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"A Structural Change is Upon Us"
Bank of Canada Governor Tiff Macklem's Frank Warning

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The Week in Review
Weekly Market Recap: U.S. and Canada
Well, this week sure was a rough one! It was a tough week for markets as all major indices ended lower. Sentiment shifted sharply mid-week leading to a broad selloff on Thursday and Friday, which pushed everything into negative territory. The TSX showed relative resilience, while U.S. indices struggled, particularly the Dow Jones, which saw the steepest losses.
In terms of performance, the Dow Jones dropped 2.49%, leading the declines. The Nasdaq 100 wasn’t far behind, shedding 2.32% as tech stocks slumped. The S&P 500 fell 1.72%, while the TSX fared slightly better with a 1.30% decline.

Week ending February 21, 2025
Major Economic Stories
This week’s economic data focussed on Canada. Inflation crept higher and retail sales showed signs of slowing. The Bank of Canada’s stance on monetary policy remained the focus, along with concerns over potential trade disruptions.
Here’s the latest update on Canada’s biggest economic releases.
Canada Inflation Rises
Canada’s inflation rate inched up to 1.9% in January, pretty much in line with expectations.

Inflation has now remained at or below the Bank of Canada’s 2% midpoint target for six consecutive months, reinforcing expectations of further rate cuts. Rising energy prices pushed transportation costs higher, while food prices declined due to tax cuts.
Inflation for transportation jumped to 3.4% from 2.3% in December.
Gasoline prices were up 8.6% compared to 3.5% in December.
Shelter inflation held steady at 4.5%.
Food prices fell by 0.6% after a 0.6% increase in December.
Read the Full Release
Canada Core Inflation Hits 2.1%
Core inflation, which excludes volatile components, rose for the second straight month.

At 2.1%, Canada’s core inflation rate is now at its highest level in nearly a year. This may complicate the Bank of Canada’s decision-making process as it balances inflation control with potential rate cuts.
Core inflation increased from 1.8% in December to 2.1%.
Monthly core consumer prices rose 0.4%, rebounding from a 0.3% drop.
The BoC’s trimmed and median measures both stood at 2.7%.
Headline inflation remained within the central bank’s target range.
Read the Full Release
Canada Retail Sales Dip 0.4%
Retail sales fell in January, marking the first monthly decline in seven months.

