Trading Day for Wednesday, Nov. 26, 2025

Key Concepts

• Hyperscalers: Large cloud computing providers (e.g., Google, Oracle, Amazon, Meta) known for massive infrastructure and high capital expenditure (CapEx).
• Credit Default Swaps (CDS): Financial instruments used to hedge against or speculate on credit risk, indicating perceived risk of default.
• Stock Spoofing: A manipulative trading practice where a trader places large buy or sell orders with no intention of executing them, to trick other investors into believing there's significant demand or supply, thereby influencing the stock price.
• Managed Care: Healthcare delivery systems that aim to manage cost, quality, and access to care, often involving health insurance plans.
• Digital Asset Treasuries: Holding companies that primarily hold cryptocurrency tokens.
• SPACs (Special Purpose Acquisition Companies): "Blank check" companies that raise capital through an IPO to acquire an existing private company, taking it public.
• Turducken Metaphor: Used to describe the complex and potentially risky merger of SPACs with Digital Asset Treasuries, likening it to a chicken stuffed in a duck stuffed in a turkey.
• E15 Ethanol: A blend of gasoline containing 15% ethanol, potentially increasing demand for agricultural products.
• Clean Tech/Climate Tech: Technologies and industries focused on environmental sustainability and combating climate change.
• Diversity & Inclusion (D&I): Policies and practices aimed at promoting the representation and participation of diverse groups within an organization.
• Inventory Overhang: An excess supply of goods that remains unsold, often leading to reduced new orders.

Market Overview and Economic News

The broadcast begins with a market update, noting the TSX is in record territory, up 0.86% for the day and 22.65% year-to-date. South of the border, the S&P 500 and Dow Jones are both up 0.92%, and the NASDAQ is up 1%, marking their fourth consecutive day of gains ahead of the US Thanksgiving holiday.

Key news items include:

• Canadian Government Aid: Prime Minister Mark Carney is expected to announce financial aid and measures to help Canadian steel producers and the softwood lumber sector, which are dealing with high tariffs imposed by former US President Donald Trump.
• Teck Resources Deal: Shares of Teck Resources are up 1% after its proposed deal with Anglo American received backing from advisory firm IHS, citing "positive strategic benefits." The deal, if approved by Canada, the US, and China, would be one of the largest ever in the mining industry.
• National Storage REIT Acquisition: Brookfield Asset Management and Singapore's wealth fund GIC have offered to buy Sydney-listed National Storage REIT for over $2.5 billion, aiming to finalize the deal by December 7th. National Storage operates over 270 facilities across Australia and New Zealand.
• Canadian Securities Exchange (CSE): The Globe and Mail reports that the CSE is considering buying CBOE Canada and CBOE Australia. CBOE is reportedly selling its Canadian segment to realign its portfolio and sharpen strategic focus.
• Dell's AI Server Outlook: Dell shares are up 6.77% after the company raised its annual outlook for the AI server market, projecting $25 billion in shipments for the year due to "unprecedented amount of orders" and accelerated AI momentum in the second half.

Tech Sector Analysis: Oracle, Google, and NVIDIA

Eric Sterner, Chief Investment Officer at Avalon Wealth Management, discusses the tech sector.

Oracle's Valuation and Hyperscaler Debt

• Concerns vs. Reality: Despite concerns about Oracle's corporate bond sales and credit default swaps hitting new highs, analysts argue the recent sell-off is "overdone."
• Hyperscaler Debt Issuance: Google issued $25 billion in bonds, Meta $30 billion, Oracle $18 billion, and Amazon $15 billion. This caused initial investor concern.
• Healthy Balance Sheets: Sterner emphasizes that the majority of these hyperscaler companies have "extremely healthy" balance sheets with "very large cash balances," some even having more cash than debt. The debt issuance is seen as a "strategic decision and capital efficiency" to preserve cash for other initiatives.
• Tech Rally Outlook: Sterner believes the tech rally "still has plenty of legs to go," including Oracle.

