Commentary

Weekly Investment Report

Volume 29, Issue 47
November 17, 2025.

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Nov 14

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Nov 7

Weekly
Change

Net Weekly
Change %

DJIA

47,147.48

46,987.10

+160.38

+0.34%

Nasdaq

22,900.58

23,004.53

-103.95

-0.45%

S&P 500

6,734.11

6,728.80

+5.31

+0.08%

S&P TSX 30,326.46 29,912.19 +414.27 +1.38%

 Source: Globe & Mail

Fractured Over More Cuts

Sal Guatieri

BMO Senior Economist

For the first time since the Fed resumed rate cuts in September, markets are split on whether another trim is likely in December. Futures markets flipped from pricing in nearly two-thirds odds of a reduction to less than a coin flip heading into the weekend.

The abrupt shift reflects a divide within the FOMC over the next course of action. Back in September, a slim majority of members expected another move in December, but now, some seem to be having second thoughts. Several officials, including a few not typically of hawkish persuasion, have signalled they are uncommitted to easing further, aligning with Chair Powell’s earlier warning that a follow-up rate cut is “far from” a done deal. A WSJ article noted that members are torn over which side of the dual mandate faces a greater risk of failure.

To recap, the case for a rate cut includes:

• Soft labour markets: Private-sector data and state jobless claims suggest job growth remains weak, and the unemployment rate may have ticked up in October, according to the Chicago Fed.

• Still-restrictive policy: Despite 150 bps of rate cuts since 2024, the funds rate is at least 75 bps above the median FOMC member’s neutral estimate (3.0%).

• Bifurcated expansion: The so-called K-shaped economy means the expansion is vulnerable to a pullback, whether from a stock market correction that hits spending by upper-income earners or from weakness in labour markets that forces lower income earners to cut back.

• Insurance: With policymakers unlikely to see the full slate of economic releases in time for the December 10 meeting, another rate trim would lower the risk of falling behind should the labour market weaken further.

• Easing tariff uncertainty: The Administration’s move to lower tariffs on some food imports (such as coffee and beef) will reduce inflation at the margin. The case for a pause includes:

• Sticky inflation: Inflation has hovered above target for nearly four years, risking the Fed’s credibility and higher inflation expectations.

• Lagged tariff effects: Goods inflation could rise further if businesses increasingly pass tariff costs on to consumers.

• Economic resilience: Apart from labour and housing markets, the economy showed resilience prior to the shutdown, partly due to the AI boom fueling wealth effects and business investment.

• Labour supply matters too: Slower job growth also reflects deportations and immigration restrictions, allaying upward pressure on the jobless rate.

• Lagged policy effects: 50 bps of rate cuts this year will support growth.

There you have it: five arguments for the doves and an equal number for the hawks, hence the virtual toss-up for the next decision. Each side must weigh whether another rate cut is needed to prevent unemployment from rising without propping up inflation. We still lean slightly toward a move, assuming continued weakness in labour markets. Come next year, though, the rate cutting cadence will likely slow, even with a new boss at the helm.


Frank and Mark.

 

Market Commentary

Source: Globe & Mail, BMO Capital Markets, Bank of Canada, Bloomberg.

 

Canada

The TSX added 1.4% last week, with a rebound in materials and strength in consumer stocks leading the pack.

The Canadian housing market stagnated in October with activity expected to be little changed from the previous month. That would put sales down about 6% y/y, as most major markets outside of Quebec were below sturdy year-ago levels. Average prices look to fall 3% y/y, and the quality-adjusted MLS HPI is expected to decline 3.5%. The latter would extend a ten-month streak of flat-to-declining monthly changes in the index. While mortgage rates have fallen as the Bank of Canada has cut rates, affordability remains a constraint in many markets. With the Bank likely nearing the end of its easing cycle, any further relief will need to come from income growth, which is also hindered by a soft labour market.

Canadian retail sales look to continue the see-saw pattern that’s been in place for most of the year. Spending is expected to fall 0.7% in September, in line with StatCan’s flash estimate, and volumes could be even softer as goods prices rose in the month. The October flash will be watched closely; although the Blue Jays’ World Series run is expected to support spending, it could be concentrated on the services side and may not be fully reflected in this report.

