Equity futures are up as traders look ahead to Nvidia’s earnings results later today. Investors will be paying close attention to the quarterly results to gauge if the world’s most valuable company can continue its meteoric rally, fueled by spending on AI hardware. Just how important are today’s results? According to Barclays strategists, the options markets are signaling that the results will be the most important catalyst left this year, even more than the Fed’s December meeting.
Taking a closer look at yesterday’s CPI print, we can see that Canada’s unexpected inflation rate increase of 2% in October was driven by food, clothing, and gasoline prices. While shelter costs, particularly rents and owned accommodation, remained a major contributor to annual inflation, price declines in interest-sensitive categories like household furnishings highlighted the restrictive impact of current monetary policy. Though headline CPI surprised to the upside, most of the increases were due to unfavourable base effects. Underlying pressures are easing, and prices are declining in the most interest-sensitive spending categories. There are other factors that the BoC needs to navigate, namely a slower pace of rate cuts by the Fed and more moderate cooling in the Canadian labour market, which may push a cautious Governing Council to cut rates more slowly.
Russia’s wartime economy is showing some surprising resilience, driven by massive military spending and high commodity revenues, but faces deep structural challenges. Inflation near 10%, fueled by soaring wages and labour shortages, is eroding purchasing power, especially for public sector workers and pensioners. While the central bank has raised interest rates to record levels, it struggles to curb price rises as demand is distorted by unproductive military outlays. Sanctions have been evaded through trade rerouting, enabling GDP growth of 3.6% this year, but labour shortages from emigration and an aging population strain industries. Despite short-term gains, reliance on military spending, demographic decline, and vulnerability to global shocks pose risks, with the post-war transition likely to exacerbate these challenges.
Price wars. Canada’s telecom market is experiencing heightened competition, driven by Quebecor’s aggressive pricing strategy through its Freedom Mobile brand, following its expansion into Ontario and Western Canada. This has intensified price wars, particularly during Black Friday, challenging the revenue growth of incumbents Rogers, Telus, and BCE. With lower immigration rates expected to limit subscriber growth through 2025-26, providers are focusing on securing long-term contracts and retaining high-value customers. While Quebecor prioritizes market share gains despite lower ARPU, the Big Three are employing non-price strategies like added perks to retain users. Growth opportunities now lie in broadband expansion and bundled service offerings, while companies like BCE seek international growth amid domestic saturation.
Staying with prices, are you a consumer that has changed your shopping habits to try and mitigate the effects of higher prices? You’re not alone. Walmart reported strong comparable sales growth of 5.3% for the quarter ending Oct 25, driven in part by market share gains across all economic groups including higher income earners, which accounted for 75% of its market share growth. In addition to lower prices overall, Walmart can thank its strategy of expanding its grocery business and improving its selection of clothing, electronics and furnishings to help attract higher income earners. Online presence allowing customers to pick up or have their orders delivered has also helped. The company anticipates the consumer will continue to spend this holiday season and has raised its comparable sales growth for its fiscal year to 4.8% to 5.1% from the previous 3.75% to 4.75%.
UK inflation rose to 2.3% y/y in October, exceeding the Bank of England’s 2% target and forecasts of 2.2%, driven by a 10% rise in energy prices and persistent services inflation. The sharp increase has dampened expectations for aggressive interest-rate cuts, with traders now predicting a more gradual easing in 2025. Despite the inflation uptick, some analysts highlight easing pressures in domestically generated inflation, which could support measured rate cuts. The BOE remains cautious amid fiscal uncertainties tied to the Labour government’s budget and potential global trade tensions under a Trump presidency.
Should have just brought in a hamster. Police were called to an elementary school this week after a student brought a “historic incendiary device”, otherwise known as explosives, for show-and-tell, prompting a full evacuation. Parents were asked to collect their children from a nearby secondary school, causing widespread concern. Witnesses described the evacuation as rushed, with some children visibly upset and parents scrambling. A bomb disposal team safely removed and destroyed the device as a precaution. The school and police praised staff, students, and families for their swift response, emphasizing that safety was maintained throughout the incident.
Diversion: Dad with the assist
