Carney's First Budget Falls Short On Vow To Transform Canadian Economy

Economic

Summary:

Canadian Prime Minister Mark Carney promised his first budget would be a bold blueprint for "generational investments," to bolster the economy and withstand a trade war with the U.S.

Canadian Prime Minister Mark Carney promised his first budget would be a bold blueprint for "generational investments," to bolster the economy and withstand a trade war with the U.S., but to some analysts Tuesday's document was a missed opportunity.

The budget, they said, ended up falling short on ambition, constrained in part by the reality of leading a minority government that relies on political rivals to survive.

"This isn't a generational budget," said Theo Argitis, senior vice president for policy at the Business Council of Canada. "It goes in the right direction on some fronts, but I think Carney was not as ambitious as he could have been."

Argitis said there was not enough that might speed private investment at the scale necessary for significant growth.

"If you're looking to transform the economy, this budget is not going to do it," he said.

CANADA ECONOMY FACES SLOW GROWTH, U.S. TARIFFS

Canada is grappling with slow economic growth and the impact of tariffs imposed by U.S. President Donald Trump.

Carney, saying the tariffs and the uncertainty they had created would cost around 1.8% of GDP, on Wednesday pushed back against the idea he had been too cautious.

"This budget is a sea change in the approach for the government," he told reporters, noting a pledge to slash the pace of official spending and what he called unprecedented changes to the tax system to boost business investment.

But while increasing numbers of Canadians struggle to put food on the table, Carney is not necessarily the politician they blame, said Elizabeth McCallion, an assistant professor of political science at the University of Toronto.

"Canadians know there are many things beyond Carney's control," she said. "They're more angry at Donald Trump than they are at Carney."

Without enough seats in his minority government to pass the budget, Carney will likely rely on the small, left-leaning New Democratic Party, which has just seven legislators, little money and no permanent leader.

If they simply abstain from the budget vote, expected after November 17, Carney's government will pull through.

"This budget won't trigger an election unless someone trips into it. No party should want to go now. Not even the Liberals. And voters? They are poised to punish anyone who tries," said pollster Darrell Bricker, Global CEO of Ipsos Public Affairs .

A Nanos Research poll this week found Carney was the preferred prime minister for nearly half of Canadians, versus 27% for Pierre Poilievre, leader of the official opposition Conservative Party.

The New Democrats welcomed some proposed measures, such as infrastructure spending tied to union jobs, but said cuts in the public sector workforce and other provisions were "a step in the wrong direction."

BUDGET COMMITS TO NEW INFRASTRUCTURE, SPENDING CUTS

The budget commits to spending C$280 billion (US$200 billion) over five years to build new infrastructure while cutting C$60 billion in government spending.

Another contentious issue is the proposed deficit, which Ottawa estimated at C$78 billion for the next fiscal year, or more than double last year's deficit. It would drop to C$57 billion by 2030.

Poilievre had previously laid out several key budget demands, including keeping the deficit below C$42 billion.

Poilievre on Tuesday also criticized the budget for keeping the taxes on groceries, work, energy and homebuilding.

But one Conservative legislator, Chris D'Entremont of Nova Scotia's Acadie-Annapolis district, appeared convinced. He announced on Tuesday he had joined Carney's Liberals, although the government will still be left with a minority. Political defections in Canada are relatively rare.

Robert Asselin, who once served as an adviser to Liberal ministers and now heads an organization of research universities, said Carney could have spent much more to drive growth but that would likely have resulted in a deficit beyond C$100 billion.

Drew Fagan, a visiting professor at Yale University who specializes in global affairs, added: "You cannot simply turn around the world's 10th largest economy with one budget."

Source: Yahoo Finance

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Devin

Economic

After yesterday's mixed picture on Manufacturing (PMI up, ISM down), analysts expected both Services surveys this morning to show an upward bounce.

S&P Global's Services PMI disappointed but did rise from September's 54.2 to 54.8 (but that was less than expected and less than the 55.2 preliminary print)
ISM's Services PMI beat expectations, rising from 50.0 to 52.4, well above the 50.8 expectations.

And this is happening amid a rise in 'hard' data (though admittedly based on housing and marginal labor data given the vacuum since the shutdown)

Source: Bloomberg

Under the hood, Prices surged to their highest in three years, new orders expanded at their fastest pace in a year and employment improved (though remained below 50)...

Source: Bloomberg

"October's final PMI data add to signs that the US economy has entered the fourth quarter with strong momentum," according to Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.

"Growth in the vast services economy has picked up speed to accompany an improved performance in the manufacturing sector.

