The Street for Tuesday, Feb. 17, 2026

Key Concepts

Kuzma Review: Upcoming review of the Canada-United States-Mexico Agreement (USMCA), potentially leading to trade renegotiations.
CPI (Consumer Price Index): A measure of the average change over time in the prices paid by urban consumers for a basket of consumer goods and services.
Trade Negotiations: Discussions between countries to establish rules governing international trade.
AI (Artificial Intelligence) Impact: The potential effects of AI on various industries, particularly software and technology.
Market Narratives: Dominant stories or beliefs influencing investor behavior, potentially detached from fundamental realities.
Value vs. Growth Investing: Investment strategies focusing on undervalued companies versus those with high growth potential.
Mr. Market: A metaphor for the irrationality of the stock market, representing an emotional investor.
Economic Moats: Sustainable competitive advantages that protect a company's market share and profitability.

Market & Economic Updates (Morning of February 20, 2024)

Trade & Politics:

Janice Charette Appointed: Janice Charette, a seasoned government official, has been appointed as Canada’s new Chief Trade Negotiator for the upcoming Kuzma Review. This role is separated from the Ambassador to the US (Mark Wiseman), with the intention of having a dedicated negotiator focused on trade details and an ambassador focused on relationship building.
Potential for Coordination Issues: Concerns were raised about potential conflicts between the roles of the Chief Trade Negotiator and the Ambassador, but Martin Cobb argued that the separation of duties could be beneficial, allowing Charette to focus on detailed negotiations while Wiseman handles diplomatic aspects.
US Political Influence: Discussion centered on the unpredictable nature of US trade policy under a potential second Trump administration, referencing the delayed Gordie Howe Bridge project as an example of political interference.
Canada-Mexico Trade Talks: Canada is actively engaging in bilateral trade negotiations with Mexico, aiming to secure a favorable position ahead of the Kuzma Review.

Economic Data (January 2024):

Canadian CPI: Canada’s CPI rose 2.3% year-over-year in January, slightly below expectations of 2.4%. This suggests easing inflationary pressures.
Gasoline Price Impact: A significant decline in gasoline prices contributed to the moderation of headline inflation.
Core Inflation: Core inflation (excluding food and energy) rose 2.4%, matching December’s increase.
Housing Starts: Housing starts in Canada continued to decline, falling 15% in January, with a 3.5% decline in the six-month moving average. This indicates a slowdown in the housing market.

Corporate Earnings & News:

BHP Earnings: BHP posted strong earnings for the second half of 2025, driven by increased copper production and rising metal prices. They also announced a $4.3 billion silver streaming agreement with Wheaton Precious Metals.
Sherritt International: Sherritt International is reducing operations at its Cuban joint venture due to fuel supply constraints.
Warner Bros./Paramount/Netflix: Ongoing negotiations between Warner Bros. Discovery, Paramount, and Netflix regarding a potential media merger.
Magna International: Magna International saw a significant stock increase (nearly 20%) on Friday.

Investment Strategy & Market Analysis

AI & Market Narratives:

Narrative-Driven Markets: Martin Cobb emphasized that market narratives are increasingly influencing investor behavior, often overshadowing fundamental analysis. He cited the example of fears surrounding AI “stealing jobs” despite limited evidence.
AI Impact on Software: Cobb believes the market has overreacted to the potential threat of AI to software companies. While acknowledging AI will change the landscape, he argues that established software companies have significant switching costs for customers and embedded relationships that provide resilience.
Valuation Opportunities: He suggested that the recent decline in software stock prices presents a potential buying opportunity, as valuations are at levels not seen in over a decade.
AI Hallucinations: Cobb highlighted the potential for inaccuracies in AI-generated information and the need for critical evaluation.

Investment Recommendations:

WSP Global: Cobb identified WSP Global as an interesting potential investment, citing its strong position in engineering and environmental services.
Adobe: He believes Adobe is undervalued, as fears about AI impacting its business are overblown.
Constellation Software: Cobb recommended Constellation Software, highlighting its diversified portfolio and high switching costs for customers.
Salesforce: Cobb sees Salesforce as a potential investment, despite current pressures, due to its established customer base and the difficulty of replacing its services.
SAP: Cobb views SAP as a solid investment, benefiting from its deeply embedded presence in enterprise systems.
Thomson Reuters: Cobb expressed caution regarding Thomson Reuters, believing it is more vulnerable to disruption from AI due to the ease of replicating its information services.
Amazon: Cobb recommended Amazon as a long-term investment, despite its current valuation.
Royal Bank of Canada: Cobb views Royal Bank as a strong Canadian bank but believes its current valuation is slightly high.

Bank of Canada & Interest Rate Outlook

Bank of Canada’s Challenges: Randall Bartlett (Desjardins) noted that the Bank of Canada faces a challenging environment due to trade uncertainties and structural economic shocks.
CPI Data & Rate Policy: The lower-than-expected CPI data suggests the Bank of Canada may be able to maintain its current interest rate policy for the foreseeable future.
Fiscal Policy Role: Bartlett emphasized the importance of fiscal policy (government spending and taxation) in supporting the Canadian economy during trade disruptions.
Kuzma Review Risk: The upcoming Kuzma Review poses a potential risk to the Canadian economy, and the Bank of Canada may need to provide support if negotiations are unfavorable.

Analyst Calls & Market Movers (February 20, 2024)

Chorus Aviation: Scotiabank upgraded Chorus Aviation to Sector Outperform.
Air Canada: Raymond James downgraded Air Canada to Market Perform.
Enbridge: Jefferies downgraded Enbridge to Hold due to valuation concerns.
Massimo: Shares of Massimo soared after being acquired by Danaher for $9.9 billion.
EV Rebates: The return of federal rebates for electric vehicles is expected to boost EV sales in Canada.

Synthesis/Conclusion

The market is currently navigating a complex landscape shaped by trade negotiations, evolving economic data, and the disruptive potential of AI. While inflationary pressures appear to be easing in Canada, uncertainties surrounding the Kuzma Review and the unpredictable nature of US trade policy remain key risks. Investors are advised to be cautious of narrative-driven market movements and to focus on companies with strong fundamentals, sustainable competitive advantages, and resilience to technological disruption. Opportunities may exist in sectors that have been unfairly penalized by market fears, such as software, but careful analysis and a long-term perspective are crucial.