Here are five things to know this morning:
Drops in the ocean: The fall fiscal update landed in Ottawa yesterday amid a swirl of negative sentiment and with the Liberals trailing in the polls. At a high level, it shows the country headed for a deficit of around $40 billion this year (1.4 per cent of GDP), but promises to get that down over the next few years. There is no path to balance but a promise to keep deficits at or below one per cent of GDP over the medium term. Although, as we know, fiscal anchors like this have come and gone in the past. As expected, housing was a major focus, with various measures expected to add thousands of units in new housing supply. That sounds great, except when you consider that the CMHC has said Canada needs 3.5 million new homes by the end of the decade to close the supply gap. The business community for its part seems disappointed with the lack of progress to balanced books, while also looking for more in the way of growth initiatives. We will put this all to a power panel on Morning Markets across the political spectrum. John Manley, Lisa Raitt and Thomas Mulcair will join me at 10 a.m. ET. I hope you do to. Lots to discuss.
How crude: The price of oil is falling as OPEC+ meetings scheduled for the weekend have been delayed. While no reason was given for the delay, Bloomberg reports there is a breakdown between members, with Saudi Arabia reportedly dissatisfied with other members’ oil production levels. The meeting will now take place Nov. 30. Futures are positive despite a nothing burger reaction in shares of Nvidia (more on that below) and shares of Deere under pressure. The farm equipment company forecasted smaller than expected profit next year as sliding crop prices have farmers pulling back on expenses.
Tough crowd: Shares of Nvidia are flat in the pre-market even as the AI-exposed semiconductor maker managed to grow sales more than 200 per cent, which exceeded the 171 per cent growth expectation. I know what you are thinking. Maybe the outlook was bad? It wasn’t. The company is projecting sales growth of more than 230 per cent in the current quarter, which is well above forecasts. Instead, it’s a perfect example of what happens when a stock has already run up and is so-called “priced for perfection.” If there was a blemish, it was the fact that China is going to be a weak market because of export controls in the U.S. Nvidia sales are going to fall significantly in the fourth quarter to China. But given the forecasted sales growth, clearly the company is able to make that up elsewhere.
Open and shut: It took Steve Jobs 12 years to get his job back at Apple after being fired from the company he founded. Sam Altman managed to do it in less than a week. His return is yet another stunning developing in one of the biggest upheavals in the tech industry that saw Altman forced out of the company Friday, join Microsoft Sunday, the entire OpenAI staff revolt and threaten to leave if Altman wasn’t returned as CEO on Monday. Did I miss anything? Either way, Microsoft wins, as their partnership continues with OpenAI. There are also board changes that include the appointment of former Treasury secretary Larry Summers and former co-CEO of Salesforce Bret Taylor. This drama was really about the future of artificial intelligence. OpenAI was founded as a non-profit, but slowly morphed into a profit-seeking enterprise. It seems clear which side has won out today.
Notable call: TD has been downgraded by Paul Holden at CIBC ahead of earnings. This comes one day after Scotia downgraded National Bank also head of earnings. Clearly there is caution out there about what bank earnings season holds for Canadian banks. Holden is worried that TD’s quarterly results could hold a bunch of negative surprises when it comes to impact from regulatory requirements, anti-money laundering investigations, or higher expenses. Given the multiple expansion over last six months, Holden recommends investors get out of the way.