In total, business activity is growing at a rate commensurate with GDP rising at an annualized pace of around 2.5% after a similarly solid expansion was signalled for the third quarter."

While growth is being driven principally by the financial services and tech sectors, Williamson says the survey is also picking up signs of improving demand from consumers.

However, the surge in prices paid is having some consequences

"However, there are signs that new business is coming at the cost of service providers having to soak up continued high input price growth to remain competitive.

Customers are often pushing back on price rises, especially in consumer-facing markets.

While good news in terms of inflation, this lack of pricing power hints at weak underlying demand and lower profits. "

Business expectations about the year ahead have also fallen sharply and are now running at one of the lowest levels seen over the past three years, as Williamson notes "signs of spending caution from customers is accompanied by heightened political and economic uncertainty."

However, Williamson points out that lower interest rates have helped offset some of the drags to business confidence, for which the October FOMC rate cut will have likely helped further.

Certainly nothing here to shift The Fed strongly from its easing path but Treasury yields are on the rise (likely driven by the inflation jump)

Source: Zero Hedge

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Winkelmann

Political

Economic

Homeless people will for the first time be able to open accounts with the UK's five biggest banks, in a pilot scheme marking the launch of the government's financial inclusion strategy.

The Treasury said its new national plan was meant to ensure financial services "worked for everyone", as it also revealed programmes that could help rebuild the credit scores of domestic abuse victims, support families with no savings and roll out financial education in primary schools across the UK.

One of the key schemes will see the high street lenders Lloyds, NatWest, Barclays, Nationwide and Santander waive the need for people to have a fixed address in order to open a bank account. The move will help vulnerable people avoid the chicken-and-egg problem of needing a bank account to apply for work and rental accommodation across the UK.

It will involve partnerships with the homelessness charity Shelter, which will vouch for prospective customers based on information on the charity's database, while accompanying individuals to face-to-face meetings at a local bank branch. The scheme expands on a partnership with HSBC, which has opened 7,000 accounts for people experiencing homelessness since its start in 2019.

The City minister, Lucy Rigby, said: "This plan is about opening doors – helping people experiencing homelessness into work, helping survivors of abuse rebuild their credit and helping families save for a rainy day.

"No one should be locked out of the chance to build a better future. Our strategy gives people the tools to get on and boosts the economy by supporting more people back into work."

The Treasury said it was also rolling out plans to help victims of domestic abuse repair credit ratings that have been damaged as a result of perpetrators having forced partners to take on debt on their behalf.

Credit agencies including Experian, Equifax and TransUnion will start reviewing how they could rescore victim's credit ratings, before reporting back to government. Charities said it would give survivors a fair chance to rebuild their financial independence.

"For far too long, domestic abusers have stolen victim-survivors' futures – forcing them into debt and destroying their credit scores with life-shattering consequences," said Sam Smethers, the chief executive of the Surviving Economic Abuse charity.

"This strategy provides a golden opportunity to help survivors rebuild their lives by restoring their credit scores. It's one we must seize so that credit reports reflect victim-survivors' creditworthiness, not the economic abuse they have experienced."

The financial inclusion strategy, which follows a years-long review by a Treasury-led financial inclusion committee, is aimed at boosting support for vulnerable people who have struggled to access banking and build financial resilience.

It comes as statistics reveal that more than 11.5 million people in the UK have less than £100 in savings, severely reducing their ability to recover from emergencies and unexpected costs such as boiler breakdowns or an extended illness.

The Treasury's strategy will also look at how to provide support for employers hoping to offer payroll savings schemes, where money is automatically deducted from wages and placed into an accessible savings pot on the workers' behalf before it hits their main bank accounts.

While the Treasury said these schemes have been popular with workers, some companies have been reluctant to take part for fear of inadvertently breaching minimum wage laws. The government said it would be "providing them with the certainty they need through the strategy to roll out such schemes far and wide".

Ministers said they would also inject financial education into the national curriculum as part of broader reforms announced by the Department for Education (DfE). Teachers will soon be teaching key financial concepts such as calculating interest as part of the maths curriculum, followed by additional financial literacy in a new compulsory "citizenship" course.

The DfE said it would ensure that primary pupils learned more about "fundamentals of money, recognising that children are now consumers often before they reach secondary school".

Source: GUARDIAN

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Adam

Cryptocurrency

Stocks

US equities tumble on valuation fears

The S&P 500 declined 1.2% overnight, while the tech-heavy Nasdaq 100 dropped 2.0%. High-profile Tesla and Nvidia bore the brunt of selling, falling 5.2% and 4.0% respectively. The sell-off highlighted growing concerns about US stock valuations after a strong year-to-date rally.

