October has seen its share of news stories for North American markets. If you listen to the U.S. president, it would appear that Canada may never get a trade deal with our southern neighbour, however, when you listen to the U.S. treasury secretary, it would appear we are close. This president likes to deliver shock-and-awe headlines, but behind-the-scenes activities often lead to outcomes that are not quite as bad as those headlines suggest. We did come to expect a headline year and, thus far, we have not been disappointed.

     In Canada, our market has seen the most activity in small mining companies and rare earth minerals, and a few commodities based on stalling trade discussions with China. I do not see this activity lasting, so it could be a dangerous area to pursue. The broader market has not been too exciting and, with the Bank of Canada reducing rates again due to our economy struggling, we do need some sort of trade deal. We need a budget that can provide some fiscal responsibility and potential job growth, or we are going to be in this situation for a while longer.

     In the U.S., the shutdown has kept the economic numbers unavailable, which leads to a little bit of guess work on the economy. We are hearing about a bunch of layoffs, as companies try to become more efficient and the easiest expense to remove is labour. The U.S. Federal Reserve (the Fed) did lower rates again, more in an effort to help in the housing area, which continues to be weak as the stock market remains strong. The spending on Artificial Intelligence (AI )and data centres remains large, and it’s not borrowed money that is funding this. The funds continue to come from the seven largest companies in the world, from their profits.

     I have heard more and more mention of bubbles, and of 1999. I lived through this period, and I see actual companies that have revenues and growth not just ideas and no revenues. This doesn’t mean we couldn’t see a correction but, if we did, the themes going forward are still intact and that pullback will be used to take advantage of cheaper entry levels. I do see some pockets of froth, but in the areas our portfolio are focused on, we are involved in very solid companies that, in my opinion, are overlooked due to much of the money going to those seven companies. The U.S. did pass a favourable tax bill, and this will come into effect later this year and into next, so the momentum should continue to the upside into year end. The job losses remain the biggest factor to keep an eye on and, if the trend goes a lot higher, faster, it will bring more caution into our portfolio.

     For now, we continue to be underweight in Europe and China, as I see too many issues in the short term. Overall, earnings that have been coming in have been strong and I do not see any change into year end. We will continue to add to positions when the opportunity appears right.