Hi Alvin,

Nigel D’Souza, our Financial Services Analyst, joined BNN Bloomberg to discuss his reaction to the Bank of Canada keeping rates on hold at its January meeting this week.

Nigel noted he was surprised by the decision to hold rates steady, but expects hikes to begin in the coming months.

“The cover was there to hike the policy rate without surprising the market, and I’m not entirely sure why they didn’t take advantage of that opportunity,” he said. “Based on the Bank of Canada’s own research, they are well behind the curve in controlling inflation. I think we still have to have a pretty quick and accelerated normalization of rates.”

Nigel remains bullish on the bank sector because higher interest rates benefit the sector’s profit margins. “It is certainly a tailwind to the top line and bottom line.”

But at some point in a cycle of rising interest rates, concerns will shift to the pressure rising rates place on overleveraged consumers and businesses.

“If you look at the last hiking cycle by the BoC, which was in 2018 when it tried to normalize interest rates, the Canadian banking sector actually underperformed the broader market because the market and investors were concerned that rising debt service costs would translate into rising credit losses.”

Watch the replay: Canadian banks stand to benefit once the BoC hikes interest rates

For more on our banking sector coverage, contact sales for subscription options.

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Veritas President and CEO Anthony Scilipoti about Canada Goose and what is actually in its parkas: I wonder how many people know this about $GOOS parkas $DUCK (with an excerpt attached from our recent report on GOOS)

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Upcoming Accounting Training

Our long-term clients and followers know that we offer an advanced accounting training course every year.

Last year’s course, titled Staying Vigilant, was designed as a wake-up call as we believed the markets had become complacent. Equity was free, and it was easy to make money. No one was paying attention to cash flows or valuations. It was all about growth, growth, and more growth.

As the year waned, the growth stories did too, with stocks like Lightspeed, Nuvei and Sunrun finishing far, far below their highs. Unfortunately, the right side of the chart is often steeper than the left side.

This year, the working title for our training is “Don’t Get Fooled Again.” (with full compliments to the 1970s song by The Who). The popularity of our Accounting Alerts for our clients on Lightspeed, Nuvei and Sunrun showed us that there is a great appetite to dig deep into the accounting of growth stories.

We will be opening up our training to all interested parties again this year. Stay tuned.