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Canada is freezing ties with the China-led Asian Infrastructure Investment Bank while it probes allegations it is dominated by the Chinese Communist Party, Finance Minister Chrystia Freeland said on Wednesday.

Freeland said she did not rule out any outcome of the investigation, a clear hint that Ottawa could pull out of a bank it officially joined in March 2018.

The bank’s global communications director, a Canadian, said on Wednesday he had resigned and criticized the bank as “dominated by the Communist Party,” allegations which the AIIB said were baseless and disappointing.

“The Government of Canada will immediately halt all government led activity at the bank. And I have instructed the Department of Finance to lead an immediate review of the allegations raised and of Canada’s involvement in the AIIB,” Freeland told reporters.

She said as the world’s democracies worked to limit their strategic vulnerabilities to authoritarian regimes, they must be clear about the ways such governments exercised their influence.

“The review I am announcing today is to be undertaken expeditiously. And I am not ruling out any outcome following its completion,” she said.

Canada freezes ties with China-led AIIB, probes Communist allegations (cnbc.com)

• The People’s Bank of China lowered the rate on 237 billion Chinese yuan ($33 billion) of one-year medium-term lending facility (MLF) loans to some financial institutions by 10 basis points.
• The Shanghai Composite was 0.3% higher while the Shenzhen Component was flat. Hong Kong’s Hang Seng index rose 1.3% and the Hang Seng Tech index jumped by more than 2%.

China cuts a key policy rate for first time in 10 months as economic rebound cools (cnbc.com)

BEIJING — China’s youth unemployment rose to a record in May, while major data missed expectations, according to data released Thursday by the National Bureau of Statistics.

The unemployment rate for young people ages 16 to 24 rose to 20.8% in May, a record and above the high set in April. The jobless rate for people of all ages in cities was 5.2% in May.

Economic stimulus in China would be a win for 3 stocks tied to Chinese consumers

Retail sales for May rose by 12.7% in May from a year ago, below expectations for 13.6% growth forecast by a Reuters poll.

Industrial production rose by 3.5% in May from a year ago, slower than the 3.6% expected by the Reuters poll.

Analysts forecast a 4.4% increase in fixed asset investment for the first five months of the year from a year ago.

Fixed asset investment for the first five months of the year rose by 4% from a year ago, slower than the 4.4% predicted by Reuters.

“The national economy sustained the recovery momentum,” the statistics bureau said in a release in English.

However, the bureau warned of persistent challenges from the international environment and “mounting pressure” on the “domestic structural adjustment,” without elaborating much.

China’s youth unemployment hits a fresh record high in May, major data disappoint (cnbc.com)

The Federal Reserve kept its key interest rate unchanged Wednesday after having raised it 10 straight times to combat high inflation. But in a surprise move, the Fed signalled that it may raise rates twice more this year, beginning as soon as next month.

The Fed’s move to leave its benchmark rate at about 5.1 per cent, its highest level in 16 years, suggests that it believes the much higher borrowing rates it’s engineered have made some progress in taming inflation. But top Fed officials want to take time to more fully assess how their rate hikes have affected inflation and the economy.

The central bank’s 18 policy makers envision raising their key rate by an additional half-point this year, to about 5.6 per cent, according to economic forecasts they issued Wednesday.

The economic projections revealed a more hawkish Fed than many analysts had expected. Twelve of the 18 policy makers forecast at least two more quarter-point rate increases. Four supported a quarter-point increase. Only two envisioned keeping rates unchanged. The policy makers also predicted that their benchmark rate will stay higher for longer than they did three months ago.

“We understand the hardship that high inflation is causing, and we remain strongly committed to bring inflation back down to our 2-per-cent goal,” Fed chair Jerome Powell said at a news conference. “The process of getting inflation down is going to be a gradual one – it’s going to take some time.”

Still, Mr. Powell stopped short of saying the Fed’s policy makers have committed to resuming their rate hikes when they next meet in late July.