YTD, the TSX up 22.64%, and the benchmark 10-year yield ended the week to yield 3.14%.

 

U.S. & Global

Equity markets scratched out modest gains in choppy trading last week. The S&P 500 rose 0.1%, led by health care and energy.

It's back to the data grind (soon) now that the U.S. government shutdown is over. Look for the backlog to get cleared out, with a few pieces potentially left void. Meantime, markets have begun to really rethink the pace of Federal Reserve rate cuts from here given still-sturdy economic growth and persistently above-3% core inflation. Some less-than-dovish commentary from FOMC members this week left market pricing for the December meeting at around 50-50—a steady stream of easing into and through much of 2026 is now hardly a foregone conclusion.

For an equity market with pretty rich valuations, this is not an ideal repricing, and partly contributed to some of the choppiness this week. Indeed, one of the most bullish arguments right now centers around the fact that major equity market cycles typically break at the hands of Fed tightening. During the late-90s tech boom, a u-turn in policy saw the Fed raise rates 150 bps in just over a year; the Fed raised rates 425 bps through the cycle that ended in 2007; and the short post-pandemic bear market came alongside aggressive inflation-driven tightening. In each case, strong bull markets only ended at the hands of the Fed. That leaves us in an interesting spot today, with the Fed in the midst of an easing cycle, and carrying a bias to cut rates further from here. At the same time, a more dovish FOMC in 2026 could arguably tilt policy even easier than underlying macroeconomic fundamentals suggest. Historically, this is the stuff of a bull market accelerating, not rolling over.

For the bears, valuations are stretched across the AI space, in traditional industries that are now priced into the data centre building boom, and across the equity market more broadly. The S&P 500 now trades at 23x forward earnings, which is the very high end of the past-decade range and consistent with levels that predated the 2022 bear market. Going back further, that’s more than one full standard deviation above longer-run norms, and challenging levels seen during the late-1990s. Canadian valuations remain more favourable overall but have also moved higher. The market is also increasingly concentrated, with the top-10 names in the S&P 500 now accounting for more than 40% of the index, almost entirely on the back of AI. As always, we’re mindful that lofty valuations are not a sufficient condition to break a bull market—stocks can go from expensive to very expensive, and often do.


YTD, the DJIA is up 10.82%, the NASDAQ is up 18.59%, and the S&P 500 is up 14.49%.  The 10-year Treasury yield ended the week to yield 4.07%.

 

The Numbers

Source: BMO Capital Markets

 

Canada

The Good

Manufacturing Sales Volumes +2.7% (Sep.); Core Wholesale Trade Volumes +0.6% (Sep.); Building Permits jumped 4.5% (Sep.).


The Bad

No news is good news.

United States

The Good: 

None this week.


The Bad

ADP Private Payrolls -11,250/week on average (4 wks to Oct. 25); NFIB Small Business Optimism -0.6 pts to 98.2 (Oct.).

Source: Canoe.com/Associated Press

Arachnid super-web reveals the surprising ‘constant party’ life of cohabiting spiders

What is thought to be the world’s largest-known spider’s web, housing tens of thousands of arachnids, has been discovered in a cave on the Albanian-Greek border.

After researchers published their findings of two different spider species peacefully cohabiting in a giant colony nestled in a pitch-black, sulfur-rich cave, evolutionary biologist Lena Grinsted likened the “extremely rare” occurrence to humans living in an apartment block.

“When I saw this study, I was very excited because … group living is really rare in spiders,” Dr. Grinsted, a senior lecturer at the U.K.’s University of Portsmouth, told The Associated Press. “The fact that there was this massive colony of spiders living in a place that nobody had really noticed before — I find extremely exciting.”

The results of the study, published last month in the journal Subterranean Biology, spread rapidly online due to the striking images of the giant 1,140-square-foot spider’s web, a carpet-thick sprawl stretching along a narrow passage wall inside Sulfur Cave, which extends into Albania from its entrance in Greece.

This arachnophobe’s worst nightmare was quickly labelled the “world’s largest spider web.”

But the most surprising thing about the spider colony — which boasts an estimated 110,000 spiders — had less to do with its size and more to do with what scientists found inside the huge mass of funnel-shaped webs.

