It was a mixed week on the markets with equities eking out small gains while bond yields rose modestly. Gold broke the $4,000 mark before retracing part of its gain. Despite the myriads of dramas that garner our attention, the equity markets continue their march upward. But valuations are stretched, and the continued climb will require earnings growth that is better than expectations or a drop in interest rates (preferably both).
| Index | Close Oct 2nd 2025 | Close Oct. 9th 2025 |
| S&P500 | 6,719 | 6,739 |
| TSX60 | 30,161 | 30,270 |
| Canada 10 yr. Bond Yield | 3.18% | 3.21% |
| US 10 yr. Treasury Yield | 4.09% | 4.15% |
| USD/CAD | $1.39665 | $1.40244 |
| Brent Crude | $64.32 | $65.18 |
| Gold | $3,855 | $3,978 |
| Bitcoin | $120,574 | $121,061 |
Source: Trading Economics & Factset
Hilary and I are in France this month where it seems to be a game of musical chairs for the prime minister(s). France will be getting its 6th PM in 2 years after the resignation of Sebastion Lecornu. PM Lecornu lasted a few short weeks but was felled by his inability to put together a cabinet that was acceptable to the National Assembly. Both the Left and Right were against his choices. A new PM is expected to be announced by Friday. The first order of business is to bring in a budget that will re-assure the bond markets. Fortunately, the political turmoil has not spoiled the weather in Montpellier nor the cuisine.
Staying overseas, Japan is slated to have its first female Prime Minister, Sanae Taikichi. Ms Taikichi is the leader of the Liberal Democratic party and has served as a cabinet minister under Shinzo Abe and Fumio Kishida. According to the press, her role model is Margaret Thatcher. Where she differs from Margaret Thatcher is her more populist inclination to higher government spending. This has the bond markets concerned, and the Yen has taken a hit.
PM Carney was back in Washington this week for talks with Donald Trump. While no deals have been stuck, the tone was much more positive this time. Donald Trump was quite complimentary towards our PM and said that a deal would happen. Steel, aluminum, autos, and softwood lumber remained at the top of the agenda. There was some talk of reviving the Keystone XL pipeline. The pipeline was cancelled by the Biden administration but is a preferred route by its proponent TC Energy. While it would avoid the domestic issues around building a pipeline to BC’s northern coast, it would do nothing to diversify our markets.
Canada’s trade deficit widened in August as exports dropped faster than the rise in imports. The decline in exports was spread across a range of trading partners. Imports from the US continued to decline while imports from other trading partners rose. We are seeing the shift in global trade patterns in real time.
The shutdown of the US government continued this week with no end in sight. For now voters are blaming both sides (though who they blame will depend on their prior biases). It will take a serious shift in the polls for one side or the other to shift their position. One of the effects of the shutdown has been to stall any initial public offerings (IPOs) on US exchanges. The regulator (SEC) is trying to ease the path for issuers, but the shutdown is impeding the ability of private companies to gain a public listing to raise capital and/or gain liquidity.
Concerns are being raised about the nature of financing in the AI sector. The issue is that many of the financings are circular involving more than one company. It is not entirely different than vendor financing, but the concern is that some of the parties are not yet profitable. If one part of the chain fails, will it bring down the counterparties? History shows us that most bubbles end because of excess debt. Watch this space.
As you may have gathered from an earlier comment, I am a digital nomad for October. Hil and I have returned to Montpellier France for most of the month. The time change works in favour of my work schedule which starts around 4:30 in the afternoon until 10PM local time. (7:30AM to 1PM BC time) It gives us the day to enjoy the south of France while continuing to work.
Dolly Parton assures us she is not dead yet. After rumours of failing health, sparked by comments from her sister, spread across the internet, she assures the world she is fine. So, we will leave you with classic and wish her continued good health….
Russ Lazaruk, RIAC, CIWM, CIM, FCSI
Managing Director & Portfolio Manager
