Barlow’s Research Roundup: Market sprint to year-end ‘looking more like a 100-metre hurdles event’

Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow

Market hurdles

Citi chief U.S. equity strategist Scott Chronert views a bunch of hurdles for the market before year-end,

“The Q4 sprint to year end is looking more like a 100 meter hurdles event. A third of the way through, the SPX is off to a solid start, up 1 per cent quarter-to-date, clearing most hurdles but with the more trying parts of the race still ahead … First, the Q3 earnings season is approaching the halfway mark and is pacing with our expectation of a more normal positive surprise relative to the outsized positive surprises in 1Q/2Q. Still, per our weekly PULSE notes, there has not been much of an uptick in index level EPS contribution outside of Tech and Energy … Expectations remain for a December [Federal Reserve] hike with markets pricing in an additional two hikes by next September … Our view continues to be that oil price direction is the lynchpin for inflation and, therefore, rate sentiment … Our view continues to be that oil price direction is the lynchpin for inflation and, therefore, rate sentiment … The AI trade continues front and center. Recently, both equity and debt issuance has helped with AI enabler sentiment per the Semis rally over the past week. Revenue strength from MSFT per today’s earnings release help support the ROI narrative. GOOGL’s earnings underwhelmed. Still, investors seem to be looking for a better balance between revenue growth and capex spend. Issuance has both a positive and negative spin to it, but we see room for positive follow through into year end … Midterms are approaching. For now, we remind of our outlook published last month Mid Term Election Perspective whereby we prepare for a potential Blue sweep”, TKsubhed

Loonie bump

Scotiabank strategist Simon Fitzgerald-Carrier assessed the effects of Wednesday’s rate hike on the loonie,

“The Bank of Canada raised its policy rate by 25 bps yesterday, after keeping the overnight rate unchanged at 2.25 per cent for 12 consecutive months. During the press conference, Governor Macklem made it clear that the move was justified by a balance of risks that has become increasingly tilted toward inflation proving less contained than previously anticipated. He also acknowledged that further policy-rate increases could be required, although they will be assessed one meeting at a time.

“Rate differential narrowing. With the Fed remaining on hold, the policy-rate differential between the BoC and the Fed narrowed by 25 bps to -150 bps. While it’s still early innings, we believe the interest-rate differential should continue to converge in 2027 and 2028. As illustrated in our upper Chart of the Day, our Scotiabank Economics colleagues expect the spread to narrow over the coming years, reaching just -50 bps by the end of 2028.

“Conclusion. This monetary policy backdrop should provide support for the Canadian dollar, particularly as the loonie is no longer behaving primarily as a petrocurrency. ... The Canadian dollar has become increasingly correlated with the Canada-U.S. two-year yield spread. We remain bullish on the Canadian dollar over the medium term.”

U.S./Iran

RBC head of global commodity strategy Helima Croft gauges the state of the U.S./Iran conflict,

“The war has proven impervious to pre-election off-ramps, with both Washington and Tehran sticking to their entrenched negotiating positions. The direction of travel still seemingly points to a near-term U.S. military escalation, despite regional talks on Monday in Tehran that included Saudi Arabia, and Vice President Vance’s reported outreach to Iran’s hardline SNSC secretary. The key question is whether such military action will constitute a final salvo before the U.S. picks up and leaves, or entails a more extensive operation to “finish the job” and help orchestrate regime change. Some in the region warn that a brief escalation followed by a hasty exit would essentially amount to an Iranian victory. On the other hand, a more sweeping campaign risks Iranian retaliatory strikes on critical civilian infrastructure …President Trump still holds the veto card, making wholesale policy reversals unlikely. However, mounting congressional opposition could push the administration toward greater reliance on unilateral executive action, intensifying legal challenges and policy uncertainty heading into 2027”.

Bluesky post of the day

The $6tln House of Cards Google’s announcement of nearly $1tln in forward commitments alone once again highlights how much of the AI boom today is being greased by all those involved committing to deliver future cash. bobeunlimited.substack.com/p/the-6tln-h...

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— Bob Elliott (@bobeunlimited.bsky.social) October 29, 2026 at 7:15 AM

Diversion

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