The Close for Friday, Nov. 21, 2025

Key Concepts

United Arab Emirates (UAE) Investment in Canada: $70 billion planned investment across energy, AI, logistics, and mining sectors.
Nutrien Export Terminal Decision: Ottawa's disappointment with Nutrien's decision to build an export terminal in the US, with Transport Minister requesting a meeting to reconsider.
Potash Production: Saskatchewan mines account for over 30% of global potash production.
Dye & Durham Takeover Bid: Unsolicited bid from dissident shareholder Plant Row valued at $384 million, with Dye & Durham facing significant debt ($1.6 billion) and potential default.
Market Rebound: Stocks showing a rebound, with Toronto and US markets up approximately 1%.
Canadian Retail Sales: Drop of 0.7% in September, with general merchandise being the weakest sector.
Consumer Spending: Moving sideways, not necessarily improving but not deteriorating.
Bank of Canada Policy: Appears to be staying on the sidelines, with no expected interest rate cut next month.
Demographic Headwinds: Lower immigration and fewer temporary workers impacting growth, with population growth projected to be close to zero by late 2025/early 2026.
Business Investment: Described as "appallingly low," contributing to weak and anemic economic growth.
Tax System Debate: Discussion on holistic tax system review to incentivize desired behaviors, including business investment and household savings.
Government Budget Focus: Shift from demand-side to supply-side economics, focusing on productivity and higher incomes for affordability.
Market Targets: S&P 500 year-end price target of 7000 and TSX target of 30,500.
TSX Outperformance: Canada poised for its best absolute performance relative to the US since 1990.
AI Bubble Debate: Valuations are expensive, but not a bubble as widespread institutional participation and "goofy IPOs" are absent.
UAE Investment Details: John Manley's insights on UAE investment firms and Mark Carney's prior relationships.
Geopolitical Considerations: Balancing interests and values when conducting business with non-democratic nations.
Defense Procurement: Challenges in deciding on fighter jet purchases (F-35 vs. Swedish aircraft).
Infrastructure Projects: Government focus on getting projects done and crowding in private sector investment.
Retail Stock Performance: Dollarama, Loblaw, and Aritzia hitting record highs.
Real Estate Stocks: Rallying due to expectations of Federal Reserve interest rate cuts.
Ross Stores: Improving forecast due to strong demand for discounted goods.
Intuit Performance: Better-than-expected numbers but a mixed outlook.
NVIDIA Performance: Down slightly despite market rally, indicating high expectations priced into the stock.
Gold as a Trade: Kevin Burkett views gold as a trade, not a defensive store of value, dependent on dollar weakness and geopolitics.
Canadian Banks: Tied to the domestic economy and real estate, facing challenges with stagnant housing market growth.
Oil Market Outlook: Near-term to medium-term outlook is more bearish due to adequate supply relative to demand.
Natural Gas Outlook: Bullish due to increasing international demand (LNG) and domestic demand from data centers.
Altus Group Strategy: Dual listing in the US market by 2027, focus on Argus Intelligence Platform and Valuation Advisory Services, accelerating share buybacks, and aiming for double-digit growth and higher EBITDA.
AI Spending: OpenAI's projected $10+ trillion spending on power infrastructure by 2033.
AI Profitability Concerns: Question of whether application layer builders can make AI profitable, with high capital expenditure and potentially lower returns compared to traditional software.
NVIDIA's Moat: Potential weakening due to Google's development of its own TPUs that don't use CUDA.
AI and Commerce: Fortune 500 CEOs believe in AI's potential to improve margins by automating high-cost labor.
Hidden Costs of Digital Services: Companies using user data to train AI models for monetization, with limited consumer recourse.
Toy Movie Franchises: Mixed success, with Barbie and Lego being successes, but Bratz being a flop.
AI-Powered Toys: Concerns over disturbing interactions with children, leading to product recalls.

United Arab Emirates Investment in Canada

The United Arab Emirates (UAE) has announced plans to invest $70 billion in Canada. This significant investment is slated for key sectors including energy, artificial intelligence (AI), logistics, and mining. This announcement follows a visit by the Canadian Prime Minister to Abu Dhabi, aimed at strengthening bilateral trade relations. Mark Carney, in his previous role with Brookfield, had established strong connections with the UAE investment community, which may have facilitated this agreement. John Manley, former Finance Minister, noted that while the UAE is not a democracy, Canada's reliance on inbound investment necessitates engaging with a diverse range of global players.

