Trading Day for Monday, Dec. 1, 2025

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

Key Concepts

• Clean Electricity Rules: Federal government policy aimed at promoting clean electricity generation.
• Industrial Carbon Pricing: A mechanism to put a price on industrial greenhouse gas emissions.
• Special Shareholders Meeting: A meeting requested by shareholders to discuss company matters.
• Strategic Alternatives Review: A process where a company explores options for its future, including mergers, acquisitions, or divestitures.
• Monthly Distribution Cut: A reduction in the regular payments made to unitholders of a Real Estate Investment Trust (REIT).
• Non-Core Assets: Assets that are not essential to a company's primary business operations.
• Santa Claus Rally: A historical tendency for stock markets to rise in the period between Christmas and the New Year.
• Stress Test Rates: Hypothetical interest rates used to assess the resilience of mortgage borrowers.
• Loss Provisions: Funds set aside by financial institutions to cover potential loan losses.
• Capital Markets: Markets where financial securities like stocks and bonds are traded.
• TSX: The Toronto Stock Exchange, Canada's primary stock market index.
• SB 500: Likely referring to the S&P 500, a major US stock market index.
• Active Management: An investment strategy that involves actively buying and selling securities to outperform a benchmark index.
• Dislocations: Market inefficiencies or mispricings that present investment opportunities.
• Fixed Income: Investments that provide a fixed stream of income, such as bonds.
• 60/40 Strategy: A traditional investment portfolio allocation of 60% stocks and 40% bonds.
• Initial Public Offering (IPO): The first time a private company offers its shares to the public.
• Tier One Assets: High-quality, long-life, low-cost mining assets.
• Feasibility Study: A study to determine the technical and economic viability of a project.
• Valuation Gap: The difference between a company's market valuation and its perceived intrinsic value.
• Jurisdictional Risk: The risk associated with operating in a particular country or region due to its legal, political, or regulatory environment.
• De Minimis Exemptions: Exemptions from tariffs or taxes for goods below a certain value.
• Backwardation: A market condition where futures prices are lower than spot prices, indicating a current supply surplus.
• Contango: A market condition where futures prices are higher than spot prices, indicating expectations of future price increases.
• Geopolitical Risk: Risks arising from political events or instability.
• OPEC+: An alliance of oil-producing countries that coordinates production levels.
• Supply Glut: An excess of supply over demand in a market.
• Cyber Monday: A major online shopping day that follows Thanksgiving in the United States.

Energy Minister's Stance on Clean Electricity Rules

Energy Minister Tim Hodgson indicated the federal government's willingness to negotiate with other provinces regarding the lifting of clean electricity rules, provided those provinces have comparable policies in place. This statement follows Prime Minister Mark Carney's suspension of these rules for Alberta. The suspension was contingent on Alberta adopting a more robust industrial carbon pricing regime, coinciding with a deal to advance a new pipeline to the British Columbia coast.

Transat Shareholder Meeting Request

Shares of Transat saw a roughly 5% increase following the confirmation of a request for a special shareholders meeting from Pierre Péladeau of Québecor. The company has confirmed that multiple directors have met with Péladeau to explore potential future options for Transat. Despite these discussions, Transat's board maintains it has a clear and disciplined plan for the company. Orlando's firm has also called for changes to Transat's board and for a review of strategic alternatives.

Allied Properties REIT Distribution Cut

Allied Properties REIT, an office space developer based in Toronto, announced a significant 60% reduction in its monthly distribution to unitholders. The company stated that it has reduced its debt over the past two years through the sale of non-core assets, a process expected to continue into 2026. These debt reductions were partly necessitated by the completion of its development projects.

Canadian Market Performance and Outlook

The TSX experienced a slip from its record close on Friday. US markets have also seen selling pressure, reportedly due to investor unease over a sharp decline in cryptocurrencies, with Bitcoin sliding.

December Market Trends: Kevin Headland, Co-Chief Strategist at Manulife, noted that December is typically a strong month for both the TSX and S&P 500, often associated with a "Santa Claus Rally." This phenomenon might be attributed to investor exuberance during the holiday season.

