It has been a week of contradictions. Equity markets rose after a brief dip at the start of the week. Bonds saw yields rise and prices fall while oil rallied but the Loonie dropped. Some of this is connected but some runs a bit counter intuitive. If you’re not confused, then you’re probably not paying attention…. Or something like that.
| Index | Close Oct. 3rd 2024 | Close Oct. 10th 2024 |
| S&P500 | 5,697 | 5,785 |
| TSX60 | 23,969 | 24,302 |
| Canada 10 yr. Bond Yield | 3.12% | 3.25% |
| US 10 yr. Treasury Yield | 3.80% | 4.07% |
| USD/CAD | $1.35568 | $1.37413 |
| Brent Crude | $77.65 | $79.19 |
| Gold | $2,556 | $2,628 |
| Bitcoin | $60,821 | $60,162 |
Source: Trading Economics & Factset
Inflation in the US continues to moderate with September’s CPI (headline inflation) clocking in at 2.4%. But that was a bit higher than the expected 2.3% reading. Core inflation (excluding food and energy) was at 3.3% for the month. Countering that (and last weeks job numbers) was a rise in jobless claims to 258,000 vs. an expectation of 230,000. Overall, it has traders being a bit more cautious on their estimates on how fast the Fed will cut rates.
In Canada, economists are starting to call for more aggressive rate cuts by the Bank of Canada. The employment picture has softened, and inflation appears to be under control with the last reading of 2%. In fact, there is a chance that inflation could fall below the Bank of Canada’s target. (The recent jump in oil prices notwithstanding). Here are some thoughts from RBC, CIBC, and TD.
And speaking of TD….. they are in the headlines for all the wrong reasons this week. In the US they have been hit with over $3 billion (yes, you read that correctly, billion with a b) in penalties for their lax anti-money laundering practices. They have also had an asset cap imposed on their retail banking operations in the US, essentially capping their loan book and bring to a halt to any expansion plans. In Canada, they have agreed to a $70.3 million settlement of a class action lawsuit over the improper collection of “trailer fees” in discount brokerage operations.
Regulators have long cast a spurious eye on the monopolistic power of big tech. This week it is Alphabet’s (Google’s) turn to be under the microscope. A landmark court ruling in August has prompted the Department of Justice to seek a breakup of the company. The government will file its proposed remedies with the courts in November and Google has until Dec. 20th to file its arguments. There is a history of breaking up monopolies in the US going back to Standard Oil and railways in the 1800s and Bell Telephone starting in 1956.
Home Depot is putting a new twist on “Management by Walking About”. They will now be requiring all corporate employees to do one 8 hr. shift in a retail store every quarter. The objective is to keep the corporate employees (aka head office) more in tune with the realities of Home Depots core business and the challenges faced by the in-store staff. Not a bad move in my estimation.
Canada has a new Nobel Laureate. This week University of Toronto physicist Geoffrey Hinton was honored along with John Hopfield of Princeton University for their pioneering work on machine learning and AI. Also in the news is Canadian software developer Peter Todd who is being credited with being the creator of Bitcoin, a claim to fame that he emphatically denies. Will the real Satoshi Nakamoto please stand up.
That’s it for now as we roll into the Thanksgiving long weekend. Enjoy the extra day off and generous helpings of turkey. It’s also another time to gather with family, so we’ll leave you with this from Sister Sledge…. Enjoy
Russ Lazaruk, RIAC, CIWM, CIM, FCSI
Managing Director & Portfolio Manager