One reason why the officials may be predicting additional rate hikes is that they foresee a modestly healthier economy and more persistent inflation that might require higher rates to cool. Their updated forecasts show them predicting economic growth of 1 per cent for 2023, an upgrade from a meagre 0.4 per cent forecast in March. And they expect “core” inflation, which excludes volatile food and energy prices, of 3.9 per cent by year’s end, higher than they expected three months ago.

At his news conference, Mr. Powell made clear that the Fed still regards the still-robust job market and the wage growth that has accompanied it as contributing to high inflation. At the same time, he expressed optimism that lower apartment rental costs, among other items, may help slow inflation in the coming months. He stressed that the Fed wants to see an inflation slowdown actually materialize before holding off on further rate hikes.

“We want to see inflation coming down decisively,” he said.

Immediately after the Fed’s announcement, which followed its latest policy meeting, stocks sank and Treasury yields surged. The yield on the two-year Treasury note, which tends to track market expectations for future Fed actions, jumped from 4.62 per cent to 4.77 per cent.

The Fed’s aggressive streak of rate hikes, which have made mortgages, auto loans, credit cards and business borrowing costlier, have been intended to slow spending and defeat the worst bout of inflation in four decades. Average credit-card rates have surpassed 20 per cent to a record high.

The central bank’s rate hikes have coincided with a steady drop in consumer inflation, from a peak of 9.1 per cent last June to 4 per cent as of May. But core inflation remains chronically high. Core inflation clocked in at 5.3 per cent in May compared with 12 months earlier, well above the Fed’s 2-per-cent target.

Mr. Powell and other top policy makers have also indicated that they want to assess how much a pullback in bank lending might be weakening the economy. Banks have been slowing their lending – and demand for loans has fallen – as interest rates have risen. Some analysts have expressed concern that the collapse of three large banks last spring could cause nervous lenders to sharply tighten their loan qualifications.

The Fed has raised its benchmark rate by a substantial 5 percentage points since March of last year – the fastest pace of increases in 40 years. “Skipping” a rate hike now might have been the most effective way for Mr. Powell to unite a fractious policy-making committee.

The 18 members of the committee have appeared divided between those who favour one or two more rate hikes and those who would like to leave the Fed’s key rate where it is for at least a few months and see whether inflation further moderates. This group is concerned that hiking too aggressively would heighten the risk of causing a deep recession.

In an encouraging sign, inflation data that the government issued this week showed that most of the rise in core prices reflected high rents and used car prices. Those costs are expected to ease later this year.

Wholesale used car prices, for example, fell in May, raising the prospect that retail prices will follow suit. And rents are expected to ease in the coming months as new leases are signed with milder price increases. Those lower prices, though, will take time to feed into the government’s measure.

The economy has so far fared better than the central bank and most economists had expected at the beginning of the year. Companies are still hiring at a robust pace, which has helped encourage many people to keep spending, particularly on travel, dining out and entertainment.

BCE Inc. BCE-T -2.31%decrease is eliminating roughly 1,300 positions as part of a significant reorganization, citing declining legacy phone revenues as well as losses in its news and radio operations.

The roles that are being cut are primarily in management, which will be reduced by about 6 per cent, BCE chief executive Mirko Bibic said in an open letter Wednesday. The company will have 20 per cent fewer executive roles than it did in 2020, he added.

Bell Media, a division of BCE, is closing six AM radio stations and selling three others, subject to approval by the Canadian Radio-television and Telecommunications Commission.

Canadian telecoms have seen their stock prices under pressure recently amid the threat of a looming recession and heightened price competition after Rogers Communications Inc.’s RCI-B-T +1.35%increasetakeover of Shaw Communications Inc.

Mr. Bibic said BCE’s job cuts are “consistent with but smaller than similar reductions announced by other leading technology and media companies across North America in recent months.”

