Powers: Pepsi is a dividend king, trading at five-year lows with a 4.3% yield

Matt Powers, Managing Partner at Powers Advisory Group, says markets were unimpressed by CPI and China news, sees long-term value in Pepsi, and stresses it remains a stock picker's market.

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Hamilton Spectator

12 minutes ago

• Hamilton Spectator

Bank of Canada hoping for better look at ‘complicated' inflation picture

OTTAWA - The Bank of Canada will get a fresh look at national inflation figures this week — a picture that's been particularly murky as of late amid tax changes and trade wars. Statistics Canada is expected to publish its consumer price index for May on Tuesday. Financial data shows the consensus among economists is that inflation ticked up to 1.8 per cent year-over-year last month. April figures showed the annual inflation rate slowed sharply to 1.7 per cent, thanks largely to a drop in gasoline prices tied to the end of the consumer carbon price. Benjamin Reitzes, BMO's managing director of Canadian rates and macro strategist, said he expects inflation cooled two ticks to 1.5 per cent in May. He pointed to a slowing in shelter inflation and a smaller jump in gas prices compared with the same time last year for the easing. But it won't be just the headline number the Bank of Canada is parsing as it attempts to set its benchmark interest rate in an increasingly uncertain world. 'The reality is, they don't just look at one number. They look at a number of different inflation metrics to really try and figure out what the underlying trend is,' Reitzes said. Bank of Canada governor Tiff Macklem called the current inflation picture 'complicated' in a speech to the St. John's Board of Trade in Newfoundland and Labrador on Wednesday. The 'firmness' in underlying inflation lately might be early signs of the trade war with the United States impacting inflation, he said. The central bank has so far been dogged by uncertainty tied to the tariff dispute, holding its policy rate steady at 2.75 per cent twice in a row as it waits for clarity on how the trade restrictions will impact inflation. While the tariffs and counter-tariffs themselves are likely to drive up prices for businesses, it's not yet clear to the bank how quickly companies will pass those costs on to customers. Resulting slowdowns in the economy could also see businesses and consumers rein in spending, keeping inflationary pressures relatively tame. Katherine Judge, senior economist at CIBC Capital Markets, said inflation likely inched higher because of tariffs. 'The acceleration in the monthly pace will be largely tied to food prices that are picking up counter-tariff impacts and core goods prices that could begin to reflect broader tariffs,' she said in a note to clients on Friday. 'We expect rent inflation to decelerate after a surprising jump in April, and in line with industry data, leaning against food price increases.' Judge noted the upcoming inflation reading will reflect adjustments Statistics Canada made to its CPI basket, but said such changes don't usually have a meaningful impact on the headline number. Reitzes said it's been hard to pinpoint the impact of tariffs on the inflation data. 'The Bank of Canada is certainly watching for that, though,' he said. 'The army of economists they have working for them will be kind of teasing through all of that data and looking for any signs of that.' Food inflation has been a bit stronger in recent months, which Reitzes noted is one area where Canada is applying counter-tariffs. But he also said that could be a lagged impact from weakness in the Canadian dollar at the start of the year now filtering into food prices. Another source of noise in the inflation data is tax changes from the federal government in the early part of the year. First, Ottawa's two-month GST holiday skewed price data on a range of groceries, gifts and household staples, and now the end of the consumer carbon tax is driving down headline inflation. But that impact is only going to last for a year and will fall out of the inflation comparison after 12 months. Macklem said the central bank is increasingly putting weight on CPI measures that strip out influences from tax changes to give it some clarity. He noted Wednesday that inflation excluding taxes was 2.3 per cent in April — stronger than the central bank was expecting. Macklem also signalled Wednesday that the Bank of Canada is scrutinizing its own preferred measures of core inflation a little more closely. Those core inflation figures are now running above three per cent, but Macklem also warned there's 'potentially some distortion' that could be 'exaggerating' price pressures. Alternative measures of core inflation are coming in lower, so he said the bank is looking at a range of factors as it gauges where inflation is heading next. 'There is some unusual volatility. So how temporary or persistent this is, I think remains an open question,' Macklem said. The Bank of Canada will get a look at two inflation reports before its next interest rate decision on July 30. If inflation shows signs of remaining well contained in those releases, Reitzes said the Bank of Canada might find a window to lower interest rates to boost the economy in the face of tariffs. 'They'll probably take that opportunity, but inflation needs to provide them with that,' he said. 'And at the moment it is not doing so.' This report by The Canadian Press was first published June 22, 2025.

