Dear valued client,
Markets finished higher this week as Canadian inflation rose slightly in October to 2% (compared to 1.6% in September) which complicates expectations for the Bank of Canada’s next interest rate decision. Investors have reduced the likelihood of another 50 basis-point rate cut in December, now estimating the odds at one in three. While some analysts argue for gradual rate reductions, citing persistent inflationary pressures, others believe stronger economic growth and employment data might justify a less aggressive approach. Shelter costs eased slightly, but inflation rose across all provinces, reflecting broad-based pressures. The central bank’s final decision, influenced by forthcoming GDP and labor data, is due on December 11. Canada Post is facing a financial and operational crisis as its workers, represented by the Canadian Union of Postal Workers (CUPW), enter the seventh day of a nationwide strike over wages and working conditions. Key issues include CUPW’s demand for a 24% wage increase over four years compared to Canada Post’s offer of 11.5%, and disagreements over weekend parcel delivery, with the union opposing the use of lower-cost contract workers. The strike has halted most mail and package deliveries, except for essential government cheques, echoing the 2018 dispute that cost the corporation $135 million. Meanwhile, Canada Post struggles with declining revenue, losing $3 billion since 2016 due to plummeting letter volumes and growing competition from faster, cheaper parcel delivery services like Amazon and FedEx. Nvidia continues to demonstrate remarkable growth, reporting third-quarter revenue of $35.08 billion, up 94% year-over-year, and surpassing Wall Street expectations of $33.16 billion. The company provided strong fourth-quarter guidance of $37.5 billion in revenue, signaling continued demand for its advanced Blackwell GPUs, designed for large-scale AI applications. However, Nvidia cautioned that higher production and engineering costs for the new chips could pressure profit margins, prompting a 2% dip in after-hours trading. Despite these concerns, Nvidia’s leadership assured investors of sustained growth fueled by its innovative AI product lineup.
The conflict between Russia and Ukraine has escalated sharply, marked by new weapon deployments and heightened tensions. For the first time, the U.S. has authorized Ukraine to use long-range missiles, a significant policy shift by President Joe Biden. Ukraine responded by employing U.S.-made ATACMS missiles to strike Russian military targets, including ammunition depots and naval facilities, following a devastating Russian assault on Ukraine’s power grid. This attack, which killed at least seven people, poses severe risks to Ukraine’s energy infrastructure as winter approaches. Russia then reportedly launched an experimental missile, accused by Kyiv of being an intercontinental ballistic missile, though U.S. officials identified it as medium-range. President Vladimir Putin justified the strike as retaliation for the use of Western long-range weapons and further heightened tensions by lowering Russia’s nuclear response threshold. As the conflict surpasses 1,000 days, the aerial front has become a decisive battleground, with advanced missile and drone warfare reshaping the dynamics of this protracted war.
“No longer certain that one ever does win a war, I am.” – Yoda
Have a terrific weekend,
PW
