Three more years of labor wage demands ahead: BMO economists

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A daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow

lbl energy expert John Kemp notes that the US diesel shortage is shrinking:

According to the US Energy Information Administration (EIA), “Inventories of distillate fuel oil increased by 3 million barrels in the six weeks between October 7 and November 18. The increase was small but ran counter to the normal trend of decline during this period. The year and points to higher prices and a sluggish economy starting to rebuild inventories… Distillate inventories haven’t increased at this time of year since 2008, when the financial crisis was pushing the economy further into recession. Stocks are still 21 million barrels (-16% or -1.25 standard deviation) below the pre-pandemic five-year seasonal average. But the seasonal average deficit has narrowed to 34 million barrels (-24% or -2.05 standard deviations) since October 7.”

“US diesel shortage begins to ease” – lbl

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BMO economist Robert Kavcic predicts that wage growth in Canada is just beginning (my emphasis):

“Treaty talks are now making headlines across several sectors/regions and suffice it to say that the volume has only just started to turn on this front. Wage settlements follow the path of inflation in Canada, as one would expect. But, because existing contracts take time to expire and inflation expectations take time to set, the process is moving somewhat slowly. As the chart shows, it seems The best fit between wage settlements and inflation comes with a lag of about three yearsSo the recent shock to price pressures is pushing up wage demands for some time…”

“BMO: “Wage claims are just warming up”” – (excerpt from research) Twitter

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The Financial Times wonders if nuclear power is poised for a comeback, but not in a way that would benefit Canada’s uranium production:

“It may be visible in the sky to some, but others hope that thorium, a radioactive element found on dark sandy beaches around the world, could one day power a powerful new generation of small modular nuclear reactors. Enthusiasts say they are much smaller than today’s giant nuclear plants.” , would be safer and cheaper, which could cost up to £1bn ($1.2bn) to decommission over decades, according to energy think-tank Ember. The UK has applied for government funding to … The International Energy Agency’s Base Scenario envisages spending on nuclear power to reach net zero carbon emissions by 2050, more than doubling by that date.”

“Time to start betting on a nuclear renaissance?” – Financial Times (Paywall)

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Diversion: “Mercedes-Benz to introduce acceleration subscription fee” – BBC

Tweet of the day: “Our Fear and Freak Sentiment Index, comprised of 11 well-known equity market sentiment indicators, is trending towards ‘Crazy’.” – Twitter

Three more years of labor wage demands ahead: BMO economists

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