Following a strong December, retail turnover took a step back, though overall spending remains strong. The decline was led by softer auto and building materials sales, while food and apparel continued to perform well.
Retail sales fell 0.4% after a 2.5% surge in December.
Food and beverage sales jumped 3.5%.
Gasoline sales rose 4.2%, benefiting from higher fuel prices.
Annual retail turnover increased 3.6%, the strongest gain in nearly two years.
Read more here.
Key Takeaways From this Week’s Economic News
Rising Core Inflation Could Delay Rate Cuts
It’s great that Canada’s headline inflation remains tame, but the steady rise in core inflation could complicate the Bank of Canada’s decision-making. At 2.1%, core inflation has hit its highest level in nearly a year, with the BoC’s preferred trimmed and median measures sitting at 2.7%. This is well above the 2% target, so there are still underlying price pressures.
This puts Bank of Canada Tiff Macklem and his team of policymakers in a difficult position. On one hand, the economy has slowed, and markets are expecting rate cuts later this year. On the other, if core inflation continues creeping higher, the Bank may have no other choice other than to delay easing. The longer inflation remains elevated, the more likely it is that expectations become entrenched, making future rate cuts riskier.
Trade War Fears: Canada’s Economy at Risk
Macklem issued a stark warning about the potential economic damage from a U.S.-Canada trade war. If the U.S. imposes steep tariffs - 10% on energy and 25% on other imports - the Bank estimates Canadian GDP could shrink by nearly 3% over two years. Exports would plunge 8.5%, consumer spending would decline, and business investment would take a significant hit.
The bigger concern (hard to imagine ‘bigger’, cause it’s already pretty bad news so far) is that this wouldn’t be a short-term shock. Macklem stressed that unlike during the pandemic, the economy wouldn’t see a quick recovery once tariffs are imposed. The long-term path for growth would be 2.5% lower than a no-tariff scenario. Canada is heavily dependent on U.S. trade, so this would be a structural shift, not a temporary downturn. While monetary policy could help smooth the decline, it wouldn’t be enough to undo the damage. Markets are already wary of trade tensions, and any further escalation could bring more volatility to both stocks and the Canadian dollar.
The Great Wealth Transfer: Housing Prices at Risk?
Canada is in the middle of an unprecedented wealth transfer, with $1 trillion set to move from baby boomers to younger generations by 2026. A huge portion of this wealth is tied to real estate, and much of it is expected to flow back into the housing market as down payments for millennial and Gen X buyers.
This raises a key question: Will this transfer keep home prices elevated despite affordability concerns? In cities like Toronto and Vancouver, where prices are already stretched, the injection of inherited wealth could further drive up demand. This trend is already visible; CIBC reports that 31% of first-time homebuyers received financial help from family in 2024, up from 20% in 2015. If supply remains constrained, we’ll see continued upward pressure on prices, making homeownership even less accessible for those without family support. The long-term implications of this wealth divide could reshape Canada’s housing market and economic landscape.
THIS WEEK’S POLL QUESTION
(Results in Next Week’s Newsletter)
You’d think Canada’s win over the U.S. in the 🥅 4 Nations Face-Off would have settled the score, but President Trump has once again ramped up his criticisms of Canada, sparking debate about our relationship with the U.S. This leads me to this week’s poll question: Do Trump’s attacks on Canada make you sad, mad, or do you see it as just politics as usual?
Share your thoughts by voting this week!
"Donald Trump is continuing his attacks on Canada. Does this make you more…?" |
LAST WEEK’S POLL RESULTS
Last week I asked which you felt was a bigger risk for you, Inflation or Recession. Recession came out on top, although there was also plenty of support for inflation being your biggest concern.

Comments of the Week
Inflation
“I went with inflation... Why? Two primary reasons...
1) When things cost more, there's less excess cash available to invest which usually results in less portfolio growth. Less cash to invest across the population, results in less buying demand, which eventually results in lower share prices.
2) I've always looked at recessions as an economic reset, while inflation can persist over longer periods. Not to mention, the longer inflation persists, the greater possibility of stagflation IMO, which is a bit chilling to consider.
No good answers here...” - callawayguy
“Canada needs strong leadership to guide our economy through inflation & possible recession. Unfortunately we have very little strong leadership in Canada. If we look at the parties & their current leadership we see a huge lack of strength, wisdom and direction. The other day I took a hard look at our leaders.
1) Jagmeet SIngh (NDP) although I have a certain level of respect for Mr Singh and his leadership of the NDP I believe he is to left for the world of today.
2) Trudeau is now gone so no need to comment.
3) Con. P.Poilievre The party abbreviation is very descriptive of this leader. Not much substance & let’s remember he has no experience working in the private sector, always working for Gov. plums whether provincial or federal. Using his contacts to climb the ladder never seems to have climbed due to ability. Harper & Musk’s boy just doesn’t cut it. Now that explains why Conservative support has evaporated.
4) Liberals - My belief is that the new leader & Prime Minister will be Mark Carney. The only person who has the ability to deal with our economy, issues in Canada that must be dealt with 1) Domestic Tariffs 2) Diversifying our economy.
Canada needs a leader, who can start us thinking like we thought after Vimy Ridge & D-Day , when we implemented the Constitution Act, when Lester Pearson was awarded the Nobel Peace Prize, when Canada invented & created the Avro Arrow, when we survived the Financial crisis better than Europe and much better than our untrustworthy acquaintance below us.
Yes we must show the flag, we must do everything we can to show our displeasure with the USA and straighten them out.
Its time for Canada to annex Alaska which will become part of Yukon, Canada, and the gulf of Alaska will be renamed The Yukon Gulf. We must also start negotiations with the States of Washington, Oregon & California to complete their Unification with the Canadian Confederation.
As history has taught us with the Rise & Fall of the Roman Empire, we are now watching the Rise & Fall of the American Empire. Let us not forget the Battle of Beaver Dams where Laura Secord & the boys made very short work of American troops who tried a sneak attack on Canadian soil. Thank you.” - entender1012
Recession
“Trump is going to crash it all, I think shortly term it will hit Canada, but long term we will be better off with less involvement with them. I am now 90% cash and looking at Canadian investments.” - kellyo2515
TRADE WARS & THE ECONOMY
Bank of Canada Warns Trade War Could Slash GDP

