The Week in Review

Weekly Market Recap: U.S. and Canada

Some mixed results this week, as the Nasdaq 100 outperformed on strength in tech stocks, while the S&P 500 and Dow Jones lagged along with inflation concerns and weaker consumer sentiment. The TSX struggled following the Bank of Canada’s 50bps rate cut, which points toward slowing economic growth.

In terms of weekly performance, the Nasdaq 100 led the pack with a 0.73% gain, driven by demand for tech stocks. The S&P 500 dipped 0.64%, the Dow Jones fell 1.82%, and the TSX lost 1.53%.

S&P 500 Returns | Week At-a-Glance

TSX Returns | Week At-a-Glance

Major Economic Stories

Economic updates this week focused on Bank of Canada’s moves and inflation data. The Bank cut rates by 50bps for the second time, U.S. inflation ticked up to 2.7% annually, and Canadian industrial capacity utilization posted mixed results.

Here’s what happened this week:

Bank of Canada Cuts Rates, Again

The Bank of Canada cut its benchmark interest rate by 50bps, bringing total cuts this year to 175bps.

In his speech, Bank Governor Tiff Macklem noted slowing GDP growth but refrained from committing to further rate cuts in 2025.

• Canadian GDP grew by 1% in Q3, below forecasts.

• BoC projects inflation near 2% for the next two years.

• Consumer spending showed resilience despite weak growth.

• Policymakers highlighted risks from potential U.S. tariffs.

Canada’s Industrial Capacity Shows Mixed Signals

Canada’s industrial capacity utilization rose slightly to 79.3% in Q3, driven by strong electricity demand during the summer.

On a more granular level, mining and oil sectors saw declines due to maintenance slowdowns.

• Capacity utilization rose from 79.1% in Q2 to 79.3%.

• Electricity generation capacity surged to 83.4%.

• Mining and oil sectors fell to 75.9%.

• Manufacturing capacity edged up to 78.2%, led by petroleum and coal.

U.S. Inflation Creeps Higher

U.S. annual inflation climbed to 2.7%, with core CPI steady at 3.3%.

Shelter costs continued to drive price increases, while energy costs fell less sharply than in prior months.

• Monthly CPI rose 0.3%, led by shelter (+0.3%).

• Food inflation accelerated to 2.4%, up from 2.1%.

• Energy costs fell 3.2%, down from -4.9% in October.

• Used vehicle prices dropped 3.4%, same as the prior month.

Key Takeaways From this Week’s Economic News

Bank of Canada: A Pause Amid Uncertainty

The BoC’s decision to cut rates again (and 50 basis point, no less) is a sure sign of growing concerns about Canada’s economic momentum. With GDP growth below expectations and Q4 at risk of another miss, the central bank is doing everything it can to cushion the slowdown. Inflation remains near target, and the resilience of consumer spending may limit the need for additional easing. Risks tied to potential U.S. tariffs could also complicate future decisions.

U.S. Inflation: Sticky Shelter Costs Pose a Challenge

U.S. inflation remains controlled overall, but the November data reminds us of the challenge posed by shelter costs, which account for nearly 40% of the CPI increase. Even with energy costs stabilizing, shelter inflation’s persistence could continue to make things challenging for the Fed.

Canadian Industries: Cooling Demand Meets Rising Capacity

I don’t cover this metric often on our YouTube channel or in this newsletter, but I did want to mention this most recent report. The Q3 industrial capacity utilization data shows how uneven Canada’s economic situation is. While electricity demand surged due to extreme summer temperatures, we saw notable declines in mining and oil, and this points to weaker resource sector output. So what should the Bank of Canada do? This imbalance raises questions about Canada’s ability to drive industrial growth without external support, such as demand for Canadian products. The Bank’s rate cuts may help, but structural issues in resource extraction and manufacturing are likely to persist into 2025.

THIS WEEK’S POLL QUESTION
(Results in Next Week’s Newsletter)

In was probably inevitable, and now it’s official. Ottawa has taken steps to intervene in the ongoing strike at Canada Post. I’ll cover this in a bit more detail below.

For now though, what do you think? Is this intervention a good thing, or a bad thing?

Answer this week’s poll question and don’t forget to share your thoughts.

LAST WEEK’S POLL RESULTS

A very close on this week, pretty much split down the middle. Thanks to everyone who contributed to the poll.

Comments of the Week

Oddly, nobody from the "Yes” side left a comment along with their vote, but here are a couple from the “No” side:

👎 No

“Employment in the private sector is obviously hurting on both sides of the border. Lowering rates will increase access to funds for the private sector allowing more hiring. Plus many homeowners are desperate for the rates to be lowered. Its bad enough that unemployment is on the rise. Coupling that with homeowners struggling to keep their heads above water would be Catastrophic.” - aloquicious

“I said No, but still Leary on the US strategy. Canada, I think is clear. We have a softening market and need the stimulus to continue. US market is still showing resilience and the Fed could halt or even increase the interest rate in 2025. I think they may hold firm in December and not decrease the rate.” - thompsond1951

THE POSTAL STRIKE
Canada Post Strike: Ottawa Intervenes After Four Weeks  

• Ottawa sends postal dispute to CIRB for review.

• Strike began November 15, disrupting holiday deliveries.

• Union demands better wages, benefits, and worker protections.

