Good evening, let’s start with today’s top stories:
The Bank of Canada raised its benchmark interest rate by half a percentage point, the first oversized rate hike in decades and an aggressive step forward in its campaign to tackle runaway inflation.
The bank’s governing council agreed Wednesday to increase the policy rate to 1 per cent from 0.5 per cent, and said that more rate hikes will be needed to prevent inflation expectations from spiralling upwards. It typically moves in quarter-point increments and has not announced a half-point hike since May, 2000.
Inflation outpacing wage gains
Around two-thirds of Canadians have seen inflation outpace their wage gains over the pandemic, translating into an effective pay cut for millions of workers, Matt Lundy reports.
Over the two years ending in February, average wages rose by 2.7 per cent a year compared with an annual inflation increase of 3.4 per cent, according to an analysis from the Canadian Centre for Policy Alternatives (CCPA). Inflation-adjusted wage growth was negative in many parts of the labour market, including industries tied to the public sector – such as education and health care – and for the average worker who hasn’t switched jobs during the pandemic.
Canada’s inflation rate hit a three-decade high of 5.7 per cent in February, and several analysts say it’s poised to climb further in the months ahead, partly because the Russia-Ukraine war has led to higher commodity prices.
Rob Carrick reports on who should worry about the wave of rate increases this year, who shouldn’t and what every stressed-out borrower should do right now.
A sign is pictured outside the Bank of Canada building in Ottawa, Ontario, Canada, May 23, 2017.CHRIS WATTIE/Reuters
Fight for Mariupol not over, commander of foreign legion says, despite Russian claims more than 1,000 Ukrainian marines surrendered
Russia has claimed that more than 1,000 Ukrainian marines have surrendered in the southern city of Mariupol, but there were competing views about whether the devastating seven-week battle for control of the strategic port on the Sea of Azov was ongoing.
Ukraine did not confirm the surrender Wednesday and said that two units of its forces still in the city had instead managed to link up. Mamuka Mamulashvili, the commander of the Georgian Legion, a battalion of volunteer fighters, told The Globe and Mail that his unit had troops “near Mariupol” who were still fighting.
Mamulashvili said he also had friends among the Ukrainian forces holed up in the massive Azovstal steel factory. He said he had spoken to them in recent days and did not believe they would have surrendered.
“I would know,” he said when asked whether the battle for Mariupol had ended, though he would not discuss the number of fighters who were still holding out. “They have not surrendered. There are still Ukrainian army forces and Georgians there.”
Read more:
- Russia’s use of chemical weapons in Mariupol unverified, but not unexpected as Moscow faces setbacks, Ukrainian general says
- Ukraine’s rail system is a vital lifeline and connection to the outside world, and a target for Russian attacks
- Why is Russia invading Ukraine? What Putin’s troops have done so far, from Mariupol to Kramatorsk to Bucha
Service members of pro-Russian troops load ammunition into an armoured personnel carrier during fighting in Ukraine-Russia conflict in the southern port city of Mariupol, Ukraine, April 12, 2022.ALEXANDER ERMOCHENKO/Reuters
China’s COVID-19 lockdowns drag down economy and cause ripple effects around world
Strict COVID-19 lockdowns in Shanghai and other cities across China are dragging down the world’s second-largest economy, threatening key growth targets and causing international knock-on effects at a time of worldwide instability.
Parts of Shanghai have been closed for more than two weeks now, with residents unable to leave their homes for any reason. Many have reported running out of food and other goods amid a supply-chain crunch, as well as struggling to access non-COVID medical care – even for life-threatening conditions.
A handful of neighbourhoods began easing restrictions this week, but the majority of the city’s 26 million people remain locked down. On Wednesday, Shanghai reported 26,330 new cases, a daily record, as officials warned community spread has still not been curbed despite the strict controls.
“There is a strong sense of uncertainty throughout the city, and it’s fuelled by supply shortages, endless lockdowns and a really big fear of being sent to one of the central quarantine camps,” said Bettina Shon-Behanzin, the Shanghai chair of the European Union Chamber of Commerce in China.
A woman looks over a barrier at an area under lockdown amid the COVID-19 pandemic, in Shanghai, China, April 13, 2022.ALY SONG/Reuters
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ALSO ON OUR RADAR
Shell executive named new CEO of LNG Canada project in B.C.: A vice-president from Shell Canada has been appointed as the new chief executive officer at LNG Canada.
Shaw Communications sees revenue, profit dip as it awaits approval to merge with Rogers: Shaw Communications Inc. saw its revenue and profit dip during the second quarter as it awaits approval from two more regulators for its $26-billion combination with Rogers Communications Inc.
