Trading Day for Friday, Jan. 30, 2026

Key Concepts

• Market Uncertainty & Shifting Allocations: Global markets are adapting to a “new normal” of uncertainty driven by geopolitical tensions, trade disputes, and evolving economic data. Portfolio allocations are subtly shifting away from a solely US-centric approach, though a full “sell America” scenario is considered unlikely.
• Earnings Season Focus on AI ROI: Corporate earnings are now heavily scrutinized for demonstrable returns on investment in Artificial Intelligence (AI), with markets demanding tangible results in margins and revenue growth.
• Canadian Economic Weakness: The Canadian economy is facing headwinds from trade uncertainty, particularly with the US, impacting manufacturing and overall GDP growth.
• Global Oil Glut & Complex Supply Dynamics: Despite geopolitical risks, a global oil glut persists due to increased production from multiple sources, including the US, OPEC+, and sanctioned nations utilizing a “dark fleet” of tankers.
• Potential Shift in Fed Policy: The nomination of Kevin Warsh as the next Fed Chair introduces potential for a more hawkish monetary policy approach, though his future actions remain uncertain.

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Market Reactions & Economic Data (Part 1 & 2)

Initial market reactions were negative, triggered by a stall in Canadian GDP growth (0% change in November vs. expected 0.1% rise), a 10% drop in spot gold (the largest in decades), and a subsequent 1000+ point fall in the TSX. US markets (Dow Jones & NASDAQ) also experienced slight declines. Statscan anticipates a 0.1% rise in December GDP for Canada. Silver prices also plunged, falling over 26%. This initial volatility reflects a broader acceptance of uncertainty as a new normal in global markets. Investors are gradually adjusting to ongoing geopolitical tensions and trade disputes.

Geopolitical Tensions & Trade Dynamics (Part 1 & 2)

US President Trump’s threat of a 50% tariff on Canadian aircraft (Bombardier, Global Express) in response to Canada’s certification of Gulfstream jets continues to fuel trade tensions. The Canadian economy is particularly vulnerable, with 76% of its trade reliant on the US. Tariffs negatively impact Canadian manufacturing, especially the auto sector, which faces challenges including semiconductor shortages and layoffs (e.g., General Motors). The interconnectedness of US and Canadian supply chains exacerbates these issues. Broader concerns about “de-dollarization” and shifting global capital flows are also contributing to market uncertainty. While a wholesale “sell America” scenario is deemed unlikely, portfolio allocations are subtly shifting towards diversification.

Corporate Earnings Reports (Part 1 & 2)

American Express (AMEX): Beat revenue estimates and raised its dividend by 16%, but the stock declined due to high market expectations and the need to demonstrate AI-driven efficiency and revenue growth. AMEX is successfully attracting Millennial and Gen Z customers, now representing the largest slice of US consumer spending on AMEX cards.

Chevron & ExxonMobil: Both reported positive fourth-quarter earnings. Chevron’s production was temporarily impacted by issues in Kazakhstan but is expected to recover. ExxonMobil is a top pick due to its strong balance sheet, low oil price breakeven point, resource base, and projected earnings growth.

Imperial Oil: Reported disappointing results due to lower oil prices and a 60% plunge in net income, partially offset by a 20% dividend increase. Write-downs of aging oil fields and weather-related production issues in Alberta contributed to the decline.

Canadian National Railway (CN): Full-year outlook is at the low end of expectations, with flat volume growth anticipated. Q4 results showed higher profit and revenue due to improved freight volumes and efficiency.

Microsoft & Meta: Earnings reports highlighted a market demand for AI investments to translate into tangible results – increased margins, revenue growth, and CAPEX. Microsoft’s large CAPEX increase was met with market disapproval, while Meta’s revenue gains alongside CAPEX were viewed more favorably, signaling a shift towards a “stock picker’s market.”

Oil Market Dynamics (Part 1 & 2)

Despite geopolitical tensions, a global oil glut persists. Contributing factors include: increased production from the US (shale oil boom, now exporting 4-5 million barrels a day), Guyana, Brazil, and Canada; OPEC+’s decision to increase output to regain market share; the emergence of a “dark fleet” of tankers (approximately 20-25% of the global fleet) transporting sanctioned oil from Russia, Iran, and Venezuela; China’s absorption of oil into its strategic reserves; and the potential for increased Venezuelan oil production (currently at 200,000 barrels/day, potential to reach 320,000 barrels/day). The International Energy Agency estimates a global oil supply surplus of 4 million barrels a day in 2025. The irony is noted that climate risks are accelerating while oil production continues to increase.

Key Perspectives & Future Outlook (Part 2)

Zachary Hill (Horizon Investments) believes investors are accepting uncertainty as a new normal, moving beyond initial reactions to trade tensions. Pedro Antunes (Signal 49 Research) characterizes the Canadian economy as lethargic, impacted by trade uncertainty and declining consumer confidence. Jason Gabelman (TD Securities) reiterates ExxonMobil as a top pick due to its overall strength and competitive position. The speaker anticipates a slight decline in Canada’s fourth-quarter GDP and a flat start to 2025. The nomination of Kevin Warsh as the next Fed Chair is considered “totally interesting,” with his historically hawkish views potentially influencing monetary policy. The speaker believes US technology companies will remain attractive due to continued innovation in AI, but acknowledges a marginal shift towards international diversification.

Conclusion

The current economic landscape is characterized by heightened uncertainty, shifting portfolio allocations, and a complex interplay of geopolitical factors. While a complete exodus from US markets is unlikely, investors are increasingly focused on demonstrable returns on investment, particularly in the realm of AI. Canada faces specific economic challenges related to trade tensions with the US, while the global oil market remains surprisingly well-supplied despite ongoing conflicts. The future direction of monetary policy, influenced by the upcoming Fed Chair nomination, will be a key factor shaping market performance in the coming months.