Morning Markets for Friday, Nov. 21, 2025

Here's a comprehensive summary of the provided YouTube video transcript:

Key Concepts

• United Arab Emirates Investment: $70 billion commitment to Canada in energy, AI, logistics, and mining.
• Critical Minerals Processing: Canada's $1 billion project to expand capacity.
• Retail Sector Performance: Gap and Ross Stores reporting strong sales and profits, driven by celebrity collaborations, marketing, and inventory management.
• Market Sentiment and Pullbacks: Current market downturn attributed to sentiment and "vibes" rather than fundamental economic factors like earnings, interest rates, or inflation.
• Interest Rate Outlook: Expectations of aggressive interest rate cuts by the US Federal Reserve in 2026, with potential for a December cut.
• Bitcoin Valuation: Difficulty in valuing Bitcoin due to its lack of cash flow, described as a commodity or trading vehicle with high volatility.
• Altus Group Strategy: Focus on Argus Intelligence platform and Valuation Advisory Services, with a planned dual listing in the US market by 2027.
• Pipeline Agreement: Potential agreement between Alberta and Ottawa, with challenges from British Columbia and Indigenous groups.
• Anglo American/Teck Resources Takeover: Canadian government pressure on Anglo American for commitments regarding executive jobs and critical minerals.
• Air Passenger Compensation: Proposed amendments that could increase airline operating costs and ticket prices.
• Canadian Retail Sales: Slowdown in September, with a decline in auto sales but growth in food and beverage.
• Christmas Tree Sales: Decline in US exports due to trade uncertainty and tariffs.
• 2026 Stock Picks: A mix of growth and defensive stocks, with a focus on value and companies supporting AI and energy transitions.

Investment and Economic News

United Arab Emirates Investment in Canada

The United Arab Emirates has committed to investing $70 billion in Canada. This significant investment will target vital sectors including energy, artificial intelligence (AI), logistics, and mining. This announcement follows Prime Minister Mark Carney's visit to Abu Dhabi, aimed at strengthening bilateral trade relations. Additionally, Ottawa is finalizing a $1 billion project to expand Canada's critical minerals processing capacity.

Retail Sector Performance: Gap and Ross Stores

• Gap Inc.: Shares are trading higher following a beat in sales and profit for its most recent quarter. CEO Richard Dixon attributes this success to celebrity collaborations and marketing efforts that have attracted higher-income consumers and boosted same-store sales. New initiatives and revamped inventory have also enabled Gap to increase denim prices and sell more products at full price.
• Ross Stores: Shares are rallying after exceeding profit and revenue estimates in its latest quarter, with a notable spike in same-store sales. The discount retailer has also raised its full-year profit forecast beyond expectations. Analysts highlight the strength in its women's fashion brands as a positive indicator for the upcoming holiday season.

Market Performance and Analysis

The TSX is trending slightly down, with most markets showing slight rebounds after a sharp sell-off earlier in the week. US markets, including the S&P 500 (currently flat), Dow Jones (slightly up), and NASDAQ (down), are also experiencing fluctuations.

Analysis by Barry Schwartz, Partner and Portfolio Manager at Baskin Wealth Management:

• Market Pullback: Schwartz views the current market pullback as a natural correction after three consecutive years of double-digit gains for the S&P, NASDAQ, and TSX. He emphasizes that the pullback is driven by market sentiment and "vibes," not by earnings, interest rates, or inflation.
• Investment Opportunities: He expresses a preference for pullbacks occurring with "no news" because they present opportunities for long-term investors. These situations allow for buying companies whose intrinsic value remains unaffected by market news, even if their stock prices have declined.
• Interest Rate Outlook: Schwartz believes the US will be aggressive in cutting interest rates over the next year, stating that current rates are "way too high" and "choking business investment." He anticipates significant rate cuts in 2026, which he expects to lead to strong markets. He notes that a statement from a Federal Reserve official suggesting a potential December rate cut has already boosted futures.
• Bitcoin: Schwartz is cautious about Bitcoin, describing it as a "trading vehicle" with "nothing really behind it." He likens it to a commodity like baseball cards or gold, which are only worth what the next person will pay. He advises preparedness for "enormous volatility" and states he would never recommend buying Bitcoin, but acknowledges that if one liked it at a higher price, they might like it better at a lower one. He reiterates that he is an "old school guy" who values companies based on future cash flows, which Bitcoin lacks.
• Retail and Economic Trends: Schwartz observes that the current economy is characterized by the wealthy spending, while the rest of the population is affected by high prices. This dynamic is hurting low-end retailers and restaurants. He also notes that high interest rates have significantly impacted homebuilding stocks and related services, which will only recover when interest rates decline and trade/tariff clarity emerges. He anticipates the US backing off "dumb trade tariff ideas," adding certainty to the market by 2026.

