Morning Markets for Monday, Nov. 25, 2025

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

Key Concepts

• Corporate Earnings & Performance: Analysis of recent quarterly results for Alimentation Couche-Tard, H&R REIT, Best Buy, and Zoom, focusing on profit, revenue, and guidance.
• Market Performance & Trends: Overview of the TSX and US market movements, including record territory for the TSX and the impact of tech stocks like NVIDIA.
• AI and Technology Sector: Discussion on the competitive landscape in AI chip development, with Meta considering Google's chips, impacting NVIDIA.
• Economic Outlook (Canada vs. US): Comparison of GDP growth forecasts for Canada and the US, highlighting divergence and headwinds for the Canadian economy.
• Canadian Real Estate Investment Trusts (REITs): H&R REIT's portfolio strategy involving the sale of properties.
• Zoom's Transformation: Analysis of Zoom's shift from a pandemic stock to an AI-focused platform, driven by new products and channel strategy.
• Canadian Lumber Industry Support: Government plans for financial aid to the Canadian lumber sector facing US tariffs.
• Cryptocurrency Market Impact: Coinbase's performance influenced by crypto market downturns.
• AI Bubble Concerns & Economic Fundamentals: Debate on whether market gains are sustainable or indicative of an AI bubble, with emphasis on underlying economic support.
• Government Stimulus & Fiscal Policy: Discussion on monetary and fiscal stimulus, tax cuts, and their impact on economic growth.
• Investment Strategy & Market Outlook: Perspectives on stock market performance, sector preferences, and the role of fixed income.
• Oil Pipeline Development: Reports of a deal between the federal government and Alberta for a new oil pipeline.
• US-Canada Trade Relations: Impact of trade tensions on Canadian travel to the US.

Market Updates and Corporate Performance

Alimentation Couche-Tard

• Performance: Alimentation Couche-Tard was a top performer on the TSX, reporting profits that exceeded estimates in its latest quarter.
• Revenue: Canadian and US merchandise segments also beat expectations.
• Drivers: The quarter was boosted by acquisitions, despite lower fuel prices and wholesale fuel revenue.
• Dividend Hike: The company announced a 10% dividend increase.
• Acquisition Strategy: CEO Alex Miller indicated ongoing engagement with deal flow and a continued focus on acquisitions, with 75 acquisitions in the past 20 years.
• Store Expansion: The company is on track to meet its goal of 500 new stores in the next five years, with 29 new stores opened globally since May.
• Business Strategy Update: A business strategy update is scheduled for February 11th.

H&R REIT

• Portfolio Strategy: H&R REIT is selling retail and office properties in Canada and the US, totaling approximately $1.5 billion USD.
• Strategic Review: The company recently concluded its strategic review process without a sale.
• Financials: Reported operating income missed estimates.

Best Buy

• Performance: Shares moved higher after posting better-than-expected results.
• Financials: Profit and revenue surpassed estimates, with US and international segment sales also exceeding expectations.
• Outlook: Best Buy boosted its full-year profit forecast, indicating consumer willingness to spend on new tech products.

Zoom

• Earnings Beat: Zoom reported strong results, beating profit and revenue estimates.
• Key Metrics: Revenue beat by $60 million, EPS by $0.08, margins by 130 basis points, and free cash flow margins at 50%.
• Drivers of Growth:
  • Zoom Phone: Contributes roughly 10% of revenue, growing at approximately 15% year-over-year.
  • Contact Centre: Introduced in 2023, growing in high double digits (estimated 90-100% year-over-year). This product is a key driver of AI innovation.
  • Zoom Companion AI: Quadrupled year-over-year, with new customers and expansions with Oracle and Salesforce.
  • Work Diva: Facilitating the transfer of Meta customers.
• AI Adoption: Analysts are focusing on AI feature development for sustained revenue and profit, as demand has dipped since COVID.
• Channel Strategy: The company has matured its channel strategy, bringing in deep expertise and retooling the program with regional focus, a redeveloped sales portal, and easier bundling for pricing.
• R&D Aggressiveness: Zoom's ability to quickly translate technology into products and features helps them land larger customers, often responding to RFPs with comprehensive solutions.
• Transformation: Zoom is no longer considered a "pandemic stock" but has shifted to an "AI-first automation platform."
• Financials: Raised guidance for 2026 and announced a $1 billion buyback. The company has $8 billion on its balance sheet.
• Valuation: The current valuation is seen as not reflecting the company's future trajectory.

Fluence Energy

• Fourth Quarter Earnings: Slightly missed revenue estimates, with approximately $300 million in orders pushed to the next quarter.
• Revenue Forecast: Upped full-year revenue forecast for 2026.
• Data Centre Pipeline: Announced approximately 30 GW of data centre leads and deals in the pipeline, an 80% increase.
• Market Reaction: Shares rose due to the increased revenue forecast and demonstrated demand for data centre solutions.