Palantir, arguably the most expensive stock in the S&P 500 by various metrics, plunged 7.9% despite announcing positive financial results. The market's reaction underscored investor nervousness about premium valuations, even when companies deliver solid earnings beats.

The S&P 500 now trades at 23.1 times forward price-to-earnings ratio, according to Factset data. This represents a significant premium to the five-year average of 19.9 times, and marks the highest level since September 2020.

Valuation concerns have intensified as the index has climbed higher throughout the year. Investors are questioning whether current price levels can be sustained, particularly on stocks boosted by the AI boom if interest rates remain elevated for longer than expected.

Strong earnings underpin market gains

Despite the pullback, the year-to-date rally has fundamental support. Approximately 63% of S&P 500 constituents have released third quarter results as of 31 October.

Corporate earnings have proven robust, with 83% of reporting S&P 500 constituents exceeding earnings expectations. The blended earnings growth rate currently stands at 13.8%, surpassing the growth rates achieved in both the first and second quarters.

The earnings season has provided solid evidence that valuations, while elevated, are mostly backed by genuine profit growth rather than pure speculation.

Technical perspective on US Tech 100

The recent pullback represents a healthy calibration after an extended rally. From a technical analysis standpoint, we highlighted signs of weakening bullish momentum in the US Tech 100 in the latest Weekly Market Navigator, suggesting a correction could be imminent.

The index currently sits at the support of its 20-day moving average and the lower bound of an ascending channel formed since mid-May. These technical levels will prove crucial in determining whether this represents a brief pause or something more significant.

A 50% Fibonacci retracement of the last upward wave could take the index towards 24,635. The critical support zone lies around 23,000. A failure to maintain support at that level would significantly increase the probability of a bear market developing. Until then, the decline could be interpreted as a correction rather than a major reversal in trend.

Figure 1: US Tech 100 index (daily) price chart

as of 5 November 2025. Past performance is not a reliable indicator of future performance.

Cryptocurrency markets face steep losses

Cryptocurrency markets also experienced severe turbulence overnight. Bitcoin fell 6%, briefly dropping below 100,000, while Ether plunged 11%.

From its early October peak, Bitcoin has declined as much as 22%. Ether's drawdown proved even steeper at 36% from its highs. The cryptocurrency market officially entered a technical bear market, defined as a decline of more than 20% from recent peaks. This represents a dramatic reversal from the optimism that prevailed just weeks ago.

The Bitcoin sell-off began immediately after the asset reached a new record high of $126,212 on 7 October. Risk-off sentiment from regional bank credit events and threats of 100% US tariffs on Chinese goods triggered the initial decline. Despite the correction, Bitcoin remains 7% higher year-to-date.

Record liquidations reveal market stress

Cryptocurrencies recorded their largest single-day liquidation event on 11 October, with liquidations exceeding $19 billion according to Coinglass data. These forced position closures amplified the sell-off, creating a cascade effect as leveraged traders were stopped out.

While liquidations have since stabilised, sentiment towards Bitcoin has not recovered. Exchange-traded fund (ETF) flow data reveals net outflows of $986 million since 27 October, indicating sustained selling pressure from institutional and retail investors alike.

Options positioning fails to show clear direction

Options data from Deribit reveals strongly divided opinions on Bitcoin's near-term trajectory. Open interest on call options with strike prices above current levels (indicated by blue arrow in chart) slightly exceeds put options with strikes below current pricing, suggesting marginal optimism.

However, put options with an $80,000 strike commanded the highest open interest. This clustering suggests many traders are positioning for further downside, hedging existing positions or speculating on continued weakness. The market currently has no consensus on direction.

Figure 2: Divided views on BTC for options expiring on 28 November

Technical indicators suggest further downside risk

Several technical indicators point to the possibility of additional losses ahead. The moving average convergence divergence (MACD) chart has yet to exhibit signs of improvement.

The latest price action shows characteristics of a corrective Wave C under Elliott Wave Theory. Typically, Wave C should match or exceed the magnitude of Wave A, which would take Bitcoin below $93,750 if this pattern plays out as expected.

June's low at $98,235 has provided some support to Bitcoin prices. However, a failure to hold this level would open up considerably more room for decline.

Any recovery attempt will face resistance at $116,369. This level represents the starting point of the recent decline and will need to be reclaimed before bulls can feel confident about renewed upside momentum.

Figure 3: Bitcoin (daily) price chart

as of 5 November 2025. Past performance is not a reliable indicator of future performance.

Source: ig

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Daniel Carter

Bond

Treasuries slipped as signs of resilience in the US jobs market combined with lingering concerns over future supply.

