Canadian economy out just yet. It surprised to the upside in the first quarter, expanding at an annualized rate of 2.2%—marking the fifth consecutive quarter of above-potential growth. However, this strength largely reflected businesses and exporters rushing to beat tariffs, effectively borrowing activity from future quarters. Meanwhile, consumer spending slowed and residential construction plunged, as trade-related fears sapped confidence. Despite lower mortgage rates, existing home sales fell for a fifth straight month in April, though preliminary May data from several cities suggest the market may be stabilizing … Despite stronger Q1 results and a modest gain in preliminary April GDP, the economy appears poised for a mild contraction in the near term … Still, the outlook has brightened somewhat. The average effective tariff rate on Canadian shipments to the U.S. is around 6%—lower than the 10% baseline rate for most countries and well below China's levy … Progress in the trade war and some firmer data led us to raise our 2025 real GDP forecast modestly to 1.3% (or 0.5% on a Q4/Q4 basis)'. *** Citi analyst Tyler Radke slapped an 'upside 90-day catalyst watch' on Microsoft Corp., 'We open a positive catalyst watch on MSFT (MSFT-Q) with our view that Street Azure estimates are too low for FY26. This is supported by exit rate math and capex ROI analysis which supports Azure growth in the mid-to-high 30s% and recent read-throughs and positive checks. We believe the catalyst will be F'4Q25 earnings when FY26 guidance is announced and beyond as both Microsoft and OpenAI AI revenue continues to ramp' Mr. Radke has a US$605 target on the stock, almost 30 per cent higher than current levels. *** In a separate BMO report, senior economist Shelly Kaushik quantified the sharp drop in cross border traffic, 'It looks like Canadian travellers continued to avoid U.S. travel in May. According to preliminary data from StatCan, 1.3 mln Canadians returned to the country via the land border in May—that's down almost 40% from a year ago. In the first five months of the year, Canadian road trips to the U.S. are down almost 30% from the same period in 2024. There are a few factors at play here. Perhaps most obviously, relations between the two countries have been at their rockiest in recent memory and have likely driven a preference for domestic travel on both sides of the border (note the U.S. domestic visitors by land were down 8% y/y in May). Plus, the weather was unseasonably cold in many parts of the continent. And, the early-year weakness in the Canadian dollar has also played a role—a quick shopping trip didn't hit the same way when the loonie was above $1.40. While some of these factors should normalize in the months to come, the real question is how quickly relations between the two countries will stabilize… and how soon people will decide it's worth visiting their neighbours once again' *** Bluesky post of the day: Diversion: 'NASA Raises Odds of Asteroid Smacking the Moon in 2032' - Gizmodo
Cision Canada
04-06-2025
- Business
- Cision Canada
BMO Survey: Personal Finance Concerns Rose Significantly Between March to April 2025 Français
Survey shows concerns about inflation and their own financial situations increased by 16 points. TORONTO, June 4, 2025 /CNW/ - A special report from the BMO Real Financial Progress Index reveals Canadians' concerns about their personal finances have surged amid increased economic uncertainty and market volatility. The survey explored changes in Canadians' concerns about their finances and current economic conditions between March and April 2025, and found: Cost of Living Considerations: 78% reported growing concerns about the cost of living in April – a 17-point increase from 61% in March. Inflation Concerns Intensify Over three quarters (76%) say their concerns about inflation have increased – a 16-point increase from 60%. Temperature on Tariffs: Concerns about the impact of US tariffs increased from 65% to 74%. Rising Recession Risks: Canadians' concerns about the prospect of economic recession increased from 60% to 74%. Pulse on Personal Finances: Nearly three in five (58%) say they are more concerned about their financial situation – a 16-point increase from the 42% in March. In addition, nearly one quarter (24%) reported in April they are increasingly concerned about the prospect of losing their job. "Canadian consumer confidence recently plummeted to the lowest depths in at least six decades on fear that the trade war will cost people their jobs and undermine their financial security. However, sentiment improved modestly in April amid a partial de-escalation of the trade war. A more recent recovery in equity markets should support confidence further in May," said Sal Guatieri, Senior Economist, BMO. "While BMO Economics is concerned about the economic impact of tariffs, we are less worried about the inflation outlook, as retaliatory tariffs on imports from the U.S. have been restrained. CPI