Macklem: "Don't Blame Me" | BCE Slashing Its Workforce

S&P 500 at All-Time High while Consumer Debt tops $17.5 Trillion.

The Week in Review

It was an momentous week in the markets, as we saw the S&P 500 cross over the 5,000 level for first time in history. The index kept investors on the edges of their seats for a couple of days as it flirted with the record, but finally pushed over the top before the week ended. It’s important to keep in mind that 5,000 is just a symbolic number and makes for great headlines, but it does show how resilient the markets are these days in the face of higher interest rates and challenging economic conditions.

The move over 5,000 came just under three years after the the index closed over 4,000 for first time back in April 2021.

Closer to home, the TSX ended the week virtually flat, and sits about 5% from its peak.

5-Day Returns | Week ending 2/9/2024

As you can see by the above chart, the week started with a whimper, but momentum picked up Wednesday and the Nasdaq and S&P 500 never looked back.

It’s probably still too early to say definitively that a hard landing or recession will be avoided, but the feeling out there is becoming more positive, with the central banks speaking in less restrictive terms, without flat out saying they’ll be lowering rates anytime soon. Weigh in with your opinion in this week’s Poll Question.

We’re well into earnings seasons now, and the current quarterly earnings are solidly more positive than many expected. Based on the two-thirds of S&P 500 companies that have already reported, Q4 net income is projected to rise 2.9% year-over-year.

Another story this week was Bitcoin’s rally, which again sees it trading just above the $48,000 level, after testing the $20,000 level just a year ago.

S&P 500 Weekly Overview

Week ending 2/9/2024 | Market Cap >$100B

S&P TSX Weekly Overview

Week ending 2/9/2024 | Market Cap >$5B


The Relative Strength Indicator (RSI) can provide a signal that suggest a stock is either overbought or oversold. A stock that has an RSI over 70 is considered to be in “overbought” territory. This might suggest that the stock is due for a pullback, however it is not a recommendation to sell. Always perform your own due diligence.

Week ending 2/2/2024 | Most Overbought Stocks, based on 14-Day RSI


A stock that is trading with an RSI below 30 is considered to be in “oversold” territory. This might suggest that the stock is due for a recovery, however it is not a recommendation to buy. Always perform your own due diligence.

Week ending 2/2/2024 | Most Oversold Stocks, based on 14-Day RSI

In this episode of The Pulse:

  • Macklem Talks About Policy Limitations

  • U.S. Consumer Debt Hits All-Time High

  • Arm Share Price Spikes; Short-Sellers Suffer

  • BCE Slashing Workforce

  • Disney’s Roller Coaster Ride

  • Foreign Buying Ban Extended

  • Market Movers


In 2024, will Canada fall into a recession (hard or soft, doesn't matter) or will we avoid one?

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Why does the media post ridiculous headlines like this one I saw this week?

Macklem says “Don’t Blame Me”

Bank of Canada Governor Tiff Macklem made it clear on Tuesday this week that monetary policy has its limits and he pointed directly at Canada's housing affordability crisis.

In a speech delivered to the Montreal Council on Foreign Relations, Macklem emphasized that the Bank's recent interest rate hikes have exacerbated mortgage payments for homeowners, but are not necessarily the root cause of soaring housing costs.

He highlighted that while shelter inflation has become the primary driver of Consumer Price Index growth, the root of the problem stems from deep-seated imbalances in the housing market, not from fluctuations in interest rates.

“Housing affordability is a significant problem in Canada – but not one that can be fixed by raising or lowering interest rates”

Tiff Macklem | Governor of the Bank of Canada

This recognition of the limits of monetary policy comes at a time when governments at various levels are intensifying efforts to address the housing market imbalance, including measures such as capping international student numbers and reducing taxes on purpose-built rental building construction.

Macklem's remarks make you wonder about the Bank of Canada's future monetary policy decisions, particularly concerning interest rates and their impact on shelter costs.

Following Macklem’s speech, analysts expressed differing opinions on the matter, with some interpreting his comments as a signal for a more lenient approach to shelter price inflation, while others perceived a more cautious stance.

Think of challenging dilemma that shelter inflation poses for the Bank of Canada. On one hand, high interest rates contribute to increased housing costs by elevating mortgage payments. On the other hand, lowering interest rates could fuel demand in the real estate market, potentially exacerbating inflationary pressures. It’s almost a damned if you do, damned if you don’t scenario.

But if Macklem’s commentary is taken to heart, at the end of the day there’s only so much the bank can do. He sites numerous other issues that play an even bigger role in keeping the crisis alive.

