Today
The selloff in AI stocks appears to be taking a breather, at least judging by this morning’s futures market. Nasdaq futures are leading the rebound, up 1.5% at the time of writing, with some chipmakers, neoclouds and hyperscalers recovering some of yesterday’s steep losses. S&P 500 futures are also pointing higher, while Dow and TSX futures are modestly lower. Overseas, the damage was more pronounced, with South Korea’s Kospi and Japan’s Nikkei both falling -6%, while Taiwan’s Taiex dropped -4.5%, bringing its weekly decline to -12%. The selloff prompted authorities in South Korea and Taiwan to intervene. South Korea’s Kospi has now lost nearly -45% since its June peak, with regulators imposing a 20-minute trading halt today and the government temporarily easing collateral requirements for brokerage firms to limit forced selling. Taiwan also stepped in, saying it is prepared to deploy its $15 billion market stabilization fund, tighten short-selling restrictions and encourage corporate share buybacks.
Beyond the volatility in tech stocks, investors have fresh economic data to digest, with both Canada and the U.S. releasing October employment figures this morning. The U.S. economy added 165,000 jobs, well ahead of expectations for 70,000, while the unemployment rate edged down to 4.1% from 4.2%. Average hourly earnings rose 0.4% for the month, above the 0.3% forecast, while upward revisions added another 84,000 jobs to prior months. Closer to home, Canada lost 4,700 jobs, compared with expectations for a gain of 15,000, following September’s loss of 68,300. The unemployment rate climbed to 6.7% from 6.5%. The contrasting reports highlight the divergence in labour market conditions on both sides of the border. Stronger U.S. hiring and wage growth reinforce the Fed’s focus on containing inflation, while further weakness in Canadian employment adds to the Bank of Canada’s challenge of supporting growth without aggravating price pressures.
Equities sold off yesterday as concerns that Democratic control of Congress could constrain AI infrastructure investment triggered widespread selling across tech stocks and the broader market. The Nasdaq 100 erased $2.3 trillion in market value, its largest single-day market cap wipeout on record, as the index sank -6.4%. The broader Nasdaq Composite fell -5.5%, while the S&P 500 fell 4.4% and the TSX declined -2%. Semiconductor companies were hit hard, with Nvidia dropping more than -9% and the Philadelphia Semiconductor Index plunging -12%, leaving the sector more than 38% below its June peak as investors reassessed elevated valuations and earnings expectations tied to continued AI spending. The reversal followed an initial post-election rally, with investors shifting their focus from the potential benefits of reduced fiscal uncertainty to concerns that political opposition to data centre development (especially in states such like Texas) could weaken the investment outlook for AI-related businesses. Market volatility picked up, with the VIX rising 11.57 points to 28.18, its highest level since March, while investors sought safety in U.S. Treasuries, driving yields down by as much as 12 bps.
Budget time. Mark Carney’s 2026 federal budget outlines $151.5 bln in net new spending and tax measures over five years, focused on stimulating business investment, strengthening economic competitiveness, and improving affordability. The government projects a $62.3 bln deficit for 2026-27, slightly below the previous $65.3 bln estimate, and expects the deficit to decline to $52.9 bln by 2030-31. Higher oil prices associated with the Iran war are expected to generate an additional $7.8 bln in revenue this fiscal year, providing temporary fiscal relief, while the government has also collected $14.1 bln from retaliatory tariffs against the U.S. A key component of the new growth strategy is the creation of a $25 bln Canada Strong Fund, alongside a new Canada Growth Incentive offering up to $15 mln in capital gains exemptions on qualifying investments in smaller Canadian companies, expanded research and development tax credits, and measures to increase banking competition. On affordability, the budget commits $45 bln toward housing over 10 years, extends some restrictions on foreign homebuyers until 2029, and introduces a one-time 50% increase in the GST rebate in early 2027 to support lower- and middle-income households. But that’s not all folks, additional measures include $1 bln for industries affected by U.S. tariffs, $6 bln over 10 years to strengthen Canadian intelligence capabilities, and tax administration reforms that would extend the personal filing deadline to May 15, ease installment requirements for businesses, and raise the foreign property reporting threshold from $100,000 to $200,000.
France is facing another wave of nationwide strikes and demonstrations over rising living costs, alongside a deepening political division over the government’s 2027 budget. Labour unions have joined recent protests, with the latest disruptions affecting rail services, Paris metro stations, schools, and ports. Political tensions are high ahead of the presidential election in six months, as the opposition looks to capitalize on public dissatisfaction. Markets have responded to the uncertainty, with the spread between French and German 10-year government bond yields reaching 178 bps in October, compared with 85 bps in early September, approaching levels not seen since the European sovereign debt crisis. Fiscal concerns have grown after France’s National Assembly rejected the government’s proposed budget, leaving lawmakers unable to agree on measures to reduce the deficit from an estimated 5.4% of GDP in 2026 to the government’s target of 5% in 2027. The administration could attempt to bypass a parliamentary vote or implement spending restrictions and tax increases by decree, although these approaches risk more political uncertainty.
Paraguay is facing political and financial crisis following the collapse of Ueno Bank, one of the country’s largest digital lenders, prompting President Santiago Peña to resign amid widespread public protests, an impeachment proceeding, and concerns about the safety of depositors’ savings. Ueno, which served more than 60% of the adult population, was seized by the central bank after regulators uncovered insider lending, poorly documented loans, and improperly classified assets that left the institution with less than half the legally required capital. The scandal has raised questions about political influence and regulatory oversight, especially since Peña previously held a stake in Ueno’s parent company, appointed a former executive of the lender to lead the central bank, and oversaw the placement of approximately $800 million in public funds at the institution, representing around 25% of its deposits. Authorities have detained eight senior executives, including the bank’s founder and president, while 27 officials and business associates face charges involving alleged fraud and breaches of trust. The collapse triggered widespread panic as Ueno suspended banking services, with workers and customers facing uncertainty over their finances and employment.
Sticking to your principles. An Italian chef working in Australia was fired after repeatedly refusing to put pineapple on pizzas, arguing that it was an insult to his Italian heritage. According to Australia’s Fair Work Commission, the man had refused to put pineapple on pizza on three occasions over four years and maintained that management instructions should not have to be followed when they conflicted with his cultural values. The dispute also involved an April workplace incident in which the chef fractured bones in his right hand after striking a metal handrail, adding to management’s concerns about his behaviour. Following his dismissal, an unfair dismissal claim was filed, but the commission rejected his application because it was submitted after the required deadline, meaning the tribunal did not determine whether the dismissal itself was justified, or if pineapple really does belong on pizza (it does). Fun fact, hawaiian pizza was created first in Canada.
Diversion:
House of mirror