Canadian Lumber Companies

• Government Support: The Canadian government announced additional financial support for the industry, to be detailed later this week.
• Impact of Tariffs: This support aims to help companies heavily impacted by US tariffs on softwood lumber and other forestry products, which have led to rising costs.

Coinbase

• Performance: Shares are down following a downgrade from "Buy" to "Hold" by Argus, which also cut its EPS guidance.
• Market Influence: Crypto markets have struggled recently, with declines in Bitcoin and Ethereum prices impacting trading volumes and revenues for crypto exchanges like Coinbase.
• Bright Spots: A deal with Circle Internet Group for its USDC stablecoin is seeing an uptick due to increased enthusiasm and traditional financial company involvement in stablecoins.

Market Performance and Economic Commentary

TSX and US Markets

• TSX: The TSX is inching towards record territory, up 0.48% at one point, and later closing in on record territory again, up 0.76%.
• US Markets:
  • S&P 500: Up about a wash initially, later up 0.22%.
  • Dow Jones: Up by 0.6869 initially, later up by 0.73%.
  • NASDAQ: Down 0.44% initially, but improving its losses later.
• NVIDIA Impact: NVIDIA shares are down on reports of Meta considering Google's AI chips, significantly impacting the NASDAQ.

AI and Technology Sector Dynamics

• NVIDIA's Pressure: NVIDIA shares are down approximately 5.5% due to reports that Meta Platforms is in talks to use Google's AI chips in its data centers by 2027, potentially renting chips from Google Cloud next year.
• Competitive Landscape: Investors believe a Meta-Google deal would signal growing momentum for Google's chips and challenge NVIDIA's market dominance.
• Jack Manley's Perspective (JP Morgan Asset Management):
  • Underscores the risk of concentrated bets on single securities.
  • Highlights the cyclical nature of technological leadership, with leadership potentially passing from "makers" (infrastructure builders) to "takers" (revolutionizers of business models).
  • Notes that large tech companies have significant cash to acquire smaller players, leading to jockeying for pole position.
  • Believes there is still ample opportunity for multiple players in the AI world due to substantial fiscal and administrative support.

Economic Outlook: Canada vs. US

• GDP Divergence: US Q3 GDP growth is tracking close to 4%, while Canadian Q3 growth is expected to be near flat. This divergence has been ongoing since before the trade war and even pre-pandemic.
• Canadian Economic Headwinds:
  • Interest Rate Transmission: Higher interest rates have a more effective transmission mechanism in Canada due to quicker mortgage rate refinancing, impacting homeowners.
  • US Policy Impact: Policy changes out of Washington have caused confusion and negatively impacted economic activity.
  • Export Dependence: The Canadian economy is tightly leveraged to the US economy, with 25% of GDP from exports, 75% of which go to the US.
  • Labor Market: Canada's labor market is considerably slacker than the US.
• Policy Uncertainty: The rules of engagement, particularly regarding trade, are fluid. Future policy noise from both Washington and Ottawa is expected to inject uncertainty into the macro landscape in 2026.

Canadian Market Outperformance

• Economic vs. Market Divergence: Despite negative economic divergence, the Canadian equity market (TSX) has outperformed the S&P 500.
• Drivers of TSX Performance:
  • Valuations: Compelling valuations at the start of 2025, with the TSX trading cheaper relative to its history and US counterparts.
  • Sector-Specific Stories:
    • Gold Prices: Up 40% this year, benefiting miners and the materials sector.
    • Financials: Improved net interest margins have been beneficial for banks.
• Caution for 2026: Investors are advised not to assume 2025's outperformance is repeatable in 2026. A 20%+ return year for the TSX and outperformance over US equities are not anticipated.

AI Bubble Concerns and Economic Fundamentals

• Philip Peterson's Perspective (IG Wealth Management):
  • Four Pillars of Support: Identifies monetary stimulus, fiscal stimulus, AI spending, and the wealth effect as key drivers for the economy and growth into next year.
  • Broad-Based Earnings Growth: Most sectors showed strong earnings growth in Q3, with only the energy sector down year-over-year.
  • AI Financing: While financing for AI initiatives might eventually dry up as companies turn to credit markets, current money flow remains strong. A slowdown in future investment is possible, but a solid core is expected for next year.
  • AI Spending: 1% to 1.5% of AI spending as a percentage of US GDP is expected to remain solid.
  • Wealth Effect: Realized financial wealth in the US leads to approximately 15-25% spending. Three strong years of growth for investors have been realized and spent by consumers.
  • Government Stimulus: Tax cuts, particularly for households earning over $217,000 (averaging $12,000), are expected to be stimulative in 2026.
  • Stock Recommendations:
    • Geographic: Equal weight in the US, with positive outlook for US equities. Expects continued outperformance from Canadian equities (TSX), international stocks, and emerging market stocks. Overweight Canada, International, and Emerging Markets relative to the US.
    • Asset Allocation: Overweight equity over fixed income.
  • Fixed Income: Returns are projected at 3-4% for broad-based fixed income portfolios, with equities expected to perform better.
  • Recession Risk: Low probability of a significant recession into 2026.
  • Inflation: Inflation is expected to settle into targeted ranges (2% +/- 1% in Canada, around 2.5% in the US) by mid-2026. Central banks' focus is shifting towards economic support.
  • Interest Rate Cuts: Forecasts four Fed cuts next year, and one by Canada.