Altus Group's Value Creation Plan

Altus Group, a commercial real estate intelligence provider, hosted an Investor Day in New York, focusing on its Value Creation Plan. Key elements of this plan include:

• Dual Listing in the US Market: Planned for 2027. Approximately 60% of Altus Group's current revenue comes from the US.
• Portfolio Simplification: The company is focusing on two core assets:
  1. Argus Intelligence Platform: A comprehensive solution for commercial real estate valuation.
  2. Valuation Advisory Services: Leveraging expert advisors for asset valuation.
• Argus Intelligence Platform: This platform integrates three components:
  • Software Engine: Performs valuations and calculations for various real estate assets (office buildings, hotels, multi-family, warehouses).
  • Data Integration: Provides portfolio performance insights and benchmarks.
  • New Analytics: Incorporates AI engines and agents to enhance capabilities, with new products launching in 2026.
• Accelerated Share Buyback: The company plans to accelerate its share buyback program, viewing its own stock as the best investment.
• Becoming a Rule 40 Company by 2027: This goal involves achieving double-digit growth in core areas and rationalizing the cost model to achieve EBITDA numbers north of 30% by 2026.
• Challenges: The primary headwind identified is longer adoption cycles for new products, particularly for AI solutions, as clients accustomed to traditional methods may require time to integrate new technologies.

Canadian Economic and Trade Developments

Pipeline Agreement Prospects

Sources indicate that Alberta and Ottawa are close to a pipeline agreement. However, securing approval from British Columbia and Indigenous groups remains a significant challenge. A Memorandum of Understanding (MOU) between Alberta Premier Danielle Smith and Prime Minister Justin Trudeau is anticipated. As part of this deal, Ottawa is reportedly considering easing the BC North Coast tanker ban, potentially lowering or removing the emissions cap, and strengthening the industrial carbon tax to support carbon capture.

Anglo American and Teck Resources Takeover

The Canadian government, specifically Minister Mélanie Joly's office, is pressuring Anglo American to make stronger commitments regarding executive and management jobs at its Vancouver base as a condition for approving the takeover of Teck Resources. Minister Joly has the authority to approve or veto the merger under the Investment Canada Act. The government is also seeking commitments related to the metals produced by the combined entity, particularly copper and zinc, aligning with Canada's critical minerals strategy and G7 objectives. Ideas such as purchasing offtake agreements to stockpile these minerals have been floated. Both Anglo American and Teck are reportedly taking these requests seriously and aiming to be cooperative.

Air Passenger Compensation System

The Montreal Economic Institute argues that a new system for air passenger compensation being studied by the Canadian Transportation Agency would increase operating costs for airlines, leading to higher ticket prices and reduced competitiveness. The proposed amendments would make compensation mandatory for all disruptions, unless they fall under a very specific set of "exceptional circumstances," placing a greater burden of proof on airlines. Air passenger rights advocates, however, have been pushing for enhanced compensation for delays and cancellations. The proposed changes are currently under consultation.

Canadian Retail Sales Data

Statistics Canada data shows that consumer spending across the country slowed in September, with retail sales falling 0.7% compared to the previous month. This decline was primarily driven by a drop in receipts at auto and parts dealers, with vehicle sales experiencing their first decline in three months. Consumers did, however, spend more at food and beverage retailers. A flash estimate predicts retail sales were flat in October.

Analysis by Dominic Lapointe, Director of Macro Strategy with Manulife Investment Management:

• Weak September and Q3: Lapointe describes September as a "weak month" and Q3 as a "significant slowdown" from Q1 and Q2, which should not be surprising given the current economic context. Six out of nine retail categories dropped in September.
• Consumer Segmentation: He divides Canadian consumers into three categories:
  1. Employed with Decent/Modest Wage Gains: Able to spend more on discretionary items.
  2. Moderate to Lower Income: Spending cautiously on staples due to high interest rates, prices, and housing costs. 50% of Canadians are reportedly holding back on spending due to these factors.
  3. Households Impacted by Tariffs: More careful about spending.
• Tariffs and Economy: Lapointe believes both tariffs and the broader economy are contributing to the slowdown.
• Discretionary Spending: While discretionary retail sales are up 3% year-to-date, he suggests this is driven by the first consumer category. He notes Canadian consumers are generally more cautious than American ones, with a national savings rate now close to that of the US.
• Automobile Sector Impact: The automobile sector experienced the biggest hit, with sales down for the year. This is attributed to a post-pandemic backlog of demand, followed by high prices and elevated interest rates for auto loans, leading to lower demand for new vehicles.
• Forward Outlook (Next 3 Months and into 2026): Lapointe anticipates continued weak growth. He expects the Bank of Canada to hold rates steady for at least the next 6-12 months, limiting purchasing power from borrowing. Trade uncertainty is also not expected to alleviate soon. Business investment is projected to remain weak, contributing to a soft labor market. However, he emphasizes this is not a recession, with the unemployment rate not at recessionary levels and no widespread layoffs. The situation is characterized by "muddling through."

