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Today’s top headlines
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11 a.m.
Bill Gross says pass on stocks and bonds
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In an investment outlook published Wednesday, Gross said neither bonds nor equities are attractive, even after the recent selloffs, because inflation leaves little room for the Federal Reserve to lower rates from a 22-year high.
“I’d pass on stocks and bonds in terms of future total returns,” he wrote, while adding that bonds are a “better deal” than equities in an economic slowdown or recession.
Gross said the “best bets” are arbitrages in mergers and acquisition deals, including Microsoft Corp.’s US$69 billion bid for of Activision Blizzard Inc., which he expects to close in about two weeks. Pipeline Master Limited Partnerships are also among his favorites. MLPs trade on exchanges, focus on natural resources like oil and gas and offer higher yields and tax advantages.
Yields on 10-year Treasuries hit a 16-year high this week as the realization that the Fed will likely keep borrowing costs high continued to sink in. The move was mostly driven by inflation-adjusted, or real yields, which have risen to 2.4 per cent from about minus 1 per cent two years ago.
Normally, a surge in real yields of this magnitude would have pushed the S&P 500’s forward price-to-earnings ratio to 12 from 18 currently, Gross said. But he said the excitement about the potential for artificial-intelligence breakthroughs and rampant government spending have blunted the impact.
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Even so, “can AI and $2 trillion fiscal deficit going forward validate that ‘it’s different this time?’” he wrote. “I am suspicious.”
Ye Xie, Bloomberg
10 a.m.
Stocks droop at opening bell
Stocks were holding steadier at the opening bell, but still struggling to stay positive.
The S&P 500 was 0.4 per cent higher in early trading, coming off a 1.4 per cent tumble that had sent it to its lowest level in four months. The Dow Jones Industrial Average added 51 points, or 0.2 per cent, a day after wiping out its gains for the year so far. The Nasdaq composite was 0.7 per cent higher, as of 9:40 a.m. Eastern time.
The TSX was up 43 points.
Associated Press
9: 12 a.m.
Aimia’s largest shareholder plans takeover bid
Mithaq Canada Inc., an affiliate of a family office based in Saudi Arabia, says it already owns or exercises control or direction over a 30.96 per cent stake in Aimia, which now operates as a holding company.
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The Canadian Press
This story has been corrected. An earlier version stated an offer had been made.
8 a.m.
WestJet to suspend flights between Montreal and Toronto for 6 months: report
A WestJet spokesperson is quoted as saying the route will return in April.
No date for the start of the suspension of service was provided, but a check on the airline website showed that flights can’t be booked from Oct. 28 until April 28.
7:30 a.m.
Toronto in buyers’ market as home sales slump, listings surge
Monthly data released by the Toronto Regional Real Estate Board (TRREB) on Oct. 4 showed the average selling price was up roughly three per cent month-over-month to $1,119,428 in September. That was also about three per cent higher than the same month a year ago.
Home sales, however, declined sharply from August. Sales registered through TRREB’s MLS System were down 12 per cent from the previous month and 7.1 per cent in comparison to September 2022. The decline in year-over-year sales was especially evident in semi-detached houses and townhouses.
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At the same time, new listings surged. In September, 16,258 new listings were introduced to the market, a 32 per cent increase from August and up 44.1 per cent year over year.
Financial Post
Stock struggle before the opening bell
Stocks are struggling this morning after closing deep in the red last night.
Markets plunged Tuesday on news that U.S. job openings were higher than expected, suggesting the economy was still strong and interest rates may have to go higher.
At the close, the S&P 500 was down 1.4 per cent. The Dow sank 1.3 per cent and the Nasdaq composite led the market lower with a 1.9 per cent drop. Big Tech stocks were among the market’s biggest losers.
The TSX closed at its lowest point since October last year.
This morning, U.S. futures are edging up.
Associated Press
What to watch today
More than 50 Alberta CEOs, entrepreneurs and industry leaders are in Ottawa in an effort to raise the profile of their province and promote “collaboration” on issues related to energy, climate and the economy. The business leaders’ trip comes amid souring relations between Alberta’s UCP government and the federal Liberals.
OPEC+ meets today but the panel is unlikely to change its oil output policy, sources told Reuters. Oil prices have been surging higher since the group, which includes oil powerhouses Saudi Arabia and Russia, said they would extend output cuts.
Toronto Regional Real Estate Board releases September home sales.
Additional reporting by The Canadian Press, Associated Press and Bloomberg
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