Daily Pulse

One of our most accessible tools, this daily comment keeps you abreast of developments on the North American and international financial markets.

Michel Doucet

Michel Doucet
Vice-President and
Portfolio Manager

January 19, 2022


Canadian border agents began refusing entry to unvaccinated American truckers just days ago, and it’s already causing chaos -- particularly in fruit and vegetable markets. A mandate starting Jan. 15 requires truck drivers crossing into Canada to be vaccinated. However, only about half of American truck drivers have gotten their shots. Meanwhile, as much as 90% of Canada’s fruits and vegetables comes from the U.S. during winter, and grocery stores are already having trouble getting some shipments. “We’re seeing shortages,” said Gary Sands, senior vice president of the Canadian Federation of Independent Grocers. “We’re hearing from members they’re going into some stores where there’s no oranges or bananas.'” The mandate is adding to Canada’s supply chain turmoil that was already abundant due to recent storms as well as the pandemic. Prices for consumers will likely rise as freight costs soar. Sending one truckload of fresh produce from California or Arizona to Canada is now $9,500, up from an average of $7,000, according to North American Produce Buyers. The price to bring food and other exports over the border has doubled on some routes given the drop in eligible truckers. The situation is only set to worsen with the U.S. imposing its own vaccine mandate on foreign travelers starting Jan. 22. The Canadian Trucking Association estimates the mandate will take as many as 16,000 drivers off the road. The lack of truckers could potentially create more of a shortage than what we’re experiencing now. That’s because trucking is the only option for transportation. Rail service isn’t available everywhere, and shipping by air is too expensive.

Builders are bringing some relief to Canada’s tight housing market, with year-end data showing the strongest run of new construction since the 1970s. Builders began work on 271,198 homes last year, the highest since 1976 and second most in records back to 1955, according to data released on Tuesday by the Canada Mortgage and Housing Corp. Work was completed on 222,670 units, the highest since 1979. The numbers show developers are seeking to take advantage of a real estate market that’s seen benchmark home prices rise by nearly 30% over the past year amid dwindling supply, with the fewest existing houses for sale in at least a quarter century.

United States

Microsoft Corp. agreed to buy Activision Blizzard Inc. in an all-cash deal valued at about $75 billion, using its largest acquisition by far to grab a videogame heavyweight that has been roiled by claims of workplace misconduct. The deal, if completed, would sharply expand Microsoft’s already sizable videogame operation, adding a stable of popular game franchises including Call of Duty, World of Warcraft and Candy Crush to Microsoft’s Xbox console business and its own games like Minecraft and Doom. Microsoft said the transaction would make it the world’s third-largest gaming company by revenue, behind China’s Tencent Holdings Ltd. and Japan’s Sony Group Corp. The deal follows a boom in the videogame business during the pandemic. It also comes as Microsoft and other technology giants are jockeying for position amid major changes in the sector, including a shift toward cloud-based gaming and the rise of a virtual world known as the metaverse where people can play, work and shop across different platforms using digital avatars. The deal entails significant complications, too. Shares in Activision had been down nearly 30% since California regulators filed a lawsuit against the company in July alleging sexual harassment and gender-pay disparity among the company’s roughly 10,000 employees.

Goldman Sachs Group Inc.’s profit fell declined 13% to $3.94 billion, or $10.81 a share, in the fourth quarter. That fell short of the consensus forecast of $11.77 a share among analysts polled by FactSet. Revenue grew 8% to $12.64 billion. That beat the forecast of just over $12 billion. Investment-banking revenue jumped 45% to $3.8 billion, with demand for mergers and acquisitions still brisk. Trading revenue was $3.99 billion, down 7%, as pandemic-induced volatility in capital markets subsided. Bond-trading revenue of $1.86 billion was essentially flat from a year earlier, while stock-trading revenue shrank 11%. Revenue from its consumer and wealth management unit rose 19% in the fourth quarter. Consumer-banking revenue grew 8% as consumers carried higher credit-card balances. Total operating expenses were $7.27 billion, up 23% from the same period a year earlier. Compensation expenses at Goldman rose 31% to $3.25 billion. The bank’s return on equity, a measure of how profitably it uses shareholders’ money, was 23% in 2021 after a return of 11.1% in 2020.

Banks due to report earnings before the opening bell in New York include Morgan Stanley and Bank of America.


U.K.’s inflation surprises with jump to highest in Britain’s inflation rate surged unexpectedly to the highest since 1992, sharpening a squeeze on households and adding to pressure on the government and Bank of England to respond. Consumer prices rose 5.4% from a year ago in December, driven by a broad increase in the cost of food, drink, restaurant meals and furniture, the Office for National Statistics said Wednesday. Household spending power is weakening, with the price of everyday goods and services rising faster than wages. Households are feeling the squeeze not just from rising energy bills, but higher food prices. Energy bills have risen 18.8% for electricity and 28.1% for gas, the biggest increase since 2009. Food prices are now climbing at their fastest rate since July 2008. Policy makers at the central bank are weighing another increase in interest rates as early as next month, and ministers are looking at ways to soften a surge in utility bills due to hit in April. The BOE last month delivered the first increase since the start of the pandemic and may move again on Feb. 3.

Oil climbed to the highest since October 2014 as the International Energy Agency said the market looked tighter than previously thought, with demand proving resilient to omicron. The global supply surplus is shrinking and oil demand is on track to hit pre- pandemic levels, according to a report from the IEA. The agency also said there’s a growing gap between changes in global stockpiles and supply-demand balances. That’s a further indication that production could be lower, or consumption could be higher, than the market estimates, it said. Futures in New York surpassed $87 a barrel earlier in the session after an explosion on Tuesday knocked out a key crude pipeline running from Iraq to Turkey. Oil markets have tightened in recent weeks due to stronger-than expected demand and outages in OPEC+ producers including Lybia, with buyers in Asia paying sharply higher premiums for spot cargoes. The sizzling start if the year had prompted Goldman Sachs Groups Inc. to boost its forecasts for global benchmark Brent, predicting 100$ oil in the third quarter.


More than two years into the pandemic most countries are striving to live alongside Covid, accepting the virus as part of everyday life. China, where the pathogen first emerged, exists in an alternate reality, wedded to a zero-tolerance strategy that’s growing harder to maintain. Despite firmly closed borders and a vaccination rate near 90%, the highly transmissible omicron variant has been reported in seven out of 31 provinces and all of China’s biggest cities. Port disruptions and citywide shutdowns are increasingly common, and on Monday, the government signaled it’s bracing for more: The central bank cut its key interest rate after the economy posted its weakest quarter since the beginning of the pandemic. The human costs are rising, too. In the city of Xi’an, at least two people died and two women miscarried, barred from medical treatment by enforcement of Covid lockdown protocols that began just before Christmas. In the most literal sense, China hasn’t been Covid Zero for months, and with every new mutation, the stakes rise for President Xi Jinping and the rest of the world. On a list of the top global political risks in 2022, the Eurasia Group put the failure of China’s pandemic strategy at No. 1. China’s latest economic results and the reaction by the central bank show how much strain the government is under. Beijing’s longer-term goals call for stronger domestic consumption, less dependence on overseas demand. Covid Zero has given it the opposite. Even if domestic demand weren’t flagging, the strategy increases China’s dependence on exports.

Asian stocks came under pressure. Overnight the MSCI Asia Pacific Index dropped 1.3% while Japan’s Topix index closed 3% lower as the yen strengthened and Sony Group Corp. plunged in the wake of the Microsoft Corp. Japan’s Nikkei 225 skidded 2.8%. China’s Shanghai Composite Index slipped 0.3%.

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