Morning Markets for Friday, Nov. 28, 2025

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

Key Concepts

Canadian Economy: Rebound in Q3 2023, GDP growth, government spending, residential investment, trade weakness, import decline, October contraction.
Tilray Brands: Reverse stock split (1-for-10), cost savings, share attractiveness.
Montage Gold: Acquisition of African Gold, expansion in West Africa, increased footprint.
Market Performance: TSX rally, record territory, US markets (S&P 500, Dow Jones, Nasdaq) also up.
Black Friday & Holiday Spending: Consumer spending trends, rising prices, economic uncertainty, online vs. in-store shopping, "Buy Canadian" push.
Bank of Canada & Federal Reserve: Upcoming interest rate decisions, potential rate cuts, focus on employment vs. inflation.
Energy Sector: Canada-Alberta energy cooperation agreement, bitumen pipeline to Pacific, Indigenous co-ownership, carbon capture project (Pathways), conditions for pipeline construction.
Mining Stocks: Copper demand (AI, electrification), First Quantum Minerals (Panama mine, Zambia operations, debt reduction), Anglo American, BHP.
Real Estate Investment Trusts (REITs): CAP REIT (largest apartment REIT in Canada), portfolio simplification, discount to NAV, demand for affordable accommodation.
Canadian Natural Resources Inc. (CNQ): Low-cost oil and gas producer, dividend increases, potential acquisitions.
Inter-Provincial Trade Barriers: Food and alcohol movement, mutual recognition agreements, protectionism, rising food inflation, GST on food.
Fixed Income: Canadian 10-year bond yield, corporate bonds vs. government bonds, inflation outlook, bond vigilantes.
Artificial Intelligence (AI): Demand for copper, AI scare, profitability of AI investments.
Private Credit: Potential defaults, underwriting, balance sheets, media portrayal.

Canadian Economy Rebounds in Q3 2023 Amidst Trade Weakness

The Canadian economy experienced a significant rebound in the third quarter of 2023, with Gross Domestic Product (GDP) rising by 2.6% at an annual rate. This growth exceeded expectations, as a Bloomberg survey of 14 economists had predicted an increase of only 0.5%. This marks the fastest pace of growth since the end of the previous year and helps offset the decline seen in the second quarter, preventing a recession.

Key Drivers of Growth:

Government Spending: A notable contributor to the economic expansion.
Residential Investments: Housing investments played a significant role.
Crude Oil Exports: Exports saw an increase.

Signs of Weakness:

Trade: Despite overall export growth, imports fell sharply by 8.6%, the largest decline since 2022. This drop was primarily driven by a decrease in metal shipments.
Household Spending: StatCan indicated that a decline in household spending also weighed on growth, along with a slower accumulation of manufacturing inventories.

October Contraction and Future Outlook:

October GDP: Preliminary data from StatCan suggests the economy contracted by 0.3% in October. This indicates a degree of choppiness in the economic data.
Bank of Canada: The weak October numbers and ongoing concerns about consumer demand are factors that will be considered by the Bank of Canada ahead of its interest rate decision on December 10th. While these figures may not drastically alter the decision, they reinforce the argument for potential rate cuts.
Data Revisions: StatCan noted that the third-quarter revision could be larger than usual in February, partly due to reliance on foreign merchandise trade data, which was impacted by the US government shutdown.

Corporate News and Market Movements

Tilray Brands Implements Reverse Stock Split

Action: Tilray Brands announced a one-for-ten reverse stock split, effective December 2nd.
Rationale: The company stated the move aims to make its shares more attractive and reduce expenditures related to its annual shareholder meeting.
Cost Savings: This split is projected to result in annual cost savings of up to $1 million USD.

Montage Gold Acquires African Gold

Deal: Canadian gold producer Montage Gold is acquiring all outstanding shares of Australia-listed African Gold that it does not already own.
Value: The deal is valued at $170 million USD.
Strategic Benefit: This acquisition adds a key project in West Africa to Montage's portfolio and strengthens its footprint in the region.
Shareholder Impact: Upon finalization, African Gold shareholders will own approximately 8% of the combined company.

Market Rally Continues

TSX: The Toronto Stock Exchange (TSX) continued its rally, reaching record territory for another day, up 0.36%.
US Markets: South of the border, the S&P 500 was up by approximately 0.4%, the Dow Jones by 0.6%, and the Nasdaq by 0.3%. Trading was slower due to the Thanksgiving long weekend in the US.

Black Friday Spending and Economic Perspective

The official start of the holiday shopping season, Black Friday, is underway. However, rising prices and an uneven economy are prompting consumers to be more mindful of their spending.

Expert Insights (Jemmy Lee, CEO of Wealth Consulting Group):

Spending Outlook: Lee anticipates strong retail spending for the holidays and a potential "Santa Claus rally." He noted anecdotal evidence of increased shopper interest.
Consumer Resilience: Despite economic pressures, Lee believes the consumer remains resilient due to relatively good employment conditions.
Fed Policy: Lee advocates for the Federal Reserve to focus more on slowing employment than inflation and supports a rate cut, which would benefit consumers and small businesses.
Market Strategy: He suggests investors consider cyclical sectors like consumer discretionary, industrials, and financials, as well as small-cap stocks, which could rally if rates decrease. Diversification away from mega-cap tech is also recommended, though tech is still liked on dips.
AI and Private Credit: Lee views AI as a good long-term bet but cautions that the market is not out of the woods regarding AI-related stock pullbacks. He believes private credit is generally sound, though some smaller pockets may see defaults.