A U.S.-Canada tariff war could shrink Canada’s GDP by nearly 3%.
Canadian exports could decline 8.5% within a year of tariffs.
Consumer spending may drop over 2% by mid-2027.
Business investment could fall 12% by 2026 due to higher costs.
Bank of Canada Governor Tiff Macklem issued a stark warning about the risks of a U.S.-Canada trade war, when he said that new tariffs would have lasting economic consequences. If the U.S. imposes a 10% tariff on energy and a 25% tariff on other goods, Canada’s economic growth could be severely impacted, wiping out gains for two years.
Deep Economic Impact
Macklem outlined a scenario where Canadian exports to the U.S. become more expensive, leading to an 8.5% decline in demand within a year. Lower export revenues would reduce household income, weaken consumer spending, and push inflation above the 2% target. He stressed that this isn’t a short-term issue; growth would be structurally lower by 2.5% even after the initial shock.
(How are we all feeling so far? 😢)
No Quick Recovery
Macklem warned that unlike the pandemic, there would be no economic bounce-back. He says that monetary policy has limits in countering such a supply shock.
“Monetary policy cannot restore the lost supply. At most, it can smooth the decline in demand.”
And the hits keep coming.
The depreciation of the Canadian dollar would further raise import costs, worsening inflation risks. So even though policymakers are trying to do what they can to mitigate damage, the outlook for Canada’s economy under a tariff war is bleak.
(On that note, don’t forget to answer this week’s poll question.)
Read the Full Story here.
PERSONAL FINANCE
Canada’s $1 Trillion Wealth Transfer Reshapes Housing Market

$1 trillion is set to transfer from baby boomers to younger generations.
Real estate wealth is a major driver of this shift.
31% of first-time homebuyers in 2024 received family financial help.
Rising inheritance gifts could worsen affordability challenges.
Canada is undergoing an unprecedented generational wealth transfer, with baby boomers passing down massive amounts to their millennial and Gen X children. Experts say this shift, which is largely driven by real estate, will have major economic and social implications - particularly for housing affordability.
Impact on Housing Prices
A large chunk of this inherited wealth is expected to flow into home purchases. A growing number of first-time buyers are receiving parental financial support, and CIBC reports that 31% of them got help in 2024, up from 20% in 2015. With supply constraints in key cities, this will most likely keep home prices elevated, making it harder for those without family support to enter the market.
Widening Wealth Gap
This transfer is also deepening economic divides. A Statistics Canada study found that people whose parents were homeowners are twice as likely to own homes themselves. Meanwhile, Indigenous communities and new immigrants - who historically had limited access to property ownership - are less likely to benefit from this shift. Some experts are suggeting Canada should consider an inheritance tax, similar to other G7 nations, to address inequality.
Read the Full Story here.
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TRADE & THE ECONOMY
Interprovincial Trade Barriers Costing Canadians Billions

Trade barriers add 7-22% in costs to interprovincially traded goods.
Food prices could be $200 higher per year due to restrictions.
Construction and auto costs are inflated by differing provincial regulations.
Eliminating barriers could boost competition and lower consumer prices.
Even though we’re one single country, Canada has an extremely fragmented internal market, with different provinces enforcing separate regulations on everything from food labeling to trucking rules. Experts argue that these trade barriers drive up costs for consumers and businesses, and limit economic efficiency.
How Barriers Impact Everyday Prices
For us consumers, interprovincial restrictions add hidden costs to essentials like food, housing, and vehicles. The Macdonald-Laurier Institute estimates that trade costs inflate prices by up to 22% in some industries. A key example is meat processing - most Canadian beef is produced in Alberta, but due to regulatory hurdles, prices are high nationwide. There are similar inefficiencies for wine, dairy, and even automobiles, where different recycling and disposal rules increase costs.
Push for Reform
The federal government is now looking to reduce these trade barriers, a move that could deliver significant cost savings. A Statistics Canada study suggests that removing restrictions could add billions to Canada’s GDP by improving productivity and competition. However, resistance from provincial governments and industry groups may slow progress.
Read the Full Story here.
THE BANK OF CANADA
Bank of Canada to Maintain 2% Inflation Target

