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         Bank of Canada will consider another half-point hike: Macklem
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         Dip Buyers Bail on China Tech ETF as Faith in Rebound Wanes
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         Canadian Activists Ask Bankers to Close ESG Debt Loopholes
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         Treasury Tax Season Provides Preview of Fed’s Balance Sheet Unwind
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         AMLO Plans Measures to Shield Mexico From Food Price Volatility
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         Bitcoin’s ‘Stuck at the Moment’ as Record Cash Flees Crypto ETFs
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         SoftBank Cuts Back Spending, Leaving Startups Desperate for Cash
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         Ontario pension fund hunts real estate, infrastructure investments on
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         U.S. stocks decline ahead of big tech earnings week
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         Cathie Wood’s ARKK Flirts With 2-Year Low as Short Sellers Eye Possible
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         Brazil Economy Chief Tests Positive for Covid After U.S. Trip
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         Barclays Traders Made Over $600 Million in Emerging-Market Havoc
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         Stocks Risk Falling Another 10% as Rates Rise, Gartman Says
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         China Covid Shock Sees Beijing Consider Risky Debt Option Again
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         HNA Concludes Overhaul, Advisers in Demand: Evergrande Update
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         Xi’s Finance Crackdown Grows as More Than 40 Officials Ensnared
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         China’s Restructuring Firms Staff Up for Record Wave of Defaults
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         U.K. Property Asking Prices Beat Record in Market ‘Frenzy’
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         Dubai Ruler Approves $1.7 Billion Housing and Land Project
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         Bitcoin’s ‘Stuck at the Moment’ as Record Cash Flees Crypto ETFs
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         Oil falls below US$97 as China’s lockdowns imperil demand outlook
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         The Long Shadow of Germany’s Top Putin Ally Is Hemming in Scholz
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         Russia’s Rosneft Fails to Award Big Oil Tender With Buyers Wary
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         Exxon Executive Is ‘Crushed’ at Hurt Caused by Pride Flag Decision
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         Russia’s Norilsk Nickel Keeps Pumping Out Metal
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         GM’s Corvette Is Going Electric 
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         Indonesia Pushed to Ask Ukraine to G-20 Summit Alongside Putin
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         Russia's Seaborne Oil Flows Jump to 4 Million Barrels a Day
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         South Africa’s ANC Suggests State Firm Ownership Model Is Dying
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         Russia’s No. 2 Gold Miner Shuns Local Sales in Favor of Exports
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         Renewable Energy Burst Sends Dutch Power Prices to Lowest Ever
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         Commodities Titan Cargill Plans to Deploy Green Ships by 2030
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         India’s Sprng Energy Nearing $1.8 Billion Sale to Shell
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         Weather Prediction Startups Grow as More Volatile Storms Loom
   
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         The Daily Chase: Post sell-off market watch; Big tech earnings to come
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         Vancouver's jammed warehouses show why inflation is so sticky
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         Canadian inflation blows past expectations, spiking to 6.7%
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         Canadian retail sales bounce back after most COVID curbs lift
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         Macklem's words boost bets on 75 basis-point-hike in Canada
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         BoC in 'catch-up mode' after falling behind on rates: National Bank
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         The Daily Chase: Central bankers talk tough; 'Skin in the game' in
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         Powell backs front-loading Fed rate hikes, says half-point on table
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         That costs what?! A look at how much some consumer prices went up in
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         Wages need 'big-time' catch-up in Canada as inflation rages: BMO
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         Ontario Teachers' looks to increase venture capital investments
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         The Daily Chase: Inflation spreads (but not to wages); Ackman bails on
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         'Solid case' for Bank of Canada to deliver full-point hike: Scotia
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         Canada tops US$7B in orders for 3-year U.S. dollar bond sale
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         The Daily Chase: Inflation at 31-year high; Netflix punished by
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         Canada dodges the worst as IMF slashes global growth outlook
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         Canadian manufacturers hope for exemptions from latest Buy American
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         The Daily Chase: Canadian housing outlook; Natural gas rally stalls
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         The Daily Chase: Warning signs in bond market; Twitter plays defence
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         China joblessness climbs, spending drops on COVID lockdowns
   