Man arrested in New York subway shooting charged with federal terrorism offence: The man arrested Wednesday in the shooting of 10 people on a Brooklyn subway was charged with a federal terrorism offence, a day after the attack on a crowded rush-hour train.
With a recession looming, is it the right time to buy stocks?: There is a 90-per-cent chance of a U.S. recession ahead. So go ahead and buy stocks. That is the rather counterintuitive message from Roberto Perli, a former Federal Reserve economist who now serves as head of global policy at investment bank Piper Sandler.
Bank of Canada’s rate hike expected to cool Canada’s hot housing markets: The Bank of Canada’s aggressive rate hike will push up borrowing costs and likely start to slow the country’s booming real estate market after two years of rapid home price increases.
MARKET WATCH
A broad rally led by the technology and commodity sectors pushed Canada’s main stock index higher midweek as the Bank of Canada approved its largest interest rate increase in two decades.
The S&P/TSX composite index closed up 122.61 points to 21,838.02.
In New York, the Dow Jones industrial average was up 344.23 points at 34,564.59. The S&P 500 index was up 49.14 points at 4,446.59, while the Nasdaq composite was up 272.02 points or two per cent at 13,643.59.
The Canadian dollar traded for 79.32 cents US compared with 79.26 cents US on Tuesday.
The May crude oil contract was up US$3.65 at US$104.25 per barrel and the May natural gas contract was up 31.7 cents at US$7.00 per mmBTU.
The June gold contract was up US$8.60 at US$1,984.70 an ounce and the May copper contract was up less than a penny at US$4.71 a pound.
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TALKING POINTS
The Conservatives’ torment: Constantly losing to a Trudeau
“In the eight elections in which the Conservatives have faced a Trudeau, they’ve lost no fewer than seven of them. The only time they haven’t served as a punching bag for Pierre or Justin was in 1979, when Joe Clark won a minority against the elder. The relief didn’t even last a year before the Liberals won a majority back.” – Lawrence Martin
Pierre Poilievre is onto something when he rants about Canada’s housing nightmare
“His tone is perfect for the swaths of young Canadians who have done everything right, but who not only can’t afford to live where they grew up, likely can’t even afford to live hours away. (The average home price in Barrie, Ont., about an hour and a half north of Toronto, is over $1-million, up 32 per cent over last year.) Plenty of politicians have talked about the problems with a housing market where only the wealthy can own property, but few have channelled the frustrations of a generation in the way Mr. Poilievre has.” – Robyn Urback
Whatever they may say, no politician actually wants to cut house prices
“If you think rising prices are a hot political issue, just wait until mortgage rates rise, prices start to fall, and over-leveraged homeowners find themselves under water. For the practising politician, then, the sweet spot is to be seen to be doing something to reduce house prices, without actually reducing them.” – Andrew Coyne
LIVING BETTER
What should you know about Omega-3′s, and less talked-about omega-6′s?
The health benefits of omega-3 fats, especially the ones in oily fish, are well reported. Studies suggest that higher intakes of these fatty acids guard against inflammation, heart disease, macular degeneration and, possibly, Alzheimer’s disease.
Omega-6 fatty acids, however, aren’t often talked about. And when they are, their health effects sometimes come with controversy.
Leslie Beck writes a primer on omega-3 and omega-6 fatty acids – their health benefits, best food sources and how to get the right balance in your diet.
TODAY’S LONG READ
In Georgia, Trump’s allies try to wrest control of the voting process
An audience listens to former President Donald Trump speak at a rally to support David Perdue, a Georgia gubernatorial candidate, in Commerce, Ga., March 26, 2022.Audra Melton/The New York Times News Service
It’s primary season in regions that Donald Trump lost to Joe Biden in 2020, and his supporters want to shape the outcome with conspiracy theories, restrictive election laws and stacking local groups with their own people. In elections this year, candidates backing former U.S. President Donald Trump’s lie that the 2020 election was stolen are aiming to win governorships and legislative majorities in key swing states.
They are passing a flurry of restrictive laws that make it harder to vote. And they are taking over local committees that run polling stations and certify election results, giving them power to set the rules for voting, kick voters off the rolls and discard ballots.
It all raises the prospect that, next time around, Trump or another losing candidate could execute the illegal seizure of power that he unsuccessfully attempted in 2020.
“If you have partisan actors who get to control the entire voting process from registration to certification,” says Helen Butler, executive director of a Georgia social-justice group, “there’s a possibility that you can have that coup.”
Evening Update is written by Emerald Bensadoun. If you’d like to receive this newsletter by e-mail every weekday evening, go here to sign up. If you have any feedback, send us a note.