Market Call: Greg Newman's outlook on North American Equities (Feb. 19, 2026)

Key Concepts

• Market Sentiment: Overall investor optimism/pessimism influencing market direction.
• TNX (10-Year Treasury Note Yield): A key indicator of interest rates and economic expectations.
• Moving Averages (50-day): Used to identify trends in stock prices.
• PE Ratio (Price-to-Earnings Ratio): Valuation metric comparing stock price to earnings per share.
• Earnings Season: Period when companies release quarterly financial results.
• Bull Market: A period of sustained price increases.
• Mag Seven: Refers to the seven largest US technology companies (Alphabet, Apple, Amazon, Meta, Microsoft, Nvidia, and Tesla).
• AI (Artificial Intelligence): A rapidly developing technology impacting various industries.
• EV/EBITDA (Enterprise Value to Earnings Before Interest, Taxes, Depreciation, and Amortization): A valuation metric used to assess a company's value.
• NIMS (Net Interest Margin): A measure of the difference between the interest income generated and the interest paid.
• PCLS (Provision for Credit Losses): An estimate of potential losses from loans.
• ROE (Return on Equity): A measure of a company's profitability relative to shareholder equity.

Market Call Summary – February 22, 2024

This segment of Market Call, featuring Greg Newman (Newman Group, Scotia McLeod) and Lindsey, provides a snapshot of North American equity markets, focusing on current trends, specific stock analysis, and investment strategies. The discussion centers around a cautiously optimistic outlook, driven by moderating inflation, strong earnings, and potential interest rate adjustments, but tempered by ongoing uncertainties.

I. Market Overview & Current Trends

The market has exhibited a more “equal weight” dynamic recently, rather than being dominated by a few key players. While the “Magnificent Seven” (Mag Seven) experienced a volatile start to the year (strong January followed by a decline), they are now attempting to stabilize. Both the S&P 500 and NASDAQ are testing their 50-day moving averages, indicating potential trend shifts. A key theme is that markets are currently “priced for good outcomes,” contingent on factors like continued cooperation from inflation and the Federal Reserve.

Newman notes a recent uptick in investor optimism, supported by cooling inflation figures and positive US employment data. Corporate earnings have significantly exceeded expectations, coming in at 1,415% versus an anticipated 11% increase. He emphasizes that earnings and interest rates are the primary drivers of market performance, and both are currently favorable. Tariffs haven’t significantly impacted inflation, but uncertainty remains regarding the new Federal Reserve Chair’s policy direction (hawkish vs. dovish). The software sector, while experiencing a correction, is now trading at a more reasonable PE ratio of around 20, aligning with a typical bull market behavior.

II. AI Disruption & Tech Sector Analysis

The discussion highlights the dispersion within the Mag Seven, with some companies (like Google) performing well while others face scrutiny. Newman argues that the substantial investments ($180 billion) made by these tech giants are justified, as they recognize significant potential returns from AI. He points out that valuations for companies like Google and Microsoft (around 21x PE with 18% growth) are reasonable. He anticipates a shift in market leadership at some point, but believes the current tech investment remains a good opportunity.

III. Stock Specific Analysis – Viewer & Caller Questions

The segment dedicates a significant portion to analyzing specific stocks based on viewer emails and phone calls.

• Broadcom: Newman recommends buying Broadcom, citing its strong run since 2022, unprecedented demand, and sustainable cash flow. Despite competitive pressures and high debt, the stock trades at 23x earnings with projected 34% growth in 2027.
• Algonquin Power: Responding to a caller (Andre), Newman acknowledges the recent positive upgrade to “Outperform” by National Bank. He highlights the company’s strong core utilities, progress on rate filings, and attractive valuation (13x 2027 earnings, 14% EPS growth, and a dividend).
• MDA Space: Newman views MDA Space favorably, noting recent positive momentum from defense announcements. He acknowledges concerns about a past contract issue but believes the company’s strong backlog and focus on space technology justify a buy, trading at 21x price-to-growth.
• Tourmaline Oil: In response to a caller (Daniel), Newman favors Tourmaline over Advantage Oil & Gas for upside potential, citing Tourmaline’s strong production growth (8%), cash flow growth, and a 6% dividend yield. He believes Tourmaline benefits from increasing demand for Canadian resources.
• Brookfield Asset Management: Newman suggests Brookfield Corp is the superior pick over Brookfield Asset Management, citing strong fundraising in infrastructure and reasonable valuations.
• Caterpillar: Newman advises against buying Caterpillar at current levels, suggesting a better entry point after a potential pullback.
• Premium Brands: Newman suggests waiting for a slight dip in price before buying, as the stock has already benefited from the “everything else” trade.
• Go Easy: Newman recommends owning Go Easy in a non-registered account, acknowledging its volatility but highlighting its growth potential. He suggests the dividend may be cut, but the stock could rally as a result.
• Constellation Software: Newman recommends buying Constellation Software, noting its strong track record and attractive valuation despite recent challenges.
• Shopify: Newman recommends buying Shopify, citing strong earnings and growth potential despite concerns about AI competition.
• Nvidia: Newman remains bullish on Nvidia, despite concerns about overspending and competition, citing strong earnings, a robust backlog, and continued demand.
• Colliers: Newman recommends buying Colliers, citing its strong growth potential and attractive valuation despite recent challenges.
• Microsoft: Newman remains bullish on Microsoft, citing its strong earnings, growth potential, and attractive valuation.

IV. Macroeconomic Considerations & Investment Strategy

Newman emphasizes the importance of monitoring interest rates and inflation. He believes that the current market environment favors small-cap stocks, particularly as long as interest rates remain stable or decline. He also highlights the potential for a cyclical recovery in Canadian energy stocks, driven by underdevelopment and increasing demand for Canadian resources. He cautions against chasing recent rallies and suggests waiting for potential pullbacks to enter positions.

V. Notable Quotes

• “Markets are priced for good outcomes as long as there’s some cooperation from a couple of different factors.” – Greg Newman
• “These are the smartest companies in the world. They’re not spending $180 billion for nothing.” – Greg Newman (referring to tech companies’ AI investments)
• “You want to buy the fear generally speaking.” – Greg Newman (regarding potential investment opportunities)

VI. Conclusion

The overall takeaway is a cautiously optimistic outlook for North American equities. While acknowledging ongoing uncertainties, Newman believes that strong earnings, moderating inflation, and potential interest rate adjustments create a favorable environment for investment. He emphasizes the importance of selective stock picking, focusing on companies with strong fundamentals, growth potential, and reasonable valuations. He also advises investors to be patient, avoid chasing rallies, and be prepared to capitalize on potential pullbacks.