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         Sri Lanka Cabinet Clears Proposal to Clip President’s Power
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         Turkish Businessman Gets Life in Prison in 2016 Coup Case
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         North Korea Holds Nighttime Military Parade, NK News Says
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         AMLO Plans Measures to Shield Mexico From Food Price Volatility
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         The Long Shadow of Germany’s Top Putin Ally Is Hemming in Scholz
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         Brazil Economy Chief Tests Positive for Covid After U.S. Trip
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         Exxon Executive Is ‘Crushed’ at Hurt Caused by Pride Flag Decision
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         Macron’s Pledge to Unite France Is Already Falling on Deaf Ears
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         South Africa’s ANC Suggests State Firm Ownership Model Is Dying
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         Hong Kong Foreign Journalists Club ‘Suspends’ Human Rights Award
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         China Lockdown Amps Up Inflation Scare for Global Markets 
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         Sri Lanka Opposition Gets Enough Support for No-Confidence Vote
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         Macron beats Le Pen to win second term as French president
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         South Africa’s Ruling Party Weighs More Private Involvement in Economy
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         Praying Football Coach Tests Religious Rights at Supreme Court
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         End of Cheap-Debt Era Won’t Be Easy, Finnish Finance Chief Says
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         U.K. Labour Party Vows to Scrap Non-Dom Tax Status Held by Chancellor
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         Twitter Suspends Far-Right Dutch Leader for Tweet Blasting Islam
   
    * Technology
       * News
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       * 
         Pentagon Taps Former Lyft Executive for New Data and AI Post
       * 
         Dip Buyers Bail on China Tech ETF as Faith in Rebound Wanes
       * 
         North Korea Holds Nighttime Military Parade, NK News Says
       * 
         Musk Says He Wants His Worst Critics to Stay on Twitter
       * 
         Bitcoin’s ‘Stuck at the Moment’ as Record Cash Flees Crypto ETFs
       * 
         Huawei Pumps $22 Billion Into R&D to Beat U.S. Sanctions
       * 
         SoftBank Cuts Back Spending, Leaving Startups Desperate for Cash
       * 
         Flying Taxi Hub Startup Nears $25 Million in Fresh Funding
       * 
         Cathie Wood’s ARKK Flirts With 2-Year Low as Short Sellers Eye Possible
         Bounce
       * 
         Don’t Pop That Cypto-Cork Just Yet on Wine NFTs
       * 
         Meta to Open Retail Store to Showcase Virtual Reality Hardware
       * 
         Amazon Union Election Kicks Off at Second New York Warehouse
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         GM’s Corvette Is Going Electric 
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         Dubai’s ICD Explores Sale of $1 Billion IT Services Firm
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         Warren Buffett to Host Final Charity Lunch for San Francisco’s Glide
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         Wall Street Firms Make Crypto Push to Catch Up With ‘Cool Kids’
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         Swvl Buys Turkish Transit Firm Volt Lines in Latest Deal Spree
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         Oura Ring Startup Brings on New CEO to Lead Its Pre-IPO Growth Push
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         Activision Misses Earnings Estimates on Lackluster Call of Duty
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         PayPal Analysts See a Lot to Like, But Not Right Now
   
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         Chocolate bunnies can teach us to save our food supply
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         The Fed has made a U.S. recession inevitable
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         America's oil reserve weapon risks misfiring
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         Four-day workweeks can burn you out
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         U.S. Fed expects a soft landing. Don't count on it
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         Markets are pushing Fed into developing-economy territory
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         Commodity traders go from bonanza to bailout plea
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         Putin's war shows West must clean up dirty money
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         Salary transparency is good for everyone
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         Microsoft's US$69B Activision deal could be a blunder
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         What if the oil market bulls are wrong and this lonely bear is right?
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         Canada's trucker protest may spread from Ottawa to U.S.
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         Omicron came for Lululemon. Which retailer is next?
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         Millennials are finally spending like grown-ups
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         Many retirees have a big problem. It isn't what you think.
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         Apple's US$3T valuation should unnerve investors
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         Your cold brew won't survive a hot world
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         Here's everything you need to know about the global supply chain crisis
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         Black Friday bargain hunters, prepare to be disappointed
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         Should you know how much your colleagues are paid?
   