inflation will likely hold close to the Bank of Canada's 2% target this year, paving the way for some further reductions in policy rates." "Many Canadians and their families are understandably more concerned about their finances and are taking proactive steps to protect their financial future," said Anthony (Tony) Tintinalli, Head, Specialized Sales, BMO. "At BMO, our team of experts are available to help Canadians build a personalized financial plan and adjust these plans as circumstances change or new goals emerge. With planning and a disciplined approach to spending, Canadians will be empowered to navigate the challenging environment, achieve their financial goals and make real financial progress with confidence." "While navigating markets has been difficult amid the recent uncertainty, we remain committed to well-balanced and well-diversified portfolios,' said Brent Joyce, Chief Investment Strategist, BMO Private Investment Council. "Uncertain times can also be a good time to reassess risk tolerance, but decisions should be made with a long outlook in mind. A trusted advisor can help people determine their best path forward." The BMO April survey also found Boomers are most concerned about the cost of living (84%), tariffs (83%), the prospect of an economic recession (82%) and inflation (80%), while Gen Z are the most concerned about the prospect of losing their jobs (37%). BMO Helps Canadians Make Real Financial Progress BMO offers tips and resources to help Canadians stay on track towards their financial goals and make real financial progress during times of uncertainty: Start Planning Early: Outlining short and long-term financial objectives and goals helps determine the appropriate investing and savings solutions to incorporate in a financial plan. Practice Discipline: Manage spending, review budgets, and include any automatic contributions through pre-authorized contributions to savings plans as an expense. Monitoring spending with a monthly budget will allow flexibility to suspend or decrease the spending amount in the continuous savings plan when needed or increase the amount when a budget allows for it. Build an Emergency Fund: Aim to save at least three to six months' worth of living expenses to help cover unexpected costs or loss of income. Diversify Investments: Spread investments across different asset classes, sectors and geographies to reduce risk. Stress Testing Strategies: Consider stress testing financial plans and investment strategies to help plan for economic, market and personal changes that can affect the progress towards financial goals such as saving for retirement, buying a home, etc. Keep Calm and Stay the Course: During periods of market volatility, avoid panic selling and maintain a long-term perspective on investments in order to benefit from the power of compound growth. Seek Professional Advice: Do not wait to seek help until a time of crisis. Working with a professional expert and meeting with them regularly can help Canadians and their loved ones create and maintain a financial plan that reflects their financial goals, sources of income and cash flow, risk appetite and time horizons, and adjust these plans new goals emerge or circumstances change. To learn more about how BMO can help customers make financial progress, visit Launched in February 2021, the BMO Real Financial Progress Index is an indicator of how consumers feel about their personal finances and whether they are making financial progress. The index aims to spark dialogue that will help consumers reach their financial goals and to humanize a topic that causes anxiety for many – money. The research detailed in this document was conducted by Ipsos in Canada from March 3 rd to 26 th, 2025. A sample of n=2,500 adults ages 18+ in Canada were collected. To account for recent changes in the economic situation, certain questions were asked again from April 17 th to 20 th, 2025 among a sample of n=2,001 adults ages 18+ in Canada. Quotas and weighting were used to ensure the composition of both samples reflects that of the Canadian population according to census parameters. The surveys have a credibility interval of +/- 2.7 per cent 19 times out of 20, of what the results would have been had all Canadian adults 18+ been surveyed. About BMO Financial Group BMO Financial Group is the seventh largest bank in North America by assets, with total assets of $1.4 trillion as of April 30, 2025. Serving customers for 200 years and counting, BMO is a diverse team of highly engaged employees providing a broad range of personal and commercial banking, wealth management, global markets and investment banking products and services to 13 million customers across Canada, the United States, and in select markets globally. Driven by a single purpose, to Boldly Grow the Good in business and life, BMO is committed to driving positive change in the world, and making progress for a thriving economy, sustainable future, and inclusive society.