The yield on 10-year notes rose three basis points on Wednesday to 4.11%, on course for the highest close in almost a month. Longer-dated notes led the decline, which was initially triggered by ADP Research data showing employment at US companies increased by more than forecast in October.

"This employment report should serve to alleviate the Federal Reserve's apprehensions regarding labor market deterioration," said Florian Ielpo, head of macro, multi asset team at Lombard Odier Asset Management. He sees a trading range between 4.00% and 4.25% "for an extended period."

The selling extended on the Treasury's refunding announcement. While officials indicated the US is not looking to boost sales of notes and bonds until well into next year, the unchanged language was widely expected and may have disappointed those betting on a more aggressive shortening of the borrowing program.

The ADP data has taken on greater importance due to the US government shutdown. It's one of the few monthly snapshots of the labor market, making it a key input into investors' outlook for the US economy as well as Federal Reserve decision-making on interest-rate policy.

Source: Bloomberg Europe

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Warren Takunda

Cryptocurrency

Key takeaways:

Bitcoin’s bull structure remains intact as long as it holds above a key trendline.

Fed liquidity and US fiscal policy will likely decide Bitcoin’s next major move.

Bitcoin tumbled more than 8% this week, slipping below the $100,000 mark for the first time since June as long-term holders offloaded roughly $45 billion worth of BTC. Three Things That Must Happen for Bitcoin to Avoid the Bear Market_1

Three Things That Must Happen for Bitcoin to Avoid the Bear Market_1

BTC/USD vs. Nasdaq, Dow Jones, and S&P 500 indexes year-to-date chart. Source: TradingView

The sell-off intensified amid sharp declines in AI-related stocks, which fueled a broader risk-off shift across markets.

Data resource The Kobeissei Letter said that BTC has “officially entered a bear market territory” after correcting by around 20% from its record high on Oct. 6.

Nevertheless, some indicators suggest BTC can still avoid a full-blown bear market, but several things must happen first.

Bitcoin must hold above its weekly moving average

Bitcoin continues to trade above its 200-week exponential moving average (EMA), currently near $100,950, a key long-term support that has defined every major correction since late 2023.

Each time BTC has tested this level following strong rallies, it has rebounded sharply to set new highs, confirming the EMA as the market’s structural floor, as shown below. Three Things That Must Happen for Bitcoin to Avoid the Bear Market_2

Three Things That Must Happen for Bitcoin to Avoid the Bear Market_2

BTC/USDT weekly price chart. Source: TradingView

The current drawdown of 22% finds the BTC/USD trading pair defending the same wave support on the chart above.

Its weekly relative strength index (RSI) is also holding at its horizontal support near 45, an area that has historically preceded major bullish reversals.

As long as BTC maintains support above its 200-week EMA and RSI base, the broader bullish structure remains intact. A breakdown below both, however, would increase the risk of a deeper bear market retracement.

Fed’s “stealth QE” can save Bitcoin bulls

Former BitMEX CEO Arthur Hayes argued that US fiscal policy will eventually force the Federal Reserve to expand its balance sheet again, this time through what he calls “stealth QE.”

The US is running deficits near $2 trillion a year, financed by Treasury debt, according to the Office of Debt Management’s Q3 2025 report.

Traditional buyers, such as foreign central banks and US households, have not absorbed the growing Treasury supply, leaving hedge funds as the marginal buyers, as acknowledged by the Fed in a recent paper.

These funds rely on overnight repo loans, i.e, borrowing cash against Treasurys as collateral.

When that cash runs short, the Fed’s Standing Repo Facility (SRF) quietly steps in to lend more money, Hayes wrote, adding that it creates new dollars behind the scenes, mimicking quantitative easing.

Hayes argued that as deficits rise, SRF usage will increase, stealthily boosting liquidity and supporting bullish outlooks for risk assets, such as Bitcoin. Hayes wrote:

“If the Fed’s balance sheet grows, that is dollar liquidity positive, and ultimately pumps the price of Bitcoin and other cryptos.”

No rally until the US government shutdown ends

However, the market can stay volatile until the US government shutdown ends and liquidity conditions improve, argued Hayes.

Luckily for the bulls, the shutdown could be resolved sooner rather than later. On Polymarket, more traders are betting on a resolution as early as next week.

