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• Cooling inflation raises odds of Bank of Canada’s interest rate hold
• No ‘broad handouts’: What economists expect from today’s fiscal update
• OpenAI in ‘intense discussions’ to quell potential staff mutiny
• New purpose-built rental units are coming, but they won’t be cheap
• If you have American connections, you may owe the IRS some tax money

5:26 p.m.

Here are Tuesday’s top 3 performers on the TSX

Centerra Gold Inc. ($7.65, 5.37 per cent)
Shares of Centerra jumped on a day when the S&P/TSX composite index’s materials sector gained, while the rest of the sub-indices declined. The Toronto-based miner is up 24 per cent from its year-to-date low on Oct. 12. Analysts have eight buys, zero holds and one sell on the stock and 12-month target price of $10.58, according to Bloomberg.

First Majestic Silver Corp. ($7.52, 4.59 per cent)
Shares of the miner hit a year-to-date low Nov. 2 on earnings losses but have since gained ground, although the stock is down 33 per cent for 2023. Analysts have two buys, four holds and no sells on the stock and 12-month target price of $10.54, according to Bloomberg.

Alamos Gold Inc. ($18.47, 4.53 per cent)
Shares of Alamos jumped Oct. 13 after the price of gold rose past US$2,000 per ounce. The stock hasn’t really looked back since then. Year-to-date, investors have pushed the shares up 35 per cent. Analysts have eight buys, four holds and no sells on the stock and 12-month target price of $20.06, according to Bloomberg.

Gigi Suhanic, Financial Post

4:47 p.m.

Market close: TSX down more than 100 points, U.S. stock markets also lower

Canada’s main stock index moved lower, led by industrial and utilities stocks, while U.S. markets also declined.

The S&P/TSX composite index closed down 136.50 points at 20,109.97.

In New York, the Dow Jones industrial average was down 62.75 points at 35,088.29. The S&P 500 index was down 9.19 points at 4,538.19, while the Nasdaq composite was down 84.55 points at 14,199.98.

The Canadian dollar traded for 73 cents U.S. compared with 72.85 cents U.S. on Monday.

The January crude contract was down six cents at US$77.77 per barrel and the January natural gas contract was down six cents at US$2.99 per mmBTU.

The December gold contract was up US$21.30 at US$2,001.60 an ounce and the December copper contract was up two cents at 3.81 a pound.

The Canadian Press

4:15 p.m.

Freeland’s fiscal update pledges new guardrails to keep deficits in check

The Liberal government’s fall economic statement acknowledges the cost-of-living crisis weighing on Canadians but offers few new measures to tackle it while pledging to keep deficits in check.

Finance Minister Chrystia Freeland is presenting her fiscal update in the House of Commons today, stressing the pressure inflation and a slowing economy are putting on federal finances.

As the Liberals face pointed criticism for their spending by the Opposition Conservatives, the update also outlines new fiscal anchors to show restraint, including setting a new goal to keep deficits below one per cent of Canada’s GDP beginning in 2026-27.

The federal government projects the deficit for the current fiscal year to come in at $40 billion, largely unchanged from its spring budget forecast, with deficits shrinking, but not disappearing, over five years.

The update adds $20.8 billion in new spending since the spring budget over five years, with some new measures designed to boost the housing supply, including rental units and affordable housing.

But much of the new spending is tied to policies and programs the federal government announced before today’s fall economic statement, including billions of dollars for electric-vehicle battery plants.

The Canadian Press

Related: ‘There is no more fiscal room’: Deficits expected to rise as the government projects dark economic clouds

3:22 p.m.

Binance CEO pleads guilty to money laundering, agrees to pay $50-million fine

Binance Holdings Ltd.’s chief executive Changpeng Zhao pleaded guilty to anti-money laundering violations and agreed to pay a $50 million fine Tuesday under a sweeping deal worked out with the Justice Department designed to keep the company operating.

Zhao agreed to step down as part of the settlement, which included the Treasury Department and the Commodity Futures Trading Commission, according to people familiar with the matter. Binance agreed to plead guilty to criminal charges and pay a US$4.3 billion fine, according to people familiar with the matter. The deal ends a years-long investigation into the cryptocurrency exchange.

In a charging document unsealed on Tuesday, Binance was charged with three counts, including money laundering violations, conspiracy to conduct an unlicensed money transmitting business, and U.S. sanctions violations. Binance allowed at least 1.1 million transactions, worth more than US$898 million, involving customers in Iran, according to the court filing.

The settlement negotiated between the two sides will resolve allegations of criminal wrongdoing.

Find out more.

Bloomberg

3:13 p.m.

Federal Reserve minutes show unity on cautious approach to future rate hikes

United States Federal Reserve policymakers at their most recent meeting united around a strategy to “proceed carefully” on future interest-rate moves and base any further tightening on progress toward their inflation goal.

“All participants agreed that the committee was in a position to proceed carefully and that policy decisions at every meeting would continue to be based on the totality of incoming information,” according to minutes of the Oct. 31-Nov. 1 Federal Open Market Committee meeting released in Washington Tuesday.