“Housing supply has fallen short of housing demand for many years. There are many reasons why: zoning restrictions, delays and uncertainties in the approval processes, and shortages of skilled workers. None of these are things monetary policy can address.”

Tiff Macklem | Governor of the Bank of Canada

As his comments confirm, Macklem remains firm in his stance that housing affordability lies largely beyond the scope of monetary policy. He stressed the importance of broader structural reforms to address the housing crisis, including measures to stimulate rental building construction and improve population growth projections.


One of the most popular videos every on our YouTube channel covers off everything you need to know about how our government sponsored pension program works in Canada, like CPP, OAS and GIS. The video is broken down into chapters, so have a look at whatever is most important to you, and bring yourself up to date. Watch it here.

U.S. Consumer Debt at New High

A recent report by the New York Federal Reserve shows that credit card delinquencies in the US spiked by more than 50% in 2023, reflecting a growing financial strain among consumers.

When it comes to total consumer debt, well, that’s now at an all-time high, coming in at $17.5 trillion, with debt in "serious delinquency" – meaning 90 days or more past due – increasing across various categories, particularly in credit cards.

Credit card debt is now $1.13 trillion, and the portion slipping into serious delinquency grew 6.4% in the fourth quarter, marking a sharp uptick from just over 4% at the close of 2022. The New York Fed's quarterly assessment revealed an alarming 8.5% increase at an annualized pace.

Delinquencies weren't exclusive to credit cards; mortgages, auto loans, and other categories also experienced rises.

Despite the surge in delinquencies, the report showed that total debt was rising at a pace similar to what we saw during pre-pandemic times. Household debt was up 1.2% in the quarter, but credit card debt was up 14.5% compared to the same period in 2022.

No surprise here, but the spike in delinquencies coincides with a period of tightening monetary policy by the Federal Reserve, which hiked its short-term borrowing rate by 5.25 percentage points between March 2022 and July 2023. This move, the most substantial in about 23 years, has impacted adjustable-rate consumer debt products, including credit cards.

With these higher interest rates, the typical rate on credit cards went from approximately 14.5% to 21.5% since the tightening began. Although delinquencies are rising from relatively low levels, it’s not a big leap to conclude that a slower economy paired with any increase in unemployment could make the situation worse.

Mortgage debt, meanwhile, increased by 2.8% in 2023, accompanied by a rise in the delinquency rate to 0.82%, up a quarter percentage point from the previous year.


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Softbank All Smiles; Short Sellers Burned

So let me make sure I’ve got this right. Just a couple of short years ago, almost to the day, Nvidia announced it’s effort to acquire the British chip maker Arm had fallen through due to ‘significant regulatory challenges’.

"Nvidia and [SoftBank Group] have agreed to terminate the agreement on February 8, 2022 because of significant regulatory challenges preventing the consummation of the transaction, despite good faith efforts by the parties.”

SoftBank Statement

This week, after reporting its third-quarter earnings, shares of Arm are up 53% year to date, most of that coming in a 48% gain on Thursday alone. What would have been a $50 billion deal had Nvidia been successful is now be worth around $117 billion.

In the earnings report, Arm beat market expectations, driven by growth in both royalty and license revenue. Of note, Arm’s expansion beyond smartphones and into markets like server chips is having a positive impact on performance.

The company also provided strong guidance for Q4, projecting between $850 million and $900 million, compared with the market estimates of $778 million.

For those unfortunates who had short positions in Arm, it’s estimated that a total of $445 million was suffered in paper losses following this share price spike. Year to date, over $7 billion in mark-to-market losses have accumulated. It will be fascinating to watch this stock over the coming days and weeks, as short sellers need to decide whether they’ll be covering to stem the bleeding.

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BCE Slashing Workforce

Bell Media, a subsidiary of BCE Inc., announced this week that it’ll be making massive cuts to its programming and news divisions following its announcement of widespread layoffs and the sale of 45 regional radio stations.

Cuts include ending multiple television newscasts, such as weekday noon newscasts at CTV stations outside Toronto, as well as scrapping weekend newscasts at various stations. The company also plans to replace traditional news correspondent and technician teams with multi-skilled journalists in certain regions. Additionally, programming changes are expected at BNN Bloomberg and CTV News Channel.

The job cuts at BCE, representing its largest layoff in nearly 30 years, will affect all levels of the company, but fewer than 10 percent will be targeted specifically at Bell Media. This follows a trend of layoffs and restructuring within the company, including a previous round of layoffs and station closures in the spring.

