Asian/European Markets

There was very little macroeconomic news last week, but there was certainly no shortage of action in the markets. We saw an extraordinarily sharp rotation out of growth and into value, with both the Russell Value Index and the S&P Value Index reaching all-time highs even as the Nasdaq suffered one of its largest recent selloffs. That is a dramatic divergence, but historically it is not unprecedented.

Ken Griffin told a room full of investors recently that we are “almost certainly” in an AI bubble. He may well be correct in that assessment, and there are plenty of media narratives that support that view.

We estimate the US economy grew at a 3.3% annual rate in the third quarter. Solid. Robust even, considering that net immigration is near zero and possibly negative, while Baby Boomers continue to gradually drift into retirement.

Rick Polsinello, Christian Galipeau Discuss high-conviction insights that go beyond media headlines.

The Middle Eastern waters might be calm enough to allow for energy shipments to recover toward pre-war levels, but Asia-Pacific (APAC) economies are not yet in calm waters. Tight petroleum product supplies and higher shipping costs leave the region vulnerable to further shocks.

We have been arguing that the reset higher in yields has restored the dual role of bonds in multi-asset portfolios: providing attractive income while once again offering the potential for meaningful risk mitigation. This month’s tech market turbulence has provided a clear example: As equities came under pressure, U.S. Treasury yields fell amid a flight to safety, allowing duration to behave like a diversifier again.

Last year, U.S. charitable giving hit a record $617.20 billion, according to Giving USA. That’s the first time it’s ever topped $600 billion. Individuals gave $394.2 billion of that, foundations gave $117.15 billion, bequests added $62.19 billion and corporations contributed $43.67 billion.

Our Director and Head of Canadian Investment Strategy BeiChen Lin sees two main forces behind this week’s more cautious market tone: higher energy prices and renewed questions around artificial intelligence investment.

Manufacturing production began to recover in early 2026 after nearly three years in recession. Yet manufacturing employment has remained largely unchanged. In other words, a year and a half after tariffs were imposed with the goal of boosting manufacturing jobs, that objective remains elusive.

With the U.S. midterm elections mere weeks away, it can be easy to get swept up in the headlines and questions about what different outcomes might mean for markets.

Emerging markets continued to deliver strong year-to-date returns in 2026, although the third quarter served as a reminder that the path higher is rarely linear. After a powerful first-half rally led by artificial intelligence (AI), semiconductors and other growth-oriented sectors, markets experienced a broad correction in July before stabilizing through the remainder of the quarter.

A broad retreat in technology shares set the tone for the week. The S&P 500 fell 1.9 per cent and the NASDAQ dropped 4.5 per cent, while the Dow rose 0.7 per cent as investors rotated out of tech and into more defensive sectors.

Middle Eastern oil exports are approaching pre-war levels, but oil prices certainly aren’t. Brent remains above $100 a barrel, as the concern increasingly is not just how much oil is flowing today, but how much is left in reserve if supplies are disrupted again.

As investors look beyond U.S. borders for fixed income diversification, Schwab Asset Management is entering the international bond ETF race with the Schwab International Bond ETF (SCIN). Expected to begin trading on the NYSE on October 21, 2026, SCIN pairs international investment-grade bond exposure with an ultra-low 0.06% net expense ratio.

While don’t think of myself as being old, I can’t call myself young anymore. When I go to the gym, it takes me longer to stretch than to work out. People my age debate the best vitamin supplements, not the best burger joints. When I am asked for identification at the market, it isn’t to confirm I am old enough to buy beer; it’s to see whether I am eligible for a senior discount.

Narratives are almost always wrong: clever stories that explain the past and say nothing about the future. One may be right. AI may become the dominant technology of the century and render much of the present economy obsolete.

Chris Galipeau and Taylor Topousis discuss high-conviction insights that go beyond media headlines.

The link between AI capex and earnings carried roughly half of this year’s profit growth, and that support fades once spending stops accelerating, even at a record level. The earnings bill doesn’t arrive when the spending stops. It arrives when the spending stops growing.

Plenty of story-stocks and recent alpha generators are outside AI glamor companies. Absolute and relative strength have ticked up in real-economy sectors that were beaten up as investor dollars flowed to tech. Macro conditions, such as ebbing Treasury rates and the upcoming U.S. midterm elections, are wildcards. Still, traders and portfolio managers should listen up for commentary in perhaps unusual places this earnings season.

There is a general framework to inflation, and it is older than any of us. Prices can rise because buyers are bidding for scarce goods with money they’ve actually earned. Or prices can rise because the cost of producing something has jumped for reasons unrelated to demand.

Over the last decade, a series of policy decisions in DC support the reindustrialization of the United States. Key policy movers include investments in infrastructure, tax policy that allows significant tax benefits for corporate capital expenditures (capex) and domestic research and development, the CHIPS & Science Act and tariff policies, especially the sector-specific 232 tariffs.