Company-Specific News and Analysis

Gap Inc. CEO Interview

Richard Dixon, CEO of Gap Inc., discussed the company's strong performance and holiday season plans:

• Consistent Strength: Gap has seen consistent consumer behavior strength across all income cohorts, with overall sales up 5% (seventh consecutive quarter of positive comps). Old Navy was up 6%, Gap up 7%, and Banana Republic up 4%. Gross margin exceeded expectations.
• Winning with Consumers: Despite external data pointing to macro pressures, Gap's customers are finding their price, value, and style appealing, breaking through the competition.
• Holiday Season Outlook: Dixon is excited about planned holiday activations, particularly in denim, sleepwear, and fleece. He highlighted a partnership with DoorDash for Old Navy to provide convenience.
• Cultural Relevance and Collaborations: Cultural relevance is a key part of Gap's playbook, driving revenue. Collaborations, when done well and authentically, broaden the consumer base. Gap has launched over 13 collaborations, including a successful "Better in Denim" campaign that generated 8 billion impressions and 500 million views, driving double-digit growth in denim. He views the "denim wars" as a sign of creativity in the fashion industry.
• Tariff Impact: The Q3 tariff impact was 190 basis points, in line with expectations. Despite this, Gap exceeded its gross margin outlook due to top-line momentum, less discounting, and better regular price sell-through. Mitigation plans involving sourcing, manufacturing, and assortments are ongoing.

Christmas Tree Sales Decline

Christmas tree sales are experiencing a downturn, particularly for exports to the US, due to trade uncertainty and tariffs. Colin Hughes, who ships over 150,000 trees annually, reports a 50% drop in US exports. He cites customer nervousness about last-minute tariffs impacting their profitability. While this impacts the Nova Scotia industry (generating over $50 million in revenue), a potential surplus of trees in Canada could lead to more local availability and stable prices.

2026 Stock Picks and Market Outlook

John Ehrlichman, host of the YouTube channel "Ticker Taker," discussed stock picks for 2026 with various BNN Bloomberg regulars:

• Mixed Bag of Growth and Defense: Investors are still seeking growth but are also leaning more into defensive plays.
• Growth Picks:
  • MDA Space: Liked by John Zechner due to recent setbacks making it less pricey.
  • Pinterest: Favored by Teal Linde for its growth potential and more attractive valuation compared to other tech companies.
• Defensive Picks:
  • Exchange Income: Liked by Andrew Pink for its steady, predictable business tied to aerospace.
  • Telus: Greg Neumann of Scotia Macleod likes it for the potential of single or double-digit returns rather than home runs.
• AI and Energy Themes:
  • Tesla: Kim Bolton likes it for its potential across various areas, including AI.
  • NiSource: Sam Stovall of CFRA likes it as a utility company supporting the AI boom.
  • First Solar: Doug Clinton likes it for its solar focus, potentially offering value that has received less attention than natural gas or nuclear.
• Gold Sector:
  • Agnico Eagle Mines: David Burrows of Barometer still likes it, believing the gold bull run will continue. He highlights the company's star performance in past gold bull markets, strong management, improved cash flow, and a consistent dividend for over 40 years.
• Overall Market Sentiment: While some investors are making cases against AI stocks, the roadmap presented by companies like NVIDIA suggests continued interest in the AI sector. The key theme for 2026 is the desire for good value, and companies will need to prove their ability to deliver to maintain stock performance.

Conclusion

The market is experiencing a period of sentiment-driven pullback, presenting opportunities for long-term investors. While economic headwinds exist, particularly in retail and consumer spending due to high interest rates and inflation, certain sectors like AI and critical minerals are seeing significant investment and strategic focus. Companies are adapting through innovation, strategic partnerships, and cost management. The outlook for 2026 suggests a continued demand for growth, but with a strong emphasis on value and companies that can navigate evolving economic landscapes.