At the meeting, U.S. central bankers held the benchmark lending rate in a range of 5.25 per cent to 5.5 per cent for the second straight time, despite a run of data showing strong consumption and hiring, which fuelled overall economic growth.

The minutes show the committee was willing to take a patient approach toward inflation while making future policy decisions dependent on incoming statistics.

“Participants expected that the data arriving in coming months would help clarify the extent to which the disinflation process was continuing, aggregate demand was moderating in the face of tighter financial and credit conditions, and labour markets were reaching a better balance between demand and supply,” the minutes stated. Read more.

Bloomberg

1:52 p.m.

Your ‘priorities are backwards,’ Bell tells CRTC during Online Streaming Act hearing

Bell Media owner BCE Inc. wants the national broadcasting regulator to create a news fund that would provide financial assistance to broadcasters and require foreign streamers to contribute to the subsidy through their Canadian content spending.

Bell representatives told a CRTC panel Tuesday that the commission should simultaneously exempt Canadian streaming platforms such as Crave from those new obligations until traditional broadcasters receive regulatory relief.

The hearing, which began Monday and is set to last three weeks, is part of the CRTC’s public consultations in response to Bill C-11, the Online Streaming Act, which came into force in April.
It seeks to determine what contributions traditional broadcasters and online streaming services will need to make to support Canadian and Indigenous content.

But Bell says the CRTC’s “priorities are backwards” amid a crisis for Canadian broadcasters that have experienced declines in revenue while also competing with new digital platforms that don’t face the same regulatory burdens.

The commission is also scheduled to hear today from Google LLC after a presentation on Monday by Quebecor Inc.

The Canadian Press

12:49 p.m.

Airfares fall 19% amid more flights, less demand

Statistics Canada says airfares have plummeted over the past year, as airlines shore up capacity even while consumers think twice about travelling in a world of higher costs.

In its consumer price index release on Tuesday, the agency says the price of air transportation dropped 19.4 per cent last month compared with October 2022.

The figure follows a 21 per cent year-over-year drop in September and a 20 per cent decrease in August, after rampant post-pandemic demand last year outstripped carriers’ capacity to meet it, resulting in sky-high fares.

The data also showed airfares declined four per cent on a monthly basis in October, when they typically rise ahead of the holiday season.

The travel sector continued to roar back this year, with seat capacity among big Canadian carriers at 92 per cent of 2019 levels, according to figures from aviation data firm Cirium.

But experts say customers are now curtailing travel plans in response to strained purse strings and nearly two years of high inflation, even as airlines increase flight volumes and try to lure Canadians back on board with lower prices.

The Canadian Press

Noon

Midday markets: U.S. markets hang on Nvidia earnings

Stocks lost steam after a rally that put the market on pace for its best month since July 2022, with traders awaiting the United States Federal Reserve minutes and Nvidia Corp.’s results. Bonds rose and the dollar wavered.

The S&P 500 dropped from “overbought” levels and the Nasdaq 100 fell about one per cent. As the earnings season winds down, questions on the sustainability of the advance led by the “Big Seven” group of megacaps have resurfaced, with Nvidia declining from a record. The bar was set high for the world’s most-valuable chipmaker, whose shares have more than tripled this year — leaving little room for error.

Some US$6 trillion in market capitalization has been added to the U.S. equity benchmark in 2023 in a rally fuelled by the artificial intelligence boom, Corporate America’s resilience and bets the Fed will pivot to rate cuts next year. The gains left the index about five per cent away from reclaiming its all-time high.

“The stock market is once again priced for perfection,” said Matt Maley, chief market strategist at Miller Tabak + Co. “Maybe Nvidia’s earnings will be ‘perfect’ enough to push things even higher. However, since the stock market is more ‘overbought’ right now — than it was ‘oversold’ three weeks ago — investors will need to remain very nimble as we move through the end of November and into December.”

On Wall Street, the S&P 500 was down 0.27 per cent at 4,534.97. The Dow Jones industrial average fell 0.22 per cent at 35,074.49 while the Nasdaq composite fell 0.44 per cent at 20,158.30.

In Toronto, the S&P/TSX composite index was down 0.43 per cent at 20,158.52.

The Canadian dollar traded for 73.01 cents U.S. compared with 72.85 cents U.S. on Monday.

The January crude contract was down 0.66 per cent at US$77.32 per barrel and the January natural gas contract was unchanged at US$3.05 per mmBTU.

The December gold contract was up 1.15 per cent at US$2,003.10 an ounce and the December copper contract was down a penny at US$3.81 a pound.

10:30 a.m.

Germany budget chaos blocks EV plant subsidies, puts green energy overhaul at risk

Germany’s emergency spending freeze is blocking funds for next-generation auto-industry and steel plants, jeopardizing the push to re-engineer Europe’s economic engine.

Berlin halted new spending authorizations this week after Germany’s top court ruled that some €60 billion (US$65.7 billion) can’t be transferred into a green-technology fund. The money was earmarked for a range of projects including decarbonizing steel production and major semiconductor works led by Intel, TSMC and Infineon.

Sweden’s Northvolt AB was also due to receive part of pledged subsides from the climate fund for an EV battery plant in northern Germany, according to two people familiar with the situation.