Two different spider species — about 69,000 Tegenaria domestica, or common house spider, and 42,000 Prinerigone vagans — were living side by side and thriving. The behavior, which had never been observed before, stunned scientists as, typically, the larger house spider would prey on its smaller neighbor.

“So often if you have spiders in close vicinity, they will fight and end up eating each other,” said Dr. Grinsted, who was not part of the cave study but has extensively researched spiders. “We can sometimes see that if there’s an abundance of food that they sort of become a bit less aggressive.”

Abundant food source

Scientists are keen to understand how and why the two species came to coexist peacefully in a “permanently dark zone” about 50 meters (164 feet) from the entrance of the cave, carved out by the waters of the Sarandaporo River to form the Vromoner Canyon.

Part of the answer, the research suggests, may lie in the combination of the estimated 2.4 million midge flies that buzz around the spider colony — an “unusually dense swarm” that provides a constant food source in an otherwise predator-scarce environment. The scientists also speculate that the friendly living arrangement could be a result of darkness impairing the spiders’ vision.

However, Dr. Grinsted says it is more likely that the larger spiders evolved or simply grew accustomed to responding to vibratory cues when the small flies land on their silken web — and maybe don’t attack otherwise.

“Spiders, in general, are not particularly good at seeing stuff ... and that includes these two species,” she said. She added that the two species might cooperate “to some extent in building the web … but I think it’s highly unlikely that they cooperate in anything else like prey capture, in brood care, or looking after each other’s babies.”

Dr. Grinsted draws parallels between the cohabiting spiders and how humans tend to coexist in apartment blocks.

“You’re very happy to share the stairs, the lift,” she said. “But if anybody comes into your living room and you haven’t invited them, you’ll be aggressive towards them.”

She added that while many spiders are “typically solitary, very aggressive” toward other critters, the cohabitation of two species is “relatively common” once spiders have evolved the ability to live in groups.

“But again, because these two species have never been found to live together and never been found to live in groups, it makes it particularly exciting,” she said.

‘The web is dense — like a blanket’

Dr. Blerina Vrenozi, a biologist and zoologist at the University of Tirana, in Albania, who co-authored the research paper, told the AP that the expeditions this year helped understand “how this mystery existed in there.”

“The DNA is interesting because they revealed that the species which live inside the cave is different from the one which lives outside the cave,” she said. “So it’s the same species, but different DNA.”

The cave colony’s giant web was first observed in 2021 by a team of Czech speleologists led by Marek Audy. A year later, the Czech team expanded to include scientists from multiple universities, which led to the recently published scientific paper.

“The web is dense; it’s more like a blanket, and when there’s danger, the female crawls back and hides, and no creature of a higher order can dig her out of there,” Audy said. “Spiders in the cave lay about a third of the eggs compared to spiders that live outdoors. Because it’s certain that they will raise their offspring there … so they can afford to lay fewer eggs.”

Audy added that the cave, which is also home to large bat colonies, also thrive on the abundance of midges inside the humid, dark space. “They are constantly having a party there, both the spiders and the bats,” he said.

Seemingly ideal environment

The study noted that the methodology used might “slightly overestimate” the total population count of spiders in the colony, as some funnel webs may be abandoned or unoccupied. However, other experts agree that the team’s exciting new research could offer broader evolutionary clues and deserves deeper study.

Dr. Sara Goodacre, professor of evolutionary biology and genetics at the School of Life Sciences, at the UK’s University of Nottingham, says these kinds of research projects help pave the way for more studies that could prove “fundamental to our understanding of what forces shape the world around us — spidery or not.”

“Natural selection will favour the ‘best’ strategies … the ‘winning strategy,’ whatever this is,” she said. “My guess is that the benefits of being part of this community far outweigh the costs.”

She added that if the dynamics in the seemingly ideal environment of abundant food and relative safety were to change, “then ‘freeloading’ will emerge and it will all break down.”

The politics of coexistence will hopefully not prove trickier above ground. Audy said that Albania has already asked which side the newly famous spiders lie.

“From a conservation point of view, we did something interesting there and marked out a border,” he said. “I just looked into it — and the spider web is on the Greek side.”