Tech companies worldwide have cut more than 360,000 jobs over the past 18 months or so, and media companies thousands more, as they seek to reduce costs amid revenue squeezes and an emphasis on bottom-line results rather than profitless growth.

Tech giants such as Amazon.com Inc., Alphabet Inc. and Microsoft Corp. have slashed jobs by the thousands as they focus on their most profitable lines of business. In Canada, big companies such as Shopify Inc. have made major cuts, while a slew of smaller players have also culled staff to boost results.

Last month, BCE reported a 15.6-per-cent drop in its profit for the first quarter ended March 31 compared with the same period a year earlier, while its revenue rose by 3.5 per cent to $6.05-billion.

Operating revenue in its media division declined by 5.5 per cent to $780-million, as advertisers pulled back amid unfavourable economic conditions.

Mr. Bibic said on Wednesday that while BCE will continue to invest in key growth areas, the company needs to align its cost structures to the revenue potential of each of its business segments.

Rogers proposes wireless access framework for Bell, Telus, Quebecor customers on TTC subways

BCE’s Bell Canada subsidiary expects to lose more than $250-million each year in legacy phone revenues, Mr. Bibic said. Meanwhile, Bell Media’s news operations are incurring annual operating losses of $40-million and the profitability of its radio business has been slashed in half since the start of the COVID-19 pandemic, he added.

“These are three examples, but they show that to succeed in today’s challenging economic, regulatory and competitive environment and be ready for what comes next, we need to accelerate our shift away from how telecom and media companies have operated in the past,” Mr. Bibic said.

As part of its reorganization, BCE will move to a “single newsroom approach across all brands” in order to make its newsgathering operations more efficient and cost effective, Richard Gray, vice-president of news, said in a memo to his team.

“We and our industry continue to be greatly impacted by a number of challenges including operating losses across all news divisions, the current economic downturn, inflation, a prolonged advertising slump with no signs of immediate recovery and a more challenging regulatory environment that has not adapted to new realities facing media,” Mr. Gray said.

In a separate memo, Bell Media president Wade Oosterman blamed the cuts on “major disruption” to the industry due to a combination of customer cord cutting and the shift of advertising revenue to foreign digital platforms.

“Creating and obtaining the content audiences want has never been more important, but it also has never been more expensive,” Mr. Oosterman said.

Bell Media will also be shuttering its foreign bureaus in London and Los Angeles and scaling back its Washington bureau. At the same time, the company says it will be expanding its Canadian coverage, adding new videographers in St. John’s, Charlottetown, Fredericton and Regina.

Bell Media owns CTV, TSN, CP24 and a number of specialty TV news and radio channels.

Bell Canada, Ontario government won’t say how much money they made from inmate phone calls

Jill Macyshon, CTV’s Manitoba bureau chief, lamented the news on Twitter, writing that “amazingly talented friends and colleagues are losing their jobs today … We were all waiting for the next shoe to drop. It slammed down.”

The six AM radio stations that the company is shutting down are:

• Funny 1290 in Winnipeg
• Funny 1060 in Calgary
• TSN 1260 Radio in Edmonton
• BNN Bloomberg Radio 1410 in Vancouver
• Funny 1040 in Vancouver
• NewsTalk 1290 in London, Ont.

BCE is also planning to sell AM Radio 1150 and AM 820, both in Hamilton, and AM 580 in Windsor, Ont., to a third party.

The inflation rate cooled in May to its lowest annual rate in about two years, the Labor Department reported Tuesday.

The consumer price index, which measures changes in a multitude of goods and services, increased just 0.1% for the month, bringing the annual level down to 4%. That 12-month increase was the smallest since March 2021, when inflation was just beginning to rise to what would become the highest in 41 years.

Excluding volatile food and energy prices, the picture wasn’t as optimistic.

So-called core inflation rose 0.4% on the month and was still up 5.3% from a year ago, indicating that while price pressures have eased somewhat, consumers are still under fire.

