Canada dodged a recession, while mixed inflation signals came out of the U.S. 

• Canada's economy avoided a recession, with GDP growth driven by higher crude oil exports, increasing the odds of interest rates remaining steady.
• Mixed inflation signals: the core PCE deflator was at its lowest since 2021, but services inflation rose, leading to varied stock market reactions.
• Apple cancelled its electric car project, shifting its focus to AI.

The Canadian economy has managed to steer clear of a recession, with a slight uptick in GDP in the last quarter of last year. This boost came mostly from a jump in crude oil exports and a drop in imports. It looks like the Bank of Canada might just keep interest rates steady at their next meeting on March 6, thanks to this bit of good news (if we can call it that). Real GDP went up by 1% for the quarter ending December 31, a bit better than the 0.8% that was expected and a nice change from the 0.5% drop in the third quarter. It seems like this growth got a helping hand from fewer supply issues (which helped exports and car sales) rather than a big uptick in what Canadians are buying at home. For more on this topic, don’t miss this week’s podcast which will focus on these numbers.

On the inflation front, one of the U.S. Federal Reserve's (the Fed) go-to indicators, the core PCE deflator, hit 2.8% year-over-year in January, the lowest since March 2021. Even though the overall PCE deflator came in as expected, the Fed is probably more concerned about the jump in services inflation excluding shelter, which ticked up to 3.45% year-over-year. The stock market had mixed feelings about all this; the Nasdaq went up, the Dow Jones didn't move much and the S&P 500 was somewhere in the middle. Bonds seemed to take the news well, though, which is something. But the break-even rates, which give us a peek into inflation expectations, didn't seem to care.

In tech news, Apple decided to drop its electric car project, a big ambition that it’s been nursing for 16 years. According to Bloomberg, the company let its almost 2,000 project team members know about this pivot. Now, this in itself is not newsworthy for this column, but the bigger picture shows how the trends are shifting from electric vehicles to another one. Because Apple hinted that the money will instead be spent on another project. Take a guess: of course, AI. Given that Apple (along with Google and Tesla) has seen its stock value dip this year, it seems like February 29, 2024 might just be the turning point where we shelve the Magnificent Seven narrative alongside the once-touted FANG and BRIC labels. Speaking of BRIC, India's economy is absolutely booming, with its GDP going up by 8.4% in the fourth quarter, way ahead of the 6.6% prediction. India's market is buzzing, offering a small consolation for emerging markets investors who are feeling the pinch from China's slump.

Listen to this week’s podcast for further insights.