Morning Markets for Wednesday, Dec. 31, 2025

Morning Markets - December 29, 2025 - Summary

Key Concepts:

• Market Volatility: Significant fluctuations in gold, silver, and overall market performance.
• TSMC & NVIDIA: Increased demand for H100 chips and production ramp-up plans.
• Nike Stock Performance: Despite CEO share purchase, stock down 20% YTD due to weakness in China and Converse brand.
• Vanda Pharmaceuticals: FDA approval of first-of-its-kind motion sickness treatment.
• 2025 Market Performance: Strong year for TSX (up 29%), despite initial concerns.
• Geopolitical Risk & Interest Rates: Factors influencing gold and silver demand.
• Canada’s Immigration Policy Shift: Reduction in immigration targets and impact on labour markets.
• Non-Alcoholic Beverage Sector: Growth, challenges, and economic contribution.
• Women’s Professional Sports: Increasing investment, media rights, and economic growth.
• Cannabis Consumption Trends: Rising substitution for alcohol and industry growth.

I. Market Overview & Precious Metals (0:00 - 0:45)

The broadcast began with a review of market activity. Gold was down 0.86% and silver experienced a significant drop of nearly 8%, following a recovery on Tuesday. This volatility prompted the CME exchange to raise margin requirements twice. Despite the current dip, both gold and silver are on track for their best year since 1979, driven by mounting geopolitical risks and successive interest rate cuts by the US Federal Reserve.

II. Tech Sector & Corporate News (0:45 - 1:45)

• Taiwan Semiconductor (TSMC): Shares rose 2.2% following a Reuters report that NVIDIA has approached TSMC to increase production of its H100 chips. Chinese tech companies have ordered over 2 million H100 chips for 2026, with TSMC expected to begin production in Q2 2026.
• Nike: Shares increased by 2.5% after CEO Elliott Hill purchased $1 million worth of stock, mirroring a similar move by Apple CEO Tim Cook ($3 million). However, Nike stock remains down 20% year-to-date, with the company warning of sales declines due to weakness in China and the Converse brand.
• Vanda Pharmaceuticals: Shares soared over 32% after the FDA approved its treatment for motion sickness in adults – a first-of-its-kind treatment in over four decades. The medication was licensed from Eli Lilly, with Vanda expecting a launch in the coming months.

III. Market Performance & 2025 Review (1:45 - 2:45)

The TSX experienced another down day (0.2%), marking four consecutive declines, but remains up 29% for the year. US markets were also down slightly (around 0.3%). The segment transitioned to an interview with Kevin Headland, Co-Chief Investment Strategist at Manulife Investments, to discuss the year’s market performance and outlook for 2026.

IV. Interview with Kevin Headland – 2025 Market Analysis (2:45 - 6:30)

• 2025 Characterization: Headland described 2025 as “interesting,” noting the initial uncertainty regarding tariffs, earnings growth, and geopolitical risks. Despite these concerns, markets rebounded strongly, particularly the TSX (nearly 30% returns).
• Turnaround Drivers: The turnaround was attributed to strong demand for gold (driven by geopolitical risks and central bank diversification away from the US dollar), a rebound in Europe (due to ECB rate cuts and fiscal spending), and a shift in investor focus.
• Gold & US Dollar: The weakening US dollar contributed to the rise in gold prices.
• 2026 Outlook: Headland advocated for a “quality bias” and a balanced approach to investments, emphasizing the importance of fixed income. He noted potential risks related to upcoming US elections and the departure of Jerome Powell from the Federal Reserve.
• Key Quote: “We want to participate in the race, but we want to take perhaps looking at more of a quality bias here, a balanced approach to investments.” – Kevin Headland
• Investment Strategy: Focus on predictable and sustainable earnings growth, with a defensive posture but not shying away from cyclical investments.

V. Canada’s Immigration Policy Changes (6:30 - 8:00)

A report from CTV News detailed Canada’s shift in immigration policy. The Trudeau government initially aimed for 500,000 permanent residents in 2025, but has since reduced targets to 395,000 this year, with further reductions planned. This change was prompted by concerns about strained public services (housing, healthcare) and rising rental costs. The number of international student visas has been slashed, leading to program cancellations and job losses. The government is now prioritizing skilled immigrants in fields like healthcare and the trades.

VI. US Tariffs & Economic Impact (8:00 - 9:30)

A Bloomberg Doc explored the impact of President Trump’s tariffs. Initial economic forecasts predicted a significant drag on growth and increased inflation (stagflation). However, the anticipated impact hasn’t fully materialized.

• Front-Loading of Imports: Companies rushed to import goods before the tariffs took effect, building up inventories.
• US Firm Absorption of Costs: US firms are largely absorbing the tariff costs rather than passing them on to consumers.
• Trade Deals & Exemptions: A series of bilateral trade deals and exemptions have mitigated the overall impact.
• AI Investment: The AI boom and related investment are offsetting some of the negative effects of the tariffs.
• Key Quote: “America was the world's single superpower in 2025. That's clearly not the case. Trump is attempting to use that last moment of strength to get a better deal.” – Bloomberg Doc Narrator

VII. Non-Alcoholic Beverage Sector (9:30 - 10:30)

The Conference Board of Canada found that the non-alcoholic beverage sector contributed nearly $6 billion to Canada’s GDP in 2025.

• Growth Drivers: Increased health consciousness, demand for meal replacements, and a decline in carbonated soda consumption.
• Challenges: Rising import costs for packaging (aluminum and plastics) and supply chain integration with the US.
• Average Salary: The average salary in the sector is $93,000, significantly higher than the national average.
• Regional Concentration: Ontario accounts for approximately 45% of the sector’s production.

VIII. Women’s Professional Sports & Investment (10:30 - 12:00)

An interview with Alison Walker, Senior Vice President at The Collective at Wasserman, highlighted the growth of women’s professional sports.

• New Economic Era: Driven by increased investment, media rights, and fan engagement.
• Investment Shift: Moving from “charity” to a focus on return on investment.
• Key Revenue Streams: Sponsorships, media rights, attendance, and merchandise.
• WNBA & NWSL Growth: The WNBA is valued at $400 million (New York Liberty) and the NWSL (soccer) has seen significant valuation increases.
• Future Trends: Increased investment in data science, facilities, and emerging sports like volleyball.
• Key Quote: “We’re seeing unprecedented performances on the field of play, record engagement and significant investments in these sports.” – Alison Walker

IX. Cannabis Consumption Trends (12:00 - 13:00)

A Bloomberg report discussed the increasing substitution of cannabis for alcohol, particularly among those identifying as “California sober.”

• Declining Alcohol Consumption: Alcohol consumption is at its lowest level in decades.
• Cannabis Market Growth: The US cannabis market was valued at $30 billion in 2025 and is projected to reach $39.1 billion by 2029.
• Thanksgiving Trend: The day before Thanksgiving is the second-largest sales day for the US legal cannabis industry.
• Federal Legalization Challenges: Uncertainty at the federal level limits access to banking and investment.

Conclusion:

The broadcast painted a picture of a dynamic and evolving economic landscape. While challenges remain (tariffs, immigration pressures, regulatory hurdles), several sectors are experiencing significant growth, driven by investment, innovation, and shifting consumer preferences. The emphasis on balanced investment strategies, the rise of alternative consumption patterns, and the increasing prominence of women’s sports suggest a period of continued transformation in the years ahead.