BoC reaffirms commitment to the 2% inflation target.
Core inflation measures may be adjusted to reflect economic volatility.
Housing price inflation is a growing concern for monetary policy.
Supply shocks will be a key focus of future reviews.
Bank of Canada Governor Tiff Macklem confirmed that the central bank will maintain its 2% inflation target, closing the door on any rumours of a potential policy shift. Some economists had speculated about adopting a more flexible approach, but Macklem stressed that now is not the time to question a framework that has provided stability.
Why It Matters
With inflation volatility in recent years, some policymakers are arguing for alternatives like nominal GDP targeting. However Macklem has pushed back and says that clarity is crucial in anchoring expectations. The BoC will instead refine its core inflation metrics to better account for supply shocks and external disruptions.
Housing in Focus
Macklem did acknowledge that rising shelter costs are a growing challenge. "We must consider how monetary policy affects housing demand and supply," he said. The central bank will examine whether housing inflation is distorting its core measures, suggesting that future rate decisions may weigh shelter inflation more heavily.
Read the Full Story Here.
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OTHER NEWS FROM THE PAST WEEK
5 Reasons Germany is Facing Political and Economic Uncertainty
Germany is grappling with economic challenges as political tensions rise ahead of upcoming elections. Trade relations with China and Russia remain a key concern, with policymakers navigating a delicate balance to maintain stability.
Loblaw Faces Backlash Over PC Optimum Points Changes
Loblaw is under fire after making it harder for customers to redeem PC Optimum points. Consumers expressed frustration over reduced rewards, sparking renewed scrutiny of corporate loyalty programs and customer trust.
January Home Sales Drop Sharply as Prices Hit High
U.S. home sales plunged in January as high prices and mortgage rates sidelined buyers. While demand remains strong, affordability challenges continue to weigh on the market, raising concerns about future price stability.
Trump’s Boeing Deal Faces Air Force One Problems
Boeing is struggling with delays and cost overruns on the Air Force One project, a deal originally struck under former President Trump. The contract’s fixed-price structure has led to mounting financial losses for the company.
German Court Rules Birkenstock Sandals Are Works of Art
A German court has ruled that Birkenstock sandals qualify as art, granting them new intellectual property protections. The decision could set a precedent for fashion brands seeking legal recognition beyond traditional trademarks.
Behind the Brand…Because business isn’t always just about dollars and cents… | ![]() |
In 1896, Henry J. Heinz introduced the "57 Varieties" slogan, despite already producing over 60 products. He chose the number 57 because "5" was his lucky number and "7" was his wife's favorite, believing it had a psychological appeal. This quirky branding decision has stood the test of time, remaining a key part of Heinz's identity.
Market Movers
Heat Map Note: Normally in this exact space, I post the “Heat Maps” for the week’s returns in the S&P 500 and the TSX. This week, I have omitted them.
Please take just a moment to let me know how important these are to you.
Thank you for helping make The Pulse the best it can be.
How important are the weekly "Heat Maps" for you? |
Top 10 Weekly Gainers

TSX, NYSE & Nasdaq Exchanges | Market Cap >$10B | Week ending February 21, 2025
Top 10 Weekly Losers

TSX, NYSE & Nasdaq Exchanges | Market Cap >$10B | Week ending February 21, 2025
10 Most Overbought Stocks

10 Most Oversold Stocks

Week ending February 21, 2025 | Most Oversold Stocks, based on 14-Day RSI
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.
📉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.
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