BoC is widely expected to keep rates unchanged at this meeting
Canada went from headlines about a technical recession to posting the strongest monthly job gains in a year and a half. The Bank of Canada will have a chance to weigh in with its latest interest-rate decision on Wednesday.
In four years, my husband has not uttered a single word about soccer. But 10 years of marriage has taught me that come World Cup time, he will suddenly reveal PhD-level knowledge of every country, every player and every controversial offside call while simultaneously losing all ability to pick up the children, manage his schedule or exist as a functioning member of this household during midday games.
In the span of a week, Canada went from headlines about a technical recession to posting the strongest monthly job gains in a year and a half. The Bank of Canada will have a chance to weigh in on conflicting data when it makes its latest interest-rate decision Wednesday. It will be especially interesting because the central bank’s forecast pegged first-quarter GDP growth at 1.5 per cent, not the 0.1-per-cent decline the economy posted instead.
The last time the BoC made a decision, it was pretty hawkish – worried about rising inflation from the war in Iran and resilient growth. A few months later, the narrative has turned on its head with oil prices falling from peak levels and growth stalling.
Then there’s the 88,000 new jobs in May to get your head around.
“Before getting too excited, keep in mind that employment is still up just 0.7 per cent …” Benjamin Reitzes, BMO Capital Markets managing director, Canadian rates and macro strategist, said in a note to clients. “The back-to-back negative GDPs, lower oil and tame core CPI point to a less hawkish BoC next week than in April … though the shift will be less material than if this report was weak.
” The BoC is widely expected to keep rates unchanged at this meeting. Dollarama Inc. has only posted an annual loss once since going public in 2009.
However, 2026 could be the second time. Shares of the dollar-store operator are down 12 per cent so far this year. Sales growth in Canada was viewed as disappointing in its last quarterly results, while progress on transforming the Reject Shop, its Australian business, has been slower. At 35 times forward earnings you can hardly make the case for it being a value stock.
However, recession-proof peers such as Walmart and Costco, which do well in strained consumer environments, are currently trading between 40 and 50 times earnings. Dollarama is expected to show nearly 4-per-cent sales growth for the quarter when it reports Thursday morning. Oracle Corp. became the poster child for excessive debt-fuelled artificial intelligence spending last fall and its shares plunged nearly 60 per cent before bottoming in April.
Since then, the stock has surged more than 50 per cent, but with the company’s quarterly results set for Wednesday, questions are still swirling about whether Oracle can keep pace with data centre buildouts and its ability to finance them. To address financing concerns, Oracle announced in April it’s laying off 18 per cent of its work force. The company’s partnership with OpenAI, once viewed as a key strength, may now be a liability.
“Questions remain around OpenAI’s competitive positioning and implications for Oracle as its primary infrastructure partner,” RBC Capital Markets analyst Rishi Jaluria wrote. He observed that Oracle traded down on reports of OpenAI missing internal revenue targets in late April.
“On the call, we will be looking for commentary on customer diversification within the backlog,” Mr. Jaluria said. The market has been busy dividing software stocks into winners and losers this earnings season, and Adobe Inc. has a chance to sit with the cool kids when it reports results this week. The stock is plumbing the lows of 2019.
With the advent of AI, who needs Adobe or Photoshop anymore when you can just use Grok or ChatGPT to create an image with only a few words? Since the launch of OpenAI’s ChatGPT in 2022, revenue at Adobe has grown at an annual 10-per-cent clip, well below the 20-per-cent sales growth it was enjoying the previous five years.
But with the stock under pressure, Jim Lebenthal, who oversees US$185-billion at Cerity Partners, told me on my podcast he is a buyer.
“The market was really saying companies like Adobe and Salesforce are going out of business,” Mr. Lebenthal said on the show, adding the thesis has gotten carried away on the downside. “Adobe is buying back its shares at 10 times earnings. It has basically no debt on the balance sheet,” he explained. U.S. housing got a second look after Berkshire Hathaway Inc. purchased a small American homebuilder in its first major deal under new chief executive Greg Abel.
The sector has been battered as the U.S. housing market stalls under elevated mortgage rates. Has it hit the bottom yet? Lennar Corp. might offer us a window into what Berkshire saw in the sector when the homebuilder reports on Thursday.
Shares are down 12 per cent so far this year as interest rates seem more likely to go higher than lower in the United States – especially after that robust jobs report on Friday . Mr. Lebenthal said he’s not following Berkshire into this one.
“I can’t get behind it. Not yet. I want to – a guy who has value in his blood, I want to get there. I just can’t see mortgage rates really coming down,” he said on the podcast.
In the Money with Amber Kanwar is Canada’s top investing podcast. New episodes out Tuesday and Thursday. Subscribe at
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