BREAKING: CPI Inflation Report - Fed Rate Cuts Confirmed

well the markets were slammed this morning when they opened in light of the latest US inflation numbers they're just out this morning this will have an effect on all of our stock portfolios especially the value of our US dollar Holdings we've got the fed's next interest rate decision just around the corner so I'm going to break down in this video today what happened this morning and how it might all shake out quick summary of what was going on today first off the US consumer prices they ticked up by 0.2% that's exactly what most people had expected that puts yearly inflation rate at 2 .5% that's the lowest it's been since 2021 but key to this report the core inflation which ignores those volatile sectors food energy they came in a little bit hotter they were 0.3% for the month they did stay flat at 3.2% for the year now even though these core prices are being a little bit stubborn inflation has cooled off compared with its peak uh from last year now what does this mean for the fed's next move on interest rates we see inflation slowing down but that core inflation is being pretty sticky so what most likely is going to happen that would suggest that the FED will be leaning towards a smaller 25 basis points cut at their meeting next Wednesday there have been a lot of Whispers rumors out there about a larger 50 basis point cut that seems less likely now the FED also has their eyes on the labor market so that's been cooling off as we talked about on Monday's video on this channel here the FED kind of you know this proverbial rock in a hard place they don't want to risk going too hard on interest rates uh they want to take a moderate approach and I think that cutting by 25 basis points it is probably the safest bet for now uh when I look at the CME fed watch tool this morning it shows an 85% chance of 25 basis points 15% chance of a 50 basis point cut uh next Wednesday so how does this affect our investments well obviously the markets aren't happy this morning the Dow Jones was down over 700 points we've seen recovery uh as the day goes on here I think it's safe to say the markets don't really like this news another thing that we have to consider is that if the FED does cut these rates that will affect bond yields they're going to come down as well that is good news if you're an investor who likes dividend paying stocks real estate investment trusts they could become more attractive Investments for Canadian investors specifically this is something that you want to keep an eye on because if the Bank of Canada follows the FED Cuts uh rates further that could also push demand for these income generating assets here in Canada um also a Fed rate cut most likely to happen next week that will likely weaken the US dollar even if it's temporary that could drive the Canadian dollar higher a couple of implications for Canadian investors there first off if you own us assets you might lose a little bit of value when you convert them back to the cad and also if you're a Canadian of business exporting to the us obviously a stronger Looney would make your products more expensive for American buyers that could hurt your bottom line especially if you look at sectors like manufacturing and energy so we have this mixed inflation news we have the core inflation still being stubborn the markets are digesting what this all means means so Real Estate Investment Trust re they made a pretty nice recovery on the TSX they're up over 20% now since late June and this rally has really turned the sector's uh returns positive for the year they've regained now about half of the losses they took from a two-year slum that they've been going through recently and what's Happening Here we just talked about interest rates and the sector has gotten a boost from the Bank of Canada which has started cutting interest rates that has historically been good has affected the re sector's performance Dennis Mitchell he's the CEO of Starlight capital and he believes that this rally could continue he says when the Federal Reserve joins the party and starts cutting rates you'll see another leg up now opinions are divided on this because it's not all about interest rates they do play a major role but Jeff Olen he's with vision Capital Corp and he reminds us that the re sector is also driven very much by supply and demand uh traditionally he gives the example of the Calgary office Market which struggled due to weak demand uh following the 2014 oil price you can see on this chart here the Orange Line shows that even though interest rates the white line here they were around 1% at the time so let's call that low for those who are old enough to remember when the price of oil crashed Alberta oil companies took a huge hit companies were slashing jobs they were obviously needing less office space than they did before so even though interest rates are low that good oldfashioned Supply demand dynamics of the commercial office space took its toll so as of now uh it's quite possible we're going to see some further growth in the re space as these falling rates could push cash from short-term Investments back into the higher yield rates with these markets being as volatile as they have been lately you might be looking for a balanced investment solution that can help you grow your wealth and generate cash flow consider the bimo balanced ETF this is a fund that invests in a mix of global equity and fixed income ETFs from bog gam the fund rebalances every quarter they do that to maintain optimal asset allocation it gives you access to a diversified portfolio of bimo ETFs that cover various markets and sectors it's all managed by bimo global Asset Management which of course is a trusted name in the industry invest in the bimo balanced ETF today and enjoy the benefits of balance diversification and Professional Management visit bimo etf.com today to find out more this week's pulse poll question which is more critical for Canada's recovery in 2024 job creation or controlling inflation if you watched Monday's video on this channel you're going to know all the latest jobs info here and in the US visit our website to weigh in on this week's poll question Brookfield Asset Management they're thinking about moving their head office from Toronto to New York the goal there would be to tap into the bigger us and Global stock indexes Chief Financial Officer Hadley Pier Marshall explained the reasoning behind the potential move she says moving the company's registered head office to New York makes sense just because we have the largest percentage of our employees our revenues and of asset management located in the US if they do make this change it would allow Brookfield to be included in more stock indices like the Russell 2000 that would make it easier uh for investment funds to invest in the companies its current setup only has 25% of its shares that are publicly traded so if they move forward with this plan it would mean that all shares would be available on the market that would bump its market cap to around $70 billion which would represent the full value of the company now even with this potential move Brookville will still keep its uh Canadian corporation pay taxes in Canada Brookfield Corp its parent company would remain based in Toronto it would still own 73% of the company from a shareholder perspective it's mostly it's a technical shift the company says that it is what they call a non-event by increasing its stock market exposure Brookfield is aiming here to get into more us and Global indices that would bring a broader range of investors and the changes ultimately would help the company grow it's looking to double its assets under management from 1 trillion now to 2 trillion over the next few years I know some viewers aren't going to believe this don't shoot the messenger here I'm just relaying the numbers they show that rent prices in some of Canada's largest cities specifically Vancouver and Toronto they dropped in August according to a report by rentals.ca and urbanation Vancouver's average rent fell by 6% to 3,116 still expensive that is now the 9th month of decline in Toronto rents dipped by 7% down to 2,697 and that continues a months long Trend as well even Calgary we've been seeing some very rapid increases there they saw a smaller a 1.1% drop uh for the first time there since 2021 now now on the flip side some of the smaller markets and they itemize Regina gatan know Quebec City they saw some pretty sharp rent increases Regina rents were up 18% the rent there is now 1418 on average Quebec City saw a rise of 22% the rental prices there are now $175 so these increases in the smaller communities they're contributing to an overall 3.3% National rent increase and this comes despite the decreases that we've seen in these major metropolitan areas um in the smaller markets the demand has remained strong it's pushing the prices up larger markets appear to be cooling off mostly due to increased supply for apartments and weaker population growth that is a wrap for today's video don't forget to vote in the pulse poll as always thank you so much for watching this video we'll see you in the next one