For instance, bets in favor of a resolution between Nov. 8 and Nov. 11 (orange) have jumped to 36% as of Wednesday from 22% last week. Similarly, odds of a resolution between Nov. 12 and 15 have risen to 28% from 17%. Three Things That Must Happen for Bitcoin to Avoid the Bear Market_3

Three Things That Must Happen for Bitcoin to Avoid the Bear Market_3

Odds of US government shutdown end. Source: Polymarket

For now, the Treasury is issuing large amounts of debt—draining dollar liquidity—while its Treasury General Account (TGA) sits about $150 billion above its $850 billion target, meaning that money isn’t yet flowing back into the economy. Three Things That Must Happen for Bitcoin to Avoid the Bear Market_4

Three Things That Must Happen for Bitcoin to Avoid the Bear Market_4

This temporary liquidity squeeze is one reason behind Bitcoin’s latest decline.

Hayes warned that many traders may misread this stagnation as the market top, just as the four-year cycle anniversary of Bitcoin’s 2021 all-time high approaches.

But he argued that the underlying dollar plumbing suggests otherwise: once spending resumes and liquidity returns, it will mark the next leg higher.

“The system only has two modes,” Hayes writes, “print money or destroy money. Right now, it’s the latter—but not for long.”

Source: Cointelegraph

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Adam

Economic

Key takeaways

Dow Jones outperforms as major US AI stocks tumble — the Nasdaq 100 and S&P 500 dropped 2.1% and 1.2%, while the Dow fell a milder 0.5%.

Financials show resilience with JPMorgan, Bank of America, Goldman Sachs, and Morgan Stanley holding steady or posting modest gains, signalling no systemic stress.

Technical setup favours a rebound, with the Dow Jones holding above its 20-day moving average and bullish signals emerging from the RSI momentum indicator.

The technology-heavy Nasdaq 100 and S&P 500 tumbled on Tuesday, 4 November, by 2.1% and 1.2% respectively, weighed down by an 8% plunge in Artificial Intelligence (AI) favourite Palantir Technologies, despite its Q3 earnings beat.

The selloff was driven by valuation concerns, as Palantir’s price-to-sales ratio surged to 85 as of Friday, 31 October, the highest in the S&P 500. Adding to bearish sentiment, hedge fund manager Michael Burry revealed short positions against Palantir and Nvidia in his latest 13F filing.

Notably, the US financial sector remained largely insulated from the tech rout, signaling no signs of systemic contagion. Major lenders JPMorgan Chase and Bank of America ended flat, while investment banking leaders Goldman Sachs and Morgan Stanley posted modest gains of 0.7% and 0.2%, respectively. This resilience helped the Dow Jones Industrial Average outperform, dipping by a milder 0.5% on the same day.

Let’s now examine the technical factors, short-term (1 to 3 days) trajectory, key elements, and key levels to watch on the US Wall Street CFD Index (a proxy of the Dow Jones Industrial E-mini futures).

S&P 500 US Financials sector underperformance has eased

Fig. 1: Relative strength of US S&P 500 Financials & Technology sectors ETFs as of 4 Nov 2025

The US S&P 500 Financials sector exchange-traded fund (XLF)’s six months of underperformance against the S&P 500 exchange-traded fund (SPY) has started to lose momentum, as shown by its relative strength chart, XLF/SPY (see Fig. 1).

The ratio of XLF/SPY has started to shape a “higher low”. In contrast, the current top outperformer, the US S&P 500 Technology sector exchange-traded fund (XLK), which consists of those mega-cap technology stocks such as Nvidia, Microsoft, and Apple, has started to lose steam as indicated by the “lower high” of its relative strength chart, XLK/SPY.

Given that the Financials sector forms the biggest weightage of around 30% in the Dow Jones Industrial Average, a reversal of fortunes in the Financials (a further slowdown of underperformance against the S&P 500) may support a positive feedback loop back into the Dow Jones.

Preferred trend bias (1-3 days) – Potential recovery at 20-day moving average

Fig. 2: US Wall Street 30 CFD Index minor trend as of 5 Nov 2025

Bullish bias on the US Wall Street 30 CFD Index with 46,740 as the key medium-term pivotal support. A clearance of 47,255 increases the odds of a short-term bullish reversal towards the next intermediate resistances at 47,460 and 47,750 in the first step (see Fig. 2).

Key elements

The price action of the US Wall Street 30 CFD Index has formed a daily bullish “Hammer” candlestick pattern right above the upward-sloping 20-day moving average on Tuesday, 4 November, after a prior 5-day corrective decline from its current all-time high of 48,088 on 29 October.

The hourly RSI momentum indicator has staged a breakout above its descending resistance, which suggests a potential revival of short-term bullish momentum.

Alternative trend bias (1 to 3 days)

A break below the 46,740 key support invalidates the bullish reversal scenario on the US Wall Street 30 CFD Index for a deeper corrective decline towards 46,350 and even 45,485 next.