The Week in Review

I’ll start with a quick Personal Note: I’m running with an abbreviated version of The Pulse this weekend, as I’m on the road taking a little vacation and working off my iPad. Doable, but certainly not as efficient as my desktop back at the house.

I’ll review the most important economic stories of the week, but I’m cutting back a tad on the other stories. I’ll be away one more week after this weekend, so I’ll be back with the full updates the weekend of November 16/17. Thank you so much for your support and I’ll be back and fully recharged soon.

Weekly Market Recap: U.S. and Canada

As for the markets, we saw a mix of economic reports take their toll, and midweek the release of U.S. labor market data kept investors on edge. This had an affect on growth sectors, especially tech, with the Nasdaq showing lots of volatility. Also, mixed earnings results from some big names added to the uncertainty, and cautious corporate outlooks led to broader market pullbacks toward the end of the week.

When the dust had settled, the Nasdaq 100 was the hardest hit, down 1.57%, while the S&P 500 fell 1.37%. The TSX fared slightly better, ending the week with a 0.85% decline. The Dow Jones was the most resilient, slipping just 0.15%. Overall, the week closed in the red across major indices, with investors remaining cautious.

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

TSX Returns | Week At-a-Glance

Major Economic Stories This Week

The big headlines this week come from the U.S. and the soft job numbers from south of the border. Here at home, slow GDP data might also be cause for concern.

Here’s what played out this week.

Canada GDP growth Flatlines in August

All the talk of stagnant growth in Canada’s GDP hit home in August, which saw flat growth in the economy.

Services-producing industries showed modest gains, but goods-producing sectors continued to decline, especially in manufacturing and transportation due to rail disruptions. 

Slightly more positive, preliminary projections see GDP is expected to have grown by 0.3% in September, lead by gains in finance, insurance, construction, and retail sectors.

• August economic growth: 0.0%

• September growth forecast: 0.3%

• Goods-producing sector decline: -0.4

• Finance and insurance sector increase: +0.5%

US Core PCE Price Index Rises by 0.3%

The US core Personal Consumption Expenditures (PCE) price index increased by 0.3% month-over-month in September, the highest gain in five months.

Service prices drove the uptick, while goods prices fell slightly. Year-over-year, core PCE remained at 2.7%, slightly above expectations. 

• Monthly core PCE rise: 0.3%

• Service price increase: 0.3%

• Goods price decrease: -0.1%

• Annual core PCE increase: 2.7%

US Jobs Fall Far Under Expectations

The US only added 12,000 jobs in October, the lowest monthly gain since December 2020.

Strikes, particularly at Boeing, had a heavy impact on manufacturing employment. Health care and government jobs continued upward trends but declines in temporary help services and manufacturing jobs were pronounced. Revisions to prior months showed a decrease of 112,000 in previous employment reports. 

Key Takeaways From this Week’s Economic News

Canada’s GDP Growth sees Persistent Manufacturing Weakness 

Not what we wanted to see in August, with zero growth in the Canadian economy. We did see glimmers of hope for September, with GDP ticking up jut a bit, showing that sectors like finance, insurance, and retail might keep economic momentum steady even as we see goods-producing sectors struggle. I note the weak manufacturing numbers, especially in durable goods, and this is a signal to me that we’re still going through the ongoing adjustment period for industries that have been impacted by shifting global demand and supply chain issues. The rail disruptions another layer to transportation challenges.

US Core PCE Inflation Rising, Led by Service Sector 

Just in case we thought inflation was under control, let’s not get too comfortable. The increase in the US core PCE inflation gauge hints that the Fed’s battle with inflation isn't over yet, as higher service prices are continuing to push inflation upward. Goods prices might be holding steady or declining, but service costs are showing stickiness. As I see it, the U.S. Fed may need to weigh these inflationary pressures against a slowing job market to determine whether additional rate adjustments are necessary. Odds are strong now of further rate cuts, but this is a slippery slope.

US Job Growth Slows Significantly Amid Strikes and Economic Challenges 

And… not what the US wanted to see on the employment front. A big miss in the US job market, with Non Farm payrolls coming in at just 12,000 new jobs in September, stunningly below the consensus expectations of 113,000.  This is a clear shoutout of the impact of ongoing strikes and also a likely cooling of overall demand. We saw declines in temporary jobs and transportation equipment manufacturing, and certain sectors are beginning to see reduced hiring pressure, a potential signal that demand-side challenges are cooling growth.

THE ECONOMY
Canada’s Economy Flatlines in August, Rate Cuts Likely Ahead 

• Economic growth stalled in August.

• Q3 growth fell short of central bank’s forecast.

• Manufacturing and transportation sectors took a big hit.

• Bank of Canada might cut rates in December.

As I touched on above in this week’s economic summary, the Canadian economy barely moved in August, with high interest rates continuing to hold back both consumer spending and business investments. StatsCan says services saw minor growth, but it was all canceled out by a drop in goods production. And with Q3 growth estimated at just 1%—short of the Bank of Canada’s 1.5% target—it’s looking like we’re still in for some tough months.

