Rebound

Good afternoon, everyone. AI juggernaut Anthropic just announced it will set aside five per cent of its shares to a new fund dedicated to the public good, while simultaneously acknowledging that AI may not be so good for the public good. 

One potential impact? Instability for workers across the broader labour market. Anthropic says it has already committed a cool $200 million to study and address the issue, but given how fast AI is developing, bolder measures may be needed. I’m not sure if this is supposed to be good news or bad news.

In today’s letter:

— Leah Golob

Inflation accelerated in September to an annual rate of 3.1%. That was slightly lower than expected, and driven largely by gasoline prices — exclude those, and annual inflation slowed to 2.2% from 2.4% in August. There’s also little evidence of higher energy prices causing inflation to broaden out to the rest of the economy. That will give the Bank of Canada and Governor Tiff Macklem more breathing room on interest rates, and potentially allow them to hike slower and less than markets have been pricing in.

Last week’s sell-off of tech stocks is ancient history. Or at least that’s the message investors were sending today, as the Nasdaq jumped by more than 1% (as of writing) after falling more than 4% last week, the biggest rout since Donald Trump’s tariff announcements last year. Trading is still volatile, though, particularly in some of the stocks which fared worst last week: neocloud provider CoreWeave, for example, saw its shares rise more than 7% this morning before falling to 2% off where it began the day. With tech earnings beginning this week, expect more swings to come.

Most Canadian portfolios stop at the border. The Harvest All In One High Income Shares ETF (TSX: HONE) doesn't.

Buy one ticker and you own three Harvest ETFs at once:

Harvest handles the balancing act, so you're not sitting there deciding what percentage goes where. Underneath, those funds, directly or indirectly, write covered calls and use leverage. Translation: HONE aims to provide high income every month while allowing you to participate in the growth side of the market. That's an opportunity for cash landing in your account twelve times a year, not four.

So instead of choosing between income now and upside later, or between the companies you know at home and the ones driving growth everywhere else, you get all of it in one holding.

Ready to give your portfolio a bigger map? See how HONE works.

The 60/40 portfolio may be ready for a comeback. Soaring bond yields and rising interest rates have left investors with equity-heavy portfolios reconsidering their exposure to fixed income. According to Sébastien Mc Mahon, chief economist at iA Financial Group, changes in the bond market mean the traditional 60/40 portfolio, consisting of 60 per cent equities and 40 per cent fixed income, has become more appealing after falling out of fashion when bond yields were lower. There's still some reluctance among financial advisors, however. “They’ve been burned by fixed income for so long,” he says, referring to the meagre returns of the 2010s.

Canadians can play prediction markets, but at a steeper price. Canadians often pay higher trading fees than Americans making the same bets directly on U.S. prediction markets. For example, buying 100 contracts priced at one US cent each costs 63 US cents in trading fees on Kalshi. But if a Canadian purchases the same contracts through Wealthsimple Predict, they'd pay US$2 in trading fees — more than three times as much. That's not to mention potential foreign exchange costs. “It starts to add up quickly and aggressively,” says Benjamin Felix, chief investment officer and portfolio manager at PWL Capital.

‘Mo money, mo problems.’ As wealth disparity widens, some newly wealthy young people are experiencing sudden wealth syndrome 2.0 — a term used to describe psychological issues associated with newfound wealth, ranging from existential anxiety and narcissism to depression. Those benefiting from the AI boom are accumulating wealth on a whole new level, with some dealing with isolation and paranoia as a result. One young man who made a fortune investing in AI told his therapist, Joan DiFuria, “My world fell apart. I wish this had never happened to me.” DiFuria says, “We hear that a lot.”

Prepared by Peak Money staff

Michael McGhee is the Senior Vice President and Head of TD Auto Finance. We asked him where vehicle prices are heading, how tariffs are impacting the sector, why EV demand is starting to recover, and more.

The Peak: How would you describe the state of the Canadian auto market right now? We went through a period of limited supply and price hikes – has that changed at all?

The Canadian auto market is much more stable today than it was a few years ago. Inventory levels have largely recovered, and we're seeing a return to more predictable sales patterns. 

The bigger challenge facing the industry now isn't availability, it's affordability. While vehicle inflation has eased, higher technology and manufacturing costs continue to put pressure on pricing. Ongoing uncertainty around tariffs and trade discussions also adds another layer of complexity. 

What we're seeing is a shift from a supply-driven market to one where affordability and value are top of mind for consumers. 

The Peak: Have elevated auto prices changed the types of vehicles Canadians are purchasing? For example, opting for smaller, cheaper models over the larger SUVs and trucks that have been so popular?

Not as much as many expected. 

Consumer demand remains strongest for SUVs and light trucks, while the used vehicle market has largely normalized. Canadians continue to favour SUVs, crossovers, vans, and pickup trucks, with light trucks accounting for nearly 90% of new vehicle sales to date this year. Rather than changing vehicle categories, many consumers are adjusting within them by choosing smaller models, lower trim levels, or older model years. Operating costs have also risen significantly over the past year, which can impact consumer affordability. This is primarily driven by the cost of fuel (which has increased roughly 30%). 

The Peak: Where do you see vehicle prices heading in the next 12-24 months?

I don't expect vehicle prices to come down significantly over the next 12 to 24 months. 

Inventory levels have improved, but manufacturers are still managing pressure from technology investments, production costs, currency fluctuations, and ongoing trade uncertainty. 

What I think we'll see is a more competitive market rather than a dramatically cheaper one. Consumers will have more choice and more opportunities to shop around, but affordability will remain a key consideration. 

This has been lightly edited for length. Read the full Q&A on our website.