Canada-Alberta Energy Cooperation Agreement and Pipeline Prospects

A significant new energy cooperation agreement has been signed between Prime Minister Mark Carney and Alberta Premier Danielle Smith.

Key Provisions and Conditions:

Bitumen Pipeline: The agreement outlines a clear path towards the construction of an Indigenous co-owned bitumen pipeline to Asian markets with a capacity of over 1 million barrels per day.
Construction Timeline: If all goes smoothly, construction could commence in 2029.
Private Sector Proponent: A crucial condition is the involvement of a private sector proponent; without one, the pipeline will not proceed.
Indigenous Co-ownership: Indigenous co-ownership and collaboration with British Columbia to share benefits are stipulated.
Carbon Pricing Agreement: A new carbon pricing agreement is required.
Pathways Carbon Capture Project: The Pathways carbon capture project must move forward for the pipeline to proceed. This project is considered key to Canada meeting its net-zero emissions commitment by 2050.
Application Deadline: Alberta has until July 1st to submit a pipeline project application to the New Major Projects Office.
BC Tanker Ban: If all conditions are met, the federal government will adjust the oil tanker ban on the coast of British Columbia.

Expert Analysis (Randy Sollensberger, Managing Director, Oil and Gas Equity Research at BMO Capital Markets):

Meaningful First Step: Sollensberger calls the agreement a "meaningful first step" but emphasizes that significant work remains.
Next Big Step: The most critical step is securing a private sponsor willing to build the pipeline and sign up shippers.
Cost Certainty: For private sponsors to step up, there needs to be a level of cost certainty, avoiding the cost overruns seen with the Trans Mountain Expansion (TMX) project (which ballooned from $7 billion to $34 billion).
Government Backstop: He suggests that some form of backstop guarantee from the Alberta government might be necessary in case of cost overruns not controlled by the pipeline company.
Indigenous Support: Sollensberger notes that a high level of support exists from Indigenous bands along the pipeline route, with around 100 out of 114 bands being supportive.
Timeline: Construction could potentially start as early as 2029, with oil flowing realistically in the mid-2030s given a 3-5 year build period.
Oil Price Factor: The oil sands are a low-cost source of supply, giving them an advantage in surviving lower price environments.
Pathways Project: The Pathways Group is keen to move forward, and its progress is tied to the pipeline's advancement.

Mining Sector Focus: Copper Demand and First Quantum Minerals

The demand for copper is expected to grow significantly due to the AI revolution (data centers) and the electrification of the auto industry.

First Quantum Minerals:

Copper Production: A major copper producer, generating approximately 400,000 tonnes per year.
Panama Mine: The company's large mine in Panama was shut down by the Panamanian government, which was surprising given its contribution to GDP and employment.
New Government Negotiations: The new Panamanian government is in negotiations with First Quantum for a potential restart of operations, which could add several hundred thousand tonnes of production.
Zambian Operations: Even without the Panama mine, operations in Zambia are performing well, including the opening of a mine extension.
Debt Reduction: First Quantum reduced its debt by securing a $1 billion gold royalty on its gold production.
Stock Performance: Shares are up significantly this year (around 55-60%), though still below pre-Panama mine closure levels.
Industry Sentiment: Major mining companies like Anglo American and BHP are actively pursuing copper assets, indicating a belief in the sector's future.

Real Estate and Energy Sector Investments

CAP REIT: A Play on Affordable Accommodation

Profile: CAP REIT is the largest apartment REIT in Canada.
Rental Demand: Despite rising home prices, rental growth has kept pace with earnings growth, meaning renting as a percentage of income hasn't increased.
Portfolio Simplification: CAP REIT has divested its European exposure (approximately 15,000 apartments in Belgium, Netherlands, and Germany) and is upgrading its Canadian portfolio.
Valuation: The REIT trades at about a 30% discount to its Net Asset Value (NAV) and offers a yield of nearly 4%, which is gradually growing.
Investment Thesis: The discount has historically narrowed when the REIT has been at these levels, and further rate cuts could accelerate this. It's seen as a strong play on continued demand for affordable accommodation in Canada.

Canadian Natural Resources Inc. (CNQ): A Low-Cost Energy Producer

Profile: One of Canada's largest oil and gas producers, known for its low-cost operations (estimated at $21 per barrel for oil sands).
Dividend Growth: CNQ has increased its dividend for 25 consecutive years.
Yield: Offers a reasonable yield of 4% to 4.5%.
Acquisition Potential: The company has a history of strategic acquisitions, including Chevron's 20% stake in oil sands operations last year. They may consider further acquisitions, such as from Tourmaline's portfolio.
Pipeline Impact: The expansion of Trans Mountain and the potential new pipeline to the West Coast are positive developments for CNQ.

