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November 18, 2021

Your CFA Update on COVID-19

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The CFAs thoughts are with all the people in the lower mainland of British Columbia as the deal with the devastating flooding and mudslides.

Provincial state of emergency declared

Financial assistance available for people affected by flooding

Inflation rate jumps again to new 18-year high of 4.7%

Canada's inflation rate jumped to a new 18-year high of 4.7 per cent last month, led by sharply higher prices for energy.

Statistics Canada says the 4.7 per cent rate is the highest since February 2003.

The showing was in line with what economists were expecting, but as Doug Porter with Bank of Montreal noted, "It's almost a relief in 2021 when hot inflation readings aren't even hotter than expectations." "While perhaps not quite as eye-popping as the latest 6.2 per cent U.S. headline inflation print, this still marks a massive upswing from inflation of just 0.7 per cent a year ago," Porter said.

All eight components that the data agency tracks were higher, but the increase was led by higher transportation costs, which went up by more than 10 per cent in the past year.

Within that, gasoline was a major factor, as prices at the pump have risen by 41.7 per cent since October of last year.

"The good news is that pump prices look to be about flat in the current month," Porter said. "But just as pump prices may be stabilizing, other necessities are grabbing at the baton."

The rising cost of the car itself is also a major driver of inflation right now. New vehicle prices have risen by 6.1 per cent in the past year, mostly due to an ongoing shortage of semiconductor chips.

Food prices continue to move higher. Meat prices have risen by almost 10 per cent, on average, with bacon in particular going up at more than twice that rate. Overall, Canadians grocery bills are going up at a 3.9 per cent annual pace.

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Ottawa expected to end molecular COVID test requirement for Canadians taking short trips abroad

Fully vaccinated Canadians taking short trips abroad will soon no longer need proof of a negative COVID-19 molecular test to return home, say sources. The sources, said the government is only dropping the testing requirement for Canadians and permanent residents for trips lasting less than 72 hours.

Molecular tests, like the polymerase chain reaction (PCR) test, will still be required for trips longer than 72 hours.

"We are looking at making steps to loosen up requirements while at the same time keeping Canadians safe," Prime Minister Justin Trudeau said Wednesday evening. "We will have an announcement to make in the coming days."

The change is expected to come into effect at the end of the month as cross-border shopping picks up before the holidays.

Health Canada expected to announce approval of Pfizer vaccine for kids on Friday

Health Canada will announce the approval of the Pfizer-BioNTech vaccine for children ages five to 11 on Friday according to media reports. The reports also suggest that Canada can expect pediatric doses to arrive in the country in a matter of "days, not weeks."

On Oct. 18, Health Canada received Pfizer-BioNTech's submission for approval of its vaccine for children — which is delivered in doses one-third the size of those given to adults and kids 12 and older.

Coffee nears decade high on mounting supply worries

Supply woes from Brazil to Vietnam sent coffee prices to a seven-year high with poor weather, shipping snarls and soaring fertilizer costs threatening to curb supply.

Arabica futures for March delivery rose as much as 4.8 per cent to US$2.235 a pound in New York, the highest for a most-active contract since October 2014. Prices have almost doubled in the past year, raising the cost outlook for companies such as Starbucks Corp. and Peet’s Coffee & Tea Inc. that favor the high-end variety of beans.

This week’s rally comes amid falling certified stockpiles and a firmer Brazilian currency that eroded incentives to sell commodities priced in greenbacks. In addition, early projections for the country’s 2022 crop indicate yields will trail the nation’s last high-yielding cycle in 2020-21. That will limit the rebuilding of stockpiles needed to weather the typical dip in the following harvest’s output.   

Data suggests that if prices breach US$2.25 arabica could surge to the US$3 level, said Hernando de la Roche, senior vice president for StoneX Financial Inc. in Miami. There’s been buying tied to expiring options, which spurred short covering, he said. 

The surge in futures threatens even higher prices at cafes and grocery stores as food inflation becomes more acute. U.S. consumer prices rose at the biggest annualized rate in 30 years last month, according to government data.

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COVID-19's impact on the world is creating waves across all sectors and industries.

Every member of the CFA community is dealing with an issue that is affecting the world, our industries, our communities, our businesses, and our people.

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