Trading Day for Thursday, Nov. 27, 2025

Key Concepts

• Canadian Dollar-Backed Stablecoin: A digital currency pegged to the Canadian dollar, aiming for faster, cheaper, and more efficient transactions, both domestically and internationally, while supporting the Canadian economy and sovereignty.
• AI as a General Purpose Technology: Artificial intelligence's pervasive impact across nearly all industries, driving innovation and efficiency, comparable to the invention of the printing press.
• Stock Spoofing: A market manipulation tactic involving placing large, non-bonafide orders to create a false impression of supply or demand, then canceling them before execution, often to profit from short selling.
• Canada-Alberta Energy Agreement: A new cooperation agreement aimed at reducing Canada's dependence on the U.S. for energy exports, unlocking Alberta's energy potential, and prioritizing new oil pipelines to Asian markets.
• Non-U.S. Investment Diversification: The strategy of investing outside the dominant U.S. market to enhance portfolio resilience, access different earnings streams, and capitalize on varying market structures and currency dynamics.
• Carbon Capture, Utilization, and Storage (CCUS): Technologies and processes designed to capture carbon dioxide emissions from industrial sources, preventing their release into the atmosphere, and either utilizing them or storing them underground.
• "California Sober": A lifestyle choice involving abstaining from or significantly reducing alcohol consumption while being open to other substances like cannabis or psilocybin.

Market Overview and Economic Indicators

The program opened with a look at current market conditions and key economic news. The TSX continued its rally, albeit at a slower pace, up 0.1%, while U.S. markets were closed for the Thanksgiving holiday.

• Canadian Current Account Deficit: Data from StatCan revealed that Canada's current account deficit shrank in the third quarter to just under $10 billion. This narrowing was primarily driven by a contraction of trade in goods, with exports rising and imports declining. Investment income and trade in services also contributed positively to this trend.
• Steel Tariffs and Market Impact: The federal government announced a new 25% tariff on approximately $10 billion worth of steel derivative imports from all countries, including the U.S. Following this, shares of Algoma Steel traded higher by 4.5% (later updated to 4.2%). Despite this protective measure, an analyst at RBC Capital Markets still anticipates the Canadian market will face a position of oversupply. On the positive side, Ottawa's plan to reduce freight rates for inter-provincial steel transportation is expected to increase demand for Canadian steel and enhance the competitive pricing of Ontario steel.
• Rogers Sugar Performance: Shares of Rogers Sugar edged higher by 1.5% after the Montreal-based sugar producer reported profits and revenue in its latest quarter that exceeded expectations. The company attributed these results to disciplined execution and consistent customer demand, and is currently focusing on expanding its refining and logistics capacity in Eastern Canada.

Global Investment Strategies and Market Outlook (Reinhart Root, Global Equity Portfolio Manager at 91)

Reinhart Root emphasized the importance of increasing non-U.S. investment to strengthen portfolio resilience and long-term outcomes, especially given the U.S. market's dominance, largely driven by big tech.

• Diversifying Beyond U.S. Markets: Investors looking outside the U.S. should seek diversified earnings and different streams of earnings. Market structures vary significantly; for example, Europe offers greater exposure to energy, materials, industrials, and cyclical financials, while emerging markets provide higher growth consumer exposure. The U.S. market's strong performance has been due to superior earnings growth, which non-U.S. investments must match.
• European Market Opportunities: Root expressed interest in European banks and industrials. Regarding the Ukraine-Russia conflict, he believes a near-term ceasefire is likely. On a multi-year basis, he argued that "Europe has woken up" and realizes the need to increase GDP spending on defense, a trend unlikely to reverse. The recent sell-off in European defense sectors might present a good buying opportunity.
• Japan's Economic Transformation: The key change in Japan is the rise of inflation, a phenomenon not seen for a long time. This is creating interesting opportunities for companies to pass on price increases. Additionally, corporate reform is underway, with many Japanese corporates, traditionally conservatively managed and hoarding cash, becoming more investor-friendly and redistributing cash to shareholders.
• Bank of Japan Rate Increases: Root believes rate increases are "bound to happen," noting the Bank of Japan seems "somewhat behind the curve," which explains some currency weakness. He views their measured approach as beneficial, allowing consumers and businesses time to recalibrate to a higher interest rate environment.
• U.S. Dollar Outlook: While difficult to predict exact levels, currency shifts tend to be multi-year cycles. Root suggests that the market has just exited a multi-year U.S. dollar bull market, and while not expecting rapid depreciation, he anticipates a less strong dollar cycle. He highlighted that the "rate of change" in currency values often matters more than absolute levels, providing potential currency tailwinds for non-U.S. investments.
• Year-End Market Optimism: Despite the U.S. market's strong year, Root noted that other markets have kept pace. He views corporate profit growth as "quite resilient" and the earnings season as "quite solid," with more companies beating expectations than missing. He expressed reasonable optimism heading into year-end.