Canadian Bank Earnings and Outlook: Headland expressed a positive outlook on the upcoming quarterly earnings for Canadian banks. He highlighted strong underlying fundamentals, with the decline in interest rates potentially easing risks in the mortgage market. He pointed out that stress test rates for mortgages originated in 2020-2021 were higher than current five-year fixed rates, suggesting reduced stress. Loss provisions are expected to decrease due to sound economic fundamentals in Canada. While not a phenomenal environment, it remains solid, with banks expected to report strong earnings, particularly those with capital markets exposure benefiting from market upturns.

Canadian Bank Index Performance: The Canadian Bank Index hit a record high on Friday. Despite below-trend economic growth (around 1%) and a sluggish economy, the banks have been a primary driver of TSX outperformance, alongside gold and specific companies. Headland believes there is sustainability for further bank stock gains, though perhaps not at the same pace, and sees no immediate trouble on the horizon for current stock prices.

Broad Outlook for Canadian Markets (End of 2025): Headland remains optimistic about Canadian equity markets, with the TSX potentially reaching new record highs due to solid company fundamentals. While acknowledging economic weaknesses in certain market areas, the overall outlook is constructive for both the current year and the next. He anticipates a slower rate of change and growth compared to 2025 but sees no alarming near-term issues. In a market with rising valuations and concentrated return drivers, Headland suggests an opportunity for active management to identify undervalued quality companies.

Sector Opportunities: Given the heterogeneity of TSX sectors, specific sector preferences are difficult to pinpoint. However, attractive individual companies exist. While not advocating for an overweighting of Canada geographically, solid opportunities remain, with portfolio managers actively finding promising companies that the market has not yet fully recognized.

Fixed Income Strategy: Manulife is currently underweight fixed income, though not drastically so (very rarely underweight to a 60/40 portfolio is around 65/35). There's still attractiveness in equities, but attention to bonds is advised. Investors who have avoided fixed income due to strong equity performance are encouraged to review their portfolios for 2026 to understand their risk tolerance. Headland emphasizes the importance of understanding risk-reward at this stage of the cycle, as most clients do not target extremely high rates of return.

Barrick Mining Exploring IPO of North American Assets

Barrick Mining is exploring an initial public offering (IPO) of its vital North American gold assets. Analysts, including those at Bloomberg, estimate these assets could be worth around $60 billion to $62 billion. The company's board has approved management's exploration of selling a minority interest in these assets. If this IPO proceeds, a subsidiary named "NewCo" would hold major gold mines in Nevada and the Dominican Republic, with Barrick retaining a majority stake. This move would create a pure gold company, as Barrick currently operates copper mines overseas, primarily in Africa.

Analyst Perspectives on the IPO:

• Colin Cieszynski (Wealth Management): Believes the IPO aims to unlock value in North American operations, with the use of raised capital remaining to be seen. He notes that North American assets are currently considered undervalued. An update is expected in February 2026, with a board vote to follow if the IPO is pursued.
• UBS: Raised a price target to $47 USD from $39 USD.
• Jefferies: Views this as a measured portfolio change rather than a breakup into two separate entities. They suggest Barrick might sell off African mines and reduce its stake in the Reko Diq mine in Pakistan.
• TD Securities: Sees substantial upside, noting that North American assets alone are nearly as valuable as the entire company.

John Ng (CEO, Maison Placement Canada) on Barrick's Strategy: Ng suggests that the parts of Barrick are worth more than the whole. He highlights the Nevada Joint Venture as one of the world's richest mining complexes and points to the Four Mile asset as a potential huge Tier 1 asset with significant in-ground ounces and high grade. A feasibility study for Four Mile is expected in early 2026, which will add valuation. He believes this IPO is a way to surface value and close the valuation gap, as Barrick has historically traded at a discount to its peers (e.g., 0.85 times price-to-earnings compared to 1.1 times for North American peers). He also notes that Barrick no longer owns Canadian mines, having sold Hemlo, which he considers a mistake. He emphasizes that jurisdictional risk is a significant factor, and bringing in sovereign partners helps to defray this risk. Ng also points out that the industry is highly profitable due to current gold prices, with Canadian producers seeing huge profit margins. However, he notes a shortage of new gold mine discoveries and declining reserves for many producers.

