Trading Day for Tuesday, Nov. 25, 2025

Key Concepts

• AI Valuations: The market assessment of artificial intelligence companies, including their price-to-earnings multiples.
• Fed Rate Cuts: Decisions by the U.S. Federal Reserve to lower interest rates, impacting borrowing costs and market sentiment.
• Risk-Off Attitude: Investor sentiment characterized by a preference for lower-risk assets, often during periods of uncertainty.
• 50-Day Moving Average: A technical analysis indicator representing the average closing price of a security over the past 50 days, often used to identify support and resistance levels.
• MAG Seven: A term referring to a group of large, influential technology companies (often including Microsoft, Apple, Google/Alphabet, Amazon, Nvidia, Meta, Tesla).
• Yen Carry Trade: A strategy where investors borrow Japanese Yen at low interest rates and invest in higher-yielding assets in other currencies.
• JGB (Japanese Government Bond): Debt securities issued by the Japanese government.
• FX Hedge Costs: The costs associated with mitigating foreign exchange rate risk when investing in foreign currencies.
• Liquidity Drain: A reduction in the amount of available cash or easily convertible assets in a market or economy.
• Repatriation: The process of returning foreign-earned assets or capital to one's home country.
• LTL (Less-Than-Truckload): A shipping service for relatively small freight that does not require the entire space of a truck.
• SMEs (Small and Medium-sized Enterprises): Businesses that maintain revenues, assets, or a number of employees below a certain threshold.
• CDL (Commercial Driver's License): A driver's license required to operate large, heavy, or placarded hazardous material vehicles in the U.S.
• FMCSA (Federal Motor Carrier Safety Administration): An agency within the U.S. Department of Transportation that regulates the trucking industry.
• Cabotage Rule: Regulations that restrict foreign carriers from transporting goods or passengers between two points within a single country.
• MOU (Memorandum of Understanding): A non-binding agreement between two or more parties outlining their intentions to work together.
• Emissions Cap: A limit set on the total amount of greenhouse gas emissions that can be released into the atmosphere.
• Industrial Carbon Pricing System: A mechanism to put a price on carbon emissions from industrial sources.
• Pathways Carbon Capture Project: A specific project aimed at capturing carbon emissions, particularly in the energy sector.
• Snowbirds: Canadians who travel south to warmer U.S. states for the winter months.
• Stock Manipulation: Intentional efforts to artificially influence the price or trading volume of a stock.
• Dividend Yield: The annual dividend payment per share divided by the share price, expressed as a percentage.
• Free Cash Flow: The cash a company generates after accounting for cash outflows to support operations and maintain its capital assets.
• Same-Store Sales: A metric used in retail to compare the sales performance of stores that have been open for a certain period, excluding new store openings or closures.

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Market Overview and November Performance

The market has seen mixed performance recently, with the TSX, Dow Jones, S&P 500, and Crude oil all showing gains, while the Nasdaq, initially down, has also turned positive. The WTI Crude is down, and both the Canadian dollar and Bitcoin are slightly declining. November was shaping up to be one of the worst Novembers in 17 years, with the market down 5% at its low point. This was attributed to concerns around AI valuations and uncertainty regarding potential Federal Reserve rate cuts in December. However, the market has since found some support, with the S&P 500 bouncing off its 50-day moving average, and positive news surrounding AI helping to alleviate earlier concerns that the sector had gotten "ahead of itself." Art Hogan, Chief Market Strategist at BBY Riley Wealth, noted this shift from a "risk-off attitude" prevalent in the first two weeks of the month.

AI Market Dynamics and Valuations

Despite earlier concerns, the valuations of the "Top Six Artificial Intelligence Darlings" (excluding Tesla) are now considered more rational, with multiples not having been this cheap in two years. These companies are trading at an average 31x multiple, while growing earnings north of 50%, revenues north of 60%, and boasting gross margins north of 65%. This suggests that a "bubble" is not imminent. While there was concern about the circular nature of financing CAPEX for highly speculative AI names, the market is now in a better place. The pullback in Nvidia's stock is seen as "overdone." Alphabet (Google), with its Gemini 3 rollout this week, is positioned as the "new leader" in the AI space, driving significant gains. Nvidia remains crucial for building large language models, with demand for its chips projected in the "hundreds of billions of dollars" for next year, even without China's participation. The need for less expensive chips is anticipated but "not there yet."

Sector Performance Year-to-Date

Year-to-date, the Communication Services sector, part of the "MAG Seven," has had a strong year. Utilities and Industrials are also performing well, driven by the "artificial intelligence adjacency" which necessitates significant power and data center build-outs. Six out of the eleven sectors in the S&P 500 are outperforming the index itself, indicating a broader market rally compared to the previous year.

Federal Reserve and Interest Rate Outlook

The probability of a Federal Reserve rate cut has increased significantly from 40% to 80%. While the decision is likely to be divided (potentially a 7-5 vote), the market is "celebrating" the increased likelihood of a rate cut in December.

