The Close for Monday, Dec. 1, 2025

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

Key Concepts

• Algoma Steel Layoffs: 1,000 workers laid off due to US tariffs on steel.
• Barrick Mining IPO: Exploring an Initial Public Offering for North American gold assets.
• Shopify Outage: Widespread outage affecting point-of-sale systems, but not online checkouts.
• Transat Shareholder Meeting: Activist investor Pierre Karl Péladeau demanding board changes.
• Market Performance: TSX, S&P 500, Dow Jones, and Nasdaq all trading lower.
• Bitcoin Decline: Falling below $86,000 USD.
• AI Investment: Continued spending expected, but productivity and employment impacts are uncertain.
• Tech Stock Outlook: Positive outlook driven by earnings growth.
• US Economy: Expected rebound in 2026, with potential for growth above 2.5%.
• Canadian Banks: Expected good quarter with improved net interest margins and lower loan loss provisions.
• International Diversification: Europe (Germany) and Japan are attractive; emerging markets are also considered.
• Transat Balance Sheet: Criticized as "broken" by activist investor Péladeau.
• Barrick's Nevada Operations: Facing challenges with declining production and rising costs.
• Allied Properties Distribution Cut: 60% cut to reduce debt and right-size payout ratio.
• Return to Office: Key factor impacting Allied Properties' occupancy rates.
• Pipeline Project: B.C. Premier David Eby open to a new pipeline if it doesn't involve lifting the oil tanker ban.
• Canadian Sentiment on Pipelines: 60% national support, but strong opposition on Vancouver Island and the North Coast.
• Foreign Investment: Canadians prioritize Canadian sovereignty over critical resources.
• Holiday Hiring: Up 12% year-over-year, but fewer positions posted than in previous years.
• OPEC+ Production: Maintaining production levels in Q1 2026.
• Oil Sanctions: Becoming a blunted tool for changing state behavior.
• Global Oil Surplus: Potential for a significant surplus in early 2026, increasing geopolitical risk.
• Apparel Stock Picks: On Holdings, Abercrombie & Fitch, and Hasbro.

Algoma Steel Layoffs and US Tariffs

Algoma Steel, based in Sault Ste. Marie, Ontario, is laying off 1,000 workers. This action is attributed to significant pressure on the company's business due to a 50% markup on steel imposed by Washington. This tariff has made it "virtually impossible" for Algoma to export its steel to the US for payment.

Barrick Mining Exploring IPO for North American Gold Assets

Barrick Mining is considering an Initial Public Offering (IPO) for its North American gold assets. If this proceeds, the spun-off entity would be anchored by Barrick's operations in Nevada and the Dominican Republic. Barrick would retain a majority interest in this new company. Reports suggest investors are pressuring Barrick to "shake things up." Martin, an equity research analyst at Veritas Investment Research, believes this IPO is likely to happen, noting that a press release of this nature usually indicates a high probability of execution. He also suggests that separating the North American assets, which have faced challenges like declining production (down 23% from 2020-2024) and increased costs (up 45% in the same period), could lead to a better valuation for these assets. The Nevada operations, in particular, need to be fixed to demonstrate their potential as a low-cost producer. The IPO is expected to be updated on February 26th.

Shopify Outage and Analyst Concerns

Shopify is experiencing a widespread outage, with some merchants reporting issues accessing their point-of-sale systems. The company states that online store checkouts are not affected and that they are working to resolve the problem. Separately, Oppenheimer's Ken Wong noted that Shopify's merchant sales for the Black Friday promotional period ($6 billion) came in below analyst expectations.

Transat Shareholder Activism

Shares of Transat are trading higher following confirmation of a request for a special shareholders meeting from Pierre Karl Péladeau's firm. His firm is calling for changes to Transat's board and a strategic overhaul. Péladeau, who is also the owner of Outremont, expressed strong criticism of Transat's current board, stating their strategy has been "mostly a failure" and that the company's balance sheet is "broken." He advocates for reducing the board from 11 to 6 members and believes that investment should be directed towards the business rather than board expenses. Péladeau highlighted that the company's debt reduction of $800 million to under $400 million was largely due to a write-off from the government of Canada, its largest creditor. He argues that the government's multiple roles as creditor, shareholder, and regulator create a conflict of interest. Péladeau drew a parallel to Videotron, which he helped turn around by investing in wireless, customer service, and having a proper balance sheet.

