August 21, 2015

On Friday, the S&P 500 and Toronto were each down 0.1%.

The biggest move on our list was Walmart, down 2.0%.

Statistics Canada reported July inflation numbers. There is a lot of data in the report. You can click to the source CANSIM tables to see vast amounts of underlying data. For example you could drill down to see the specific inflation rate for bananas or potatoes if you wish. But the most important number is the Bank of Canada Core Index which was at 2.1%. This means that the Bank of Canada considers that the best estimate of the underlying inflation rate after stripping out the volatile food and energy price changes is 2.1%.

It does NOT mean that anyone ifs ignoring those volatile categories. Headline actual inflation is also reported and was 1.3%. As I have stated before, back when actual inflation was HIGHER than the core inflation there was always a chorus of people chanting that Statistics Canada and the Bank of Canada were ignoring the high inflation numbers by looking only at core inflation. Now that core inflation is actually higher than headline inflation, the chorus has gone silent.

Toll Brothers are expected to report strong earnings growth on Tuesday morning. The big Canadian banks also start to report earnings this week. The focus will be on loan losses and the outlook for loan losses. This will be even more the case when Canadian Western Bank reports earnings on September 1st. So far CWB has acknowledged that its loan losses on oil and gas production loans are up significantly but has not indicated that there would be much contagion to other customers. That may or may not remain the case.