On Tuesday the S&P 500 was down 0.6% and Toronto was down 0.2%.
Canadian Western Bank was up 3.0% after upgraded their recommendation on it.
Couche-Tard was up 3.7%.
After the close, Toll Brothers came out with very good earnings.
Canadian inflation came in lower than expected at 2.9% year over year. This gave hope that the Bank of Canada can soo start reducing interest rates.
Mortgage interest costs are one of the bigger drivers of inflation. BNN indicated that mortgage interest payments are up on average by 27% year over year. That has a 3.8% weight in CPI and so that would account for 27% times .038 = 1.0% all by itself. And it seems to me that average mortgage interest payments are going to keep rising as more mortgages renew at higher rates. Certain core inflation numbers are coming down but its not clear that headline CPI will go down given higher and higher mortgage interest.
The Bank of Canada will likely want to see evidence that high interest rates are cooling the economy in terms of business expansion. I think they actually need to see layoffs before they will cut rates.
Inflation in overall shelter costs was 6.2% year over year and it has a 28% weight in CPI. That means shelter accounted for 1.7% of the 2.9%. It appears that a a lot of prices are finally not rising much or are down year-over year. Gasoline and airfares were down.
Click the following link and then click “latest Snapshot” to see all the basket weights. Very interesting. And click price trends to explore inflation by the individual major basket items.
https://www150.statcan.gc.ca/n1/pub/71-607-x/71-607-x2018016-eng.htm