Trading Day for Friday, Jan. 23, 2026

Trading Day Summary - February 2, 2024

Key Concepts:

• Canadian Retail Sales: November saw a 1.3% increase, driven by food and beverage retailers, with core sales up 1.6%.
• AI Chip Imports (China): China has signaled approval for tech firms to order NVIDIA’s H100 AI chips.
• Chinese EVs in Canada: A trade agreement allows 50,000 Chinese EVs into Canada, sparking debate.
• Precious Metals Rally: Gold and silver prices hit record highs, with silver experiencing a particularly rapid surge.
• Silver-to-Gold Ratio: The ratio dropped to 50, the lowest in over a decade, raising bubble concerns.
• AI Investment & Potential Bubble: Significant investment in AI infrastructure, particularly data centers, is raising concerns about a potential bubble.
• Intel’s Challenges: Despite investment, Intel faces supply constraints and delayed customer acquisition for its new chip fabrication business.

1. Canadian Economic Data & Consumer Spending

Canadian retail sales increased by 1.3% in November compared to the previous month, according to Statistics Canada. This increase was primarily driven by gains in the food and beverage sector. Core sales climbed 1.6%. An economist noted that retail sales have been “zigzagging” throughout the year after a strong acceleration in 2024, attributing this to factors like HST/GST, holiday rebates (particularly for EVs), and overall economic uncertainty. Despite these factors, Canadian consumers have largely remained cautious, staying “on the sidelines” given the relatively weak labour market. Preliminary estimates for December indicate a 0.5% decline, suggesting a 0.2% drop in Q4 2025 sales. The Bank of Canada is not expected to cut rates in the near term, with employment and inflation being key metrics monitored.

2. International Trade & Automotive Industry

China has reportedly informed its major tech companies, including Alibaba, that they can begin ordering NVIDIA’s powerful H100 AI chips, suggesting a formal approval of these essential AI components is imminent. A new trade agreement with China will allow approximately 50,000 Chinese electric vehicles (EVs) into Canada, representing about 3% of the Canadian auto market. This has sparked significant controversy. Ontario Premier Doug Ford has called for a boycott of Chinese EVs, citing concerns about job losses in the Canadian auto sector. Sam Fiorani of AutoForecast Solutions argues that allowing Chinese EVs into the market could stimulate investment in local manufacturing and potentially lower car prices. He believes Chinese manufacturers will need to establish local production to expand beyond the initial 49,000-unit quota. He also noted that the Canadian automotive market has been limited to a few major players and that Chinese entry could bring new investment.

3. Precious Metals Market Surge

Gold and silver prices reached new record highs, with silver experiencing an exceptionally rapid increase. Silver’s price topped $100 US per ounce for the first time. Michael Dahle, Senior Portfolio Manager at Investment Partners, attributed this surge to geopolitical events (specifically mentioning Venezuela and Greenland) driving demand for safe-haven assets. The silver-to-gold price ratio dropped to 50, the lowest in over a decade, leading to concerns about a potential bubble. Dahle cautioned that the surge in silver is “unclear” compared to gold and that a consolidation is likely. He recommends caution and suggests that geopolitical risks subside, the market will shift towards earnings season and central bank decisions. Dahle recommends a diversified portfolio with a weighting in precious metals, particularly gold mining stocks, due to their strong free cash flow.

4. AI Investment & Bubble Concerns

A Bloomberg documentary highlighted the massive investment flowing into the AI sector, raising concerns about a potential bubble. The report detailed a “circular deal” dynamic where money is flowing between major companies like NVIDIA, OpenAI, and Oracle, with limited immediate profitability. Companies are investing heavily in data centers, with Morgan Stanley estimating a $3 trillion spend on AI data centers. While the infrastructure build-out is creating opportunities for companies providing “picks and shovels” (e.g., construction, utilities), the report cautioned that many AI projects are currently operating at a loss. The documentary drew parallels to the dot-com bubble, warning that a collapse in the AI sector could have significant economic consequences. The report emphasized that while AI itself is likely not a bubble, certain companies may be overvalued.

5. Intel’s Performance & Future Prospects

Intel’s stock experienced a correction following its earnings report, despite a previous run-up fueled by NVIDIA’s investment and government support. The company reported a 4% revenue drop and a loss for the latest quarter. Stacy Rascon of Bernstein noted that Intel’s performance was not “perfect” and that the stock’s previous gains were based on “vibes and tweets.” Supply constraints continue to be a challenge, and the company anticipates delays in securing new customers for its chip fabrication business. Intel’s $28 billion Ohio project is also facing delays due to a lack of immediate capacity needs. Rascon suggested that it will take a decade to “fix” Intel, and a significant catalyst, such as a positive intervention from Donald Trump, could be needed to drive substantial gains.

6. Lululemon Product Issue & Market Reaction

Lululemon faced a public relations issue with its new “Get Low” leggings, which were found to be see-through. The company temporarily removed the product from its website, and its shares declined. The incident was highlighted as another example of product quality control issues for the company.

Notable Quotes:

• Economist (on Canadian spending): “Canadians, given all of the uncertainty and the relative weakness in the labour market, we've seen Canadians just sort of, you know, stay on the sidelines.”
• Michael Dahle (on silver): “Silver is still kind of unclear why silver is surging so much relative to gold. And we do think that these levels could, you know, we are in some sort of bubble territory.”
• Sam Fiorani (on Chinese EVs): “This will give them a foot in the door…They’re going to need to build locally in order to expand that beyond the current 49,000.”
• Stacy Rascon (on Intel): “It took ten years to break it. It’s probably going to take ten years to fix it.”

Technical Terms:

• Core Sales: Retail sales excluding automobiles, gasoline, food, and beverage stores.
• H100 AI Chips: NVIDIA’s high-performance graphics processing units (GPUs) designed for artificial intelligence applications.
• Flash Estimate: A preliminary estimate of economic data released before the final figures are available.
• Free Cash Flow: The cash a company generates after accounting for capital expenditures.
• Yields (in semiconductor manufacturing): The percentage of usable chips produced from a wafer.
• Greenfield Installation: Building a new facility from scratch.

Logical Connections:

The broadcast connected macroeconomic trends (Canadian retail sales, global trade) to specific company performance (Intel, Lululemon) and broader market themes (AI investment, precious metals rally). The discussion on Chinese EVs linked trade policy, automotive industry dynamics, and potential economic impacts. The segment on AI investment built on the earlier discussion of NVIDIA’s chip sales and highlighted the risks associated with rapid growth in the sector.

Data & Statistics:

• Canadian retail sales increased 1.3% in November.
• Core retail sales increased 1.6% in November.
• Silver price surpassed $100 US per ounce.
• Silver-to-gold ratio dropped to 50.
• Projected AI data center spending: $3 trillion.
• Intel reported a 4% revenue drop.
• 67% of Canadian exports went to the US in October (down from 79% a year ago).

Conclusion:

The broadcast presented a mixed economic picture, highlighting both positive developments (retail sales increase, precious metals rally) and potential risks (AI bubble, Intel’s challenges, Chinese EV controversy). The key takeaway is the increasing importance of diversification, both in terms of export markets and investment portfolios, in a rapidly changing global landscape. The AI sector, while promising, requires careful scrutiny due to the potential for overvaluation and the lack of immediate profitability.