Corporate bond yields are high, but spreads are low. Low spreads are supported by strong corporate fundamentals, and high yields might help offset potential price declines.

In more normal periods like today, hiring broadly matches the labor force growth, and unemployment holds steady. Labor force growth has slowed to about 0.5% a year, so payroll gains have slowed too. Payrolls rose only 29,000 in September and averaged about 45,000 a month over the past year, yet unemployment is still a low 4.2%.

If markets are good at one thing, it's reminding investors that stock prices don't simply go up, uninterrupted, forever. I have updated this report several times since it was initially published in 2008, and given recent market volatility, it made sense to do so again.

Central banks are tightening, and stocks are still within reach of their highs. The Fed hiked on September 16 for the first time since 2023, and the 10-year Treasury yield touched 5.34% this month, its highest level since 2002. Even so, the S&P 500 sits within roughly 2.5% of its record, and Japanese equities recently set fresh all-time highs.

As we round the three-quarter pole and head into the final stretch of 2026, the prevailing investment narrative has, of course, been AI, along with its pros and cons. Since March, when the Iran conflict began, there has been a secondary drumbeat that continues to get louder and louder: the narrative surrounding bond prices, interest rates, inflation, and the economy.

In light of accelerating global fragmentation and geopolitical conflict, many governments and businesses are investing in resilience. That imperative has coincided with the emergence of AI, a technology that can expand the frontier of what is possible. As a result, technology security is becoming a pillar of national economic security strategy.

One of the hallmarks for the U.S. economy over the last few years has been its resiliency. This calendar year has been no exception as the war in the Middle East led many a market prognosticator to pencil in the potential for a recession stemming from the effects of the Middle East war.

Gold and silver finally put a winning week on the board. But the more revealing development is what happened while prices were falling: investors poured billions into gold-backed funds, and China stepped up its purchases of physical gold.

Every time I clean out my wardrobe, I find items I have not worn in years but cannot quite bring myself to give away. Maybe they will come back into fashion. Maybe they’ll fit again one day. Or maybe getting rid of them simply feels harder than buying them did.

Stocks enjoyed a profitable week in the lead-up to third quarter earnings season. The tech-heavy NASDAQ started the week strong, ending Monday at a record high.

Global income strategies offer a compelling value proposition for investors: a steady stream of income generated from dividend-paying equities, government bonds and structured instruments like equity-linked notes (ELNs) from around the world.

Global equity markets finished the third quarter only modestly higher, but the path beneath the surface was anything but calm. The AI and momentum trade that powered markets in the first half unwound sharply in July, leadership broadened through August as capital returned to areas that had been left behind, and the market narrowed again in September.

The outlook for government policy, bond markets, and monetary policy appears less settled than it has been for much of the post-COVID period. The debate about public debt, the functioning of the Treasury market, inflation persistence, and the future path of interest rates has intensified. Global bond yields have been soaring.

Our Senior Portfolio Manager and Head of Global Sustainable Investing, Kris Nelson, sees markets balancing several competing forces this week, from renewed oil-price volatility to softer labor data and increasingly demanding expectations around AI earnings.

Earlier last week, a supertanker loading crude in the Gulf of Oman was fixed at $1.01 million a day for a voyage to Asia, with another deal reportedly agreed at $1.16 million.

By generation, Gen Z and Millennials now make up 88% of online betting activity. Gen X trails at 9%. Boomers barely register. As recently as this spring, Millennials were the bigger group. Then Gen Z passed them, and Bank of America called it a “turning point.”

Global investing is changing. Geopolitical tensions, shifting trade relationships, energy costs and divergent central-bank policies are increasingly influencing which companies and markets are best positioned to navigate the environment.

We have a number of logistics routes that run close to our home, which can snarl traffic. Freight rail lines cut across local roads, and long columns of trucks crowd local highways. Transit delays are frequent, and their duration always seems proportional to how much of a hurry I am in.

While a gold ETF is a convenient way to play gold's price, you don’t possess any gold. You have paper. And you don’t know for sure that the fund has all the gold, especially when it sees inflows. In such a scenario, there have been difficulties or delays in obtaining physical metal.

I write my letter as if I’m writing to friends, which I consider you to be. How many times do you get together with friends and you focus on just one topic? The usual friendly dinner conversation covers lots of topics. This week is a multiple topic letter, but with so much happening, how could it not be?

Emerging markets (EMs) have historically been associated with commodity exports and low-cost manufacturing. Those characteristics remain relevant in parts of the investable universe, but the sources of competitive advantage have broadened materially.

Headlines are popping up left and right about how high the 10-year Treasury yield has risen. While investors make decisions about what is the “right” longer-term cost of government debt, many journalists focus on single-factor ways of viewing it.