North American Market Performance

The North American markets are showing declines to start the week and the month:

• TSX: Down 237 points, trading at 31,145.
• S&P 500: Down 31 points.
• Dow Jones: Down 352 points (approximately 0.75%).
• Nasdaq: Down 88 points (approximately 0.4%).

Bitcoin has also fallen below $86,000 USD, adding pressure to stocks.

Market Outlook with Pierre Ouimetette (UBS Canada)

Pierre Ouimetette, Head Investment Strategist at UBS Canada, anticipates equity markets to end the year around current levels. He notes that the economic backdrop is not "particularly buoyant," with a relatively weak fourth quarter expected, and potentially similar conditions in the first quarter of 2026. However, beyond that, he sees a clear path for markets to continue rallying through next year due to supportive elements.

AI Evolution: Ouimetette expects continued spending on AI, calling it "revolutionary." He acknowledges the uncertainty regarding productivity gains (which may take years to materialize) and the impact on employment (job creation vs. elimination). While proponents suggest new jobs will be created, he expresses reservations about employment growth, particularly in manufacturing, but sees potential gains in the service sector.

Tech Stocks: Despite the unknowns, Ouimetette remains "relatively positive on tech stocks," primarily due to earnings. He notes that equity markets are also positive for the same reason, with earnings currently growing at 8-9% and projected to reach double digits (low teens) by mid-2026.

US Economy: He expects the US economy to rebound in the last three quarters of 2026, potentially even in the first quarter relative to the fourth quarter of the current year. He anticipates a "fiscal bonus" from deregulation and significant fixed asset investment, particularly in manufacturing, which will initially boost construction jobs. Growth is expected to rise above 2.5%, possibly reaching 3%. The US consumer, particularly the top 40% of income earners, continues to spend, supporting consumer spending.

Federal Reserve: Ouimetette expects a "supportive Fed," with interest rates likely to decline next year. He forecasts the Fed Funds Rate to reach as low as 3.25%, which will be supportive for equity markets and risk-taking.

Canadian Banks: He anticipates "relatively good news" from Canadian banks, driven by better net interest margins, lower loan loss provisions (depending on the bank), and heightened activity in capital markets. Banks with US operations are expected to benefit from less regulatory burden.

International Markets: UBS Canada has diversified into Europe, particularly Germany, due to significant government spending on infrastructure and defense. They have also diversified into Japan and are looking at emerging markets as "relatively attractive." Ouimetette is not overly positive on the US dollar, expecting it to decline as US rates narrow. This would benefit emerging markets with strong earnings. He also notes that Canada has a high earnings revision ratio globally, suggesting it could be an attractive diversification option for foreign investors, as Canadian earnings are not heavily tied to the domestic economy.

Barrick Mining IPO and Investor Pressure

Martin, an equity research analyst at Veritas Investment Research, discusses Barrick Mining's exploration of an IPO for its North American gold assets. He believes this is likely a response to pressure from activist investor Elliott Management, which holds a significant position. Martin suggests that separating the North American assets from riskier international ones could lead to a better valuation for the North American portion and potentially boost the overall stock. He anticipates the IPO will happen and expects an update by February 26th. He notes that the Nevada operations have underperformed, with production down 23% and costs up 45% from 2020-2024, compared to Agnico's 13% cost increase. The Mill project, expected in 2029-2030, could significantly reduce production costs due to higher grades. Barrick will retain majority control of the new entity. He also speculates that Newmont might be interested in acquiring the new company, particularly the Pueblo Viejo partnership.

