Today
Investor worries about the AI trade have eased for now, with CoreWeave’s latest earnings helping lift tech stocks. Nasdaq futures are leading this morning’s gains, up 2% at the time of writing. CoreWeave, the largest of the so-called “neocloud” providers, builds data centres and leases AI computing capacity to companies such as Microsoft and OpenAI. The company reported better-than-expected revenue and said demand for its computing capacity would remain strong through 2027 and 2028. The results offered some relief after CoreWeave’s borrowing costs rattled markets in recent weeks, drawing attention to how the company is financing its expansion. Yields on its unsecured debt climbed to 15% from less than 10% a few months ago, making it more expensive to finance its growth. Management said it plans to move away from unsecured borrowing, although the company will need substantial capital to meet future demand. CoreWeave shares have fallen -65% from their May peak but are poised to recover some ground, up 15% in premarket trading. Asian markets were mostly higher, supported by gains in chipmakers, while European indexes are posting modest advances. Canadian and U.S. bond markets are closed today in observance of Remembrance Day. On this Remembrance Day, we honour those who served and sacrificed, and those who continue to serve. Lest we forget.
Fed officials signalled a potential acceleration in U.S. monetary tightening after October inflation came in hotter than expected, raising the possibility of a 50 bp interest-rate increase in December. Headline consumer prices rose 0.4% month over month, moderating from September’s 0.6% increase but exceeding forecasts, while core inflation advanced 0.3% for the third consecutive month, above expectations of 0.2% and suggesting underlying inflation remains elevated. Fed officials were making their opinions known yesterday, with Fed Governor Christopher Waller indicating that a core CPI reading of 0.3% or higher would justify considering a 50 bp increase at the December 8–9 meeting, arguing that not enough tightening could undermine the central bank’s inflation-fighting credibility, while Dallas Fed President Lorie Logan reinforced the hawkish outlook, suggesting policymakers could accelerate the pace of increases. Markets were quick to react, with the two-year Treasury yield posting its largest increase since April 2025, while the implied probability of a December 50-basis-point hike briefly reached 15% before easing to 10%.
Fighting back. After securing their midterm sweep, congressional democrats are preparing to challenge Trump’s tariffs on Canada. Senate Democratic leader Chuck Schumer confirmed that all tariffs are under consideration, including those on steel, aluminum and autos, which have been damaging to Canadian industries. Democrats are set to control both chambers of Congress in January (house and senate), but overturning Trump’s tariffs will be difficult. A presidential veto would require a two-thirds majority in both chambers to override, meaning substantial Republican support would be needed. There are also divisions within the Democratic Party, with some lawmakers favouring targeted tariffs to protect domestic industries. While the election results have increased political pressure on Trump, a meaningful rollback of tariffs is far from assured. Canada and the U.S. are also expected to resume trade negotiations, although no date has been set.
Active management under pressure. Canada Pension Plan Investment Board (CPPIB) is merging its active equities and capital markets units into a new division called Active Public Markets after years of weak performance. The active equities portfolio lost $6 billion over the five years ended March 31, including $3.5 billion in the past year, with losses attributed to regulatory changes in China and poor stock selection. The restructuring will result in dozens of layoffs, while the head of active equities, Frank Ieraci, will depart. CPPIB joins other pension funds, including Ontario Teachers’ and Europe’s ABP, in reducing their reliance on active stock picking in favour of passive strategies. Separately, CPPIB reported a 0.5% investment loss for the quarter ended September 30, as fixed income losses offset gains in equities and private assets. Total assets increased to $866 billion from $864 billion at the end of June.
Markets may be entering a period of higher volatility, with continued uncertainty across equities, bonds, and commodities increasing the risk that future stock market selloffs could be more severe than recent declines. Despite the 10-year Treasury yield retreating more than 40 bps from its early-October peak and Brent crude falling more than $20 per barrel from last month’s highs, both remain well above their June lows, suggesting that recent corrections have not reversed the broader repricing of macro risks. Volatility indicators reinforce this concern, with the VIX establishing support near 20 after reaching approximately 14 in August, while the MOVE Index has remained around 90, near its 85th percentile over the past year, including a 32-session streak above that level. Although speculative positioning in Treasury and oil futures has approached YTD lows and momentum indicators suggest oversold conditions, some strategists argue that reduced positioning does not necessarily signal improving fundamentals, particularly as cross-asset volatility continues rising towards levels not seen since Trump’s tariff-related market selloff. Unlike that little episode, the latest equity drawdown is occurring alongside elevated inflation and hawkish Fed commentary, which could limit the central bank’s ability to support financial markets through accommodative policy.
Parents gone wild. There was a time when bringing home a bad grade meant explaining yourself to your parents. Now, apparently, it’s the teachers who have some explaining to do. Across the U.S., parents are challenging teachers over grades, classroom disputes and even report card comments. In Silicon Valley, one mama bear sued her son’s school district after a teacher noted he needed to improve his ability to cooperate with others following a playground clash. Not to be outdone, another papa bear filed a lawsuit after his son’s essay was flagged as 76% AI-generated, resulting in a lower grade. According to a 2024 Education Week survey, 40% of American teachers reported facing pressure from parents to change grades, with complaints more common among affluent families. Educators say greater parental involvement, competition for university admissions, and declining trust in schools are contributing factors. What once warranted a conversation with the teacher can now involve legal counsel, leaving schools to navigate the tension between parental advocacy and academic accountability. At the risk of sounding old school, whatever happened to letting kids fight their own battles?
Diversion:
No family loyalty here
