Markets were mixed this week. The TSX gave up last week’s gains while the S&P500 has traded sideways. Oil broke below $80 this week (good for inflation) while bond yields are well below recent highs. Interestingly, Bitcoin has been a star for another week.
| Index | Close Nov. 3rd 2023 | Close Nov 9th 2023 |
| S&P500 | 4,358 | 4,349 |
| TSX60 | 19,825 | 19,587 |
| Canada 10 yr. Bond Yield | 3.75 | 3.86 |
| US 10 yr. Treasury Yield | 4.56% | 4.63% |
| USD/CAD | $1.36590 | $1.38120 |
| Brent Crude | $80.51 | $75.54 |
| Gold | $1,992 | $1,956 |
| Bitcoin | $34,611 | $36,573 |
US Fed Chair Jay Powell’s hawkish comments at an IMF conference on Thursday were quite hawkish. In his comments he re-iterated the Fed’s focus on getting inflation down to 2%. He said that the Fed would raise rate again if they thought it necessary. While traders are betting hoping that rate hikes are done and interest rate relief on its way, central bankers are not stacking the odds in their favour.
The continued hawkishness has strengthened the US dollar against most currencies. The strong dollar has also pushed down the prices of several commodities that are priced in USD. One exception is iron ore.
The sag in the commodities markets are partly due to China’s economic sluggishness. The problems are manifest. The real estate sector is over-built and over-leveraged. Now consumer prices are declining pushing the country into deflation. So far, stimulus measures taken by the central government have not had a measurable effect.
Australian Prime Minister Anthony Albanese travelled to China this week for meetings with Xi Jinping. Despite the high levels of trade between the 2 countries, diplomatic relations have been strained since Australia accused China of meddling in its elections 7 years ago. (Sound familiar?) There appears to be a willingness by both sides to reset the relationship.
Ukraine is a bit closer to full membership in the European Union. The European Commission has recommended that formal talks should begin with Ukraine on joining the EU. Both Ukraine and Moldova were granted candidate status after Russia’s invasion of Ukraine. Both had to undertake a series of reforms to reach the next stage of the process, which Ukraine has largely completed. Membership is not a given though as it requires the consent of all 27 countries, something Hungary’s Victor Orban may not be willing to give.
A bit closer to home, and this does affect us in BC, Hollywod actors have settled their labour dispute and strike action with the movie producers. In addition to a bigger slice of the pie, actors negotiated some protections against the intrusion of AI into their craft. A strike by writers ended earlier this year. Prior to the labour actions, upwards of 88,000 people were employed in the film & TV industry in BC.
Vancouver based Photonic Inc. has inked a deal with Microsoft to develop quantum computers that would be part of Microsoft’s Azure cloud computing services. At the same time, the company raised USD $100 million from a consortium of investors including BC Investment Management, Microsoft, and the UK National Strategic Investment Fund. Good news for BC and our tech sector.
Charlotte and her baby sister Sophie are back visiting with us for a few weeks. Charlotte, who is now 3, is a fan of Monsters Inc., so we’ll close off with the Monster Mash…. Enjoy
Russ Lazaruk, RIAC, CIWM, CIM, FCSI
Managing Director & Portfolio Manager
Tel 250.999.3329.
www.ncpdfo.com