Today
U.S. stocks are set to open higher this morning, led by the Nasdaq, after suffering its biggest weekly drop since Trump’s “Liberation Day” tariff announcements last April. Nasdaq futures were up 1%, while S&P 500 futures rose 0.5% ahead of the open. The relief was also felt in Asia, where South Korea’s Kospi, dominated by AI chipmakers Samsung Electronics and SK Hynix, gained 1.8% after tumbling -14% last week. European markets were less enthusiastic, with the FTSE, DAX and CAC all trading lower. In France, government bonds came under further pressure after cost-of-living protests turned violent over the weekend. The unrest adds to an already difficult fiscal predicament for the country. After years of heavy spending financed by cheap borrowing, France faces a deficit exceeding 5% of GDP, public debt approaching 120% and more than $1 trillion in debt coming due by 2030, much of which will need to be refinanced at significantly higher rates. A fractured parliament and public resistance to spending cuts leave little political room for fiscal reform. Back home, Canadian futures were pointing lower as investors digested the latest inflation figures released at 8:30 a.m. ET. Albertans also head to the polls today in a referendum on whether to remain in Canada or begin the process toward a future vote on separation. The vote follows months of political divisions over the province’s relationship with Ottawa, although polls suggest a majority favour remaining in Canada.
Inflation in Canada was 3.1% over the year in September rising from 3.0% in August, coming in below economists’ expectations of 3.2%, as higher gas prices were partially offset by easing underlying inflationary pressures. Gasoline prices increased 27.8% annually, compared with 22.8% in August, reflecting the continued impact of high energy costs, while headline consumer prices rose just 0.1% month-over-month. The Bank of Canada’s preferred measures of core inflation declined, with CPI-median easing to 1.9% and CPI-trim falling to 1.8%, while inflation excluding food and energy remained steady at 2.1%. Price pressures also became less widespread, with data showing that the proportion of CPI components experiencing inflation of at least 3% declined to 29.2% from 34.2% in August. Grocery inflation slowed to 1.7% from 2.8%, its lowest annual pace since May 2024, while shelter inflation increased slightly to 1.8% from 1.5%. The softer-than-expected inflation report provides some reassurance to the BoC ahead of its October 28 policy decision, especially as the central bank balances inflation risks from the Iran conflict against weakening domestic economic conditions and ongoing U.S. trade tensions.
U.S. equities sold off on Friday led by declines in tech and AI-related stocks. The Nasdaq declined 2.1%, bringing its weekly loss to over -4%, while the S&P 500 fell -1.1%. Semiconductor stocks were hit hard, with the Philadelphia Stock Exchange Semiconductor Index falling -3.8% on Friday bringing the weekly decline to -11.4% amid concerns about growing competition from China and the sustainability of elevated AI-related valuations. Investor anxiety also grew around the debt-funded expansion of AI infrastructure, with CoreWeave declining nearly -12% on Friday and -25% for the week. Meanwhile, geopolitical tensions involving Iran and Russia pushed WTI up 3.51% to $101.41 per barrel, reinforcing concerns about inflationary pressures. Recent stronger-than-expected producer and consumer inflation figures have complicated the Fed’s policy outlook, although futures markets currently imply only a 17% chance the central bank will hike rate later this month.
Protests over the cost of living, fuel prices and deteriorating public services turned violent across France on Saturday, with rioting, looting and clashes with police in cities including Paris, Marseille and Bordeaux. More than 500,000 people took part in demonstrations nationwide, with authorities reporting 2,400 arrests and nearly 1,000 police officers injured. Hundreds of businesses were damaged, with losses estimated in the tens of millions of euros. The demonstrations have added to President Emmanuel Macron’s political troubles ahead of the 2027 presidential election, with opposition leaders Marine Le Pen and Jean-Luc Mélenchon both weighing in. Public opposition to spending cuts also complicates the government’s efforts to bring its finances under control.
Investors have a positive outlook on Brazilian equities, government bonds, and the Brazilian real, following a stronger-than-expected showing by right-wing presidential candidate Flavio Bolsonaro in the first round of Brazil’s election. Bolsonaro secured 47% of the vote and will face incumbent President Luiz Inácio Lula da Silva in a runoff later this month. Brazilian markets have already responded positively, with equities and the real appreciating while 10-year government bond yields declined, reflecting expectations for more market-friendly policies and improved fiscal credibility. Investors believe a Bolsonaro administration could improve relations with Washington, reducing U.S. tariffs and boost investment in critical minerals, tech, and defense. Still, it will be difficult for any government to achieve fiscal reform, as approximately 90% of government expenditures are mandatory and significant spending reductions would require constitutional amendments and cooperation within congress.
The federal government’s proposal to build a new pipeline capable of transporting 1 million barrels of Canadian crude oil per day to the Pacific coast could expand oil exports to Asia and reduce Canada’s dependence on the U.S. Still, some experts say it may not be able to revive employment in Alberta’s oil industry. Higher oil production no longer translates into more jobs, as automation, operational efficiencies and tighter capital spending have allowed oil sands producers to increase output with fewer workers. Some forecasts estimate that oil sands employment will decline by 4% by 2035 even as production increases 6%. Alberta’s oil and gas sector currently employs 435,000 people, about 85,000 fewer than in 2014, while annual oil sands capital investment has fallen from a peak of $35 bln in 2014 to $14.2 bln in 2024, highlighting the industry’s shift away from large-scale expansion projects. Carney’s support for expanding oil infrastructure represents a shift in federal energy policy, potentially improving relations with Alberta and strengthening Canada’s export competitiveness, but it also exposes his government to criticism from environmental advocates and conservatives expecting stronger employment and wage growth.
A black bear made a well-timed visit to a Library in California last week. On October 14, which happened to be the 100th anniversary of the first appearance of Winnie-the-Pooh, the bear broke into the library to raid the staff snack supply, where it helped itself to peanut butter, peach cups, cookies and, fittingly, a jar of honey. After briefly browsing the library shelves, the bear helped himself out without causing any reported damage. Library officials shared video footage of the incident on social media, noting that no books or shelves were harmed, although the honey jar remained missing. Winnie-the-Pooh got his start when Canadian veterinarian and military officer Captain Harry Colebourn purchased a black bear cub for $20 during a train stop in White River, Ontario, naming her Winnipeg, or Winnie, after his hometown. The bear became the mascot of the 2nd Canadian Infantry Brigade during the First World War before Colebourn brought her to the London Zoo, where she attracted the attention of a young Christopher Robin Milne. Christopher Robin’s affection for Winnie inspired his father, author A.A. Milne, to create the Winnie-the-Pooh stories. Winnipeg continues to celebrate its connection to the famous bear through a commemorative statue of Colebourn and Winnie at Assiniboine Park, the permanent Pooh Gallery, and special centennial programming at local libraries.
A tragic loss at CFB Wainwright. Four Canadian soldiers lost their lives at CFB Wainwright this weekend, a tragedy felt well beyond the military community. Our thoughts are with their families, friends and fellow service members, as well as those injured and facing a long road to recovery. We are grateful to the first responders, medical teams and communities who have come together to help. The outpouring of support from across the country speaks to the compassion and generosity of Canadians when it matters most.
Diversion: Great survival instincts