Yahoo

2 hours ago

• Yahoo

Social Security's 2026 COLA Is on Track to Do Something That Hasn't Happened in 41 Years

The Senior Citizens League predicts a 2026 Social Security COLA of 2.5% -- the same increase received in 2025. The last time there was the same COLA in back-to-back years was in 1983 and 1984. Retirees shouldn't bet on a 2026 COLA of 2.5% just yet, though. The $23,760 Social Security bonus most retirees completely overlook › Is it too early to speculate how much more retirees might receive in Social Security benefits next year? Nah. In fact, The Senior Citizens League (TSCL), a nonprofit organization that advocates for seniors, does it every month. TSCL's latest cost-of-living adjustment (COLA) prediction was especially intriguing. Social Security's 2026 COLA is on track to do something that hasn't happened in 41 years. TSCL's statistical model is updated throughout the year. This model uses multiple factors to predict the next Social Security COLA, including the Consumer Price Index (CPI), the Federal Reserve's interest rate, and the U.S. unemployment rate. The CPI is arguably the most important piece of data used to predict the next Social Security COLA. The COLA itself is calculated using a variant of the CPI, called the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The CPI-W measures inflation experienced by primarily blue-collar workers who live in urban areas. There has been a distinct trend in TSCL's COLA predictions so far this year. The nonprofit organization's statistical model has generated a higher projected COLA for four consecutive months. Its latest prediction is for a 2026 COLA of 2.5%. Is a higher COLA a good thing for retirees? Not necessarily. TSCL executive director Shannon Benton warned: Seniors should be concerned as inflation continues to tick upward. TSCL's research shows that there's a serious disconnect between the inflation the government reports and the inflation that seniors experience every day. If the government tells us that prices are rising faster, it's likely that seniors are already feeling the crunch. A steadily increasing Social Security COLA prediction isn't unusual. When inflation rises, it tends to continue to rise. There's sometimes a momentum effect at work. What is out of the ordinary about TSCL's latest projected 2026 COLA, though, is that it matches the Social Security benefits increase of 2.5% received in 2025. Perhaps surprisingly, the last time there were identical back-to-back Social Security increases was in 1983 and 1984. The annual COLA in both years was 3.5%. Some might look at the history of Social Security COLAs and argue that the last time the COLA was the same in back-to-back years was more recent than 41 years ago. They could point out that the COLA was 0% in both 2009 and 2010. That is true. However, an adjustment of 0% is no adjustment at all. And if there's no adjustment, there's no COLA. The last time Social Security benefits were truly adjusted by the same amount in two consecutive years to reflect a change in the cost of living was in 1983 and 1984. That said, there have been instances where the Social Security COLA was the same in two close but nonconsecutive years. This occurred in 1993 and 1995, when the benefits increase was 2.6%. It also happened in 2012 and 2014, with COLAs of 1.7% in both years. Is it a slam dunk that the 2026 Social Security COLA will do something that hasn't happened since 1984? Don't bet on it. The actual 2026 COLA will be determined based on the average CPI-W for the third quarter of 2025 compared to the average for the third quarter of 2024. Retirees won't know the final number until the Social Security Administration releases it in mid-October. There are also some reasons to suspect the inflation level will continue to rise later this year. The full impact of President Donald Trump's tariffs hasn't been felt yet. This is due in part to businesses increasing their inventory levels before the tariffs took effect. Many economists predict that inflation will rise more significantly during the summer months. The Social Security COLA's 41-year streak might not be broken after all. But retirees might wish it were. If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known could help ensure a boost in your retirement income. One easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Join Stock Advisor to learn more about these Motley Fool has a disclosure policy. Social Security's 2026 COLA Is on Track to Do Something That Hasn't Happened in 41 Years was originally published by The Motley Fool