Canada's Digital Currency Future: The Stablecoin (Didier Lavallee, CEO of Tetra Digital Group)

Didier Lavallee discussed the federal budget's framework for a Canadian dollar-backed stablecoin, emphasizing its potential to maintain the Canadian dollar's global relevance and sovereignty.

• Federal Framework and Progress: Lavallee praised the speed at which the framework was released by Minister Champagne's office and Premier Carney. He sees it as a "great starting point."
• Regulatory Challenges and Ideal Structure: A key missing piece is further definition of what a stablecoin will do for Canadians and how it should be properly regulated, particularly addressing jurisdictional challenges between provincial and federal authorities. Lavallee strongly believes stablecoins should be utilized as payment tools and be federally regulated, a direction the draft legislation partially supports. However, provinces like Ontario are currently treating them as securities, issuing prospectuses, indicating a belief in provincial jurisdiction until a federal framework is law.
• Rationale for a Canadian Dollar Stablecoin: Stablecoins are a digital representation of the Canadian dollar, enabling faster, quicker, and cheaper international and local transactions. They offer programmatic benefits for treasury management, settlement, and counterparty risk. Canada is currently behind other G7 countries in adopting financial innovations like open banking and real-time payment rails. Pegging to the Canadian dollar is crucial for sovereignty, supporting Canadian treasuries and the Canadian economy, rather than the U.S. economy through U.S. dollar stablecoins.
• International Ambitions and Partnerships: Tetra Digital Group is actively working to ensure international transaction capacity for the Canadian stablecoin. They have partnered with high-profile players like Wealthsimple, Purpose, ATB Financial, National Bank, and Shopify, and are pursuing global partnerships to integrate the Canadian dollar into transactional systems or create a G7 basket for digital currencies. Liquidity is considered incredibly important for success.

Canada-Alberta Energy Agreement and Pipeline Development (Lindsay, BNN Bloomberg & Premier Danielle Smith)

A major new energy cooperation agreement between Prime Minister Mark Carney and Alberta Premier Danielle Smith was signed, outlining conditions for a new bitumen pipeline to the Pacific, aimed at increasing export access to Asian markets.