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         Dip Buyers Bail on China Tech ETF as Faith in Rebound Wanes
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         Bitcoin’s ‘Stuck at the Moment’ as Record Cash Flees Crypto ETFs
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         Cathie Wood’s ARKK Flirts With 2-Year Low as Short Sellers Eye Possible
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         Food Supply Fears Send Record Cash Flowing to Long-Forgotten ETF
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         Scaramucci’s Crypto Pivot Comes With an Eye on Tripling Assets
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         Stocks Will Shake Off Gloom and Shine, Defiance’s Jablonski Says
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         Cathie Wood Says Fed Won’t Hike as Much as Market Priced In
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         K-Pop’s Ubiquitous Influence Will Reach Into the World of ETFs
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         Fidelity Bulks Up Its Thematic Lineup With Crypto and Metaverse ETFs
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         Bitcoin ETFs Set to Roll Out in Australia to Test Crypto Demand
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         A Bond Hedge Crushes All Rival ETFs to Post 57% Gain
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         Treasuries Rally, Emboldening Bond Bulls Who See an Inflation Peak
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         Roundhill Waits Eight Months to Launch Its WEED ETF on 4/20
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         Medical-Device Stocks Surge Most Since 2020 After J&J Results
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         Cathie Wood’s Ark Now Sees Tesla Shares More Than Quadrupling
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         Record Rout Hits $19 Billion Treasury ETF as Bond Slide Deepens
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         New SPAC ETF Plots Wall Street Launch Even as the Market Craters
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         Do-Good Funds Are Booming as ETF Launches Double From Last Year
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         The Great Emerging Markets Debate Grows More Fraught
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         Skittish Stock Traders Are Bracing for $2 Trillion Option Expiration
   
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         First female bank CEO in Canada leads with younger self in mind
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         Company holiday parties are making a comeback, but many employers have
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         Elon Musk and Jeff Bezos now worth almost half a trillion dollars
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         Jane Fraser has a plan to remake Citigroup while tormenting rivals
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         ‘Forever changed’: CEOs are dooming business travel — maybe for good
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         National Bank names Laurent Ferreira CEO, succeeding Vachon
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         The remote-work czar is the new shortcut to the C-Suite
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         Olympics boss aims to put 'most-followed' Tokyo games on track
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         Wellness resorts eye long COVID treatments as new moneymaker
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         Ghosn accomplice says he 'deeply regrets' helping him escape
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         Gates divorce speeds divergence of separate investing goals
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         Buffett exits as Gates Foundation trustee, sidestepping rift
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         Gates’s divorce casts harsh glare on US$170 billion money manager
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         Machin joins Serendipity Capital board after quitting CPPIB
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         Billionaires back startup that wants to let anyone be a landlord
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         World's richest face tax blow after 40% wealth surge to US$8.4T
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         WestJet CEO Sims to retire, airline begins search for successor
   
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Market Call David Fingold's Top Picks
David Fingold, vice president and senior portfolio manager at Dynamic Funds,
discusses his top picks: Eli Lilly and Co, Chevron Corporation, and Elbit
Systems Ltd.

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 * We can't get ahead of inflation: Mullen Group CEO
   
   
   

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 * There’s a huge focus on expanding Canadian businesses internationally:
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 * Paul Harris discusses Firstservice Corp
   
   
   

 * Paul Harris discusses Service Now
   
   
   

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 * Demand for nat gas has been rising but production growth has slowed: Eli
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 * OTPP's investment in private tech could be 'fortuitous': Bruce Croxon
   
   
   

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 * BNN Bloomberg's mid-morning market update: April 21, 2022
   
   
   

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 * BNN Bloomberg's closing bell update: April 20, 2022
   
   
   

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 * CNQ surpasses $100B market value
   
   
   

 * Inflation in Canada is broadening significantly: TD Economics' James Orlando
   
   
   



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Apr 24, 2022




POSITIVE U.S. REAL YIELDS ADD TO TOXIC EMERGING-MARKET COCKTAIL

Netty Ismail and Marcus Wong, Bloomberg News

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BC-Positive-US-Real-Yields-Add-to-Toxic-Emerging-Market-Cocktail , Netty Ismail
and Marcus Wong

(Bloomberg) -- The long list of worries for emerging-market money managers
threatens to expand further with positive real yields in the U.S. worsening an
outlook already clouded by slowing growth and the war in Ukraine.

The first warning shots were fired last week, when the inflation-adjusted rate
on 10-year Treasuries briefly rose above zero for the first time in two years.
While the level didn’t hold for long, it did signal a turning point -- the era
of negative yields that sent investors rushing to emerging markets in search of
higher returns may be nearing an end as the Federal Reserve hikes rates
aggressively.

A sustained and substantial increase in U.S. real yields would be bad news for
developing nations as it typically boosts the dollar and sucks capital out of
riskier assets -- just like it did in 2008 and 2013. Investors are already
bracing for that outcome: Franklin Templeton is cutting positions in high-yield
debt, while Fidelity International bets against emerging-market currencies and
State Street Corp. shuns local debt of nations with weak finances.

“As U.S. yields go into positive territory, that starts tightening financial
conditions and does put pressure on a lot of emerging markets, particularly the
weaker ones,” Mohieddine Kronfol, the Dubai-based chief investment officer for
Middle Eastern and North African fixed income at Franklin Templeton. “We still
think there is much to worry about from growth to geopolitics, and from
inflation to monetary policy.”

