Trading Day for Thursday, Jan. 16, 2026

Key Concepts

• Canada-China Trade Deal: A new agreement easing tariffs on specific goods, including Canadian canola and Chinese electric vehicles (EVs).
• Tariffs: Taxes imposed on imported or exported goods, impacting trade costs and market access.
• Geopolitical Risk: The influence of political events and tensions on financial markets and trade.
• Deflation/Inflation: Sustained decreases/increases in the general price level of goods and services.
• TSX & S&P 500: Key stock market indices representing Canadian and US market performance respectively.
• Nikkei 225: A key stock market index representing Japanese market performance.
• Energy Transition: The shift from fossil fuels to renewable energy sources, impacting oil demand and prices.
• K-Shaped Recovery: An economic recovery where different segments of the population experience vastly different outcomes.

Canada-China Trade Deal & Market Reactions

The video focuses on a newly established trade agreement between Canada and China, spearheaded by Prime Minister Mark Carney. The core of the deal involves Canada easing tariffs on approximately 49,000 Chinese Electric Vehicles (EVs) to a rate of 6.1%, reverting to pre-trade friction levels. In exchange, China will reduce tariffs on Canadian canola seed to 15% (from approximately 76%), eliminate tariffs on canola meal, and maintain existing tariffs on canola oil. The agreement is slated to begin March 1st and last until the end of the year, raising questions about its long-term sustainability.

Ontario’s Opposition: Premier Doug Ford strongly condemned the agreement, arguing it disadvantages Canadian auto workers and invites a “flood of cheap made in China EVs” without reciprocal investment in the Canadian economy. He expressed concern about the lack of consultation and potential negative reaction from the US, even coining the term "spy cars" to express distrust of the technology within Chinese EVs.

US Reaction: Initial reactions from the US were mixed. While former President Trump expressed a general openness to deals contingent on Chinese investment in US manufacturing, the US Trade Representative, Jameson Greer, labelled the decision “problematic” and warned Canada might regret it.

WestJet Seating Configuration Change

WestJet announced it is reverting to its previous seating configuration after receiving negative guest feedback on its “densified seating” arrangement. The airline will remove one row of seats in affected aircraft, restoring previous legroom in economy cabins. WestJet’s CEO stated the company will learn from this experience while maintaining cost discipline and innovation.

Market Performance & Economic Outlook

The Toronto Stock Exchange (TSX) is currently experiencing record trading territory. US markets, specifically the S&P 500, are also performing well, though not yet at record levels.

January Market Trends: Historically, January performance is a strong indicator of the year’s overall market performance. Since World War II, a positive January has correlated with a 16% average annual gain for the S&P 500, occurring in 86% of years. Additionally, if the first quarter low doesn’t fall below the previous December low, the S&P 500 has historically risen for the entire year 100% of the time.

Midterm Election Year Volatility: The video cautions that midterm election years tend to be more volatile, with an average annual performance of only 3.8% and a 55% chance of positive returns.

Expert Commentary: Sam Stovall (CFRA)

Sam Stovall, Chief Investment Strategist at CFRA, provided insights on the Canada-China trade deal and the broader economic landscape.

• EV Deal Concerns: Stovall echoed concerns about the lack of reciprocal investment from China, referencing President Trump’s stance on allowing Chinese EVs only if they are manufactured in the US with American workers.
• Intel’s Position: Stovall assessed Intel’s competitive position, noting it is no longer the industry leader and faces increased competition from Taiwan Semiconductor Manufacturing Company (TSMC), which is building foundries in the US. He indicated Intel has limited strength in AI devices, though they are making initial steps with their Core Ultra series processors.
• Gold as a Safe Haven: Stovall explained the recent rise in gold prices is driven by geopolitical tensions and concerns about potential currency debasement, making it an attractive store of value.
• Oil Market Fundamentals: Stovall highlighted that the oil market is currently oversupplied, and geopolitical risk is not yet fully priced in.

Expert Commentary: Rob Thomas (Tortoise Capital)

Rob Thomas, Senior Portfolio Manager and Managing Director at Tortoise Capital, discussed the oil market and the implications of geopolitical events.

• Geopolitical Risk & Oil Prices: Thomas believes the oil market currently underestimates geopolitical risk, particularly concerning Iran and the Strait of Hormuz. A disruption to the Strait of Hormuz could significantly increase oil prices.
• Long-Term Oil Outlook: He anticipates oil prices will gradually increase, potentially reaching the low 70s per barrel over the long term, driven by reduced US oil production and increased demand.
• Natural Gas & AI: Thomas emphasized the importance of natural gas in powering the growing demand for electricity driven by Artificial Intelligence (AI). He believes the US and Canada have a competitive advantage due to their access to low-cost natural gas.

Japan’s Economic Shift

A segment of the video focused on Japan’s economic transformation after decades of deflation.

• Decades of Deflation: Japan experienced stagnant or decreasing prices for three decades, making even small price increases significant.
• Weak Yen & Inflation: A weakening Yen, coupled with global events like the pandemic and the Ukraine war, has triggered rising prices and inflation in Japan.
• Bank of Japan’s Policies: The Bank of Japan (BOJ) implemented extreme monetary policies, including negative interest rates and massive government debt purchases, to stimulate inflation, but these efforts had limited success until recently.
• Challenges & Future Outlook: Japan faces challenges including an aging population, high public debt, and the need to balance inflation with economic stability. The new Prime Minister faces the task of navigating this transition and ensuring sustainable growth.

Key Takeaways

The video highlights a complex interplay of trade, geopolitics, and economic forces. The Canada-China trade deal, while offering benefits to Canadian canola farmers, faces criticism regarding its potential impact on the Canadian auto industry and its alignment with US trade policy. Market indicators suggest a positive start to the year, but caution is warranted due to historical volatility in midterm election years. The global economic landscape is marked by shifting dynamics, including Japan’s transition from deflation to inflation and the growing importance of energy sources like natural gas in the age of AI. The overall message is one of cautious optimism, emphasizing the need for adaptability and strategic decision-making in a rapidly changing world.