And the hits keep coming. BCE is also selling off 45 radio stations to different buyers, citing the decline of the radio business as a reason for divestiture. Financial analysts suggest that BCE's dividend policy and pressure to produce more free cash flow are driving these changes.

The company emphasized the need to adapt to evolving market conditions while navigating regulatory challenges and increasing competition, but those words fell hollow on the government, an in particular with Canadian Heritage Minister Pascale St-Onge.

"I am extremely disappointed in Bell Canada's decision for many reasons. In the past decade, when acquisitions were allowed for those big companies to acquire television stations or radio stations, it came with the promise that they would deliver on news content. And today, they are backing [away] from that promise."

Pascale St-Onge | Canadian Heritage Minister

In 2023, Bell Media’s advertising revenues fell by $140 million compared with 2022, and is now bleeding more than $40 million a year in operating losses.

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Is Disney’s Roller Coaster Ride Over?

There are few iconic companies that have been through the wringer more in recent memory than The Disney Company.

But on Wednesday this week, Disney reported better-than-expected fiscal first-quarter earnings and unveiled some pretty exciting plans for the future. The markets seemed to like what they heard, and shares were up around 7% following the announcement.

Let’s look at some of the quarterly highlights of the earnings report.

  • Disney confirms it’s on pace to meet or exceed cost cutting by at least $7.5 billion by end of fiscal 2024.

  • The company announced a $1.5 billion stake in Epic Games, the maker of Fortnite. It will launch its ESPN streaming service in the fall of 2025.

  • Earnings per shares were $1.22 adjusted, compared with $0.99 expected.

  • Revenue was $23.55 billion vs $23.64 billion expected

  • Net income attributable to the company was $1.91 billion ($1.04/share) up from $1.28 billion ($0.70/share) year over year.

  • Losses for its entire streaming business were $216 million, down from $1.05 billion in Q1 2023.

  • Attributed to price hikes, Disney+ core subscriber fell by 1.3 million from Q4, 2023, but average revenue per user rose.

  • Earlier in the week, Disney announced it will launch a new sports streaming business with ESPN, Fox and Warner Bros. Discovery later in 2024.

Disney also announced a 50% hike in its dividend, declaring a dividend of 45 cents a share, payable July 25 to shareholders of record on July 8. This is the first dividend increase since the company reinstated its dividend in December last year, after it was eliminated early in the Covid-19 pandemic.

Following the meeting, Disney CEO Bob Iger was asked whether he felt the positive results would lower the pressure from activist investor Nelson Peltz, who is trying to shake up the Disney board. Iger said he has no plans to discuss these results with Peltz. His answer was unambiguous.

“The last thing that we need right now is to be distracted in terms of our time, our energy, by an activist or activists that, frankly, have a completely different agenda and don’t understand our company, its assets, even the essence of the Disney brand”

Disney CEO, Bob Iger

Iger added that he has not spoken with Peltz ‘in a while’, and has no plans to speak to him prior to the company’s scheduled April 3rd shareholder meeting.

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Foreign Buying Ban Extended

The battle to improve housing affordability in Canada continues, with the Canadian government announcing that they’re extending the ban on foreign nationals and commercial operations from buying residential property in Canada until 2027.

The ban, which was first announced back in 2022, is hoping to make housing more affordable for Canadian families by taking speculation out of the market.

"By extending the foreign buyer ban, we will ensure houses are used as homes for Canadian families to live in and do not become a speculative financial asset class.”

Chrystia Freeland | Finance Ministor

There are, of course, skeptics of the ban, those who point out that in reality, a very small portion of ownership falls into these categories in the first place, and feel the government would be better off directly assets to other housing initiatives. In one example, in 2021, only around 1.1% of home sales in British Columbia involved a foreign buyer.

There will be exceptions to the ban, notably international students, refugee claimants, temporary workers and buildings with four or more residences or in less populated areas.

Market Movers

Top 10 Weekly Gainers

TSX, NYSE & Nasdaq Exchanges | Market Cap >$10B

Top 10 Weekly Losers

TSX, NYSE & Nasdaq Exchanges | Market Cap >$10B

In Other News this Week

💸 A Colorado Regulator slapped Suncor with a US $10.5 Million fine for violating environment regulations.

🛬 Troubles continue to plague Boeing, with the news that the FAA is now planning to increase the level of oversight for the company. More

🫰 A lot of Canadians own shares of Brookfield Asset Management, and were no doubt happy to hear of a 19% dividend hike. Full Story 

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