• Ottawa sets May 2025 deadline for resolution.

The Canada Post strike has dragged on for four weeks now, perfectly in sync with holiday shopping hitting full swing. The union says they’re fighting for fair wages, better benefits, and improved working conditions, especially for temp workers. Meanwhile, Canadians everywhere are dealing with delayed packages, and small businesses are scrambling to get products to customers on time.

Government Steps In

On Friday, Labour Minister Steven MacKinnon stepped in, sending the dispute to the Canada Industrial Relations Board. I think Ottawa is trying to strike a balance here. By avoiding binding arbitration and instead setting a May 2025 deadline, they’ve given both sides more time to work things out—without dragging the economy into a mess.

What Happens Next?

The union wasn’t happy with the move, calling it an attack on their bargaining rights, but Ottawa didn’t have many options left.

Canada Post is ready to comply, but unless something gives soon, this dispute might drag into the new year. For me, it feels like a good old fashioned high-stakes game of chicken, and everyone—workers, businesses, and consumers—is stuck in the middle. Personally, I haven’t spoken to one person who hasn’t been affected by this strike in some shape or form.

Read the Full Story here.

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TAXATION AND THE ECONOMY
GST/HST Holiday Aims to Ease Costs for Canadians    

• GST/HST removed on goods from Dec. 14.

• Includes groceries, meals, clothing, and video games.

• Tax break could cost $2.72 billion overall.

• Excludes e-books, luxury goods, and decorations.

Starting this weekend, the federal government’s GST/HST holiday kicks off, offering Canadians a break on some essentials until February 15. Groceries, restaurant meals, and kids’ clothing make the cut, while things like decorations and collectibles are left out. Honestly, the exclusions might annoy some people—e-books are taxed, but printed ones aren’t? Feels a little random to me, and yes, I even though I don’t plan on altering my spending patterns because of this ‘holiday’, I do find it confusing, and thus frustrating as well.

Here’s a list of what qualifies, and what doesn’t.

The Holiday Spending Push

The government says this will help families and boost spending over the holidays. And with inflation stretching a lot of family’s budgets, it’s hard to argue against anything that puts a little extra back in our wallets. But let’s be real: it’s a temporary band-aid, not a long-term fix for rising costs.

Will It Work?

The program could cost over $2.7 billion in lost tax revenue. In a recent poll in this newsletter fully 80% of our readers said that this event will not affect their spending habits. That said, for some families it is a small reprieve when they need it most.

Read the Full Story here.

PENSIONS
Ottawa Removes Pension Fund Investment Cap  

• 30% cap on pension fund stakes lifted.

• Frees up billions for Canadian business investments.

• Includes $1B for venture capital funding in 2025.

• Provinces must adjust rules to align federally.

This had fallen off my radar, but the federal government just scrapped the rule limiting pension funds to owning 30% of any Canadian company. To me, this feels like a big deal. With over $3 trillion in managed assets, our pension funds have the money to fuel major investments here at home, and I’ve argued for years that we should have given them the tools to do this long ago.

Chasing Global Competition

Finance Minister Chrystia Freeland says this move will help Canada compete for capital against countries like the U.S., which has been tightening its grip with “America first” policies. On top of that, Ottawa is sweetening the pot with $1 billion in venture capital funding and incentives for AI-related projects. They’re obviously trying to build some momentum in key industries.

Can It Deliver?

While I think this has potential, the provinces still need to align their rules to make this work seamlessly. And in reality, pension funds still have to weigh their risks carefully. Will they actually shift investments into Canada? That’s the big question. For now, though, I’m fall into the optimistic camp about what positive affect this could have for Canadian companies.

Read the Full Story Here.

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OTHER NEWS FROM THE PAST WEEK

House Committee Orders Apple and Google to Prepare for TikTok Ban
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Tech Companies Threatened by Trump Donate to Inauguration Fund
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Bud Light Loses Draft Market Share to Michelob Ultra
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TD Employee Arrested for Fraudulent Transactions
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Canada’s Most Livable Cities: 2024 Rankings
A new report ranks Vancouver, Calgary, and Quebec City as Canada’s most livable cities in 2024. Rankings consider factors like affordability, safety, and public services, offering insights for relocations.

Elon Musk Faces SEC Pressure Over Disclosure Violations
Elon Musk claims the SEC is pressuring him to pay a penalty for allegedly failing to disclose key financial information in a timely manner. The controversy adds to Musk’s tense relationship with regulators.

Canadian Airlines Criticized for Rising Fees at Senate Hearing
Airline executives faced backlash at a Senate hearing for rising fees and declining service quality. Senators called for increased regulation, citing affordability concerns for Canadian travelers.

Rule of 70 vs. Rule of 72: Key Differences
A breakdown of the "Rule of 70" and "Rule of 72" explains how these financial shortcuts calculate the time it takes for investments to double. The piece compares their accuracy and use cases.

Market Movers

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The Relative Strength Indicator (RSI) can provide a signal that suggest a stock is either overbought or oversold.
📈A stock that has an RSI over 70 is considered to be in “overbought” territory. This might suggest that the stock is due for a pullback, however it is not a recommendation to sell.
📉A stock that is trading with an RSI below 30 is considered to be in “oversold” territory. This might suggest that the stock is due for a recovery, however it is not a recommendation to buy. Always perform your own due diligence.

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