Trading Day for Thursday, Jan. 13, 2026

Key Concepts

• Trade Relations (Canada-China): Potential easing of restrictions on canola products in exchange for relaxed tariffs on Chinese EVs.
• Inflation & Consumer Prices: US consumer prices rose 2.7% year-over-year in December, with shelter, food, and energy as key drivers.
• Corporate Earnings: Reports from Maple Leaf Foods, JP Morgan, and Delta Air Lines, highlighting revenue growth, investment banking fees, and profitability concerns.
• Market Performance: Overview of TSX and US market performance, including fluctuations and sector-specific trends.
• Economic Outlook: Discussion of a potential K-shaped economy, consumer spending, and the impact of interest rates.
• AI & Software Sector: Analysis of the impact of AI on software companies and potential investment opportunities.
• Geopolitical Risk: Concerns about geopolitical instability and its potential impact on markets and travel.
• Residential Housing: Potential unlocking of the residential housing market and its impact on consumer sentiment.

Market Overview & Economic Data

The TSX is currently up 0.11% and has risen 32% over the last year. US markets are mixed: S&P 500 is down 0.3%, Dow Jones down 0.75%, and NASDAQ down 0.17%. US consumer prices rose 2.7% year-over-year in December, driven by increases in shelter, food, and energy costs. High prices and a cooling labour market remain key concerns for Americans.

Canada-China Trade Discussions

Bloomberg reports that China is proposing to ease restrictions on Canadian canola products in exchange for Canada relaxing tariffs on Chinese electric vehicles (EVs). Currently, Canada has a 100% tariff on Chinese EVs and a 25% tariff on steel and aluminum. China has a 75% tariff on Canadian canola seed and a 100% tariff on canola oil. The Canadian government is cautiously optimistic but downplaying expectations of a quick deal, particularly regarding EV tariffs, due to potential US reaction. Former Canadian diplomat Colin Robertson suggests China is attempting to create a wedge between Canada and the US. A key condition for China could be establishing EV manufacturing facilities in Canada with job creation.

Corporate Earnings Reports

• Maple Leaf Foods: Shares are rising due to boosted revenue in its 2026 guidance and a 10% increase in dividends. The company targets mid-single-digit revenue growth in 2026, supported by its sustainable meats business, investment in core brands, and expanded US distribution.
• JP Morgan: Met Q4 revenue estimates, but investment banking fees dropped 5% to $2.4 billion, causing shares to fall nearly 4%. Despite this, analysts consider the overall results strong.
• Delta Air Lines: Beat earnings expectations but issued a full-year revenue guidance below analyst expectations, leading to a share price decline. Concerns include geopolitical instability and limited travel from Canada and China. Delta is partnering with Uber to improve customer experience.
• CI Management: Acquiring Invesco Canadian Fund Business, increasing assets under management to approximately $170 billion.

Expert Insights – Jemmy Lee (Wealth Consulting Group)

Jemmy Lee believes banks, particularly JP Morgan, are positioned to benefit from cyclical sectors and a strengthening economy. She anticipates increased corporate activity (CAPEX and M&A) if the Federal Reserve lowers interest rates more than expected, which would also benefit consumers burdened by debt. Lee suggests a K-shaped economy, where lower-income consumers would benefit most from lower interest rates. She downplayed the potential impact of Trump’s proposal to cap credit card rates at 10%, stating it’s uncertain if it will happen. Lee views geopolitical risks as the biggest market volatility factor but suggests viewing downturns as buying opportunities, predicting strong returns in the S&P 500 and broadening market participation.

Expert Insights – Gloria (D.A. Davidson – Technology Research)

Gloria highlighted that despite the AI hype, good software companies will continue to thrive. She identified three software companies poised for growth:

• Manhattan Associates: Strong domain expertise in supply chain management, recurring revenue, and a dominant market position. Expects revenue acceleration in cloud and services.
• Zeta Global: Marketing software company gaining market share from Salesforce, with faster growth and higher profitability expected.
• Box: Content management software adapting to the age of AI, showing signs of revenue acceleration, and led by a thought leader in AI.

Gloria emphasized the importance of Software-as-a-Service (SaaS) revenue models, characterized by recurring revenue, scalability, and high incremental margins. She believes the market has temporarily undervalued software stocks due to the AI craze.

Expert Insights – Colin Robertson (Canadian Global Affairs Institute)

Robertson believes Prime Minister Carney’s trip to China aims to stabilize the relationship after years of tension. He suggests a process for tariff reduction on both sides is more likely than an immediate deal. He notes China is attempting to drive a wedge between Canada and the US. He stresses the importance of reciprocity in negotiations with China and enforcing Canadian red lines regarding interference and disinformation. He also highlighted the importance of maintaining a strong relationship with the US, even while diversifying trade.

Restaurant Industry Trends – Matt Tiemstra (Restaurants Canada)

Tiemstra reports that 75% of Canadians are dining out less due to the cost of living. Restaurants are facing challenges from food inflation (up 11% in two years), labour costs, and decreased consumer spending. 41% of restaurants are operating at break-even or at a loss. McDonald’s Canada lowering value meal prices to $5 is a response to affordability concerns. The industry employs 1.2 million Canadians, with 41% being youth.

Notable Quotes

• Jemmy Lee: “We’re believing that JP Morgan’s results were were met by investors with a little mixed…But overall we think that the consumer is going to stay strong.”
• Gloria: “Good companies that execute well will not only survive the revolution, they’ll thrive in it.”
• Colin Robertson: “You push as far as you can and see what the what the guide wires are.”

Logical Connections

The report flows from broad economic updates (inflation, market performance) to specific trade discussions (Canada-China), corporate earnings, and expert analysis. The expert interviews provide context and insights into the broader economic trends. The discussion of the restaurant industry serves as a micro-level example of the impact of economic pressures on businesses and consumers.

Conclusion

The report paints a picture of a complex economic landscape with both opportunities and challenges. While inflation is easing, concerns remain about consumer spending and geopolitical risks. Canada is actively seeking to diversify its trade relationships, but maintaining a strong alliance with the US remains crucial. Despite market volatility, experts remain optimistic about long-term growth, particularly in sectors like technology and financials, but emphasize the importance of careful investment strategies and risk management.