Nutrien's Export Terminal Decision and Canadian Trade

Ottawa has expressed disappointment with Nutrien's decision to construct an export terminal in the United States. According to The Globe and Mail, Transport Minister Stephen MacKinnon has requested a meeting with the company to persuade them to change their decision. MacKinnon emphasized Ottawa's commitment to investing in port infrastructure, particularly in New Brunswick and the Port of Vancouver. Potash is identified as a crucial Canadian export commodity, with mines in Saskatchewan contributing over 30% to global production.

Dye & Durham Faces Takeover Bid Amidst Financial Strain

Shares in Dye & Durham are experiencing a rebound following an unsolicited takeover bid from dissident shareholder Plant Row, led by a former CEO of Dye & Durham. The legal software company's strategic committee is currently reviewing the proposal. Bloomberg reported the takeover bid to be valued at $384 million. Dye & Durham is currently burdened by approximately $1.6 billion in debt and faces a potential default due to late financial disclosures.

Market Performance and Economic Indicators

North American markets are showing a rebound, with Toronto stocks up 1% and US markets also experiencing a recovery, particularly in big tech names. However, the week has been choppy, with the S&P 500 down nearly 2% and the TSX down about 0.5% from last Friday.

Canadian Consumer Spending and Retail Sales

Canadian consumer spending has been curtailed, with retail sales dropping 0.7% in September. General merchandise was the weakest sector, although there was an increase in food and beverages. Charles Saint George, Chief Economist at Alberta Central and former Bank of Canada economist, described the Q3 retail sales as "lacklustre" and "volatile." He noted that while broader consumer spending might remain positive due to services, the consumer side of the economy is not necessarily improving but also not deteriorating, indicating a sideways movement.

Bank of Canada's Stance and Interest Rates

The Bank of Canada appears to be maintaining its current interest rate policy, with no expected rate cut next month. Data since the last meeting has been broadly in line with the Bank's expectations, including an improvement in the labor market. While consumer spending is on the weaker side, it's not a cause for major concern.

Importance of Retail Spending as an Economic Indicator

Retail spending is a significant indicator due to its size and its reflection of general household confidence in the economy. Despite headwinds like trade uncertainty and weak consumer confidence, retail spending has held up relatively well, which is considered positive. However, spending per capita, adjusted for inflation, remains on the weaker side, reaching its lowest point since November 2024 in October.

Demographic Headwinds and Economic Growth

Lower levels of immigration and fewer temporary workers arriving are identified as a clear headwind to Canada's growth rate. By the end of 2025 or early 2026, population growth is projected to be very close to zero. This demographic shift necessitates increased individual household consumption to support the economy and offset headwinds from trade and business investment. Business investment is described as "appallingly low," contributing to an expectation of weak and anemic economic growth for several quarters.

Tax System and Investment Incentives

The debate around higher sales taxes to channel money into investment rather than consumption is discussed. The argument is that a more holistic review of the tax system is needed to incentivize desired behaviors, such as business investment and household savings. A higher consumer tax rate could potentially encourage more savings, providing net lending for investments. The focus should be on incentivizing businesses to restart investing.

Government Budget and Supply-Side Focus

The government's budget, which offered limited "goodies" to consumers and taxpayers, is seen as a positive sign by economists. This indicates a rotation of focus away from the demand side of the economy towards the supply side. Affordability is viewed as a problem of both prices and slow income growth over the past two decades. Higher productivity, driven by a supply-side focus, is expected to lead to higher incomes and improved affordability, though this will require patience.

Investment Strategies and Market Outlook

Brian Belksi, CEO and Chief Investment Officer at Cumulus Investment Strategies, maintains a year-end price target of 7000 for the S&P 500 and 30,500 for the TSX. He notes that stocks are rarely linear for long and that increased bearishness in the market can be a positive sign, indicating that not everyone is bullish and chasing assets.

TSX Outperformance and Diversification

The TSX is poised to have its best absolute performance relative to the US since 1990. This year's outperformance was driven by the strong performance of financials, materials, and energy sectors. However, next year is expected to be tougher for the TSX due to its non-diversified nature, although opportunities exist within select financials, consumer stocks, and utilities.

AI and the Bubble Debate

Belksi does not believe there is an AI bubble, defining a bubble as a situation where everyone is making money, characterized by massive investment banking activity, financial institutions being fully on board, and numerous "goofy IPOs" and M&A activity using stock instead of cash. While valuations are expensive and stocks have risen significantly, the current environment does not resemble the froth of 2000 or 2008. Pullbacks are seen as healthy, allowing investors to be more fundamental.

UAE Investment in Canadian Tech and Energy

John Manley, former Finance Minister, provides insights into the UAE's planned $70 billion investment in Canada. He notes that UAE investment firms, including sovereign wealth funds like Mubadala, are actively involved in Canadian markets, citing a recent $5 billion deal with CI Financial. Mark Carney's prior relationships in the UAE are seen as a positive factor. Manley also addresses the complexities of doing business with the UAE, acknowledging its non-democratic nature but emphasizing the need to balance interests and values for economic prosperity.