Market Correction and Euphoria Concerns

• Mike Vinocur's Perspective (Wealth Partners IA Private Wealth):
  • Correction Needed: Markets have been strong without meaningful corrections, which is unusual. A broader market correction is anticipated.
  • Narrow Market: The US market has been driven by a few tech stocks ("Mag Seven"). Concerns exist that without broader participation from other S&P 500 companies and small/mid-cap stocks, further selling pressure will occur.
  • Rotation from Mag Seven: Expects a rotation away from most Mag Seven stocks, with the exception of Alphabet.
  • Alphabet Valuation: Puzzled by Alphabet's current valuation, seeing "too much too fast" and euphoria, despite its strengths. Purchased in March at a more attractive valuation (15-16x forward earnings) but sold a few weeks ago near $300.
  • NVIDIA Correction: Anticipates a much steeper correction for NVIDIA due to increasing competition from AMD, Google, and potentially Intel, questioning its ability to retain market dominance and its current PE ratio.
  • Credit Spreads: Notes subdued volatility in Treasuries and corporate spreads, indicating complacency in the market. High-yield ("junk") market is showing some pressure due to recent bankruptcies (e.g., Tricolour).
  • Salesforce: Sees value in Salesforce, citing strong management (Marc Benioff), a net cash position, and the potential for AI agents to reduce operating costs and expand margins.

Specific Developments and Policy

Oil Pipeline Deal

• Federal Government and Alberta Agreement: Reports indicate broad terms of a deal have been agreed upon to support a new oil pipeline to Canada's West Coast.
• Announcement: Provincial and federal leaders are set to announce special exemptions and political support on Thursday.
• BC Opposition: BC Premier David Eby has opposed the plan and stated he was not finalized on details.
• MOU Details (Colton Praill's Report):
  • An MOU is expected to be signed, pushing the pipeline project forward.
  • Likely to include environmental plans such as a tanker ban carve-out, changes to emissions cap, and clarity on carbon capture and storage projects.
  • Tanker Ban: Limits large tankers from docking north of Victoria/Vancouver Island up to Alaska, impacting oil shipments to Asia from a Northern BC coast refinery.
  • First Nations Buy-in: Federal government willing to clear barriers if proponents have buy-in from First Nations and the jurisdiction.
  • BC Premier's Stance: David Eby wants to be at the table and has expressed concerns about taxpayer dollars for the project, suggesting a cap or equivalent taxpayer dollars for BC ($50 billion mark).

US-Canada Trade Tensions and Travel

• Impact on Snowbirds: Trade tensions are causing some Canadians to opt out of traveling to the US this winter and could affect American Thanksgiving travel.
• Canadian Response: Many travellers are boycotting travel to the US due to strained relations.
• US Senator Concerns: Some US senators from border states have called Trump's tariffs a mistake, noting economic damage and the personal response of Canadians.
• Cultural Break: Concerns about a cultural break, with Canadians viewing Americans as adversaries rather than friends.
• Travel Data: October travel data shows a decline in trips by car (down 30%) and by air (down 24%) from the US compared to the previous year.
• Poll Findings: A recent poll indicated 70% of Canadians would feel uncomfortable traveling to the US, and 65% are concerned about new border requirements.

Conclusion and Synthesis

The broadcast covered a range of market-moving news, from strong corporate earnings in the retail and tech sectors to broader economic trends and policy developments. Alimentation Couche-Tard and Zoom demonstrated robust performance, with Zoom highlighting a successful transformation into an AI-focused company. The competitive landscape in AI chip development is intensifying, with Meta's potential move towards Google's chips posing a challenge to NVIDIA's dominance.

Economically, a significant divergence is noted between the US and Canadian economies, with Canada facing headwinds from interest rate sensitivity and export dependence. Despite this, the Canadian equity market has outperformed, driven by attractive valuations and sector-specific strengths, though future outperformance is not guaranteed.

Concerns about an AI bubble persist, but analysts like Philip Peterson emphasize underlying economic support from stimulus, AI spending, and the wealth effect, suggesting durable expansion. However, others, like Mike Vinocur, caution about market narrowness and potential corrections, particularly in highly valued tech stocks like NVIDIA.

Policy developments, including potential government support for the Canadian lumber industry and a reported deal for an oil pipeline, are also significant. Trade tensions between Canada and the US are impacting travel sentiment. Overall, the market environment is characterized by a mix of strong corporate performance, evolving technological competition, and ongoing economic and policy considerations.