Yahoo

a day ago

• Yahoo

Fed keeps rates steady as Trump ramps up attacks on Powell

The Federal Reserve kept interbank interest rates at a range of 4.25 to 4.5 percent Wednesday amid trade policy fluctuations and pressure from President Trump. Fed officials stressed the overall health of U.S. economic conditions, which has seen decreasing inflation in recent months along with steady levels of low unemployment. 'What we're waiting for, to reduce rates, is to understand what will happen with the tariff inflation. There's a lot of uncertainty about that,' Federal Reserve Chair Jerome Powell said Wednesday. 'Someone has to pay the tariffs … between the manufacturer, the exporter, the importer, the retailer, ultimately somebody putting it into a good of some kind – or just the consumer buying it.' The unemployment rate has held at 4.2 percent in its past three readings, with about 7 million people out of work in a labor force of 170 million. Inflation ticked up slightly in May consumer price index (CPI) to a 2.4-percent annual increase from 2.3 percent in April. It declined in its previous three readings from a 3-percent increase in January. The personal consumption expenditures (PCE) price index, which is the Fed's preferred inflation gauge, fell to a 2.1-percent increase in April – nearly at the Fed's target rate of 2 percent. Many economists and businesses have been warning of higher prices due to President Trump's tariffs, which have raised the overall U.S. tariff rate to the highest level in nearly 100 years. So far, however, they have yet to show up conclusively in the price data. 'It takes some time for tariffs to work their way through the chain of distribution to the end consumer,' Powell said at a press conference Wednesday. 'We're beginning to see some effects and we do expect to see more of them over coming months.' End-user import prices were up just 0.2 percent annually in May and have changed little over the past year. Trade services in the producer price index (PPI), which can show the margin effects of tariffs, were up 0.4 percent in May but were down for apparel, which is a heavily imported consumer good. Apparel prices overall decreased in May while margins were unchanged, suggesting those importers were eating the cost, according to former Fed economist Claudia Sahm. 'For now, any extra costs of tariffs (not offset by the lower import prices) appear to be absorbed by businesses,' chief economist Claudia Sahm of New Century Advisers wrote in a Wednesday analysis focused on the apparel sector. 'Those costs could be passed on later via higher consumer prices, but the apparel gross margins are elevated relative to pre-pandemic levels, which could provide some cushion.' President Trump has been calling for the Fed to resume its interest rate cuts, which it started in the back half of last year but has paused since January after inflation ticked up over the fall. Trump went so far as to call Powell a 'numbskull' recently for maintaining his pause, which will increase interest costs on sky-high U.S. debt levels that are likely to be made worse by GOP tax-and-spending cut legislation now making its way through Congress. However, markets and economists expected the Fed to maintain rates while businesses react to Trump's tariffs. 'Every one of the 95 forecasts in the consensus expects rates to be unchanged,' UBS economist Paul Donovan wrote in a Wednesday commentary. 'U.S. President Trump advocates rate cuts, but this is a distinctly minority view. The trade tax increase is big, and the Fed wants greater certainty about its impact before changing policy.' Businesses can respond to the tariffs in three main ways — by eating the cost of the taxes, raising prices, or lowering overhead. They can also change their supply chains and production schedules in a way that could impact all three. Consumer sentiment has languished in the wake of Trump's trade war. Retail sales took a dive this week, with purchases declining by 0.9 percent in May from April. Also weighing on the Fed's decisionmaking has been the prospect of a major war in the Middle East, following comprehensive strikes by Israel on Iran's nuclear facilities as well as targeted assassinations of Iranian military leaders and scientists. This has led to a spike in oil prices last week, one of the largest single day movements on record. Oil prices were up again Monday yesterday, as Brent crude finished the day at its highest level since February at $76.45 per barrel. 'Oil is still below its 2024 average of $80 so we have to put things in perspective from an inflationary angle but it was trading at $58.20 in early May,' analysts for Deutsche Bank wrote in a Wednesday note to investors. Trump has warned of increasing escalation in the conflict, saying that 'the next week is going to be very big.' Iranian leader Ali Khameini's social media channel posted overnight that 'the battle begins.' Updated at 3:10 p.m. EDT. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. Sign in to access your portfolio