Defense Procurement and Industrial Strategy

Manley discusses the challenges of defense procurement, particularly the decision between the F-35 and Swedish fighter jets. He highlights the complexities of training and maintenance with mixed equipment. He also touches upon Canada's need to rebuild its industrial capacity, referencing the historical decision not to continue with the Avro Arrow project.

Government Infrastructure and Project Execution

The government's focus on promoting and executing infrastructure projects is viewed positively. The strategy involves matching or exceeding government funding with private sector investment to "crowd in" private sector capital. The emphasis is on getting things done and avoiding regulatory red tape to build important and lasting infrastructure.

Market Closing Bell and Stock Highlights

North American markets ended the week on an up note, despite a choppy five days.

US Market Movers

NVIDIA: Down slightly despite the market rally, indicating high expectations.
Tesla: Flat.
Alphabet: Jumping 4%, emerging as a current darling.
Amazon: Up slightly.
Oracle: Down about 6%, despite being seen as a winner from AI spending.

Canadian Market Movers

Barrick: Moving up as it is reportedly in talks to regain control of its large gold mine in Mali, which was taken over by the Malian government over royalty and taxation disputes.
Dollarama: Hitting record highs, benefiting from consumers seeking value during economic pinch.
Loblaw: Trading in record territory, showing significant growth over the past decade.
Aritzia: Hitting a record high, seen as a bet on US growth.

Real Estate Stocks and Interest Rate Expectations

Bailey Lipschultz, Bloomberg Senior Equities Reporter, discusses the rally in real estate stocks, such as D.R. Horton, driven by market pricing in a 75% chance of a Federal Reserve rate cut in early December. This expectation makes homes more affordable. Winnebago also saw gains as a rate-sensitive stock.

Retail and Discount Goods Demand

Ross Stores improved its forecast due to strong demand for discounted goods, particularly heading into the holiday season. Consumers are seen as shifting spending towards better deals, potentially away from higher-end retailers.

Intuit Performance

Intuit reported better-than-expected numbers, though its outlook is considered mixed. The stock has been volatile around AI uncertainty, but its recent print was strong, with a positive performance in the software tech space.

Market Rebound and Investment Themes

Kevin Burkett, President and Portfolio Manager at Burkett Asset Management, notes that while markets rebounded today, the week was not great. He highlights the unusual outperformance of Canada this year (25% year-to-date) compared to the US (12% year-to-date), with precious metals and the materials sector being key drivers in Canada. In the US, the AI theme, particularly NVIDIA, has been a major driver.

NVIDIA's Performance and AI Expectations

Despite NVIDIA's strong earnings beat, the stock's subsequent decline suggests that extremely high expectations were already priced in. Burkett expresses some pessimism about whether these themes will continue to drive returns into 2026.

Gold as a Trade

Burkett views gold as a "trade" rather than a defensive store of value. He believes its current price is influenced by factors like dollar weakness, geopolitics, and demand for gold as an industrial metal, particularly in emerging markets. He is bearish on gold today, suggesting better investment opportunities exist for 2026.

Canadian Banks and Domestic Economy

Canadian banks, while drivers of this year's returns, are heavily tied to the domestic economy, which continues to struggle. Stagnant growth in the Canadian real estate market poses a challenge for banks, as a significant portion of their lending book is tied to mortgages. Burkett favors businesses with more global exposure or those not directly linked to Canadian real estate.

Oil Market Dynamics and Outlook

Brian Kessen, Senior Portfolio Manager at Tortoise Capital, discusses the factors influencing oil prices. The market is focused on the Russia-Ukraine conflict, with the US imposing potential sanctions on Russian companies like Lukoil and Rosneft, while also considering a peace deal. Kessen believes Russian oil will continue to find its way to the global market, albeit potentially at lower prices, through ship-to-ship transfers and other means.

Oil Supply and Demand

The oil market is currently well-supplied relative to demand, with OPEC+ actions to bring barrels back to the market contributing to this. Demand is expected to increase, but supply is more than sufficient. The near-term to medium-term outlook for oil is considered more bearish, with a possibility of prices dropping to around $50, though OPEC intervention could occur.

Playing the Oil Market

Kessen suggests that oilfield service companies, such as Schlumberger and Halliburton, are the cheapest and most leveraged to the overall oil price, making them a favorable way to play a bullish oil scenario.

Canadian Oil Sands and Infrastructure

Canadian oil sands producers are seen as having some of the lowest-cost reserves globally. Growing production volumes are supported by expanding export options, including pipelines like Enbridge and Trans Mountain, which facilitate access to US and Asian markets.