Nevada Joint Venture Details: Barrick owns 68.5% of the Nevada Joint Venture, with Newmont owning 38.5%. If Newmont desires a larger stake, they would need to approach Barrick. However, Newmont has experienced significant write-downs on past acquisitions.

Hot Picks: Consumer Stocks

Zachary Warring, Equity Research Analyst at CFRA, discussed three consumer-focused stocks:

1. On Holding AG (Footwear/Apparel):

   • A fast-growing footwear company also expanding into apparel, which is expected to drive growth over the next 3-5 years.
   • Their footwear brand is currently very popular.
   • Shares are considered undervalued, trading around 25 times forward earnings, below their three-year average.
   • The stock has been impacted by tariff discussions, though most of their business is in the US.
   • Last quarter saw significant gross margin increases, indicating pricing power.
   • Innovation in footwear is strong, comparable to Nike.

2. Abercrombie & Fitch (Apparel):

   • Experienced a significant stock pop (40%) after earnings, with continued gains.
   • Shares are still considered to have plenty of value, trading under 10 times forward earnings, well below their three-year average of around 15.
   • Also impacted by tariffs, but has managed to offset a good portion of the impact.
   • Investors are awaiting the full-year impact of tariffs.

3. Hasbro (Toys/Digital Business):

   • The primary attraction is their digital business, which has grown significantly over the last 3-5 years and carries much higher operating margins (40%+).
   • As the digital business becomes a larger revenue portion, operating margins have improved, insulating them from tariff impacts.
   • Valuation is considered fair, trading at about 16 times forward earnings, above its three-year average but below pre-2019 levels (above 20 times).
   • The digital business is driving most profits, especially as the consumer products (toy) division has faltered post-COVID.
   • Revenues for the consumer products division are expected to turn around in the second half of next year, alongside margin improvements.

Cryptocurrency Market Sell-off

Bitcoin dropped below $85,000 USD, continuing a sell-off that had eased the previous week.

Alexandra Blum (Founder & CEO, Two Prime) on Crypto Weakness: Blum attributes the weakness to several factors:

• Normal Bitcoin Behavior: The asset class experiences significant pullbacks (21 pullbacks of 30% or greater over the last years).
• Crypto-Specific Factors: Large liquidations in October are still impacting the market.
• Macroeconomic Factors: The Bank of Japan's potential interest rate increase and generally tight liquidity conditions.

Despite the pullback, Blum's firm, a large Bitcoin-backed lender, is seeing significant loan volume ($3 billion over 2.5 years) and clients with hundreds of millions in Bitcoin on their balance sheets are not looking to sell but rather to generate more returns. She sees this pullback as an opportunity for acquisition or monetization.

Institutionalization of Crypto: The introduction of ETFs has led to more counter-cyclical behavior, with companies looking to buy around these lower prices.

Bitcoin-Backed Loans: Two Prime is one of the largest Bitcoin-backed lenders globally. They lend dollars against over-collateralized Bitcoin. The business started seven years ago, with lending commencing 2.5 years ago. Market-wide loan volume reached about $60 billion in the previous cycle.

Financing for Lending: Two Prime works with a network of capital partners, including banks, family offices, and private businesses seeking returns above treasuries. These loans are considered low-risk due to high over-collateralization.

Underlying Trends in Crypto:

• Onboarding of Bitcoin by Businesses: Regular businesses and public companies are onboarding Bitcoin and looking for ways to utilize their balance sheets more intelligently. Several 11-figure businesses are onboarding Bitcoin in Q1 and Q2 of next year.
• New Products and Access: Charles Schwab is bringing Bitcoin to retail investors in early 2026. JP Morgan is offering a structured note. These developments are expected to drive inflows into Bitcoin.
• Impact of ETFs: Bitcoin ETFs have transformed the crypto space by making it easier to invest without opening a direct crypto account. BlackRock's Bitcoin ETF has become its most profitable ETF product, motivating further growth. The ease of access through ETFs, simpler custody, and traditional financial rails have allowed new participants to enter the market.