New York Post
15-05-2025
- Business
- New York Post
Wholesale prices plunge by most since 2020 despite Trump tariffs
US wholesale prices dropped unexpectedly in April for the first time in more than a year despite President Trump's sweeping taxes on imports. The producer price index — which tracks inflation before it hits consumers — fell 0.5% last month from March, the first drop since October 2023 and the biggest in five years. Compared to a year earlier, producer prices rose 2.4% last month, decelerating from a 3.4% year-over-year gain in March, the Labor Department reported Thursday. Excluding volatile food and energy prices, so-called core wholesale prices dipped 0.4% from March and rose 3.1% from a year earlier. Advertisement The producer price index — which tracks inflation before it hits consumers — fell 0.5% last month from March, the first drop since October 2023 and the biggest in five years. AP Economists had forecast that producer prices rose modestly in April. Services prices fell 0.7%, the biggest drop in government records going back to 2009, on shrinking profit margins at wholesalers and retailers. Wholesale food prices fell 1%, and egg prices plunged 39%, though they are still up nearly 45% from a year ago because of bird flu. Advertisement On Tuesday, the Labor Department reported that consumer prices rose just 2.3% last month from April 2024 — smallest year-over-year gain in more than four years. Economists have predicted that Trump's tariffs would drive up prices, and many expect the impact to show up in June or July. Still, Trump's tariffs are ever-changing, so it's hard to forecast their economic impact. On Monday, for instance, Trump unexpectedly agreed to a massive de-escalation of his trade war with China — third-biggest source of US imports — by scaling back his taxes on Chinese products to 30% from 145%; China slashed its retaliatory tariffs on US products from 125% to 10%. Economists have predicted that President Trump's tariffs would drive up prices, and many expect the impact to show up in June or July. Above, the president in in Qatar on Thursday. AP Advertisement 'Tariffs have yet to make much of a mark on pricing, though it's likely just a matter of time,'' Sal Guatieri, senior economist at BMO Capital Markets, wrote in a commentary.
Yahoo
11-05-2025
- Business
- Yahoo
'Economic casualties' will mount in Canada and U.S., pushing BoC to three more rate cuts this year: BMO
U.S. President Donald Trump's trade war will cause 'economic casualties' in Canada and the U.S. even if some tariffs are scaled back, according to a new economic outlook from the Bank of Montreal. BMO economist Sal Guatieri writes that 'Canada's economy now likely faces a shallow downturn as a result of the trade war,' with a modest contraction of real gross domestic product (GDP) in the second and third quarters of this year. The bank assumes some tariffs will be rolled back as a result of trade talks, a development that would see Canada's economy growing again by later in 2025. But economic damage from tariffs on steel, aluminum and motor vehicles, as well as crumbling consumer and business confidence, is expected to turn up in the form of reduced exports and rising unemployment in the near term. As a consequence, BMO expects the Bank of Canada to resume interest rate cuts in June, gradually lowering its overnight rate by 75 basis points — to two per cent — by year end. BMO's outlook was published on Tuesday, the same day Canadian Prime Minister Mark Carney met Trump in Washington for their first face-to-face meeting. In the outlook, Guatieri notes that the tariff situation could "change abruptly," pointing to Trump's recent threat of 100 per cent tariffs on foreign films. Guatieri writes that the consequences of the trade war will see the U.S. economy 'nearly stall for a while,' with annual GDP growth slowing, unemployment nudging up and inflation nearing four per cent 'before a moderating trend resumes in response to weaker demand and softer labour market conditions.' BMO expects the Fed to hold interest rates steady in the months ahead before gradually trimming 150 basis points by June 2026. The relatively light tariff outcome for Canada on Trump's April 2 'Liberation Day' and a subsequent delay on auto parts tariffs put the average effective tariff rate for Canadian exports to the U.S. at around five per cent, Guatieri writes — 'much less than feared going into the trade stand-off in early February.' But the remaining tariffs 'could drive exports sharply lower this spring and summer,' BMO's outlook warns, while trade war-stricken supply chains and 'a less efficient allocation of resources' are likely to harm Canada's already struggling productivity. BMO forecasts annual growth to slow to 0.7 per cent this year — down from 1.5 per cent in 2024 — with Ontario hit hardest due to its concentration of automotive and steel manufacturing. Canada's employment situation has held up reasonably well, Guatieri writes, 'but this may be the proverbial calm before the storm.' The projected downturn could see more than 100,000 workers lose their jobs, the economist says, bringing the unemployment rate to 7.7 per cent by the end of 2025. Although inflation may rise in the U.S., BMO does not expect a similar increase in Canada, with lower fuel prices and the end of the carbon tax projected to push the annual consumer price index below the 2.3 per cent recorded in March. 