Google vs. NVIDIA in AI

• NVIDIA's Claim: NVIDIA tweeted (on X) that its GPUs are "a generation ahead" of Google's AI chips.
• Market Position: NVIDIA has been a top performer among mega-techs, but Google has also seen strong returns recently.
• Early Stages of AI: Sterner believes AI is "still very much in the early innings," suggesting ample room for both companies to grow and compete. The AI movement is "so big" and will affect "every sector in our economy," making it a worldwide phenomenon.
• Google as a "Sleeping Giant": Google, once described as a "sleeping giant" in global AI, is now "fully awake." Sterner views this as a continuation of the strong tech rally over the past three years, with "plenty of room to grow."
• Valuation Concerns: While valuations for the top ten S&P 500 companies (P/E ratios typically in the 30s, compared to 19 for the other 490) are "a bit frothy," their "outstanding" quarterly earnings justify the "priced for perfection" status. Pullbacks are considered "healthy."

S&P 500 Outlook and Economic Risks

• J.P. Morgan & Deutsche Bank Projections: J.P. Morgan projects the S&P 500 could hit 7500 by the end of 2026, potentially 8000 if the Fed continues to cut rates. Deutsche Bank shares a similar outlook.
• Reachability: Sterner believes these targets are "certainly" reachable if "everything goes as planned" and major "potholes" are avoided.
• Supporting Evidence (Corporate Health):
  • Earnings Growth: Third-quarter earnings marked four straight quarters of double-digit earnings growth.
  • Net Profit Margins: At 13.1%, the highest since 2009.
  • Revenue Growth: At 8.4%, the highest in three years, with all 11 sectors experiencing higher revenue growth.
  • Conclusion: The "corporate health of the S&P 500 companies is extremely strong."
• Potential Risks/Potholes:
  • Weakening Labor Market: While a concern, Sterner suggests the economy could grow with fewer jobs due to AI-driven productivity gains and limited labor supply (aging demographics, immigration policies).
  • Rising Geopolitical Tensions.
  • Rising Unemployment.
  • Any Dent in Consumer Spending.

Favored Sectors: Healthcare

Eric Sterner highlights healthcare as a favored sector, which has been "in a rut" and "ignored" for much of the year and five of the last six years, trailing the S&P 500.

Weight Loss Drugs as a Key Driver

• Innovation: Weight loss drugs are identified as the "second most innovative trend" in markets after AI.
• Cleared Hurdles: Supply bottlenecks earlier in the year have been cleared.
• Policy Shift: Biotech companies have a new deal with the White House: in return for lowering drug costs, they will receive "more coverage" for weight loss drugs through Medicare and Medicaid.
• Market Expansion: This coverage opens the market to "40 million more consumers."
• Revenue Projections: The weight loss drug industry is expected to generate $150 billion in revenues by 2030.
• Market Impact: Eli Lilly recently achieved a $1 trillion market value, indicating significant growth potential.

Specific Healthcare Stock Picks (Alex Fitch, Harris Associates)

Alex Fitch, Partner, Portfolio Manager, and Director of U.S. Research at Harris Associates, discusses his favorite healthcare stocks, focusing on "long-term value investors" and "highly out of favor parts of the healthcare market like managed care."

1. Centene Corp.

   • Current Challenges: Centene is a large player in Medicaid and exchange businesses, which have been "hammered" by policy shifts and a "sharp acceleration in the cost trend in healthcare." Premiums are often "not adequate" to cover costs, leading to "sizeable earnings headwinds." EPS fell from ~$7/share (2023-2024) to ~$2/share this year.
   • Short-Cycle Insurance: Managed care is "short cycle insurance," repricing annually, unlike property and casualty insurance.
   • Historical Recovery: Historically, "low margins fix low margins." Examples include 2015 (exchanges) and 2020, where margins recovered to peak levels within two years.
   • Market Recovery Precursors: All public companies in the exchange business are losing money; CVS is exiting the market; Medicaid companies are losing money on average; states are becoming more generous with updates.
   • Investment Thesis: Investors are "hyper-focused" on the timing of recovery (3-6 quarters). Harris Associates is compensated to wait, seeing Centene as a $39 stock that could return to $7 in earnings power in a few years, trading at 5.5 times trough earnings.