Market Movers and End-of-Day Closures

• TSX: Closed down 281 points (almost 1%).
• S&P 500: Closed up 36 points (about 0.5%).
• Nasdaq: Closed down 89.89 points (about 0.4%).

Toronto Movers:

• Bausch Health: Gained over 11% on acquisition news.
• Curaleaf: Up 4.6%.
• Acon Group: Up 3.5%.
• Skeena Resources: Up 3.2%.
• Celestica: Down over 7%.
• Shopify: Down 6.3% due to the outage.
• Bombaj: Down 4.3%.

Stephanie Hughes (Bloomberg Equities Reporter) on Bausch Health: Bausch Health's significant gain (over 15% at its peak) was due to its acquisition of its long-time Chinese aesthetics distribution partner, Shibo Group. This move aims to capitalize on rising demand for beauty and aesthetics treatments in China, providing immediate access to a larger customer base and potential revenue/market share growth for Bausch's medical segment.

Stephanie Hughes on Barrick Mining: Barrick Mining gained nearly 3%, reaching a new all-time high, following the news of exploring an IPO for its North American gold assets. Analysts view this positively, with RBC Capital Markets estimating a 15-20% stock price upside. The company will provide an update in February.

Bailey Lipschutz (Bloomberg Senior Equities Reporter) on US Movers:

• Nvidia and Synopsys: Both gained on a $2 billion investment deal between Nvidia and Synopsys, aimed at creating better, faster technology. This is seen as another example of Nvidia's trend of partnerships and investments in the tech ecosystem.
• Bitcoin: Under pressure again, falling back below the $85,000 level. This weakness is impacting companies like MicroStrategy, whose stock closed near its lowest level since October. The premium to Net Asset Value (NAV) for MicroStrategy has decreased significantly.
• Moderna: Slipped due to the FDA tightening guidelines for vaccines. This puts increased scrutiny on companies like Moderna, which relies heavily on mRNA technology for its pipeline, including cancer treatments.

AI Investment and Market Reset

Young U, Chief Investment Strategist at PNC Asset Management Group, discusses the AI investment landscape. He believes the market is undergoing a "sorting" process to identify sound investments and areas of overinvestment, which is healthy but will lead to a reset. He doesn't foresee the end of significant daily gains and losses in the AI sector due to the long-term nature of its benefits.

AI Investment Strategy: U advises investors to be well-diversified in the AI space, acknowledging its rapid evolution. He draws a parallel to the 1990s dot-com bubble, where early perceived winners did not always pan out.

Sectors Benefiting from AI:

• Healthcare: Strong early indications of AI benefits.
• Legal Sector and Professional Services: AI is expected to significantly improve productivity in these areas, which have historically been difficult to gain efficiency in.
• Call Centers and Coding: Already seeing benefits.

Retail and AI: Early indications from Black Friday data suggest that traffic directed to retailers from AI had higher conversion rates than traffic from other sources. This is seen as a positive marker for both retailers and AI companies.

Federal Reserve and Interest Rates

U expects a rate cut in December and a decent chance of another in January. He notes that New York Fed President John Williams' support for a rate cut was influential. The key question will be the Fed's messaging and how the market reacts. He also anticipates that a new Fed chair appointed by President Trump might lean towards looser monetary policy.

Allied Properties Distribution Cut

Brad Sturgis, Equity Research Analyst at Raymond James, discusses Allied Properties' 60% cut to its monthly distribution. He characterizes this as a "prudent" move to right-size the payout ratio and retain cash for debt repayment. Allied Properties currently has a Debt to EBITDA ratio of 12.5 times, historically high. The company plans to reduce debt through asset sales (over $500 million expected) and cash from closings at King Toronto. Sturgis views the distribution cut as the "most important first step." The debt reduction from the cut is modest ($150 million annually), with asset sales and potential EBITDA growth from an office market recovery being more critical. The "return to office" trend is the key factor impacting Allied Properties, with occupancy at 84% as of September 30th, lower than the initial 90% guidance. Sturgis upgraded Allied Properties from "Sell" to "Hold" but lowered the price target from $14.75 to $14, citing caution due to the gradual pace of office market recovery.

