In the Money: 5 Things to Know

Futures inch higher, BMO & National Bank beat, Definity acquisition, Abercrombie surges

I’m running late and my eldest child is wearing a crop top to school. I’m going to self-soothe by writing the newsletter.

Watch the full episode: Markets may be gripped by housing panic and rising interest rates but are investors missing the real estate opportunity? In this episode of In the Money with Amber Kanwar, seasoned real estate investor Dennis Mitchell, CEO & CIO of Starlight Capital, shares why Canadian REITs might be one of the most mispriced areas of the market and what investors are getting wrong about the sector.

Nvidia we trust: Futures are slightly higher this morning, after a rip-roaring rally yesterday, ahead of Nvidia’s earnings tonight. As always, it will be a key set because our entire world hinges on AI spending (sarcasm). Let’s just ignore the fact that Nvidia is back where it was mid-June of last year and has been a real side-ways stock. “In the meantime, market leadership has shifted to Financials, Industrials, Utilities, and both Consumer Discretionary and Staples,” wrote Jim Reid of Deutsche Bank. That’s not to say Nvidia doesn’t have a lot at stake. Reid points out that forecasts for Nvidia’s 2030 revenue have stopped moving higher and in fact have come down since the release of DeepSeek earlier this year (see chart below). “That leaves a significant growth runway required to hit the 2030 target—underscoring that Nvidia remains a high-beta heavyweight,” says Reid.

Marching to the beat: BMO beat earnings expectations by a wide margin even as it set aside more money than expected for loans that could go bad. The latter point is important because provisions for credit losses have been the source of ugly surprises in quarters of the past. BMO also boosted its dividend 3% as expected. Another positive in the quarter was that gross impaired loans came down from the previous quarter. Strength in wealth management helped to drive results. However, Canadian banking and capital markets was lighter than expected.

Surge trading: National Bank trounced profit expectations on the back of a *90%* increase in capital markets. We will have to wait for the call for details as to why (at 11amET). But even analysts are struggling to explain with John Aiken of Jefferies saying “If any of you can explain NA’s capital market performance, I would appreciate it…” National also boosted its dividend. We will watch for how the market greets the beat driven by capital markets. Blemishes in the quarter include a doubling of gross impaired loan formations that may get some attention. We also saw integration of Canadian Western Bank which it bought last year and it materially added to profits this quarter. Personal and commercial banking was up 22.5% but when you strip out the acquisition of CWB it was up 1%.

To infinity: Watch shares of Definity at the open after it’s deal to buy the Canadian unit of Travelers for $3.3 billion. It is it’s biggest deal ever and will vault the company into fourth place among property and casualty insurers in Canada. They are financing the deal in part through a stock sale priced at $66.65 a piece. However, the deal has already been upsized and there is a chance it trades well above that at the open. It is a coup for the insurer that just came to market in the height of IPO fervor in 2021. While many companies from that vintage have languished, shares of Definity are near all-time highs and are up nearly 63% over the past year.

Too hot to handle: Shares of Abercrombie & Fitch are surging nearly 30% in the pre-market as investors take comfort they’ve got a handle on the tariff situation. Sales and profit came in better than feared (although the namesake banner Abercrombie fell 10%). This was offset by strength in Hollister. The company also repurchased 5% of its shares in the quarter. In terms of the forecast, ANF increased its sales outlook while slashing its profit outlook due to a $50 billion hit from tariffs. Still, given the stock has been beaten up, it is enough for investors. Also,14% of the shares are short, so at the very least it is enough to spook the shorts.