Weekly Wrap

Brent crude oil had dropped during the week initially but popped up to $114 per barrel on concerns over a fresh flare-up in the Middle East. Some media reports suggest that the U.S. and Israel have developed plans for renewed strikes on Iran after the mid-terms. Tech and semiconductors specifically experienced heightened volatility resulting in the Nasdaq’s worst day since June on Thursday and a negative week down around 1.4%. The ‘diversified’ S&P 500 is also red for the week by over 1% with names like Meta & Tesla reporting earnings and worrying investors resulting in their share prices dropping significantly. The Dow is positive over the past 5 days as investors rotate into more defensive names and is up 0.6%. Elevated bond yield and rising expectations of rate increases in Canada caused a bit of a sell-off in Canadian stocks and the TSX is in the red currently around 1%. The Emerging Markets, ever susceptible to rising energy costs, are down around half a percent. Gold, with the reignition of inflation worries due to spiking oil prices and the thought that rates may be ‘higher for longer’ reducing the appeal of non-yielding gold, also had a bad week (in fact its worst weekly decline since June) falling 2%. No shortage of news to keep us busy in the coming days as the U.S mid-term election is only 11 days away.

Market Insights

Record Highs don’t mean the end is nigh. Despite recent AI-related turbulence, several markets remain near all-time highs. The S&P 500 and Nasdaq have hit 28 and 24 record highs in 2026, respectively, with Canada and some EAFE members also near their summer peaks. South Korea, though below its 2026 record, remains a top performer. Record highs don't necessarily signal speculative peaks. Forward one-month returns may be muted, but three-month and one-year returns show a constructive picture. The MSCI ACWI has averaged 1.1% three months later and 4.2% annually. Over the past 20 years, global equities have posted positive returns approximately 63%, 71%, and 62% of the time at one-month, three-month, and one-year intervals, respectively. Immediate downside risk following record highs has been modest—median forward one-month drawdowns for global equities stand at -1.3%.  

The Bank of Canada and the rate dilemma. Markets are forward-looking, trading on future expectations rather than current conditions (for the most part). Bank of Canada (BoC) Governor Tiff Macklem has signaled hawkish concerns about elevated energy prices potentially broadening inflation in the future, despite September's CPI coming in below expectations at +3.1% year-over-year. Core median and trim inflation came in at +1.9% and +1.8% respectively—both below the BoC's 2% target (see chart below). However, underlying pressures are building as momentum in core inflation measures has ticked up lately. The Business Outlook Survey from this week shows firms' inflation expectations have risen to 3.7% over the next year, with half of businesses planning to pass cost increases to customers. This forward-looking inflation anxiety appears to be the BoC's primary concern.

While growth headwinds persist—including tariffs, elevated unemployment, and a sluggish housing market—markets are pricing in an ~85% probability of a rate hike next week, with 4-5 additional hikes expected over 12-15 months. Major economists at BMO, Scotiabank, Desjardins, and RBC Capital Markets now expect the BoC to hike despite currently benign inflation data. The BoC appears poised to act on inflation concerns that haven't fully materialized in current readings. David Rosenberg from Rosenberg Research sees the Canadian situation a little differently than the U.S. where there is a case for hikes: the economy has shed over 40,000 jobs, year-over-year growth is half the U.S. rate, core inflation sits where it should be and Canada faces an acute vulnerability - $3 trillion in household debt. This would be troubling for the Canadian economy should the BoC match the U.S. Federal Reserve’s rate hiking pace.

Portfolio Update

There is no portfolio update this week. 

Please note any changes apply to our Private Investment Management (PIM) portfolios only, subject to restrictions. Please call to clarify if you have any questions.

Planning On

We Worry So You Don't Have To

At RBC Wealth Management, we've learned something valuable: worry is part of our job description, not yours.

Nick and I don't lose sleep over our personal portfolios. We're confident in our investment strategies and know that markets have historically rewarded patient, diversified investors through volatility. But here's what we've realized—not everyone shares that same comfort level, and that is why we are here.

Our job is to worry so you don't have to.

On the investment side, Nick is constantly weighing opportunities across both equities and fixed income. We don't chase benchmarks or follow the crowd—we manage deliberately differently. While many advisors follow index-weighted allocations, we seek out opportunities based on our strict criteria with the most important being “durable competitive advantage”. Our fixed income approach is also unique and very different than the traditional Government of Canada bond and corporate bond fund exposure so often employed. This active approach requires continuous attention and conviction.

From a financial planning/wealth management lens we are equally focused on the non-investment details that compound your security. Which accounts should you draw from first to minimize taxes? When does it make sense to convert an RRSP to an RRIF? How do we structure your estate to protect your legacy?

Behind every seamless client experience is our associate team—opening accounts, processing timely money requests, resolving issues, and handling the operational details that keep everything running smoothly. We're a team of six, all working in concert for you.

The work happening behind the scenes is substantial. We stress-test your plan, optimize withdrawal sequences, and continuously monitor whether life changes require adjustments.

Whether you've already built your retirement or are still working toward it, we are working for you. While you focus on living your life, we're focused on one thing: ensuring your financial confidence. 

This information is not intended to provide legal, tax, or insurance advice. To ensure that your own circumstances have been properly considered and that action is taken based on the latest information available, you should obtain professional advice from a qualified lawyer or accountant, as applicable, before acting on any of the information.

Updates from the Team

MOSAIC 50^th Gala Luncheon

On October 16th, Nick joined MOSAIC’s 50th anniversary celebration gala. For 50 years, MOSAIC has helped newcomers build new lives in Canada. What began in 1976 as a small community organization supporting people learning English, finding work, and navigating local resources has grown into one of Canada’s largest immigrant-serving organizations. What a remarkable journey!

https://mosaicbc.org/about/celebrating-50-years-of-impact/ 

Charts of the Week

Feel free to share this newsletter with anyone who might benefit from it or find value in it. Thank you for reading our commentary. We welcome your feedback!

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