Market Update

• All the market indices closed higher than the beginning of the month.
  • • The S&P 500 finished at 6,840.20 pts (2.27%)
    • The DOW finished at 47,562.87 pts (2.51%)
    • The NASDAQ finished at 23,724.96 pts (4.70%)
    • The TSX finished at 30,260.74 pts (0.79%)

Canada

Monetary Policy

• On October 29^th, The Bank of Canada (“BoC”) decided to lower the overnight lending rate by 25bps.
  • Currently, the overnight rate is 2.25%, the Bank Rate is at 2.50%, and the deposit rate is at 2.20%.
  • “With ongoing weakness in the economy and inflation expected to remain close to the 2% target, Governing Council decided to cut the policy rate by 25 basis points. If inflation and economic activity evolve broadly in line with the October projection, Governing Council sees the current policy rate at about the right level to keep inflation close to 2% while helping the economy through this period of structural adjustment.”
  • The next interest rate announcement will take place on December 10^th, 2025.

Economic Data

• Canada’s economy added 60,400 jobs in September – nearly reversing the 65,500 job losses in the previous month.
  • The unemployment rate in Canada remained unchanged at 7.1% in September.
• The Canadian Real Estate Association (CREA) reported that sales of existing homes stumbled in September, falling 1.7%, and marking its first decline since April 2025.
  • The CREA also reported that the average price of a home across Canada increased by 0.2% in September.
• Canada’s annual inflation rate increased to 2.4% in September from 1.9% in the previous month, which was above expectations.

U.S.

Monetary Policy

• The Fed decided to lower the target range for the federal funds rate by 25bps in its October meeting.
  • The target range for the federal funds rate is 3.75-4.00%.

• “Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment rose in recent months.”
• The next Fed meeting will take place on December 9^th – 10^th.

Economic Data

• The U.S. annual inflation rate rose to 3.0% in September, slightly below economists’’ expectations of 3.1%
  • Additionally, core inflation – which excludes volatile items such as food and energy – eased to 3.0% from 3.1% in August.
• Most major economic releases from U.S. government agencies have been delayed in response to the government shutdown, which is now the second-longest in history. Inflation data was compiled as the U.S. Bureau of Labor Statistics recalled staff to prepare the cost-of-living adjustment for Social Security.

Global

• U.K. gross domestic product expanded by 0.1% in August, reversing the 0.1% decline in the previous month. Economists were expecting the 0.1% increase.
  • Driving growth in August was a rise in manufacturing production, which increased by 0.7%.
• Japan’s economy appears to be on a relatively steady footing, propped up by government support measures in large part due to U.S. tariffs. Japan reached a trade deal with the U.S., but it is still facing tariffs.
• China’s economy expanded by 4.8% year-over-year in the third quarter of 2025. This was down from the 5.2% increase in the second quarter and was the slowest growth since the third quarter of 2024.

Notes From our Firm

• Over the past couple of quarters, markets have posted sizable gains even as tariff concerns continue to loom over investors. This growth has been driven largely by companies incorporating and investing in artificial intelligence (AI) across their business practices. As a result, many of our clients have been asking the question: “Are we in an AI bubble?”.
• Last week, one of our fund partners, Fidelity, sent out the following attachment and insights, which we found particularly useful:
  • Jurrien Timmer, Fidelity’s Head of Global Macro, noted that “….it looks to be more of a boom and less of a bubble.”.
  • The accompanying chart, “Nasdaq percentage gains in the dot-com vs. current AI era”, compares the Nasdaq Composite Index’s performance across two distinct cycles: the dot-come era (in green) and the current artificial intelligence cycle (in black). The green line begins in December 1994, corresponding with the release of Netscape (the first web browser), while the black line begins at the end of November 2022, marking the release of ChatGPT.
  • If today’s AI-driven Nasdaq rally follows a similar trajectory to the 1990s tech cycle, we may still be in the early innings of a sustained AI bull market.

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.

Yours Truly,

The Team, C.R. Smith Financial

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