Below, you will find our monthly market update and relative information that pertains to the current state of the economy.

Market Update

• Half of the major market indices have closed slightly higher than the beginning of the month.
  • • The S&P 500 finished at 5,728.80 pts (-0.58%)
    • The DOW finished at 42,052.19 pts (-0.66%)
    • The NASDAQ finished at 18,239.92 pts (+0.28%)
    • The TSX finished at 24,255.16 pts (+1.06%)

Canada

Monetary Policy

• On October 23^rd, The Bank of Canada (“BoC”) decided to reduce the overnight lending rate by 50bps.
  • Currently, the overnight rate is 3.75%, the Bank Rate is at 4.00%, and the deposit rate is at 3.75%.
  • With inflation now back around the 2% target, the BoC decided to reduce the policy rate by 50 basis points to support economic growth and keep inflation close to the middle of the 1% to 3% range.
  • The last interest rate announcement for 2024 will happen on December 11^th.

Economic Data

• Canada’s inflation rate fell to 1.6% in September, which was down from the previous month’s 2.0% rate.
  • September’s rate came in below the 1.8% economists had expected.
• The Canadian economy added 46,700 jobs in September, the most since April. This topped the 22,100 jobs added in August and economist’s expectations of 27,000 jobs.
• A sharp drop in gasoline prices helped bring inflation down. The growth in shelter prices slowed. Conversely, restaurant prices accelerated in September compared to August.

U.S.

Monetary Policy

• The Fed announced that it was lowering its federal rate in its November meeting by 25bps.
  • The target range for the federal funds rate is still 4.50-4.75%.

• Recent indicators suggest that economic activity has continued to expand at a solid pace. Since earlier in the year, labour market conditions have generally eased, and the unemployment rate has moved up but remains low.
• Inflation has made progress toward the Committee’s 2 percent objective but remains somewhat elevated.
• The next meeting will take place on December 17^th – 18^th .

 Economic Data

• The U.S. economy added 254,000 jobs in September, well above the 150,000 job additions economists had expected.
• The U.S. inflation rate was 2.4% in September from 2.5% in the previous month.
• For the second straight month, the U.S. unemployment rate declined, falling to 4.1%.
• Data is pointing to ongoing troubles in the U.S. real estate market. Activity has weakened amid increased borrowing costs and high home prices. Sales of existing homes dropped by 1.0% to 3.84 million in September, which was the lowest number of home sales in a month since 2010.

Global

• Earlier in October, the People’s Bank of China (“PBOC”) and China’s government announced plans to enact extensive measures to help support China’s struggling economy.
  • The PBOC lowered its one- and five-year loan prime rates by 25 bps to 3.10% and 3.60%, respectively.
• At its September meeting, the European Central Bank (“ECB”) lowered its key deposit facility rate by 25 bps to 3.25%.
  • A flash estimate showed that Europe’s annual inflation rate continued to decline in September, falling to 1.8%, the lowest rate since April 2021.
• The U.K. economy showed some signs of improvement in August.
  • Gross domestic product in the U.K. rose by 0.2% – this follows two consecutive months of flat growth (0.0%).
  • The overall trend for growth has been muted in recent months, likely pointing to slower economic growth in the third quarter compared to earlier in the year. This could put the Bank of England in a position to cut interest rates again this year.

Notes From our Firm

• While political headlines may cause short term volatility, it’s important to remember that long term market movements are likely to be driven by market and economic fundamentals such as corporate earnings and interest rates.
• Just as making investment decisions based on a preferred political party can negatively impact portfolios, pulling investments out of the market and moving to cash during election years can be equally detrimental.
  • S&P 500 investment during only non-election years since 1950 (moving to cash during election years): 6.32% Annualized Return
  • S&P 500 full investment since 1950: 8.13% Annualized Return

As always if you have any questions, please feel free to reach out to us. Or, if you know someone who would like an opinion on their investments or insurance, please connect us! There is no better compliment than a referral from one of our current clients.

The Team, C.R. Smith Financial

Community, Respect, Service & Financial Integrity