Milan Cacic
November 07, 2025
Money Economy Commentary Weekly update Weekly commentary
BUDGET SHENANIGANS AND AI REALITIES
As we wrap up another week, two topics bubbled up in conversations that merit a quick note: Ottawa’s fiscal "discipline," and lingering worries about an AI bubble.
First, the Canadian government's budget. It included a record-high deficit projection, north of $78 billion for the coming year, and what appears to be never-ending deficits for the foreseeable future. They are making some cuts; half of Trudeau’s $2 billion tree planting, 40,000 civil service jobs, and immigration. However, they are spending big in other areas and came up with a slogan "spend less to invest more." (I'm still decoding what that means, does it mean borrowing to save?). Overall, budgets like this underscore why diversification both in asset classes and geography are so important.
AI Realities
On another note, several of you had questions about an "AI bubble". This is a fair question; the hype is thick and valuation on some companies are stretched. But unlike the 2000 dot-com fiasco, where unprofitable startups burned cash like confetti, today's AI leaders (Nvidia, Microsoft, Google, Amazon) appear to be printing money hand over fist. Earnings growth is real (13%), and companies are funding the AI buildout largely from profits, not endless debt. These companies are spending $1 trillion+ globally over the next 2 years. I think the question that should be asked is “Is it a bubble if the infrastructure is being built to support genuine demand?”. The demand is real and it appears to be accelerating. OPEN A.I. just announced over 700 million active users, which is mind blowing considering it has only offered its services for 2 years! Having said that, we have trimmed some positions. Markets will do what they do, and we will do our best to navigate with a properly diversified portfolio – regardless of whether it’s a bubble or not.
AI Capex Spending Forecast (as of Oct 7, 2025):
I've also included a piece from our CIBC Economics team entitled "If the Supremes sing ‘stop, in the name of law’".
As always, if you have any questions, please feel free to give us a call at any time.
Have a great weekend.
Milan