Every week we bring you a roundup of the world’s biggest travel, currency, and business news. This week: 30% chance that the Canadian housing market will collapse, Trump will renegotiate NAFTA, the US may ban laptops on European flights, the TSX was hit hard on Wednesday, inflation in Canada steady, Canada and Bombardier fire back at Boeing, Brazil’s stock market hit by government corruption allegations, and Abenomics may be working.
Canadian housing market
According to Goldman Sachs, Canada has one of the most at-risk housing markets in the G-10 with about a 30% chance of an ‘adjustment’ in the next two years. New Zealand and Sweden both fare worse with a 35%-40% chance of going belly up. The investment bank made the assessment based on: house prices to rent ratio, house price to household income ratio, and house prices adjusted for inflation. Goldman also noted that it appeared the supply of new homes was outstriping demand for new homes.
NAFTA
The Trump administration intends to begin talks with Canada and Mexico about renegotiating NAFTA “as soon as practicable” according to a letter delivered to Congress by US trade representative Robert Lighthizer. A 90 day consultation period will now take place before negotiations begin to “modernize” NAFTA. Technology and the global economy have both changed significantly since the deal was first signed so it may benefit from updates, but critics fear that Trump’s protectionist rhetoric could translate into protectionist policy. Tensions between Mexico and America have been high since Trump was elected, and recent trade disputes with Canada over softwood lumber and dairy products have also made headlines.
Europe Laptop Ban would be costly
A proposed ban on laptops on flights between Europe and North America could costs travellers up to US$1 billion per year. The US already moved to ban laptops on flights from a number of Middle Eastern and North African airports. Many flyers rely on their laptops to work during their flights, and International Air Transport Association (IATA) argues that the ban would cost US$655 million in lost productivity, US$216 in travel delays and US$195 in “reduced well-being.”
TSX Falls
The Toronto Stock Exchange suffered its largest loss on the year on Wednesday, falling 269.65 points amid concerns over political uncertainty in Washington. Gold rose US$22.30 to US$1,258.70 on the New York Mercantile Exchange. The CAD hit 73.45 cents USD, down from 73.55 cents US on Tuesday, but has rebounded to 73.84 cents USD at the time of writing.
Canadian inflation
The national inflation rate held steady at 1.6% in April, but gas prices rose 9.5% this month, and are up 16% year on year. Food prices have fallen 1.1% year on year, while transportation and shelter are both up 2.2%.
Boeing vs Bombardier
The Canadian federal government told Boeing not to take their contracts with the Canadian government for granted. The statement follows accusations made by Boeing that Canada is unfairly subsidising Bombardier’s CSeries jet allowing them to sell it below market prices and undercut competition like Boeing. The US Commerce Secretary Wilbur Ross backed the claim which will be heard by the US Department of Commerce. Chrystia Freeland, Foreign Affairs minister, disagreed with the decision.
Brazil’s Stock Market hit hard
Brazil’s stockmarket was halted as stocked fell over 10% following huge corruption allegations made against President Temer. The fall in stock prices caused an automatic ‘circuit breaker’ to pause trading.
Japan growth
Japan’s economy grew at an annualized rate of 2.2%, the fastest rate in a year. It represents the longest period of growth in over a decade suggesting that Abenomics (named after Prime Minister Shinzo Abe) is having the intended effect.
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