U.S. GDP Growth and Corporate Earnings

U.S. GDP growth estimates vary, with the Atlanta Fed projecting north of 2.5% and the St. Louis Fed closer to 1.8%. GDP growth is expected to pick up in the first half of next year, driven by factors such as less regulation, increased productivity from artificial intelligence, and a stable corporate tax rate. Corporate earnings have shown robust growth, with double-digit increases for the last three quarters. The third-quarter earnings reporting season, initially estimated at 7-7.5% growth, has surpassed 13%. Furthermore, estimates for the fourth quarter and 2026 have been revised higher, indicating sound fundamental prospects for long-term investors.

Alimentation Couche-Tard's Q2 Earnings and Strategy

Alimentation Couche-Tard (ATD) reported strong second-quarter earnings, beating profit expectations with net earnings of $740.6 million US, up from $708 million the previous year. While revenue was slightly below estimates, the stock saw a significant bounce, rising almost 6% (later reported 4.5%). This performance signals a potential recovery after the company spent most of 2024 focused on an unsuccessful takeover attempt of the company behind 7-Eleven. Total merchandise and service revenue increased by 6.6%. Notably, same-store sales in Canada were up over 5%, and in the U.S., they saw a 1.2% increase, marking the first increase in seven quarters. Growth in the food service section, particularly hot food sales, was highlighted by CEO Alex Miller, who expressed unprecedented confidence in this segment, partly due to a partnership with a celebrity chef.

Regarding future strategy, analyst Peter Hodson of Eye-to-Eye Capital Management suggested that while large acquisitions are difficult to come by, "small tuck-in acquisitions" in retail and convenience stores, along with cross-promotions, would be beneficial. He also emphasized the potential for more aggressive expansion into EV charging operations, leveraging Couche-Tard's existing locations. The company has a history of acquisitions, with 75 in the last 20 years, accounting for 70% of its stores. Alimentation Couche-Tard also raised its dividend by 10% to 1.2% and bought back almost $900 million worth of stock this year, demonstrating its use of free cash flow for shareholder returns in the absence of a major acquisition.

Quantum Biopharma and Alleged Stock Manipulation

A Canadian research company, Quantum Biopharma, developed a promising drug called "Lucid Mice" for Multiple Sclerosis (MS), a disease affecting nearly 90,000 Canadians. A video demonstrated a paralyzed mouse recovering completely after 42 days of treatment with Lucid Mice. Despite this promising technology and favorable test results for another drug in its portfolio, Quantum Biopharma's stock price experienced significant drops (e.g., from $7.39 to $2.76, and later $1.84 to $1.56). Investor Atul Dadwal lost 98% of his "few hundred thousand dollars" investment. Alex Barr, an MS patient and company board member, stated that the low share price hindered the company's ability to raise money for human clinical trials, thus preventing the drug from becoming accessible to patients. Quantum Biopharma launched an investigation into what it believed was "alleged stock manipulation," leading to a "nearly three-quarter billion dollar lawsuit."

Japan's Economic Stimulus and Global Financial Implications

Japan has announced a new "trillion-dollar stimulus package" aimed at providing price relief and economic support, raising concerns about the country's fiscal sustainability. Thomas Hirano, Co-Chief Investment Officer at Sage Advisory, explained the historical context of the "yen carry trade," where decades of significantly lower interest rates in Japan allowed international investors to borrow yen cheaply and invest in higher-yielding assets globally, making Japan a "large exporter of liquidity."

However, this dynamic is changing. Japanese Government Bond (JGB) 10-year yields have risen "seven times" since Q4 2022, from 25 basis points to 1.8%. When combined with FX hedge costs, this makes borrowing yen for overseas investment less attractive or even unprofitable. This shift poses a "double whammy" risk to the global economy:

1. Liquidity Drain: It could "dry up liquidity" or a crucial source of funding that investors have relied on for decades.
2. Capital Repatriation: Rising JGB yields could incentivize institutional investors in Japan to "repatriate" capital back into yen to buy domestic bonds, creating "headwinds" for foreign markets.

Such a shift could lead to "headwinds for yields abroad" (e.g., in US, European, and emerging market debt) and increased "FX volatility" as hedges are unwound. Hirano suggested that this could be a significant "liquidity drain on markets globally," potentially ending a decades-long "tailwind" for global liquidity.

The stimulus package itself, at $135 billion (the largest since the pandemic), aims to boost Japan's lagging GDP growth (which was sub-1% for Q3 and in contraction by 40 basis points). Measures include energy subsidies, tax cuts, and handouts to support direct consumption. While the stimulus and potential capital repatriation could support Japanese capital markets, the outlook for Japanese equities remains tied to domestic growth, with hopes that the package will push GDP growth to 1-1.5% for 2025.

