That was a wild few days on the markets. After a big rally after the US mid-term election, equities decided to give back that upside and then some more. This time bonds did act as a minor counterbalance with yields dropping (prices up). While gold was essentially flat, bitcoin dropped precipitously on Thursday. Despite a bounce on Thursday, oil was also down sharply on hopes of an end to the war with Iran.
| Index | Close Oct. 29th 2026 | Close Nov. 5th 2026 |
| S&P500 | 7,681 | 7,342 |
| TSX60 | 36,249 | 35,583 |
| Canada 10 yr. Bond Yield | 3.80% | 3.66% |
| US 10 yr. Treasury Yield | 4.94% | 4.83% |
| USD/CAD | $1.39875 | $1.39940 |
| Brent Crude | $115.61 | $98.36 |
| Gold | $4,024 | $4,084 |
| Bitcoin | $79,360 | $75,878 |
Source: Trading Economics
Thursday was budget day in Canada. Titled “masters of Our Destiny” it was the second budget brought in by the Carney government. There was a bit of everything in it. For the business community it made permanent the ability to write off major capital expenditures in 1 year, a new capital gains tax exemption for start-up founders up to $15 million, plus an enhanced small business rollover. There was money for housing, a top up to the Groceries and Essentials (GST) benefit, and a proposed end to the mandatory conversion of RRSPs to RRIFs at age 71. Defense and security both got significant new funding with CSIS getting an extra $6 billion over 10 years.
While still high, the deficit will be lower than previously forecast and is expected to drop from $62.3 billion (2026-27) to $52.9 billion (2030-31). Direct program spending growth will be capped at 2% (down form 8%). Overall, the budget balances investment in the economy through infrastructure and tax incentives with affordability measures while putting the deficit on a downward track. You can find the entire budget here.
While a few of us were more interested in this week’s budget in Canada, the rest of the world was obsessed over the US mid-term elections. In a stunning rebuke to the Trump Administration, both houses of Congress were taken by Democrats by margins far greater than pundits had been expecting. But the question now is, what will change? Foreign policy is still the under the purview of the President, there are still ways to bypass Congress to impose tariffs, and the President still holds the power of the veto. In short, the need for middle powers to strengthen their economies and become more resilient has not gone away. Elbows up, eh.
In that vein, the Canada-EU summit from last week concluded with the launch of an “Alliance for the Future”. There are still a myriad of details and proposals to be negotiated, approved, or discarded. But some of the more concrete items that should see fruition include closer integration of financial services, better mobility including Canada’s participation in the Erasmus program, and participation in SAFE which helps finance investment in the defence industry.
Has the bloom come off the (AI) boom? Judging by Thursday’s market action, one would be tempted to give an emphatic yes. But that may be getting a bit ahead of the game. There is no question that valuations and expectations were starting to get ahead of reality. This week the mid-terms acted as a catalyst to bring the AI darlings back to earth. It wasn’t just the election of a more sceptical / cautious Democrat Congress. There were several referendums on proposed data centres that failed to pass. Between that, the rising cost of capital, and the struggles of Coreweave there is a bit more caution in the market.
The Internet of Things (IoT) is a wonderful convenience for households and a source of productivity for companies. It is also a vulnerability if your cyber security is not up to scratch. This week there was another hack of refrigeration systems in Europe. This time it hit supermarkets in 7 countries from Belgium to Sweden. No one has claimed responsibility for these attacks or the ones in France last month. Which will allow anyone to concoct their own conspiracy theory about it.
Staying on the topic of cyber security, crypto currency exchange Binance was hacked last weekend to the tune of $6.3 billion. The thieves used a fake job offer and malware to get into Binance’s system through an employee’s laptop. The FBI is pointing the finger at North Korea, who has denied the allegations (like they would admit it). Binance has made its depositors whole, but the reputational damage will remain for while.
With modern digital highwaymen on our minds, we’ll close with this from The Highwaymen… enjoy!
Russ Lazaruk, RIAC, CIWM, CIM, FCSI
Managing Director & Portfolio Manager
