Hello everyone,

Last month I referred to October being a favourable performer in the last two decades, well, the jury is out on this one. So far, month to date, the S&P 500 is up 0.6%, kind of flat really but at home, the TSX is making noise, up 2.38% at the time of this writing. Not surprising if you think about it. The TSX Composite Metals & Mining Index is up 8.44%.

So, what's going on? I think this revolves around the next couple of weeks to be honest, it has everything to do with U.S. politics and the uncertainty, it's just an absolute nail biter down there.

Market participants continually try to assess a Harris vs. Trump White House occupation. My take after all the reading I've done, would suggest that a Harris win is likely to continue with stability, possibly with little change in tax rates, fiscal deficits, and limited aggressive policy advancements due to gridlock, which is often the case.  While political gridlock in Washington may hinder the passing of policies, it is generally considered good for the markets as it provides stability. The impact of a Democratic win on financial markets can vary based on historical trends and potential policy changes. Since 1945, the stock market has experienced an average annual return of 11% under Democratic presidents (Yahoo Finance. "What To Expect With the Stock Market If Harris Wins the Presidency).

However, if the White House is Republican, with a Trump win, especially alongside a Republican-controlled Senate and House, historically it leads to strong market performance. Factors under a Trump presidency may include America First policies (of course), potential tariff increases, which is not going to help their exporters, and higher tariffs may ultimately lead to higher inflation. His magic bullet or his focus, will be on lower taxes, benefiting consumer spending and corporate profits.

But in the said above, I don't think that is what investors are worried about, it's if the election can't be declared or decided for days, weeks or even months. This extended uncertainty may lead to a market selloff because it will bring in the question about the stability of the system and the "fairness" of the election…….bringing back memories?

Anyway, coming full circle here, investors often turn to gold and gold stocks during times of financial market uncertainty for all the reasons I mentioned above but in relation to this election, perhaps gold and gold mining companies have seen appreciation in their prices because it will provide a hedge against inflation and safe-haven asset. But having said all that, viewing election outcomes globally, countries like India, South Africa, France, U.K., and Mexico have successfully navigated their elections this year and, they've all ended up with results, they've moved on, and I don't think the U.S. will be any different…..I hope! LOL.

In bigger news, LOL, Canada cut its interest rate by 50bps. This is significant because when Canada's interest rates are aligned with or influenced by U.S. interest rate cuts, there are several significant implications for both economies. Firstly, the Canadian economy can benefit from lower interest rates, which may lead to increased borrowing and spending by businesses and consumers, potentially stimulating economic growth (https://theconversation.com/bank-of-canada--latest-rate-cut). Secondly, and more importantly, keeping Canada's rates in line with the U.S. can help maintain stability in currency exchange rates between the two countries (https://www.bnnbloomberg.ca/business/economic/2024//10/23/boc-delivers-half-percentage -point). As the U.S. and Canadian economies are closely intertwined through trade and investment, synchronized interest rate policies can promote economic harmonization and mitigate potential disruptions that could arise from diverging rates (https://stories.td.com/ca/en/article/october-bank-of-canada-rate-announcement-2024). Furthermore, when the U.S. Federal Reserve adjusts its own interest rates, Canada's central bank often responds to maintain competitive interest rate levels, ensuring that Canadian businesses and individuals remain competitive in the global market (https://www.cbc.ca/news/business/bank-of-canada-october-interest-rate). In times of economic uncertainty or global financial shifts, coordination in interest rate adjustments can provide a sense of stability and predictability for businesses and investors in both countries (https://www.cp24.com/news/canada/2024/10/23/bank-of-canada-to-release-interest-rate-decision-economic-forecast-today/).

So, what's in store for next month? Historically, November is often considered a favourable month for stocks, with promising market movements (https://www.cnn.com/2023/11/03/investing/premarket-stocks-trading-november-seasonal. For example, in November 2023, the S&P 500 index gained 8.9%, marking its second-best November performance since 1980 (https://www.bloomberg.com/news/articles/2023-11-30/frantic-year-end-awaits-stock-bulls-after-historic-november-win). Additionally, during the same period, the Dow Jones Industrial Average reached its high for the year, with a significant increase of 520 points (https://www.cnn.com/2023/11/30/investing/stock-market-best-month-this-year/index.html). Moreover, in the year of U.S. elections, historical data suggests that stock markets tend to experience certain trends in November. Typically, stocks have shown a tendency to rise from March to August and then again from November to year-end during election years (Business Insider - Stock Market Trends in Election Years). Specifically, the S&P 500 has exhibited an average gain of around 7% during U.S. presidential election years since 1952. While this gain is notable, it falls short of the 17% average increase observed in non-election years. Good thing it's an election year….lol.

Until next month, have a spook-tacular Halloween….