Oil Prices and OPEC+ Strategy

Oil prices are holding steady as OPEC+ plans to maintain production levels in the first quarter of 2026, citing concerns about a potential supply glut.

Gregory Brooks (Senior Analyst, Eurasia Group) on OPEC+ and Sanctions:

• OPEC+ Strategy: Since April, OPEC+ has aimed to increase production to regain market share while gradually easing market management. However, members are now cautious about bringing too much supply online too quickly to avoid oversupply. They are closely monitoring supply-demand balance and the forward curve, which remains in backwardation. Geopolitical risks, such as Ukrainian attacks on Russia (an OPEC+ member), are also putting upward pressure on prices. For now, OPEC+ sees space for continued production increases but will pause for the first few months of 2026 to assess the market.
• Effectiveness of Oil Sanctions:
  • Shaping Markets: Sanctions can shape markets. For Iran, US sanctions since 2018 have limited its customers to China. Despite this, Iran's oil exports have exceeded 2 million barrels per day recently, the highest since sanctions were reimposed. However, Iran remains constrained.
  • Changing State Behavior: Sanctions are intended to alter state behavior. Iran has not ceased support for proxies, backed away from its nuclear program, or stopped developing ballistic missiles. Russia, despite increasing sanctions from the US and EU, shows no signs of pulling back from its war in Ukraine. Therefore, sanctions are no longer working as originally intended to change state behavior.
• Emerging Crude Market Surplus: Brooks anticipates a surplus in the crude market, with the size depending on geopolitical factors. The prediction of a significant surplus in early 2026 is contributing to increased geopolitical pressure (e.g., US sanctions on Lukoil and Rosneft, Ukrainian attacks on Russian export terminals). This suggests the market is soft enough to absorb additional geopolitical risks and supply shocks. The imbalance in fundamentals increases the risk of geopolitical events involving Russia, Venezuela, and potentially Iran.
• Venezuela and US Military Presence: The US is marshalling significant military assets in the Caribbean, including an aircraft carrier and numerous vessels. There have been attacks on boats allegedly moving narcotics out of Venezuela. While President Trump's actions are unpredictable, signs point to the US preparing to escalate against Venezuela. The impact on oil is uncertain, as Chevron remains active in Venezuela, and the US continues to take some Venezuelan crude, though 85% of exports go to China. Brooks believes the US has an interest in preserving Venezuela's oil and export infrastructure if escalation occurs, especially if a new, US-friendly government emerges.

Cyber Monday and Online Spending Trends

Cyber Monday is expected to be the biggest online spending day of the year, with global online spending predicted to reach nearly $54 billion, while US spending is estimated at $13 billion.

Spencer Soper (Bloomberg) on Cyber Monday:

• US Sales Growth Lagging: A surprising phenomenon is that US online sales growth on Cyber Monday is lagging behind other regions, particularly Europe. This is attributed to the first Cyber Monday since Trump imposed sweeping tariffs and the succession of interest rate reductions in Europe, which is boosting its economy, while the US may be affected by tariffs and the recent government shutdown.
• Global vs. US Growth: The global growth rate is about double that of the US, indicating muted effects in the US.
• De Minimis Exemptions: These exemptions, which allowed goods under $800 to enter tariff-free (benefiting sites like Temu and Shein), have ended and are no longer a factor.
• Discounts: Discounts in America are averaging 31%, up from 28% last year, reflecting a standoff between retailers and consumers. Retailers aim to encourage earlier shopping, while shoppers expect the best deals on Cyber Monday.
• Hot Product Categories: Spending on homes is increasing again, with kitchen items and home decor performing well. This follows a trend seen during the pandemic when people invested in their homes.

Shopify's Performance

Shopify shares fell about 5% as Oppenheimer's Ken Wong noted that the $6 billion in merchant sales during the Black Friday promotional period was below analyst expectations. The pace of spending moderated through Sunday, and some merchants experienced issues accessing their accounts.

Bausch Health Acquisition

Bausch Health is among the best-performing stocks in Toronto today. The pharmaceutical company acquired its long-time Chinese distribution partner, The Shibo Group, to meet rising demand in China for its aesthetics and skincare business. Deal terms were not disclosed.