2. Molina Healthcare

   • Similar Challenges, Better Management: Molina faces similar Medicaid and exchange exposure but is considered the "best managed company" and "most efficient operator" in the industry.
   • Profitability: While the average Medicaid company has a -1% profit margin, Molina maintains a "positive 2% profit margin."
   • Earnings Potential: If the industry returns to earning its cost of capital, Molina's earnings "need to more than double."
   • Margin of Safety: Its efficiency allows it to earn $13/share this year (a $145 stock), trading at 11 times trough earnings. Normal mid-cycle earnings are "dramatically higher," implying a "mid-single digit multiple of EPS" after market recovery.

3. IQVIA (IQVIA Holdings Inc.)

   • Business Model: A "clinical research organization" (CRO) that conducts clinical trials for pharmaceutical companies, essentially a "growing royalty on pharmaceutical R&D spending." Historically, it grew at high single digits with high returns on capital.
   • Recent Underperformance: Over the last three years, the stock "meaningfully underperformed" the S&P 500 due to "cyclical" rather than "secular" issues. COVID-19 drove a boom in R&D, pulling work forward and inflating revenues, followed by three years of "weak or even negative organic growth."
   • Turning Tide: Biopharma spending is returning, and IQVIA's growth is accelerating. Investors are becoming convinced the "bottom is in" and acceleration is ahead.
   • Recovery Stage: Stocks like IQVIA are up 50% off their lows, but Harris Associates believes it's still in the "early stages" of recovery, with significant growth in pharmaceutical R&D ahead. They expect it to no longer trade at a "20 to 30% discount" once high single-digit growth returns.

Retail Sector Performance: Urban Outfitters and Holiday Shopping Trends

Lindsay Biscaia from BNN Bloomberg discusses Urban Outfitters' strong performance and broader holiday shopping trends.

Urban Outfitters' Strong Q3 and Q4 Outlook

• Q3 Earnings: Urban Outfitters reported "record sales" and "record income" for Q3, with sales surging "more than 12% year over year."
• Stock Performance: Shares climbed over 10% today, making it one of the biggest movers on the NASDAQ.
• Brand Performance: The company owns Anthropologie and Free People, both of which "really helped to drive up sales." Women's denim was a key driver for Urban Outfitters specifically, with a future focus on menswear (college-aged men, hoodies, sweaters).
• Consumer Habits (Q3): The CEO noted that consumers were "okay with buying things full price" in Q3, despite broader economic concerns.
• Q4 Outlook: Very positive, with expectations for total sales to grow in the "high single digits," total revenue growth, and profit margin growth of "25 to 50 basis points" (driven by lower margins).
• Nuuly (Subscription Service): The clothing subscription and rental service (launched 2019) is expected to deliver "mid to double-digit revenue growth."
• Pricing: The company believes "any price increases are behind them" and sees "very little need to raise prices in the very near future."

Holiday Shopping Trends

• Shift in Consumer Behavior: For the holiday season (Black Friday/Christmas), the CEO and President, Richard Hayne, noted a shift: people are "waiting for those sales, waiting for those promotions."
• Online Behavior: A trend of people putting items in their online carts but "not checking out," waiting for promotions or discounts.
• Broader Retailer Observation: Other retailers like Gap and Walmart have also observed consumers being "more aggressive" in seeking deals.

Diversity and Inclusion in Canadian VC/PE

Paula Cruickshank, Senior Vice President of Fund Investments at BDC Capital, discusses the increasing diversity in Canadian venture capital (VC) and private equity (PE) firms.