All of those numbers were exactly in line with the Dow Jones consensus estimates.

This is breaking news. Please check back here for updates.

• Marketing revenue rose in the first three months of 2023 for several Chinese internet giants — but not Alibaba, the largest of them all by dollar value. That’s on a year-on-year basis.
• Rather than 2023, “the general consensus in the industry is that 2024 is going to be the year of growth and rebound,” said Ashley Dudarenok, founder of ChoZan, a China marketing consultancy.
• Among major U.S.-listed Chinese internet platforms, Pinduoduo saw the biggest year-on-year increase in revenue from ad sales in the first quarter. The company operates a group-buying app known for bargain discounts.

https://www.cnbc.com/2023/06/12/ad-sales-in-china-are-pointing-to-a-soft-recovery-for-the-consumer.html

Published: 6/12/2023 5:56 AM ET

Oil prices fell nearly 3 percent on Monday amid persistent concerns around the demand outlook and ahead of a slew of key central bank meetings due this week.

Benchmark Brent crude futures tumbled 2.5 percent to $72.94 a barrel, while WTI crude futures were down 2.6 percent at $68.34.

Concerns about China’s fuel demand growth and rising Russian crude supply weighed on prices, with Goldman Sachs Group Inc. cutting its price forecast by nearly 10 percent.

Goldman Sachs lowered its Brent outlook for December to $86 a barrel from $95 a barrel, citing signs of increasing supply and slower demand for crude.

The investment bank also revised down its WTI forecast for December from $89 per barrel to $81 despite Saudi Arabia’s announcement of output cuts and efforts by OPEC Plus to limit supplies into 2024.

Meanwhile, investors await the outcome of a slew of central bank meetings this week that should determine the short-term outlook for the global economy.

Traders will pay close attention to the Federal Reserve’s monetary policy meeting scheduled from 13th June to 14th, with the U.S. central bank expected to pause its recent interest rate increases.

The Fed’s accompanying statement as well as key U.S. consumer inflation data will be key as investors look for clues about the outlook for rates.

Meanwhile, more Chinese banks cut deposit rates, signaling monetary easing ahead. There is a chance of China cutting its medium-term lending facility on Thursday.

Analysts expect the European Central Bank to hike rates by 25 bps on Thursday while the Bank of Japan is likely to maintain its current loose policy settings on Friday.

 | Published: 6/12/2023 8:13 AM ET

Canadian shares are likely to open on a mixed note Monday morning, with investors tracking positive lead from Europe, and commodity prices.

With major central banks scheduled to announce their monetary policies during the course of this week, the mood is likely to remain a bit cautious.

The Federal Reserve’s rate decision is due on Wednesday. The U.S. central bank is expected to pause in raising interest rates amid signs of cooling inflation and slowing economic growth.

The Fed’s accompanying statement as well as U.S. CPI data will be key as investors look for clues about the outlook for rates.

The People’s Bank of China, European Central Bank and Bank of Japan are scheduled to announce their monetary policies this week.

The Canadian market ended weak on Friday, moving lower after showing a lack of direction early in the session. The benchmark S&P/TSX Composite Index fell 50.64 points or 0.3% to 19,892.06, closing lower for the third straight session.

The extended pullback on Bay Street came as traders continued to react to the Bank of Canada’s interest rate hike on Wednesday, which came after the Canadian central bank left rates unchanged for two straight meetings.

Asian stocks closed mostly lower on Monday as growth worries lingered, and investors looked for cues from key central bank meetings due later in the week.

European stocks traded higher on Monday ahead of a big week of central bank meetings. The European Central Bank is widely expected to hike rates by 25 basis points on Thursday.

West Texas Intermediate Crude oil futures are down $1.67 or 2.38% at $68.50 a barrel.

Gold futures are up marginally at $1,977.70 an ounce, while Silver futures are down $0.100 or 0.44% at $24.310 an ounce.