'Counter-tariffs on some U.S. imports will temporarily lift inflation, but the annual rate should still hover around the two per cent target this year and next, given lower energy costs and rising unemployment.' John MacFarlane is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jmacf. Download the Yahoo Finance app, available for Apple and Android. 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
Reuters
28-02-2025
- Business
- Reuters
US housing to get a bit more affordable this year, but mainly due to lower rates: Reuters Poll
BENGALURU, Feb 28 (Reuters) - Affordability in the U.S. housing market will improve modestly in the coming year, according to property market experts polled by Reuters, based on expectations for a few more interest rate cuts, not an increase in homes available to purchase. Home prices are set to keep rising modestly this year and next, in forecasts broadly unchanged from a November survey and suggest little has been done to alleviate relentless financial pressure on aspiring first-time buyers. A 62% majority of respondents, 13 of 21, in a February 14-27 Reuters survey said purchasing affordability for first-time home buyers over the coming year would improve, compared with 53% three months ago who said it would worsen. That was mostly down to an expected dip in 30-year mortgage rates (USMG=ECI), opens new tab from near 7% to an average 6.76% this year, and 6.32% next, poll medians showed. "By various measures, U.S. housing affordability is still the worst in about four decades. While we will see some improvement in the coming year, it will still be a challenge, particularly for many first-time buyers, to get into the market," said Sal Guatieri, a senior economist at BMO Capital Markets. "We expect home prices to continue rising, but at a more moderate rate than recently," Guatieri added. "This just reflects our view the housing market will slowly pick up as mortgage rates decline in response to anticipated Fed easing later this year and through next year." President Donald Trump has announced a series of executive orders and sweeping policy changes over the past month in the White House. But apart from expectations for a deregulation agenda, the administration is yet to announce any plans to address the lack of affordable homes. In the meantime, U.S. home prices based on the S&P CoreLogic Case-Shiller composite index of 20 metropolitan areas (USSHPQ=ECI), opens new tab were expected to rise 3.6% this year, median estimates from 27 property analysts showed. Home prices were then predicted to go up 3.3% and 3.5% respectively, in the coming two years. Part of this has to do with a persistent supply shortage, which has kept average U.S. home prices over 50% above pre-pandemic levels. Over 500 basis points of Fed rate hikes in 2022-23 broadly did nothing to lower house prices. The shortage of homes available to buy is partly driven by existing homeowners who secured historically rock-bottom mortgage rates during the pandemic and are reluctant to sell. "Since such an overwhelming percentage of the outstanding mortgage market is fixed-rate, where borrowers were able to take out loans in 2020-21 with two- or three-handle rates, their incentive in this current environment is to keep their homes off the market," said James Egan, Morgan Stanley housing strategist. "That's kept inventory very constrained and put upward pressure, and a holistic level of support, for home prices," said Egan, who doesn't expect affordability to improve drastically over the next year or two. Asked what would rise faster over the coming year, a 55% majority, 11 of 20, said home prices over rents. Average rents will increase around 3% this year, according to the median estimate from a smaller sample of respondents. Existing home sales (USEHS=ECI), opens new tab, comprising over 90% of total sales, were expected to rise modestly until mid-year and rise to an annualised rate of 4.15 million and 4.23 million units, respectively, in the third and fourth quarters. But those were downgrades from the previous survey and well below the 6.6 million units recorded in early 2021. "Fundamental demand remains strong due to an estimated housing deficit of 2.6 million units providing a floor under house prices," said Cristian deRitis, deputy chief economist at Moody's Analytics. ((Other stories from the Q1 global Reuters housing poll))
