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During October, stocks in North America had their worst month since the start of 2016, despite the sharp rally on the final two days of the month. The S&P/TSX Composite Index in Canada and the S&P 500 in the U.S. each lost over 7%, the Dow Jones Industrials Index was down over 6% and the Nasdaq Composite plunged over 10%, its worst month since October 2007. While the market appears very ‘oversold’ on a short-term basis we think that this decline in different from the February sell-off and is more indicative of the overall risk to stock markets that we have been wary of for many months now. While the February decline ended up being just another opportunity to ‘buy the dip’ for further gains, the current pullback has been generated by a deeper set of problems that we expect to lead to further losses over the next year. (more…)