Manufacturing and Transport Take the Biggest Hit

Manufacturing led the downturn in August, which honestly isn’t surprising with lower demand across sectors and a pause in Ontario auto plants as they update their lines. Andrew DiCapua from the Canadian Chamber of Commerce summed it up well:

Transportation and warehousing also dropped, impacted by shutdowns at Canada’s two major railways.

Rate Cuts Coming?

With growth lower than expected, the Bank of Canada has some leeway for rate cuts. Right now, rates sit at 3.75%, but there’s a good chance we could see a cut in December. As TD’s Marc Ercolao put it, the latest numbers aren’t a “red flag” but do keep the focus on economic weakness.

And Bank of Canada Governor Tiff Macklem is playing it cautious, saying that future cuts will depend on upcoming data. My take? If the economy doesn’t perk up soon, a rate cut feels almost inevitable.

Read the Full Story here

IN PARTNERSHIP WITH BMO ETFs

Why Dividend ETFs are in the Spotlight Right Now

As we head into a lower-rate environment, the spotlight is on dividend ETFs. Investors are moving toward these income-generating assets, seeking a steady yield stream as bond returns start to look a bit flat. With the potential for rates to come down, dividend ETFs are a natural choice, offering both a consistent payout and some valuable tax efficiency—something any savvy investor can get behind.

 BMO’s Canadian Dividend ETF, ZDV stands out here. It’s designed to capture high-quality Canadian companies that have a track record of paying dividends, but with a smart beta twist. Unlike traditional dividend ETFs that simply chase the highest-yielding stocks, ZDV uses a strategy that prioritizes quality and sustainability, balancing solid yield with stability. The result? A well-rounded portfolio of dividend-payers that’s aimed at growth and cashflow alike, giving investors a sweet spot between risk and reward.

And it’s not just about Canadian markets. Let’s look at ZUE, the BMO S&P 500 Hedged to CAD Index ETF. This fund tracks the U.S. big players, and here’s a little secret: many people miss out on the magic of dividends in broad-market ETFs. Price return only tells part of the story—the real deal is in total return, where reinvested dividends do some heavy lifting. Historically, dividends have accounted for a big chunk of the S&P 500’s gains. With ZUE, you’re not just capturing growth but benefiting from the compounding power of reinvested dividends, which over time can significantly boost returns.

So, if you’re looking for dividend oriented strategy that’s ready to perform in a lower-rate world, dividend ETFs like ZDV, BMO’s Canadian Dividend ETF  or ZDY, BMO’s US Dividend ETF might be worth exploring. They provide a tax-efficient way to earn income, balancing yield with quality.

Check out BMO’s lineup to see how you can put the power of dividends to work in your portfolio. 

This content is sponsored by BMO Exchange Traded Funds. This content has been prepared by Beavis Wealth and represents its assessment at the time of publication. Beavis Wealth is compensated under this arrangement by BMO Exchange Traded Funds.

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Disclaimer
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This content is sponsored by BMO Exchange Traded Funds. Beavis Wealth is compensated under this arrangement by BMO Exchange Traded Funds. This content is intended for information purposes only. This content has been prepared by BMO Global Asset Management, the manager of the BMO Exchange Traded Funds, and represents its assessment at the time of publication. The views expressed herein by BMO Global Asset Management are subject to change without notice. The content contained herein is not, and should not be construed as, investment advice to any party. Any securities described herein must be evaluated relative to the individual’s investment objectives and risk tolerance, and professional advice should be obtained with respect to the individual’s particular circumstances.

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HOUSING CRISIS
Is Canada’s Rental Market Being Rigged?

• Renters say they’re seeing sky-high, software-driven rent hikes.

• U.S. lawsuit claims rental software could be enabling price-fixing.

• Tenants are calling on Canada’s Competition Bureau to investigate.

• Some landlords are already stepping back from using the software.

If you feel like your rent keeps going up at a crazy rate, you’re not alone. A lot of tenants are asking some hard questions about YieldStar, a software that adjusts rents based on “real-time market data.” Sound fair? Maybe, except that the same software is under investigation in the U.S. for allegedly helping landlords set high prices in unison. Now, some want Canada’s Competition Bureau to step in and look into whether this is happening here too.

Can a Price Algorithm Really Push Rents Up?

YieldStar’s algorithm pulls together rent data from different properties and adjusts prices based on what the market can “take.” In the U.S., the Department of Justice claims this lets landlords coordinate rent hikes without directly talking to each other—like digital collusion. And now tenants here in Canada are getting worried. Minister of Innovation François-Philippe Champagne says he’s pushing for an investigation, but so far, the Competition Bureau hasn’t confirmed one.

Could This Be a Turning Point for Tenants?

Some landlords like GWL Realty Advisors and Dream Unlimited have stopped using YieldStar, probably due to the pressure. Lawyer Dania Majid thinks this could be just the start and warns that if nothing changes, rent algorithms might just keep spreading. For renters already struggling with higher prices, that’s a big worry.

Read the Full Story here.

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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