FTX Crypto Crash, Ottawa Senators For Sale, and Used Vehicle Prices: Must-Read Business and Investing Stories
Being overtaken by a week that got away? Here’s your weekly roundup of the Globe’s most essential business and investing stories, with insights and analysis from the pros, stock tips, portfolio strategies and more.
Crypto Panic: FTX Crashes
The crypto carnage continues. A deal for major cryptocurrency exchange FTX fell apart this week after rival Binance pulled out of a proposed acquisition. FTX was once seen as an oasis of trust in a fragmented industry, and now its uncertainty has sent the prices of several cryptocurrencies plummeting and raised serious doubts about the business model of all crypto assets, reports Tim Kiladze. Since the announcement of the new FTX, the prices of bitcoin and ether, the two most popular cryptocurrencies, have dropped significantly and are now both down 76% over the past year. Moreover, it sends shockwaves to Canadian investors, including the Ontario Teachers’ Pension Plan, which has a US$95 million stake in FTX that they now risk losing.
Calling all millionaires: The Ottawa Senators are for sale
You have another $655 million? Consider trying to buy an NHL team. After the two daughters of late Ottawa Senators owner Eugene Melnyk officially put the franchise up for sale last week, a number of potential bidders emerged, including famed Vancouver native Ryan Reynolds. As Andrew Willis reports, transportation billionaire Michael Andlauer is the early favorite, with a proven relationship with NHL commissioner Gary Bettman and team owners as the Montreal Canadiens’ minority partner. The founder and CEO of Andlauer Healthcare Group Inc. will take on a number of billionaires who want to control the ice.
Finally, the price of used vehicles is falling
About a year ago, due to severe disruptions in demand and supply, the price of used cars and trucks had increased by 45% compared to the previous year and accounted for a third of the increase core inflation. As Jason Kirby reports, that’s no longer the case. In October, used vehicle prices fell for the fourth consecutive month, a sign that headline inflation has turned its back. And even though used-vehicle price tags are still well above 2019 figures, the year-to-year price change is almost back to its pre-pandemic flat rate.
Lowe’s Exit From Canada Signals Hardware Industry Disruption
The hardware landscape in Canada appears to be heading for upheaval after US hardware giant Lowe’s announced last week that it was selling its Canadian retail operations – approximately 450 stores that operate under the Lowe’s, Rona , Reno-Depot and Dick’s Lumber – in New York private-equity company Sycamore Partners. According to Nicolas Van Praet, rival groups are already positioning themselves to sign Rona dealers who decide to cut ties with the investment company. After a two-year period in which the hardware industry in Canada benefited from an increase in home renovations during the COVID-19 pandemic, retailers are now revising their sales forecasts and preparing for a recession.
More Canadian homeowners have mortgages over 30 years old
A growing share of mortgages issued by major Canadian banks now have amortization periods of more than 30 years, report James Bradshaw and Rachelle Younglai. With each increase in interest rates by the Bank of Canada, the cost of servicing a variable rate mortgage increases. In most banks, however, the borrower’s monthly payment does not increase immediately. Instead, the amortization period – the time it takes to repay the loan in full – is getting longer. When the term of the loan comes to an end, the amortization must return to its original term, which means a sudden increase in monthly payments. At RBC, BMO and CIBC, the percentage of mortgages with an amortization over 30 years recently doubled in three months, which is one of the clearest indicators that stress is building up on mortgage holders. at variable rates, who increasingly pay more interest and less capital on their loans.
New to Canada? Here’s how to increase your retirement pension
Almost all Canadians rely on Old Age Security (OAS) pensions for their retirement. The maximum monthly payment at age 65 is currently $685.50 and increases each quarter as the Consumer Price Index (CPI) rises. But not everyone is eligible for a full payout, which is reached after age 40 in Canada, after turning 18. To even qualify for an OAS pension, you must have lived in Canada for at least 10 years after the age of 18. If you lived in Canada between 10 and 40 years after age 18, your OAS pension at age 65 would be reduced proportionately. However, as Frederick Vettese points out, nothing in the rules prevents counting years of residence after age 65. Here are two ways for retirees who haven’t lived in Canada for that long to increase their OAS pension.
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Now that you’re all caught up, get ready for the week ahead with The Globe’s investment calendar.