The bombshell court ruling, catching the government seemingly unprepared, is putting Germany in danger of falling behind in the global race for green technologies, according to Claudia Kemfert, professor of energy economics at the DIW research institute in Berlin.

We “have already lost large parts of this competition, and now we are also in danger of losing it in electromobility, digitization and green hydrogen for heavy industry,” Kemfert said. “This is particularly painful as Germany gave the go-ahead for the energy transition 20 years ago and was the global market leader for many years.”

Bloomberg

Read the full story here.

9:45 a.m.

Markets are open: Stocks slide in early trading

Wall Street is slipping in early trading, a rare drop following a rally that vaulted it to the highest level since the start of August. The S&P 500 was 0.3 per cent lower in the early going Tuesday. The Dow fell 59 points, and the Nasdaq composite was off 0.6 per cent.

In Canada, the S&P/TSX composite index was down 1.11 per cent at the open.

The Associated Press, Financial Post

8:30 a.m.

Inflation cools to 3.1% in October as gas prices ease

The inflation rate slowed to 3.1 per cent on a year-over-year basis, down from 3.8 per cent in September, as the price of gasoline fell, Statistics Canada said Tuesday.

The price drivers paid for gasoline in October fell 7.8 per cent from a year earlier compared with a 7.5 per cent increase in September, driven partly by a spike in gasoline prices in October 2022 after OPEC announced production cuts.

Excluding gasoline, Statistics Canada said the consumer price index was up 3.6 per cent for October, following a 3.7 per cent increase for September.

Prices for goods were up 1.6 per cent, while prices for services were up 4.6 per cent, largely driven by higher prices for travel tours, rent and property taxes and other special charges.

The largest contributors to inflation continued to be mortgage interest costs, food purchased from stores and rent.

Mortgage interest costs were up 30.5 per cent compared with a year ago, while the cost of rent was up 8.2 per cent.

While grocery prices rose faster than overall inflation, Statistics Canada said the pace continued to slow. Grocery prices were up 5.4 per cent year-over-year in October compared with a 5.8 per cent move higher in September.

The Canadian Press

7:30 a.m.

OpenAI in ‘intense discussions’ after staff threaten mutiny over Sam Altman’s ouster

OpenAI said it’s in “intense discussions” to unify the company after another tumultuous day that saw most employees threaten to quit if Sam Altman doesn’t return as chief executive.

Vice president of Global Affairs Anna Makanju delivered the message in an internal memo reviewed by Bloomberg News, aiming to rally staff who’ve grown anxious after days of disarray following Altman’s ouster and the board’s surprise appointment of former Twitch chief Emmett Shear as his interim replacement.

OpenAI management is in touch with Altman, Shear and the board “but they are not prepared to give us a final response this evening,” Makanju wrote.

The memo from Makanju doesn’t elaborate on the extent of contact with Altman, and the former CEO didn’t respond to a request for comment outside regular business hours.

“We are continuing to go over mutually acceptable options and are scheduled to speak again tomorrow morning when everyone’s had a little more sleep,” Makanju wrote. “These intense discussions can drag out, and I know it can feel impossible to be patient.”

She added a word of reassurance for employees: “Know that we have a plan that we are working toward.”

Bloomberg

OpenAI in ‘intense discussions’ to quell potential staff mutiny

Before the opening bell: Stocks waver

United States equity futures wavered on Tuesday as some investors questioned the sustainability of a powerful rally fuelled by expectations of a U.S. Federal Reserve pivot to rate cuts.

Goldman Sachs Group Inc. strategists said there is a risk of “disappointment in the near term” amid lingering concerns about economic growth and inflation, after the S&P 500 surged to its strongest close since August and the Nasdaq 100 hit a 22-month high on Monday. Citigroup Inc. strategists warned of the possibility of a short squeeze that could derail the momentum.

“Despite a more certain outlook regarding peak rates and potential cuts in 2024, there are few upside catalysts,” said Liberum strategist Susana Cruz. “Corporate guidance was pretty soft during this earning season, forecasts for the fourth quarter have fallen and we will probably see more downgrades. That’s why we expect equities to experience a soft patch in the first half of 2024.”

Contracts on the S&P 500 and Nasdaq 100 were little changed.

In Canada, the S&P/TSX composite index closed up 70.70 points at 20,246.47.

Bloomberg

What to watch today

The inflation reading for October is out this morning. Economists expect the data to show inflation cooled on lower gas and food prices. Other data releases include the new housing price index for October, and in the United States, existing home sales.

Finance Minister Chrystia Freeland will table the Liberal government’s fall economic update this afternoon. Economists expect more spending on housing, but say Ottawa must find a delicate balance on spending as the economy slows.

The United States Federal Reserve Open Market Committee releases meeting minutes for its Nov. 1 interest rate decision at 2 p.m. ET.

Expect earnings reports from George Weston Ltd., Nvidia Corp. and Lowe’s Companies Inc.

Need a refresher on yesterday’s top headlines? Get caught up here.

Additional reporting by The Canadian Press, Associated Press and Bloomberg

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