The Bank of Canada’s oversized cut is poised to bring down the cost of borrowing and jolt consumers into spending, Warren Buffett is urging people to ignore “Warren Buffett,” and climate change is threatening winemakers in France. More on that below, but first:
In the news
Steely resolve: A group representing Canadian industry, including the cement association and steel producers, are calling for sweeping changes to the country’s carbon markets.
A new chapter: Paper Excellence Group aims to turn the page on past controversies with a new business name.
The climate case: As federal public servants fight office mandates, a new study has found that remote work has climate benefits.
Happening today
- Statistics Canada reports its month-over-month New Housing Price Index.
- Purchasing-managers indexes were expected to underscore the health of the U.S. economy and continued strain in Europe.
- Earnings include Rogers Communications Inc., Teck Resources Ltd., Capital One Financial Corp., and United Parcel Service Inc.
Economy
Tiff Macklem: The deep cuts
The move: The Bank of Canada cut its policy interest rate by half a percentage point and said that inflation has largely returned to normal, as markets now look to the bank’s next decision in December.
The Decemberists: The oversized cut represents an acceleration of the pace of monetary policy easing as the bank attempts to engineer a soft landing for the economy, The Globe’s Mark Rendell reports. Investors expect a smaller quarter-point cut at its next meeting in December, Darcy Keith reports, but some Bay Street economists think the bank could deliver another oversized move.
“There’s no real logic in taking baby steps towards getting interest rates to a level that won’t needlessly hold back economic growth,” Avery Shenfeld, chief economist at Canadian Imperial Bank of Commerce, said in a note to clients.
What’s next: Bank of Canada Governor Tiff Macklem said the bank now sees upside and downside risks to inflation as “reasonably balanced.” On the downside, he flagged longer-than-anticipated household spending and business investment, as well as potential geopolitical shocks such as rising tariffs if Donald Trump is elected U.S. president on Nov. 5.
What not to do: Lower interest rates bring relief to borrowers, but that’s not really the point, Rob Carrick writes. “What the Bank of Canada is saying when it lowers its benchmark rate is something along the lines of ‘Get to it – spend!’ "
His list of things to avoid overdoing include getting too amped about housing, relying too much on dividend stocks, and “buying too much car.”
I would add falling for deepfakes of Warren Buffett boosting bitcoin schemes to that list:
The real Warren Buffett at a shareholder meeting in 2022.Reuters
In focus
Listen to Warren Buffett: Do not listen to ‘Warren Buffett’
Warren Buffett was asked on a Fox News segment to offer his fresh new investment advice. The first telltale sign that something was amiss was that Warren Buffett was giving fresh new investment advice.
Over the course of his legendary career, in which he has amassed a personal fortune north of $100-billion and built Berkshire Hathaway Inc. into a trillion-dollar company, the Oracle of Omaha has kept things simple: Invest in companies with strong growth potential at a fair price, and in industries he understands. Famously, that has not always included technology.
Which is why anyone who has followed Buffett’s career with even the slightest degree of interest might’ve spit out their coffee when he responded:
“Yes, of course. I am watching a bitcoin giveaway take part. If you want to change your future … enter promo code ‘gift’ and enjoy your prizes: 0.3 BTC. Do not miss the opportunity that will change your life.”
If the offer itself wasn’t enough to give one pause, there was one undeniable giveaway: The words he was saying did not in any way align with the shapes being made by his mouth.
“Undeniable” is doing a little work here, and might not be entirely fair: Clearly, enough people had seen this clip circulating on social media – and possibly acted upon its advice – that Berkshire Hathaway felt compelled to issue a statement yesterday making clear that the actual Warren Buffett would not endorse “investment products or political candidates.”
But in an investor meeting in May, even Buffett himself said he was impressed with his AI double – to the degree that he would “send money to myself over and over in some crazy country.”
Buffett isn’t the only public figure to be targeted by scammers seeking to manipulate their likenesses and profit from their reputations. Bizarro-world Bill Gates, Mark Zuckerberg and Elon Musk have all offered to “change your future” with cryptocurrency. (Although it sometimes feels like we are already witnessing a bizarro-world Elon Musk.)
In Canada, Conservative Leader Pierre Poilievre and Deputy Prime Minister Chrystia Freeland seemingly put political hostilities aside to promote money-making schemes on Facebook.
But as The Globe’s Patrick Dell reports, Freeland’s office confirmed a recent video was fake, and urged Canadians to “remain vigilant when consuming information online and to use their judgment when videos and websites appear doctored and out of character.”
Evidently, people really need to hear this. One Toronto man said he lost $12,000 after watching a video depicting Prime Minister Justin Trudeau promoting cryptocurrency.
Even the lighter side of deepfakes is dark. Toronto journalist David Silverberg recalls the first time he was fooled by an AI-generated video: Tom Cruise, clutching a guitar, absolutely crushing the Dave Matthews Band hit Crash Into Me. I don’t mean to suggest Tom Cruise covering DMB was in itself an act of darkness, although that argument could be made. Rather, as Silverberg writes, his subsequent realization shows that even someone who has covered digital culture for years can be caught off guard.
His experience suggests we need to make AI literacy just as essential as math and English in our educational system.
Those formational tools might be too late for some social-media users of today. But as governments, regulators, sophisticated investors and veteran journalists struggle to keep up with the velocity and scale of AI advancements, it might increasingly fall to individuals to navigate their way through what’s real and what isn’t.
Charted
Extreme weather is weighing on French winemakers
Climate change has become an undeniable risk for wine growers around the world, Irene Galea reports. It’s disrupting a carefully constructed web of viticulture techniques, local economies and regulation that have evolved over centuries.
* For scale: One wonderful Olympic-sized pool would require 25,000 hectolitres of wine.
The lookout
On our radar and reading list
Into hiding: The Canadian man ‘unmasked’ as bitcoin creator Satoshi Nakamoto has gone to ground.
Dressing down: Gucci owner Kering becomes the latest luxury retailer to warn of dipping demand in Asia.
Looking up: A California-based company is developing catapult-based technology that uses a giant rotating arm to fling satellites into low-Earth orbit. Might catapults be the answer to more problems than we think?
Morning markets
Global markets were mostly higher as investors tried to find footing amid uncertainty about the tight U.S. presidential race and conflict in the Middle East, while getting some lift from corporate earnings. Wall Street futures were mixed, with the tech-heavy Nasdaq pointing higher on a boost from Tesla’s robust earnings report yesterday. TSX futures were also up.
Overseas, the pan-European STOXX 600 was up 0.51 per cent in morning trading. Britain’s FTSE 100 rose 0.5 per cent, Germany’s DAX climbed 0.69 per cent and France’s CAC 40 advanced 0.75 per cent.
In Asia, Japan’s Nikkei closed 0.1 per cent higher, while Hong Kong’s Hang Seng dropped 1.3 per cent.
The Canadian dollar traded at 72.37 U.S. cents.