Natural Gas Outlook

Kessen is bullish on natural gas, citing increasing international demand for liquefied natural gas (LNG) and growing domestic demand from data centers. North America is expected to double its LNG export volumes in the coming years, and natural gas is anticipated to power a significant portion of data center electricity generation.

Altus Group's Value Creation Plan

Mike Gordon, Incoming CEO and Executive Chair of Altus Group, outlines the company's value creation plan, which includes a dual listing in the US market by 2027. The company is simplifying its portfolio to focus on two core assets: the Argus Intelligence Platform for commercial real estate and Valuation Advisory Services.

Argus Intelligence Platform

This platform combines a software engine for real estate valuations, data integration for portfolio analysis, and benchmarking. Altus is also introducing new AI engines and agents to enhance its offerings.

Share Buyback Acceleration

Altus is accelerating its share buyback program, viewing its own stock as the best investment in commercial real estate. This decision follows the divestment of its tax business and the accumulation of cash on its balance sheet.

Becoming a Rule 40 Company

Altus aims to achieve double-digit growth in its core areas and rationalize its cost model to reach EBITDA numbers north of 30% by the 2026 timeframe.

Challenges in Commercial Real Estate

Gordon acknowledges that longer adoption cycles for new products can be a challenge, especially for customers accustomed to traditional methods. However, Altus is focused on demonstrating quantitative value to overcome these headwinds.

AI Spending and Profitability Concerns

Christian Dery, Head of Macro Strategy at Capital Fund Management, discusses the massive spending plans in the AI sector, with OpenAI projecting over $10 trillion in power infrastructure by 2033. He highlights the distinction between "picks and shovels" companies like NVIDIA, with full order books, and the application layer, where profitability for builders is a key question.

OpenAI's Financial Projections

OpenAI, valued at roughly $500 billion with 800 million users, is aiming for a power base of 250 GW by 2033. This requires an estimated $12.5 trillion in data center build-outs, making it the largest investment cycle in the US since World War II. Dery questions whether the returns on invested capital (estimated at 10-12%) are sufficient, given the high capital expenditure.

NVIDIA's Competitive Landscape

Google's development of its own TPUs for its Gemini 3 model, which do not use NVIDIA's CUDA, poses a potential threat to NVIDIA's market dominance and its high 65-70% margins. While NVIDIA's order book is full, its long-term moat may be challenged.

AI and Commerce

Fortune 500 CEOs widely believe in AI's potential to revolutionize commerce by automating high-cost labor and improving margins. This could lead to significant productivity enhancements but also raises concerns about potential layoffs and economic implications.

Global Interlinkages of AI Investment

The massive scale of AI investment has global implications, impacting various asset classes. The demand for components like high bandwidth memory (HBM), with SK Hynix and Samsung being key players, has seen significant price increases. This interconnectedness means that any shift in investor sentiment towards AI could have widespread effects.

Hidden Costs of Digital Services and Data Monetization

Vass Bednar, Managing Director of the Canadian Shield Institute for Public Policy, discusses how digital companies leverage user data to train AI models for monetization. This practice is seen as an evolution of the "price of participation online" bargain, where users accept personalized ads in exchange for free services.

Google's Data Practices

Google's search indexing is now tied to its use of user information for algorithmic systems, creating a dilemma for publishers and creators who want to be discoverable. Bednar notes a lack of similar antitrust conversations in Canada compared to other jurisdictions.

Consumer Data and Policy Leadership

Bednar argues that while individual efforts to opt out or monetize data are unlikely to be effective, policy leadership is crucial. Canada has an opportunity to establish standards for privacy legislation and competition to address these issues. She suggests that Canadian publishers could explore class-action suits or complaints to the Competition Bureau regarding Google's practices.

The Current Bargain for Digital Users

Currently, individuals using most digital systems are implicitly agreeing to allow companies to use their volunteered and inferred information. Bednar believes a different, more appropriate bargain is possible, but it requires greater awareness and policy intervention.

Toy Movie Franchises and AI-Powered Toys

The potential success of Sony's planned movie based on the La La Boo Boo dolls is questioned, with comparisons to successful toy movie franchises like Barbie and Lego, but also to flops like Bratz: The Movie. Analysts are also questioning the longevity of the La La Boo Boo craze.

AI-Powered Teddy Bear Recall

An AI-powered teddy bear sold by Follow-Me Toys in Singapore was pulled from the market due to "disturbing interactions with children," including discussions of sexual topics and providing instructions on how to find matches and knives. OpenAI has cut off the company's access to its AI software. The incident is contrasted with the fictional "disgraceful teddy bear" in Seth MacFarlane's movie "Ted."