• Agreement Overview and Federal Support: The plan seeks to reduce Canada's dependence on the U.S. and unlock Alberta's full energy potential. Ottawa's support for "one or more new oil pipelines" to Asia is a priority. The federal government has also agreed to suspend some environmental policies for Alberta and will adjust a tanker ban on BC's North Coast if necessary.
• Conditions for Alberta: The Memorandum of Understanding (MOU) stipulates that Alberta must:
  • Sign an industrial carbon pricing agreement to lower emissions by 75% over the next ten years.
  • Extend the Carbon Capture Incentive Program, linking Pathways Carbon Capture and Storage (CCS) projects directly to any pipeline development.
  • In return, the federal Liberals will not implement an emissions cap on Alberta's oil and gas sector.
• Premier Smith's Perspective: She views the agreement as a positive shift after "ten pretty bad years" of laws hindering Alberta's oil and gas industry. Key wins include the removal of the emissions cap (boosting confidence for production expansion) and the elimination of clean energy regulations for the electricity sector (encouraging reinvestment in natural gas, potentially fueling an AI boom). The commitment to a new million-barrel-a-day pipeline to Asian markets, a carve-out on the tanker ban, and developing additional CCUS infrastructure were also highlighted.
• Alberta's Commitments (Details):
  • Industrial Carbon Pricing: The stringency and ultimate price (rising to $130 by April 1st) are still under negotiation, with the goal of avoiding the prior agreement's $170 by 2030 target, which was deemed "too far too fast."
  • Methane Reduction: Alberta has already reduced methane emissions by 45% below 2014 levels (two years ahead of schedule). The federal government has aligned with Alberta's target of 75% reduction by 2035, rather than a more stringent 2030 target. Smith emphasized aligning with global 2050 targets (China 2060, India 2070) to use oil and gas wealth for decarbonization technology.
• Private Sector Interest and Government Role: The MOU emphasizes private sector financing for pipelines. Premier Smith stated that if the federal government has to build a pipeline, it would be a "failure of the exercise," as the goal is to restore investor confidence. She noted encouraging signs of private sector interest, with Enbridge, TMX, and South (Keystone assets) announcing expansions or new pipeline projects totaling over 1.4 million barrels. The government's role is to partner with industry to overcome past "false starts" (e.g., Keystone, Energy East, Northern Gateway) and build confidence.
• Need for New Pipeline: Smith cited OPEC's forecast that the world will need a minimum of 123 million barrels a day by 2050 (up from current 104 million). Canada aims for a growing share of this market, particularly with its "lowest carbon barrels," which would be advantageous for European and Asian markets valuing lower emissions products. She stressed the need to address global energy poverty (700 million people lack affordable energy) while reducing emissions, calling it a period of "energy addition" where oil and gas will remain the backbone.
• Opposition and Stakeholder Engagement:
  • British Columbia: Premier David Eby has been vocal in his opposition due to risks to water, fisheries, and long-term health. The MOU commits to dialogue with BC to ensure shared economic and financial benefits, though BC was not included in initial talks. Smith and Eby have agreed to disagree on some points but will collaborate on common interests like TMX expansion, LNG development, and nuclear investment.
  • Indigenous Groups: Coastal First Nations are against pipelines and tankers on their coast, and their consent and support are crucial. Alberta has had past success with Indigenous co-ownership on projects totaling $750 million through loan guarantees, with capacity to go up to $3 billion. The federal and BC governments have similar programs, and the goal is to secure substantial Indigenous ownership along the proposed route.
• Addressing the Tanker Ban: While a tanker exemption is possible, it would be the last step. The approval process for a new pipeline, once on the Major Projects List, would take two years, followed by years of construction. Smith believes that addressing the "nine bad laws" to the industry's satisfaction will allow many other projects (expansions, optimizations) to proceed sooner. She highlighted that the TMX construction dramatically reduced the "differential" on Western Canada Select, demonstrating the importance of market diversification beyond over-reliance on the American market, as Asian markets (China, Korea) have shown appetite for Canadian oil.

Combating Market Manipulation: Stock Spoofing (John Woodward, W5 Report)

A W5 report highlighted the growing problem of stock spoofing, a market manipulation tactic that is becoming easier to execute at scale.

• The Problem of Spoofing: Stock spoofing involves traders using computer programs or "algos" to place thousands of fake orders, creating a false impression of demand or supply, then canceling them before execution. This drives stock prices down, allowing manipulators to profit from short selling (betting a stock will drop). Randy Manzano, a retiree, lost tens of thousands on Quantum Biopharma stock, which subsequently sued Canadian banks for $700 million, alleging spoofing.
• Enforcement and Penalties: Spoofing is illegal in Canada. The number of proceedings against market manipulators doubled from 5 in 2022 to 10 last year, but total fines remained low, never exceeding $1.05 million. In contrast, U.S. authorities have been more active; JPMorgan Chase paid a $920 million settlement for hundreds of thousands of fake orders, and Canadians operating in the U.S. have been prosecuted (e.g., Alexander Milrod, whose network allegedly made over $1 million a month; TD Bank paid over $20 million related to a former trader's actions).
• Proposed Solutions: Terry Lynch, CEO of Save Canadian Markets, advocates for stronger court messages (punishment and reform) and taking the profit out of spoofing by restricting short selling. A report for the Ontario government recommended such restrictions five years ago, but progress has been slow. Ontario's Finance Minister emphasized that all market participants must follow the rules and that the government is committed to protecting good actors and pursuing bad ones.