• Increased Representation: 88% of Canadian VC and PE firms now feature women on their investment teams, up from 60% four years ago and 66% in 2022.
• Impact and Metrics: While it's "very early days" for financial impact, BDC Capital sees "innovation moving forward with diverse viewpoints." The survey helps companies benchmark themselves.
• Positives of Diversity:
  • New Ideas: Diverse teams are "more likely to come up with new ideas."
  • Talent Pipeline: Helps address succession issues and bring in new talent.
• Concerns: A slight concern is a decrease in bringing in diverse talent at "more junior levels" compared to last year.
• BDC Capital Initiatives:
  • Black and Indigenous Entrepreneurship Funds: Launched a $200 million platform. A managing partner for the Black Entrepreneurship Fund was announced in February; still seeking one for the Indigenous Fund, but actively working with Indigenous funds.
  • Thrive Platform (Women-Led Firms): Announced in 2022, includes a lab for early-stage companies and a $300 million fund for later-stage companies.
  • Clean Tech and Climate Tech: Invested $1.6 billion since 2016. This space is challenging due to long adoption times and proof-of-concept periods, but BDC Capital has successfully "crowded in private capital" alongside government money. Both their Sustainability Fund and Clean Tech practice are making regular investments.

The SPAC Craze and Digital Asset Treasuries

Bailey Lipschultz from Bloomberg discusses the return of SPACs, describing it as "weirder than ever" and a "financial Turducken."

• Turducken Metaphor: A "chicken stuffed in a duck stuffed in a turkey." In this context:
  • SPACs (Turkey): Blank check companies that go public to acquire a private company, serving as a "backdoor way of going public."
  • Digital Asset Treasuries (Duck stuffed with Chicken): Holding companies that hold crypto tokens.
  • The Merger: Merging a SPAC with a Digital Asset Treasury is like stuffing the crypto-holding duck into the SPAC turkey, creating a complex and potentially risky investment.
• Current Situation: More than eight companies are pursuing these mergers, with two investor approval votes scheduled for next week.
• Market Volatility: This trend occurs amid "market volatility" and a "pretty sharp pullback" for Bitcoin and other digital assets.
• Denting Sentiment: The pullback is "definitely denting sentiment."
• MicroStrategy Example: MicroStrategy (now Strategy) was a "poster child" for this model, trading at one point for "more than three times the actual Bitcoin that it held," creating an arbitrage opportunity. This premium has now compressed to "basically trading at the amount of Bitcoin that it holds."
• Risks for New Deals: When these deals were announced in the summer, the picture was "rosier." Now, with the premium "sucked out," there's concern about where these shares will open (e.g., $10.15 shares opening at $6), potentially "significantly burn[ing] those that hold on to the stock."

Agriculture Sector: Deere & Company

Michael Slusky, Equity Research Managing Director at Davidson and Company, discusses Deere's Q4 earnings and 2026 outlook.

• Deere's 2026 Net Income Forecast: The company's forecast "did not meet expectations," leading to a decline in shares.
• Core US Farmer Challenge: The primary concern is a projected "decline of 5 to 10%" in Deere's "core heavy equipment market" for 2026, which is a "very important part of their sales and of their earnings."
• Growth Elsewhere:
  • Smaller equipment and construction businesses are expected to be "up next year," driven by large infrastructure projects and data centers.
  • Large agriculture outside the US is projected to be "up" in Europe and "somewhat flat" in South America.
• Headwinds:
  • Tariffs: A "1.2 billion headwind on tariffs" for 2026, which Deere expects to largely overcome and pass on to consumers.
  • Trade War with China: An agreement with China on trade is expected to "help unlock the US soybean trade."
  • Crop Prices: The core issue is low crop prices due to farmers planting too much or high yields leading to a "very large supply of crops."
• Potential Upsides:
  • Government Subsidies: Additional government subsidies are being considered for US farmers.
  • Dealer Trends: Deere is seeing "very early signs of dealer trends turning" in the last month.
  • Increased Demand: Potential areas of increased demand next year, such as the "expansion of E15 ethanol."
• 2026 as the Bottom: Deere's head believes 2026 will be the bottom, despite potentially being "even worse" than 2025 (which Slusky called "the worst year for tractor sales in the history of agriculture").
• Reasons for Optimism:
  • Smaller equipment sales turning positive for 2026.
  • Better parts sales.
  • Dissipation of the "inventory overhang" from the last 18 months, allowing retail and wholesale sales to align.
  • More favorable White House policy towards US farmers over the next 12 months, improving sentiment.