Pipeline Project and Canadian Sentiment

B.C. Premier David Eby's Stance: Eby has softened his stance on a new pipeline, stating he is open to one going through B.C. to the coast, provided it does not require changes to the oil tanker ban. This opens up the Port of Vancouver as a potential route, not just for the Trans Mountain pipeline expansion but for a new pipeline.

Angus Reid Institute Survey:

• National Support for Northern Pipeline: 60% of Canadians support the idea of a northern pipeline between B.C. and Alberta.
• B.C. Support: 53% support, a significant increase from previous years. However, opposition is strong on Vancouver Island and the North Coast.
• Tanker Ban: Majority view in B.C. is to leave the moratorium in place. Only about 40% of Canadians overall support an exemption or lifting the ban for this project.
• Foreign Investment: Canadians prioritize maintaining Canadian sovereignty over critical resources, even if it means slower development. There is particular concern over US and Chinese investment in critical resources.

Holiday Hiring Trends

Holiday hiring is up 12% compared to last year, according to Indeed.com. However, companies are posting fewer positions than in 2021 and 2022. Canada's unemployment rate is around 7%, with youth unemployment double that. Job seekers are competing with more peers, and some applicants with retail experience are also seeking second or third jobs.

OPEC+ Production and Oil Market Dynamics

OPEC+ will maintain production levels in the first quarter of 2026, citing growing signs of a surplus in global oil markets. Gregory Roux, Senior Analyst at Eurasia Group, explains that OPEC+ is wary of adding supply too quickly and pushing the market into oversupply. They are monitoring the supply-demand balance and geopolitical risks, such as attacks on Russian infrastructure.

Effectiveness of Oil Sanctions: Roux argues that oil sanctions, while effective in shaping markets (e.g., Iran selling only to China), are becoming a "blunted tool" for changing state behavior. Iran has not altered its support for regional proxies or its nuclear program despite sanctions. Similarly, Russia has not pulled back from its war in Ukraine.

Global Oil Surplus and Geopolitical Risk: Roux anticipates a significant surplus in the crude market in early 2026 (1.5 to 2 million barrels per day). This imbalance increases the risk of geopolitical events impacting oil prices, citing US actions against Venezuela and potential actions against Iran. He believes the US would likely avoid striking energy infrastructure if it escalates against Venezuela, as a new government would need to preserve its oil infrastructure.

Apparel Stock Picks (CFRA)

Zachary Warring, Equity Research Analyst at CFRA, provides three stock picks in the apparel sector:

1. On Holdings: A fast-growing footwear company expanding into apparel. Warring likes the brand's innovation and aesthetic appeal, comparing it to Nike. Shares are considered undervalued, trading at 25 times forward earnings, below their three-year average, despite pricing power demonstrated by increased gross margins.
2. Abercrombie & Fitch: Shares have seen a significant pop and continue to trade well. They are trading under 10 times forward earnings, well below their three-year average of around 15. Despite tariff impacts, the company has managed to offset a good portion of them.
3. Hasbro: Warring is attracted to Hasbro's digital business, which has higher operating margins (40%+). As this segment grows, it improves overall operating margins and insulates the company from tariff impacts. While the consumer products division has faltered, Warring expects revenues to turn around in the second half of next year, aided by the digital business. Hasbro trades at 16 times forward earnings, above its three-year average, but historically traded above 20 times.

Canadian Bank Earnings Outlook

Paul Goldberg with Bloomberg Intelligence expects solid fourth-quarter results from Canadian banks, with low double-digit revenue growth. Net interest income should remain strong due to a steepening yield curve, despite sluggish loan growth. Capital markets and wealth management businesses are also expected to contribute positively. However, the outlook for 2026 is more cautious due to continued slow loan growth and the unresolved trade war. Charges for impaired loans are expected to rise to more normalized levels, while commercial loan provisions will remain elevated due to ongoing tariff negotiations.