The Street for Friday, April 17, 2026

Key Concepts

• Market Volatility: Fluctuations in stock prices driven by geopolitical tensions (Iran-Israel-US conflict) and macroeconomic uncertainty.
• Active Management: A strategy of selecting specific stocks rather than passive index investing, necessitated by uneven market participation.
• Dry Powder: Cash reserves held by investors to deploy during market corrections.
• Technical Recession: A period of two consecutive quarters of negative GDP growth (noted as the current state of the Canadian economy).
• AI Infrastructure: The physical and software components (data centers, chips, cloud connectivity) enabling the growth of Artificial Intelligence.
• Contrarian Indicator: Using high levels of cash on the sidelines as a signal that investors may be overly fearful, potentially signaling a market bottom.

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1. Market Overview and Economic Outlook

The S&P 500 has shown a strong turnaround, posting three consecutive weeks of gains exceeding 3%. Despite this, the market remains volatile due to geopolitical risks, specifically the conflict involving Iran, Israel, and the US.

• Geopolitical Impact: Hopes for a ceasefire have eased tensions, though officials warn a full resolution could take months. Oil prices have eased, though the closure of the Strait of Hormuz remains a critical concern for energy markets.
• Interest Rates: Initial expectations for 3–4 US rate cuts in 2026 have been reduced to potentially one, due to a short-term spike in energy and oil prices.
• Canadian Economy: The guest, Brianne Gardner, asserts that Canada is in a "technical recession" (negative Q4 and Q1 GDP). She expects the Bank of Canada to be strategic with rate cuts, likely delaying them until the latter half of the year to mitigate the impact of potential US tariffs.

2. Investment Strategy: "Cash is King"

Gardner discusses the record $7.8 trillion currently sitting in money market funds.

• The "Dry Powder" Framework: Velocity Investment Partners proactively raised 8–12% cash before the recent correction. This liquidity allowed them to buy into the market during the dip.
• The Cost of Cash: While cash provides safety, Gardner argues that after accounting for inflation and taxes, sitting in cash is a "wash" or a net loss. She advocates for deploying capital into high-conviction sectors like Materials, Energy, and Tech.
• Market Participation: Currently, only about 50% of stocks are trading above their 200-day moving average, indicating that the recovery is not broad-based.

3. Sector Analysis and Stock Picks

• Netflix (NFLX): Despite a 10% pre-market drop due to a weak outlook and the departure of co-founder Reed Hastings, Gardner views this as a buying opportunity. She highlights the company's shift toward fundamentals (pricing power, advertising, and subscription growth) and their decision to avoid debt by canceling the Warner Brothers deal.
• Broadcom (AVGO): Positioned as a leader in AI infrastructure. Gardner notes a multi-year partnership with Meta involving gigawatt-scale deployments, suggesting significant revenue upside (estimated 20%).
• Oracle (ORCL): Viewed as a "watch list" name. Its collaboration with AWS for multi-cloud connectivity is seen as a strategic advantage, though it is not currently held in their portfolio.
• IBM (IBM): Despite recent price target cuts by analysts, Gardner views IBM as a "cash flow king" and an undervalued compounder in the AI infrastructure space.
• Constellation Software: Currently ranked 3/10 on value. Gardner advises waiting for a turnaround before entering, despite high analyst price targets.

4. Real-World Application: NHL Playoffs Economic Impact

Sean McCormick from Moneris provided data on the economic "multiplier effect" of professional sports.

• The "Hockey Bump": Playoff games significantly boost bar and restaurant sales, particularly on mid-week nights.
• Key Statistics: In Montreal, city-wide spending in bars/restaurants increased 30% and 45% during the first two home games of a previous playoff run. A 16% national increase in spending was recorded during a Game 7 between Edmonton and Florida.
• Methodology: The impact is highly localized to the "downtown core" near arenas. Unlike Taylor Swift concerts, which drive massive retail/apparel sales, hockey playoffs are primarily a hospitality and food/beverage driver.

5. Notable Quotes

• On Market Sentiment: "The one thing that markets don't like are the unknowns." — Brianne Gardner
• On Active Management: "It is a great market for being more active and having an active strategy... and being selective on the companies that you are invested in." — Brianne Gardner
• On Economic Impact: "It takes a lot to move the needle even 2 or 3% on consumer spending... when we see numbers like sales up a third on any given night, that's important." — Sean McCormick

Synthesis

The market is currently navigating a transition from high-volatility, fear-driven trading to a more selective, fundamental-based recovery. While geopolitical risks and inflation remain, the consensus is that the "AI infrastructure" trade is a multi-year cycle rather than a short-term bubble. Investors are encouraged to move away from excessive cash positions and focus on companies with strong free cash flow and clear roles in the digital transformation of the economy.