Stock Manipulation Case: Quantum Biopharma

John Woodward of W5 reports on an alleged stock manipulation case involving Quantum Biopharma, a Canadian research company developing Lucid MS, a promising drug for Multiple Sclerosis.

• Lucid MS: A drug targeting a unique mechanism, showing potential in mice by restoring their ability to walk.
• Funding Challenges: Founder Anthony Derkatch sought to raise money through stock markets in Toronto and New York.
• Stock Decline: Investor Salim Ahmed bought $100,000 in shares, but the stock value was "almost wiped out."
• Alleged Spoofing: Quantum's detailed analysis of trading data, particularly on NASDAQ, revealed a "strange pattern": millions of ordered but uncompleted trades, many over seconds, designed to push the stock price down. This is identified as "stock spoofing."
  • Definition of Spoofing: A trader makes large buy or sell orders without intending to complete them, to mislead other investors about price direction, then profits by selling existing shares.
• Canadian Disclosure Rules: Canadian data was crucial for the lawsuit because Canadian exchanges are "much better at being able to provide information on the trading."
• Lawsuit Allegations: Quantum claims 16 million "fictitious orders" came from Canadian bank platforms: ~12 million from CIBC, 267,000 from Royal Bank, and 3.7 million from an unnamed "John Doe." These orders allegedly sent "false and misleading pricing signals" and interfered with natural supply and demand.
• Damages Sought: Quantum is seeking $700 million in total damages.
• Banks' Responsibility: Quantum argues banks and brokers have a responsibility as "gatekeepers" to ensure clients and traders comply with rules.
• Banks' Defense: The banks deny spoofing, claiming Quantum's data is "cherry-picked" and that the stock's decline was due to Quantum's "own mismanagement" (never turning a profit, losing tens of millions annually).
• Outcome: A US court may decide the suit, with investors hoping regulators will also intervene.

Consumer Spending Trends: Black Friday Essentials

Lily Meyer from Bloomberg discusses a shift in US consumer behavior for Black Friday sales.

• Shift to Essentials: Consumers, anxious about job security and cost of living, are using Black Friday sales to "stock up on essentials" rather than just buying gifts or indulging in wish list items.
• Examples: Customers are buying multiples of everyday products like "three bags of 40-pound dog food," mascaras, and sunscreens.
• Motivation: People are "cautious about spending," "stressed about the economy and about prices getting higher," and want to "save where we can."
• Historical Context: This trend started last Black Friday due to concerns about tariffs and increasing prices. Amazon Prime Day earlier this year also saw "dish soap and paper plates" as hot ticket items.
• Impact on Businesses: Companies offering "really good value propositions are seeing shoppers spend." Higher-income consumers are "trading down" to more value-oriented retailers (e.g., The Gap). It remains to be seen if businesses will cater more to this demand for essentials with promotions.
• Future Outlook: This trend is expected to "carry through into the new year," potentially worrying companies focused on non-essentials.

Synthesis/Conclusion

The broadcast paints a picture of a dynamic and somewhat contradictory market environment. While major indices are hitting record highs, driven by strong corporate earnings and a resilient tech sector, underlying economic anxieties are influencing consumer behavior, leading to a shift towards essential purchases during holiday sales. The tech sector, particularly hyperscalers and AI innovators like Google and NVIDIA, continues to show robust growth, despite concerns about valuation and debt. The healthcare sector, after years of underperformance, is highlighted as a significant opportunity, propelled by innovative weight loss drugs and expanded coverage. However, specific sub-sectors like managed care face immediate challenges, though analysts see long-term recovery potential. The agricultural sector, exemplified by Deere, faces headwinds from tariffs and low crop prices, particularly impacting US farmers, but also shows signs of potential recovery. Finally, the market is grappling with complex and potentially risky financial instruments like SPACs merging with crypto treasuries, alongside serious allegations of stock manipulation, underscoring the need for vigilance and regulatory oversight. Overall, the market is characterized by strong corporate fundamentals in some areas, strategic shifts in others, and a cautious, value-driven consumer base.