Here are five things you need to know this morning:
Over to you, Nvidia: The story of the day on markets will be all about Nvidia, with the chip maker set to post results after markets close. The pressure is on to perform, as the stock with a 3,776 per cent return since the start of 2019 is increasingly being asked to pick up the slack for the otherwise wobbly Magnificent Seven tech companies. After going along for the ride on the market plunge of August 5, Nvidia has quietly marched 28 per cent higher on expectations that the AI hype can deliver. The company is forecast to rake in more than US$29 billion in revenue for the quarter, more than double last year’s tally. It will be interesting to watch the sales growth figure as results from Alphabet and Amazon showed huge increases in expenses tied to AI spending, but relatively little revenue growth to show for it. Expect a big reaction in Nvidia’s stock price either way once the numbers come out, as trading on the options market implies the stock is going to move as much as 10 per cent in either direction if they meet, surpass or miss their lofty expectations.
Bank earnings: Earnings at Canada’s big banks continue this week, with Royal Bank posting numbers before the bell that show the lender beating most analyst expectations. RBC earned $3.26 a share on an adjusted basis, well ahead of the $2.97 anticipated. Lower loan loss provisions were a big reason why, with the bank setting aside $659 million during the period. That’s less than the $921 million analysts had forecast and less than the $920 million the previous quarter. National Bank of Canada also posted results before the bell this morning and it, too, mostly beat expectations. Adjusted EPS came in at $2.68, above the $2.47 expected. Revenue came in at $2.98 billion, ahead of the $2.86 billion expected, while loan losses came in at $149 million. That’s a 34 per cent increase from last year, but in line with expectations.
Air Canada eases rebooking rules as strike deadline nears: Air Canada is offering passengers who have booked flights in the next month more flexibility than usual to make alternative plans, as a potential walkout by the carrier’s pilots is on the horizon. More than 5,400 Air Canada pilots could be in a position to strike as soon as Sept. 17. The airline has rewritten its rebooking rules to make it easier for customers scheduled to fly between Sept 15 and 23 to rebook at no additional cost. Travellers can also cancel their flight and get a credit for future travel. A large number of Air Canada pilots were demonstrating at Pearson Airport in Toronto this week, showing their resolve to walk off the job unless they’re offered a new contract more to their liking.
Flair in talks with bankers about recapitalizing: Discount airline Flair Airlines is talking with investors about raising up to $100 million, Bloomberg reports. The carrier’s newly minted interim CEO Maciej Wilk says the airline is in talks with investors about a recapitalization plan to give the company some “breathing space,” although he stressed that a cash injection is not something the company “desperately needs.” Flair’s finances have been a subject of concern for a while now, after lenders repossessed some of its jets last year, and the company also owes the CRA tens of millions of dollars in back taxes. But the company’s outlook has improved of late, after low-fare rivals Lynx and Canada Jetlines both went out of business in the past few months.
Credit card balances hit record high of $4,300: You aren’t the only one -- Canadian credit card holders had an average outstanding balance of $4,300 at the end of June. That’s according to credit monitoring agency Equifax, who say it’s the highest figure on record since they started tracking data in 2007. In a new report, Equifax noted a sharp decline in the rates of people paying down their credit card, especially for those under 35. Borrowers between 26 and 35 had the highest missed payment rate at nearly two per cent. Another pressure point was found in those who had a mortgage, where that cohort saw an average increase of 12 per cent to their credit card balances. That’s much greater than the overall increase of 7.7 per cent clocked by those who don’t have a mortgage to pay.