Inter-Provincial Trade Barriers and Food Inflation

Kelly Higginson, President and CEO of Restaurants Canada, highlighted concerns about inter-provincial trade barriers for food and alcohol products.

Key Issues:

Exclusion from Agreements: Food and alcohol products have been excluded from recent mutual recognition agreements on the sale of goods, leading to delays and hindering free movement across the country.
Fragmented Market: Canada operates as 13 distinct economies, making mutual recognition challenging.
Protectionism: Some level of protectionism exists, which is understandable but problematic during times of rising food costs.
Food Inflation: Food inflation has outpaced general inflation for nine months, impacting consumers and businesses.
Regulatory Duplication: Provinces have different rules, labeling requirements, and packaging agreements, adding costs and complexity for businesses, especially small operators.

Proposed Solutions:

Mutual Recognition: Implementing mutual recognition agreements, where food inspections in one province are recognized by others, is seen as the most efficient solution.
Uniform Federal Standard: Creating a uniform federal standard for food provisions, regulations, labeling, and inspections, similar to Australia's model, would simplify trade across all borders.
Remove GST on Food: Restaurants Canada calls for the removal of all GST on food to alleviate affordability pressures.

Impact on Restaurants:

Reduced Consumer Spending: High inflation and household debt are reducing discretionary spending, with 75% of Canadians eating out less and planning further cutbacks.
Government Priority: Restaurants Canada urges the government to make affordability a higher priority and implement impactful measures.

Fixed Income Market Outlook

Earl Davis, Head of Fixed Income and Money Markets at BMO Global Asset Management, provided insights into the bond market.

Interest Rate Outlook:

Bank of Canada & Federal Reserve: Both central banks are expected to announce rate decisions on December 10th. Recent comments from Fed officials have revived hopes for US rate easing.
US Pause: The US is expected to pause its rate hikes, and the market anticipates corporate bonds and equities to perform well until the Fed meeting. Volatility may follow depending on the hawkishness of any cut.
Constructive Year for Growth: 2026 is anticipated to be a constructive year for GDP growth in both Canada and the US.

Canadian Economy and Investment:

Lagging Growth: Canada is expected to lag the US in growth, partly due to uncertainty surrounding NAFTA (now USMCA) negotiations, which deters large private market investments.
Government Spending Support: Public markets and government spending are currently buoying Canadian growth.
US Economic Influence: The Canadian economy is significantly impacted by the US economy (estimated at 60%), with US deregulation, bank capital growth, and tax cuts in 2026 expected to be supportive.

Canadian 10-Year Bond Yield:

Five-Year Horizon: Not necessarily a buyer of Canadian 10-year bonds at a 3.1% yield for a five-year horizon.
One-Year Horizon: A buyer at current levels, expecting yields to remain within a range of 2.75% to 3.60% for 2025.
Future Buying Opportunity: If yields rise to 3.65% again in 2026, Davis would become a very large buyer and go overweight bonds.
Corporate Bonds Preferred: Currently prefers corporate bonds over government bonds due to higher yields (an additional 125-150 basis points over government bonds).

Inflation and Bond Vigilantes:

Inflation Not a Concern (Currently): Inflation is not a concern in Canada at this point due to less demand (linked to US negotiation uncertainty) and excess supply. Inflation typically arises from excess demand.
Bond Vigilantes: Davis believes Canada is not at risk from "bond vigilantes" because other global markets (UK, France, Japan, and potentially the US) are considered more at risk. He anticipates the US will face inflation issues before Canada. This makes Canadian bonds, particularly corporate bonds, a comfortable investment.

Black Friday Shopping Trends in Canada

Black Friday participation in Canada has been steadily increasing, with 84% of Canadians considering it their most important shopping day of the year.

Shifting Dynamics:

Decline of "Door Crashers": The emphasis on extreme early-bird deals ("door crashers") has diminished. Promotions now extend for days or weeks, both online and in-store.
In-Store Experience: Despite the rise of online shopping, stores are still invested in the in-store experience, and many consumers continue to visit malls.
Cyber Monday: The phenomenon of Cyber Monday also influences consumer planning.

Consumer Spending Amidst Uncertainty:

Spending Levels: Canadians are expected to spend roughly the same amount as in previous years.
Affordability Concerns: Affordability is a major concern, and consumers are actively seeking sales and comparing prices to make their dollars go further.
"Buy Canadian" Push: A significant portion of Canadians are prioritizing buying Canadian products to keep their dollars within the country.

Market Wrap-up

TSX Rally: The TSX continued its upward trend, trading in the green and reaching new record highs.
US Markets: US markets (S&P 500, Dow Jones, Nasdaq) also experienced gains, though trading was lighter due to the Thanksgiving holiday.
Silver Driving TSX: Silver mining stocks were a significant driver of the TSX's performance, with companies like Endeavour Silver, First Majestic, and Discovery Silver Core seeing substantial gains.
Silver Prices: Silver prices are nearing record territory, surpassing previous peaks.