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Address 500 Centre Street SE 27th Floor Calgary AB, T2G 1A6
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Milan Cacic

January 13, 2023

Economy Commentary Weekly commentary
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WHAT GOES UP MUST COME DOWN?

Inflation in the United States has been decelerated for six straight months. The December 2022 year-over-year inflation rate came in at 6.5%. Of note, used car prices are now 8.8% lower than they were your ago. Almost every metric was flat or came down month-over-month except for the cost of shelter. The December report also showed its first month-over-month drop in inflation of -0.1%. Another important metric is the so-called "core" inflation which excludes food and energy which came in at 0.3% month-over-month. Overall, inflation is coming down fairly fast and the odds of the 50 basis point rate hike in February has dropped significantly.

 

Graph 1

 

 

Another chart that I found interesting is the price action of copper. Some people believe that copper has its PhD in economics. The reason for this is because when copper goes up it is usually a sign that the economy is going to improve. I am sure you are as confused as I am because most people are predicting a recession in 2023. As you can see from the chart below copper has made a comeback over the past six months. Based on Dr. Copper’s reputation, this should bode well for an acceleration in the economy in the later half 2023 – or perhaps copper is just going up because the Chinese economy’s been reopening. Either way, it’s starting to feel a little bit like after the tech crash in 2001. That was the start of a secular bull market in commodities. Only time will tell!

 

 

 

 

I have also included a link to a video from Ben Tal and our CIBC Economics Team entitled "2023 Economic outlook – Light at the end of the tunnel?". If you would like to watch the video or read the transcript please click on the appropriate link here. Watch the full video | Video transcript

 

As always if you have any questions please feel free to give us a call at any time.

 

Have a great weekend.

 

Milan

 

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CIBC Private Wealth” consists of services provided by CIBC and certain of its subsidiaries through CIBC Private Banking; CIBC Private Investment Counsel, a division of CIBC Asset Management Inc. (“CAM”); CIBC Trust Corporation; and CIBC Wood Gundy, a division of CIBC World Markets Inc. (“WMI”). CIBC Private Banking provides solutions from CIBC Investor Services Inc. (“ISI”), CAM and credit products. CIBC Private Wealth services are available to qualified individuals. Insurance services are only available through CIBC Wood Gundy Financial Services Inc. In Quebec, insurance services are only available through CIBC Wood Gundy Financial Services (Quebec) Inc.


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