Launch Pad

Today

Futures are moving higher this morning, putting U.S. equities on track for their strongest weekly performance since early August, despite volatility surrounding Nvidia, rising oil prices and persistent inflation concerns. Treasuries are getting some relief following the latest U.S. inflation report which showed U.S. wholesale inflation rising slightly less than expected in October, with the PPI increasing 0.3% month-over-month compared with economists’ expectations for a 0.4% gain. Core PPI increased 0.3%, matching forecasts. Despite the softer monthly headline reading, annual PPI accelerated to 6.5%, up from 6.3% in September and reaching its highest level since November 2022. In corporate news, Nvidia shares slightly recovered following Jensen Huang’s departure, while strong corporate earnings helped stabilize sentiment toward AI-related investments. Meanwhile, investor appetite for AI shows little sign of fading, with Anthropic’s upcoming IPO reportedly attracting demand six times greater than the shares available. 

With Jensen Huang’s departure, Nvidia faces a question that has confronted some of the world’s most iconic companies. What happens when the person synonymous with the business is no longer running it? Apple went on to deliver extraordinary returns following Steve Jobs’ death in 2011, with Tim Cook bringing a different approach to leadership. Starbucks, on the other hand, struggled to move beyond founder Howard Schultz, bringing him back to lead the company on multiple occasions. Going further back, Disney struggled creatively for years after Walt Disney’s death before finding its footing under new leadership. History, as you can see, offers no obvious playbook. Under Huang’s leadership, Nvidia evolved from a gaming chipmaker into a dominant supplier of chips powering the AI boom, supported by an established software ecosystem and substantial cash generation. Interim CEO Colette Kress inherits those advantages along with some difficult decisions, especially around the billions Nvidia has committed to financing customers and supporting the AI industry. Nvidia shares fell as much as -14% Thursday before recovering much of the day’s losses. Even with that rebound, the stock is down around -30% from its October peak. Perhaps the more interesting question is not whether Nvidia can survive without Huang, but whether the qualities that made him indispensable during its extraordinary rise are the same ones it needs for its next chapter. 

Too much of a good thing? We’ve written about the strength of corporate earnings over recent quarters, with S&P 500 profits growing at a solid pace, although much of that growth has been concentrated in the Mag Seven. While profit margins have climbed for these tech giants, they have been essentially flat for the other 493 companies in the S&P 500. This concentration is interesting when viewed through a historical lens. The Globe and Mail’s Ian McGugan recently noted that U.S. corporate profits now account for over 9% of the economy, up from roughly 5% a generation ago and reaching levels last seen in 1929. McGugan points out that periods of unusually high profitability have preceded major market disruptions, including the Great Depression, the inflationary period of the 1970s, the dot-com bubble, and the GFC. Of course, today’s tech giants have competitive advantages that could allow them to sustain higher margins than companies in previous cycles, but whether those advantages can support the current pace of earnings growth is another matter.  Analysts are forecasting S&P 500 earnings growth of 33% this year and 16% in 2027, expectations that depend in part on AI investment delivering productivity gains and profits beyond the tech sector. History suggests that exceptionally high profitability can be difficult to sustain. 

Recall the headlines this summer about Japan intervening to support the yen with help from Washington? We now have the numbers behind the U.S. contribution. According to a New York Fed report, the U.S. Treasury sold US$500 mln worth of euros from its reserves to purchase ¥79.4 bln during the July 31 intervention, aimed at stabilizing the currency after it weakened to ¥163.9 per U.S. dollar. The American contribution was modest compared with Japan’s US$97.5 bln in intervention spending through August 26 but marked the first coordinated effort to support the yen in nearly three decades. Washington also had an incentive to participate, given concerns that Japan could sell U.S. Treasuries to finance further intervention, potentially pushing American borrowing costs higher. The yen subsequently strengthened to ¥153.6 per dollar in September but has since weakened to ¥159.9 at the time of writing, bringing it back toward levels that previously prompted intervention. 

Canadians may be giving the U.S. a pass these days, but our neighbours to the south apparently can’t get enough of it. International travel to the U.S. has fallen over -6% since Trump returned to office in January 2025, but the decline would be much worse without visitors from Mexico. According to Bloomberg, Mexican visits to the U.S. rose nearly 14% over that period, reaching record levels, while arrivals from the rest of the world fell more than -12%. The contrast with Canada is notable. In 2025, Mexican visitors to the U.S. outnumbered Canadians for what may have been the first time, as Canadians pulled back amid trade tensions and Trump’s references to making Canada the 51st state. A stronger peso and close economic ties have helped sustain Mexican travel, while Canadian visits have only recently begun to recover. The overall travel decline to the U.S. is unusual given that international tourism globally has grown. It has contributed to a shift in the U.S. travel balance, with Americans now spending more abroad than foreign visitors spend in the U.S., a trend that began before Trump’s return. The economic impact may be modest, but the divergence says something about how America’s appeal as a destination may be changing. 