It’s not just that positive U.S. real yields are coming, but that they’re coming
at a bad time for emerging markets. Inflation in the developing world has
stubbornly stayed high into the second quarter, belying some money managers’
expectation that it would peak by the end of March.

That means it’ll take even longer before emerging economies themselves can offer
investors positive real policy rates, leaving them at a disadvantage versus the
U.S. which can. As many as 35 of the 42 nations tracked by Bloomberg have
negative rates. Turkey’s minus 47% is the world’s worst real rate. 

“We were expecting that emerging-market inflation would start peaking as early
as in the first quarter, but all bets are off post the sharp increase in
commodity prices post Ukraine war,” said Guido Chamorro, the co-head of
emerging-market hard-currency debt at Pictet Asset Management. 

Growth Conundrum

Investors are also grappling with the war’s impact on food and energy prices, as
well as concerns surrounding China’s sagging economy. Emerging market
local-currency bonds have slumped about 4% this year, surpassing the record
full-year loss of 3.8% in the wake of the 2013 taper tantrum.

“Growth expectations continue to fall and inflation remains at generational
highs in many countries providing a very difficult macro cocktail for
investors,” said Paul Greer, a money manager at Fidelity International in
London. “Higher U.S. real yields is a headwind for all risk assets and of course
emerging markets will not be immune to that.”

Local-currency bonds of Turkey, Indonesia and Mexico may be the most vulnerable
to a surge in U.S. yields given their persistent fiscal and current account
deficits, lower foreign-exchange reserves and high foreign ownership of bonds,
said Emily Weis, a macro strategist at State Street in Boston. Whenever U.S.
yields jumped more than 50 basis points over a three-month period, the yields on
those developing countries’ bonds had risen by more than twice that, she said.

Bullish Case

Meanwhile, some investors argue though that positive U.S. real rates may herald
a potential peak in the Fed’s policy hawkishness. For Nordea Investment, that
would be the time to turn “tactically bullish” on emerging-market currencies and
sovereign debt, said Witold Bahrke, a Copenhagen-based senior macro strategist
at the firm. 

“I definitely think U.S. real yields crossing the zero-line is an important
milestone on the path towards a peak in the monetary headwinds emerging-market
investors are facing in 2022,” said Bahrke. “Positive real rates would also
bring us closer to peak Fed hawkishness, which is the ultimate requirement for
risk appetite to stage a meaningful comeback.”

But that remains a contrarian view for now. Most money managers believe emerging
economies remain exposed to capital-flight risks because there’s little they can
do to change the equation vis-a-vis improving yields in the developed world.
Much of the inflation faced by them is not their own doing, but driven by
external factors. Many central banks have already raised rates to their limit
and have little room to tighten further. 

So, despite being ahead of the curve, higher U.S. real rates will put more
pressure on policy makers to extend their tightening cycles, said Ed
Al-Hussainy, senior currency and rates analyst at Columbia Threadneedle
Investments. Monetary policy decisions in Russia, Hungary and Colombia will be
closely watched this week. 

“The most vulnerable assets are low-yielding bonds in Asia and Eastern Europe
which are exposed to inflation spillovers from the Russia war and the Covid
disruptions in China but don’t have a real yield buffer relative to the U.S.,”
Al-Hussainy said. “Commodity exporters in Latin America who have been
accelerating their tightening cycles have more of a buffer.”

Here are the main things to watch in emerging markets in the week ahead:

 * China’s April purchasing managers’ indexes due Saturday will probably show a
   deeper contraction in activity, underscoring the damage to manufacturing and
   the service sector from Covid lockdowns
   * China’s industrial profits for March are likely to register a decline,
     according to Bloomberg Economics
 * Russia is likely to cut interest rates on Friday as policy makers shift their
   focus toward cushioning the impact of international sanctions on the economy
   * Wednesday’s release of activity indicators will reveal how the first full
     month of war and sanctions have hit the economy
 * Hungary will probably raise its benchmark rate by a full percentage point on
   Tuesday as the war in Ukraine fans inflation
 * Colombia’s monetary policy meeting on Friday will also be closely watched,
   with policy makers split on the appropriate speed of future rate increases
 * Turkey’s central bank will publish its inflation report on Thursday. The
   nation has maintained its ultra-loose monetary policy despite inflation
   accelerating to a two-decade high in March
 * South Korea, Taiwan, the Czech Republic and Mexico will report on gross
   domestic product

 

©2022 Bloomberg L.P.


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