Market Recap: U.S. and Canada

The markets got a late start this week, with US and Canadian exchanges closed Monday for Labour Day, leaving just four trading sessions on the week. The TSX and the Dow slid hardest through Wednesday and Thursday as oil prices climbed, before both found some footing heading into Friday. Tech held up far better than the rest of the market, with the Nasdaq 100 and S&P 500 losing ground but avoiding the kind of steep slide that hit blue-chip and Canadian names.

As for the numbers, the Nasdaq 100 held up best, dipping just 0.59% over the shortened week. The S&P 500 fell 0.80%, the Dow Jones dropped 1.57%, and the TSX brought up the rear with a 2.12% decline.

Major Economic Stories | At a Glance

Inflation Ticks Up as Core Prices Run Hotter Than Expected

US consumer prices rose 0.4% in August, matching forecasts and holding the annual rate at 3.4%, but core inflation crept up 0.3% for the month, a tenth of a point hotter than expected. Gasoline drove more than a third of the headline gain, jumping close to 4% in August, while the bigger surprise came from a broad pickup across services categories like wireless plans, airfares, and used cars.

• Core inflation, annual: 2.4%, the lowest reading since March 2021

• Shelter costs: up 0.3% in August, the quickest pace in three months

• Energy prices: up 16.3% over the past year, versus 14.7% in July

• Market reaction: traders raised the odds of a Fed hike at next week's meeting

Consumer Sentiment Sinks to Second-Lowest Reading Ever

The University of Michigan's preliminary September sentiment index fell to 47.8, down from 51.7 in August and well below the 51.0 economists had expected, marking the second-lowest reading in the survey's history. The damage was almost entirely forward-looking, driven by rising gas prices and renewed trade tensions that left consumers bracing for tighter household budgets ahead.

• Current Economic Conditions Index: 50.9, down slightly from August

• Consumer Expectations Index: 45.8, down sharply from August

• One-year inflation expectations: up to 4.6%

• Year-over-year: sentiment down 13.2% from September 2025

TOP INSIGHTS

The Fed's Real Inflation Problem Is Buried in the Details

Headline CPI came in at the consensus, but the monthly acceleration in core prices came from a wide range of services categories; wireless plans, lodging, airfares, education, and used cars, things that have nothing to do with tariffs or energy. That's a broad-based reacceleration and it's exactly the kind of print that makes a rate decision uncertain going into next week.

This shows up as costs in smaller things such as your wireless bill and other subscriptions, and a gradual buildup is arguably harder to plan around than one big visible price shock.

I think next week’s Fed vote itself matters less than the dot plot that comes with it. If officials pencil in fewer cuts for next year, that's a bigger signal than whether they hike or hold this month. I'm watching for language in the statement about how much of this core pickup gets treated as noise versus a genuine trend.

Consumers Are Telling a Scarier Story Than the Data

Michigan sentiment cratered to its second-lowest reading ever, even though the hard data; employment, inflation, GDP, still points to a moderating economy rather than a collapsing one. That gap between what people say and what the numbers show has been widening for months now, and this week's reading pushed it about as far apart as it has ever been.

When we look at this from the perspective of the everyday Joe, gloom like this tends to become self-reinforcing. People who feel poor cut back on discretionary spending regardless of what their actual paycheque says, and that pullback becomes its own drag on growth. For the markets, sentiment surveys are watched closely precisely because they can lead the hard data rather than just describing it.

It will be interesting to see what comes out in next week's retail sales report. If spending holds up even with sentiment this weak, it tells us Americans are anxious but still willing to open their wallets. If it slips, the mood may finally be catching up with the wallet. Long overdue, in my opinion.

Energy Is Doing the Economy's Talking

If you trace both of this week's reports (the inflation surprise and the sentiment collapse) back far enough you end up with the same culprit: gasoline. Energy prices jumped over 2% in August and sit up more than 16% from a year ago, and survey respondents specifically cited fuel costs and trade tensions as reasons for their souring mood.

For the policymakers over at the Fed, this is precisely the kind of imported, geopolitically driven inflation that a rate hike can't really fix, since the Fed has no lever over Middle East oil supply.

My own thoughts are that oil prices, not anything the Fed does next week, will end up being the bigger swing factor for both inflation and sentiment over the next couple of months.

The Week Ahead

The big one is the Fed's rate decision next Wednesday, September 16, where the debate has shifted from a hold to a live possibility of a hike to 3.75% to 4.00%, after Friday's hotter-than-expected core inflation print handed hawks fresh ammunition ahead of a meeting that also brings updated economic projections. Wednesday also brings August retail sales, which will show whether US shoppers kept spending through a month of rising gas prices and falling consumer confidence.

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TOP STORY
The $5,000 Cheque Nobody Can Explain

• Lutnick insists the $5,000 payments won't touch taxpayer money

• Administration officials have given at least three different funding stories

• National debt just surpassed $40 trillion for the first time

• The reconciliation route alone could cost about $1.3 trillion

Commerce Secretary Howard Lutnick spent a chunk of his interview with NBC News this Thursday trying to convince Americans that the dividend cheques Trump promised this week are basically free money, paid for by things like the new Trump Platinum Card program and paper gains on the government's Intel stake. The trouble is that every senior official who has tried to explain the plan has landed on a different answer, from a congressional funding manoeuvre to tariff revenue that a Supreme Court ruling has already complicated. As is his style, Lutnick was much more animated talking about his plan to crash oil prices to two dollars a barrel (yes, he really did say that, but we can assume he meant gas prices, not oil) by squeezing Venezuela and Iran, a promise that isn’t exactly compelling when you look at the elevated pump prices Americans are actually paying right now. None of this changes the basic math: every dollar mailed out is a dollar that isn't going toward the debt, government programs, or lower taxes.