Out of office, but not by choice. In case you somehow missed it, which might say something about your productivity in general, Microsoft experienced a widespread outage Thursday that disrupted applications including Outlook, Teams and Copilot, leaving millions of users with an unexpected excuse not to answer their emails. Downdetector recorded a peak of about 200,000 reports of problems across Microsoft services, including more than 20,000 in Canada. The disruption affected businesses, schools, hospitals and government institutions, with Via Rail warning customers that email communications could be delayed. Microsoft attributed the problems to overloaded infrastructure and unresponsive servers, with recovery taking longer than expected. By Thursday evening, the company reported limited improvements in some regions as it continued working to restore service. Let’s hope everything is back up and running for a smooth Friday workday, including getting this publication into your inbox by 9 a.m. ET, as scheduled. 


Diversion: Still got it  

Commodities

Cashing in, sort of. The U.S. has collected $12.3 bln from Venezuelan oil sales since taking control of the country’s revenues earlier this year, but nearly 99% of those funds have been returned to Venezuela, according to a State Department report. Of that amount, $12.1 bln was transferred to Venezuela’s central bank, with $168 mln remaining in U.S. controlled accounts at the end of September. The findings contrast with Trump’s claims that the U.S. has profited substantially from its control over Venezuelan oil sales following the removal of Nicolas Maduro earlier this year. Washington maintains that its oversight is intended to prevent corruption and support Venezuela’s economic recovery. The funds have helped finance government operations, support the currency and facilitate imports. Inflation has eased from 475% in 2025 to 375% in October, although it remains among the highest globally. 

Russian diesel exports doubled in October to 271,000 barrels per day from 135,000 in September, following U.S. pressure on Ukraine to pause attacks on Russian refineries and Trump’s agreement with Putin to ease fuel sanctions. The goal was to boost global supply and lower diesel prices, particularly for Americans. While no Russian diesel has reached the U.S., shipments to Brazil and Turkey have increased. The deal has drawn criticism from U.S. lawmakers, with some questioning its legality and seeking to block deliveries at American ports. However, the export increase may be short-lived. Ukraine resumed refinery attacks on October 30, while Russia extended its diesel export restrictions through January amid domestic fuel shortages. Analysts expect exports to remain constrained, limiting the potential for sustained price relief. 

Fixed income and economics

Global bond markets are facing renewed selling pressure as inflation, hawkish central bank commentary, and growing government debt supply push yields higher, raising concerns that this year’s bond rout is far from over. U.S. Treasury yields rose this week, with the two-year yield reaching 4.85% and the 10-year yield climbing to 5.12%, following their largest respective two-day and weekly increases since March 2023 and April 2025. The selloff picked up after stronger-than-expected U.S. inflation data and comments from Fed officials raised expectations for additional rate hikes, including the possibility of a 50 bp increase in December. Rising Treasury yields are also pressuring global bond markets, with yields in Japan, Australia, and France moving higher as investors reassess monetary policy and fiscal risks. Some strategists now expect the U.S. 10-year yield to approach 5.5%, while others see buying opportunities around 5.3%.  

The Fed has revised its 2027 FOMC calendar, eliminating the October interest-rate decision as part of Kevin Warsh’s initiative to reduce the frequency of monetary policy meetings and allow policymakers more time to evaluate incoming economic data. Under the revised schedule, the Fed will hold seven rate-setting meetings next year, down from the traditional eight, before transitioning to six annual rate-setting meetings by 2028. Although the number of interest-rate decisions will decline, Warsh intends to maintain eight FOMC gatherings annually by replacing some rate-setting meetings with sessions dedicated to a larger monetary policy strategy and longer-term economic considerations. The removal of the October meeting creates an unusually long 12-week interval between the September and December 2027 policy decisions, potentially increasing the importance of economic releases and market developments during that time frame. Warsh, who became Fed chair in May, first proposed the adjustment in July, arguing that longer intervals would provide a better economic picture and support more-informed monetary policy decisions. The move represents the first major change to the Fed’s meeting frequency since the early 1980s, when the central bank reduced its annual meetings from 12 to eight. 

Chart of the day

Markets