Hot Picks in Transportation and Logistics

Jason Seidl, Analyst for Transportation and Logistics at TD Cowen, discussed three "hot picks":

• FedEx (FDX): Identified as a top pick, positioned to benefit from e-commerce growth. FedEx is trading in line with its historical average, but its upcoming spin-off of the LTL (Less-Than-Truckload) division is a key factor, as LTL businesses typically trade at higher multiples than parcel operations. Near-term peak season expectations are "muted," especially for SMEs affected by tariffs, but both FedEx and UPS are maintaining "disciplined pricing." A recent tragedy involving a UPS freighter (MD-11) led to the grounding of MD-11 fleets for both carriers (4% of FedEx's fleet, 9% of UPS's). The companies are adapting by shifting to ground transport, deploying spare aircraft, adjusting maintenance, and utilizing airline belly space. Long-term, FedEx is "rightsizing" its network, aiming to consolidate deliveries to a single truck per household, a significant change from its original air-centric model.

• GXO Logistics (GXO): An automated warehouse provider and supply chain coordinator. Seidl highlighted that automation in warehousing faces "no pushback," unlike in trucking or rail. The new CEO, Patrick Kelleher (formerly of DHL), is refocusing on organic growth and expanding into higher-margin areas. GXO benefits from long-term contracts with over 90% renewal rates, having already booked almost $1 billion in new contract revenue for 2026 by Q3. A recent acquisition (Canton), previously held up by British regulators, is now expected to contribute about $60 million to EBITDA and facilitate expansion into the A&D (Aerospace & Defense) consumer base.

• Knight-Swift Transportation (KNX): The U.S. trucking industry is in a severe downturn, the "longest" in Seidl's 30+ year career (over three years). However, there's positive news as government actions are reducing market capacity. The FMCSA (Federal Motor Carrier Safety Administration) has issued rulings, including the "non-domiciled driver ruling" (estimated 8% capacity impact over two years, though currently in courts), English language proficiency testing, and addressing "illegally issued CDL" (Commercial Driver's Licenses). "CDL mills" that issue licenses in one day are a significant safety concern. California recently saw 17,000 CDLs removed (almost 9% of its capacity) due to fraud. Canada also faces issues with illegal drivers and violations of the "cabotage rule," where foreign drivers overstay and solicit additional work. These measures are crucial for curtailing the excess capacity that expanded post-COVID supply chain disruptions and for improving safety.

Canada-U.S. Tensions and Travel

Tensions between Canada and the U.S. are impacting travel, with many "snowbirds" opting out of heading stateside this winter, potentially affecting American Thanksgiving travel. Travelers are boycotting U.S. travel due to "strained relations." U.S. Senators from border states acknowledged a "cultural break," noting that Canadians increasingly view Americans as adversaries, partly due to past tariffs (which they called a "mistake"). October travel data showed car trips from the U.S. down 30% year-over-year and air travel down 24%. A recent poll indicated 70% of Canadians felt uncomfortable traveling to the U.S. this winter, and 65% were concerned about new border requirements for long-term visitors, including fingerprinting. Despite this, some U.S. Senators remain optimistic about repairing relations.

Local Holiday Shopping Initiatives

Downtown districts across Canada are promoting local spending during the holiday season. In Charlottetown, a one-day deal offered 20% off local gift cards from Downtown Charlottetown Incorporated, redeemable at over 140 participating stores and restaurants. This initiative is part of a broader program in over 40 Canadian cities, aiming to divert sales from large online retailers to small, independent businesses. Business owners have observed a "real surge" in local support, partly attributed to trade negotiations and tariffs, highlighting the importance of community support for economic vitality.

Market Movers at Closing

As the market closed, the TSX was nearing its intraday high, up almost 1% for the day, led by several companies. Notable gainers included BRP (recreational vehicles), up 7.71%; Discovery Silver, up 4.82%; and Iamgold, reflecting a good day for the mining sector. Alimentation Couche-Tard was up 4.3% following its earnings beat, though it remains down 5.85% year-to-date. On the downside, Exploration was off 5%, Parex Resources down 4%, and Vermilion Energy down 3%. Nvidia's shares were under pressure due to reports of Meta Platforms potentially using Google's AI chips in its data centers, signaling a growing challenge to Nvidia's market dominance.

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Synthesis and Conclusion

The video provides a comprehensive snapshot of current financial markets and economic trends, highlighting both opportunities and challenges. Key takeaways include the resilience of the AI sector despite earlier valuation concerns, with Alphabet emerging as a significant player alongside Nvidia. The increasing likelihood of a Fed rate cut is boosting market sentiment. Corporate earnings and U.S. GDP growth show positive momentum, suggesting a sound fundamental picture for investors.

However, significant global economic shifts are underway, particularly with Japan's new stimulus package and the implications of rising JGB yields on the long-standing yen carry trade. This could lead to a global liquidity drain and capital repatriation, impacting foreign markets. Domestically, the Canadian energy sector is navigating a potential pipeline deal with Alberta, facing opposition from B.C. Premier David Eby over taxpayer funding and environmental concerns. The U.S. trucking industry is in a prolonged downturn, but government-led capacity reductions and fraud crackdowns offer a glimmer of hope. Meanwhile, Canada-U.S. tensions are affecting cross-border travel, and local initiatives are encouraging support for small businesses during the holiday shopping season. The market remains dynamic, with specific companies like Alimentation Couche-Tard demonstrating strong recovery, while others like Nvidia face new competitive pressures.