Kyle Prevost, editor of Million Dollar Journey and founder of the Canadian Financial Summit, summarizes the week’s top financial stories and what they mean for Canadian investors.
We’re all Volcker-ians now
Paul Volcker is widely remembered as the Federal Reserve governor who used aggressive, contractionary monetary policy to finally tame the high inflation of the 1970s. His legacy looms large today as central banks and markets focus intensely on inflation data and the possibility of substantial rate hikes.
Just as Keynesian fiscal ideas regained broad acceptance after past crises, Volcker’s insistence on tight monetary policy seems to have become the prevailing approach among policymakers and market participants. Investors and traders are treating inflation readings and Fed rhetoric as the primary drivers of asset prices.
Recent U.S. CPI data showing a 0.1% monthly gain and an 8.3% year-over-year rise surprised markets because it was slightly hotter than expected. Even though gasoline prices fell sharply, increases in food, shelter and medical care kept headline inflation elevated. The reaction was swift: the S&P 500 suffered a large daily drop, and technology-heavy indices fared even worse as higher rates hit interest-sensitive growth stocks.
Bond markets also moved decisively in response, with yields rising on renewed expectations that the Federal Reserve will raise rates more aggressively and sustain them for longer. That “higher, faster, for longer” narrative now seems to dominate forecasts and pricing across fixed income and equities.
There remains debate among economists and commentators about how painful policy tightening must be to control inflation without inflicting unnecessary economic damage. For the moment, however, the market is pricing in a Volcker-esque stance — firm, focused, and willing to accept short-term pain to bring inflation down.
Oracle’s revenue beat outpaced profit expectations
Oracle (ORCL/NYSE) dominated the earnings headlines in the U.S. this week. The company reported adjusted earnings per share of USD 1.03, slightly below analyst forecasts, while revenue matched the USD 11.45 billion consensus and grew 18% year-over-year. The stock’s modest decline after the report reflected the mixed nature of the results.
Oracle also finalized its acquisition of Cerner, a major health-data software provider, in a deal that highlights the scale of large U.S. transactions. Oracle’s co-founder and chief technology officer, Larry Ellison, signaled confidence in Oracle’s cloud business by suggesting some large customers may move workloads off competing cloud platforms to Oracle Cloud Infrastructure, a claim intended to highlight long-term growth potential.
In Canada, earnings season delivered fewer headline-grabbing reports, but some domestic brands had notable updates. Apparel retailer Roots, for example, reported a year-over-year revenue increase of more than 20% while still posting a quarterly loss. Management said they expect to navigate the important holiday season without the severe inventory markdowns that have affected some peers.
Guardian and Moshe Milevsky introduce new retirement solutions
In the Canadian retirement-income space, Guardian Capital LP partnered with Professor Moshe A. Milevsky to launch a suite of retirement solutions designed for recent and soon-to-be retirees. Milevsky is a well-known academic in retirement finance, and this collaboration aims to blend actuarial principles with investment management to address longevity and income risks.
Guardian has introduced three distinct products:
- GuardPath Managed Decumulation 2042 Fund: Designed to provide steady cash flow over a 20-year horizon using risk-management strategies to extend portfolio longevity.
- GuardPath Modern Tontine 2042 Trust: A pooled survivor-credit structure that aims to deliver larger payouts to surviving participants after 20 years, based on compounded growth and shared survivorship benefits.
- Hybrid Tontine Series: A combined approach that merges the managed decumulation strategy with the modern tontine structure to offer a more comprehensive retirement income solution.
The Hybrid Tontine example on Guardian’s website illustrates how a hypothetical CAD 100,000 investment might generate annual distributions and, for surviving unitholders after 20 years, a larger lump-sum “tontine” payout. Guardian says its assumptions rest on sound actuarial methods and conservative market outlooks. Fees vary by series: Series A carries a 1.35% management fee while Series F is 0.60%, a notable difference investors should evaluate carefully.
These products are worth considering for retirees concerned about outliving their savings, especially for those who prefer professional management and pooled survivorship benefits as part of a retirement income strategy.
Wealth and happiness: a clear correlation, with notable exceptions
Visual Capitalist recently illustrated the relationship between average wealth per resident and national happiness scores, using Credit Suisse data for wealth. The data show a clear positive correlation: wealthier countries generally register higher happiness scores, though wealth alone does not guarantee the highest happiness rankings.
There are striking outliers that highlight the role of culture, politics and social context. Countries with similar average wealth can score very differently on happiness, and some very wealthy regions do not rank at the top for subjective well-being. Political instability and social stressors in places such as Lebanon and Hong Kong have depressed happiness compared with their wealth levels. Similarly, Japan and South Korea register lower happiness than some less wealthy countries, suggesting cultural and social factors matter as much as material wealth.
Canada performs well on both measures, with solid average wealth per adult and a high happiness score, reflecting a combination of economic prosperity and social factors that contribute to residents’ well-being.
Kyle Prevost is a financial educator, author and speaker. When he’s not on a basketball court or in a boxing ring trying to recapture his youth, he helps Canadians with their finances at MillionDollarJourney.com and through the Canadian Financial Summit.