The Credibility Gap Widens

When three cabinet-level officials give three different funding stories for the same program, voters tend to notice, and the polling on Trump's economic approval already reflects that skepticism. We can expect the administration to coalesce around a single talking point well before the midterms, whether or not the money is actually there.

Watch Congress, Not Social Media

If the reconciliation route is really the plan, it will need votes in a Congress that Republicans could lose control of in November, which is exactly why Trump keeps tying the payments to keeping the House and Senate. Whichever way that plays out, someone eventually has to foot the bill.

Full story here

Between Lutnick's $5,000 promise and gas prices sitting above $4 a gallon, this week's news cycle put two very different kinds of financial relief side by side. One is a lump sum that may or may not ever arrive, and the other is the kind of everyday price relief that shows up automatically, every time you fill up or check out at the grocery store. I'm curious to see what our readers think actually moves the needle for their own budget. Please vote on this week's question:

LAST WEEK’S POLL RESULTS

In last week's poll, I asked which AI related stock our readers would rather hold today, a software or platform company, or a chipmaker. Fifty-seven percent sided with software and platforms over chipmakers, so it looks like readers have more confidence in the applications layer than in hardware right now. As always, thank you to everyone who voted.

INTERNATIONAL TRADE

Trump Opens the Door to Chinese Cars

• Trump says he's fine with Chinese automakers building here

• The catch is they must hire American workers, he said

• A 2025 Biden rule already bans Chinese vehicles outright

• Automakers are lobbying Congress to make that ban permanent

Much to the surprise of many, President Trump told Fox News this week that he wouldn't stand in the way of Chinese car companies setting up factories on US soil, and he compared it to how Japanese automakers have long built vehicles here with local labour. The comment came just weeks before Trump is set to meet Chinese President Xi Jinping, and it immediately drew pushback from lawmakers who worry he's negotiating market access behind closed doors as part of a broader deal. Trump pushed back hard against the idea that he's softening on China, calling reports of a deal a total phony rumour. For an industry that has spent years building a wall of tariffs and regulation against Chinese vehicles, his comments came as a surprise.

A Trade War With an Exit Ramp?

When you think about it, this is the same president who has kept a wall of restrictions around Chinese vehicles for years, so a sudden openness to Chinese factories on American soil is a real shift in tone. It points to trade policy toward China being more negotiable heading into the Xi meeting than anyone expected.

Detroit Isn't Convinced

US automakers have already asked Congress to make the current ban permanent before Trump can even consider loosening it, and that fight is likely to intensify. Watch whether the Alliance for Automotive Innovation's push gains traction before the Xi meeting, or whether Trump's comments end up steamrolling it entirely.

Full story here.

HOUSING
Canadian Rents Post Their Steepest Drop Since March

• Average asking rent fell to $2,035 across Canada in August

• That's the steepest year-over-year rent drop since March

• Rents have now posted year-over-year declines for 23 straight months nationally

• Condo rents dropped nearly 8% while purpose-built rents fell less

This is another one of those stories that feels contrary to what so many people are actually feeling. Canada's rental market keeps sliding, and the trade war with the US is now adding a fresh layer of uncertainty on top of an already soft market. Urbanation's Shaun Hildebrand points out that weaker employment and consumer confidence could cool demand even further in the months ahead, while rising construction costs threaten to choke off the supply side too. Rents were basically flat compared to July, which makes it look like the steep annual decline is more a reflection of how inflated things got a couple of years ago rather than any sudden shift happening right now.

Renters Get a Break, With Caveats

After years of brutal increases, this is great news for anyone renting in this country's most expensive markets. A market driven down by weaker hiring and shakier confidence carries different risks than one cooling because supply finally caught up with demand.

Watch the Trade War's Second-Order Effects

If tariffs raise construction costs the way Hildebrand expects, new supply could slow just as the population keeps growing, setting up a squeeze a year or two down the road. For now, tenants should enjoy the relief while it lasts.

Full story here.

TECHNOLOGY & CYBERCSECURITY
AI Worms Are Learning to Hack Better

• University of Toronto researchers built a self-learning AI worm

• The worm adapts its attack strategy for each device

• Building these worms is now essentially free for attackers

• A survey shows 26% of Canadians still reuse the same passwords

A team led by Canadian Institute for Advanced Research AI chair Nicolas Papernot has shown that today's publicly available AI models are already good enough to build a worm that spreads between devices and gets smarter as it goes, learning from every network it breaches. That's a huge departure from something like WannaCry, which followed one fixed script and could be stopped once defenders patched the specific hole it used. Papernot's message to the public gets straight to the point: use a password manager, turn on multi-factor authentication, and stop ignoring update prompts. The bigger problem, as one government official put it at the same event, is that this fundamentally changes what defence has to look like: the old approach of patching individual vulnerabilities alone isn’t enough against something that finds a new way in every time.

Cheap Attacks Change the Threat Model

When a worm can fund its own spread by hijacking a victim's processing power, the economics of cybercrime flip in the attacker's favour, and that should worry anyone running critical infrastructure like hospitals or power grids. Researchers shared these findings with national security and defence bodies months before going public, a sign of how seriously they're taking the threat.

The Fix Is Boring, and That's the Point

None of Papernot's advice is exotic. Unique passwords, multi-factor authentication, and prompt software updates close off the human-error gaps that even a brilliant AI attacker still needs to exploit. Basic hygiene remains the best defence even as the attacks themselves get dramatically more sophisticated.

Full story here.

The Relative Strength Index (RSI) can provide a signal that suggests 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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