Investing in the Age of AI (Mike Taylor, Investment Manager at Baillie Gifford's Global Alpha Team)

Mike Taylor discussed the broad impact of AI and where investors can find growth potential beyond just the high-flying big tech companies.

• AI as a General Purpose Technology: Taylor described AI as a "general purpose technology" with profound implications, impacting almost every industry, from finance and healthcare to sawmills. He likened its significance to the "invention of the printing press."
• Key Growth Areas and Speed of Innovation: While the most profound impacts currently are in coding, Taylor is excited about broader implications, particularly in healthcare (e.g., developing new drugs and therapies through genomics). The speed of AI's development is remarkable, driven by increasingly powerful chips like NVIDIA's GPUs, which offer more performance per unit of cost. The industry is still constrained by chip supply, indicating significant future potential.
• Supply Chain Dynamics and Big Tech Investment: Bottlenecks exist in the supply chain, with NVIDIA dominating chip design and TSMC leading efficient manufacturing. However, large "hyperscalers" are deploying substantial capital into the AI space, which will benefit both these companies and their supply chains in the long run.
• AI in Emerging Markets: AI is globally accessible, allowing emerging market companies to experiment with the technology. Taylor observed this firsthand in South America, where companies are using AI for sales processes, reducing staff while increasing customer satisfaction. While most data center buildout is in the Western world, forward-thinking emerging market companies can readily access the technology.
• Focus on China and Electric Vehicles: Taylor identified as a "China bull," looking five years out for businesses that will be meaningfully larger and dominate their industries. He specifically highlighted the electric vehicle (EV) industry, expecting it to be significantly larger, with Chinese businesses at its heart. He praised CATL, a Chinese company that makes EV batteries, for its market share (over one-third) and superior technology, packaging, and manufacturing capabilities.

Cannabis Normalization and Market Growth (Charles Garvin, Bloomberg Report)

A report by Charles Garvin explored the growing trend of cannabis consumption during holidays like Thanksgiving, reflecting its increasing normalization.

• Shifting Consumer Preferences: More Americans are opting for cannabis over alcohol during holidays, aligning with the "California sober" lifestyle (abstaining or barely touching alcohol but open to cannabis or psilocybin). A recent Gallup poll showed alcohol consumption at its lowest level in decades, and over half of Bloomberg Intelligence survey respondents substitute cannabis for alcohol at least weekly.
• Market Size and Culinary Integration: The day before Thanksgiving is the second biggest sales day for the U.S. legal cannabis industry (behind April 20th). The industry was valued at over $30 billion last year, with BDSA forecasting growth to $31.6 billion this year and $39.1 billion by 2029. Chefs like Miguel Trinidad, founder of the 99th Floor Cannabis Dining Club, are integrating THC into holiday menus through "micro-infusions" (e.g., 5 milligrams of THC in a rack of lamb cooked sous vide), aiming to "destigmatize cannabis through the language of food."
• Regulatory Hurdles: Despite legalization in dozens of states, cannabis remains a Schedule One drug federally (same category as heroin and LSD). This federal prohibition creates significant hurdles, limiting access to banking, investment, and broader legitimacy for the industry. While President Trump considered reclassifying cannabis, no announcement has followed, leaving the divide between state legalization and federal prohibition as a major challenge.

Synthesis and Conclusion

The "Trading Day" broadcast provided a comprehensive snapshot of Canada's economic landscape, global investment trends, and evolving social dynamics. Key takeaways include Canada's strategic moves to diversify its energy exports and embrace digital currency innovation, alongside the ongoing battle against market manipulation. Investors are encouraged to look beyond traditional U.S. markets for growth, particularly in Europe, Japan, and emerging markets, while recognizing AI's transformative potential across all sectors. The increasing normalization of cannabis, despite federal regulatory hurdles, highlights a significant cultural and market shift. The discussions underscore a period of significant change and opportunity, requiring adaptability from both policymakers and investors.