By Angela Harmantas
The US Federal Reserve decided against raising interest rates on Thursday, but was that the right move? Today on Before the Bell we outline the argument in favour of an interest rate hike. Also, Cineplex Entertainment’s recent acquisition may be in response to increasing competition from Netflix in the movie business, and Sentry Investment’s Jon Case outlines a bullish take on gold – here’s what you need to know today:
It’s decided: the US Federal Reserve announced on Thursday that they would keep the interest rate unchanged. Was anyone else surprised by the decision? I know I was. Everyone was gearing up for the apocalypse yesterday and while it may seem like we averted a disaster, I’m not sure that’s the case. The Feds are saying that a still-shaky global economy and low inflation levels are the main contributing factors in their decision to hold the interest rate near zero. Both are valid concerns, but what I think the decision fails to grasp is that things may not get much better for a while – in fact, it’s possible it could get worse. What then? If these are indeed better times, what happens if the global economy tanks and there’s no more room to cut rates? Now it’s looking like we’ll have to go through the same uncertainty come early December when the Feds are due to meet again.
I wrote earlier this week about how Netflix is angering major movie chains by acquiring the distribution rights for new releases, and yesterday one such theatre chain made an investment that may just be in response to the changing business model in the movie industry. Cineplex Entertainment, which operates Canada’s largest chain of theatres, announced that it was acquiring the assets of WorldGaming, an online gaming platform, as well as investing US$5 million to create a new competitive in-house gaming league. A reader pointed out to me yesterday that Cineplex and its competitors in North America have to adapt to the increasing competition posed by streaming services, and this investment appears to me to be a response to the changing nature of media consumption.
Finally, my interview with Jon Case, portfolio manager at Sentry Investments, is up on SmallCapPower today. Jon tells us why gold tends to outperform in the second half of the year, why the balance of risk is towards the upside despite the potential for an interest rate hike this year and the reason why Canadian gold miners have seen their margins double since the weaker loonie. He also gives us two Canadian gold companies to watch, thanks to their strong balance sheets and cost optimization. Given the Fed’s decision to keep interest rates unchanged, are you bullish on gold? Let us know in the comments. Have a great weekend!
Do you have a burning question you’d like answered by an investment expert or analyst? Let me know and I can post the answer here in the blog. Contact me by email at angela@smallcappower.com or on Twitter: @aharmantas.
Interested in previous Before the Bell blogs? 
