Today
Stock futures slipped this morning following the latest batch of U.S. economic data and ahead of a potential key ruling from the Supreme Court on Trump’s tariffs. The U.S. economy expanded at a slower-than-expected 1.4% annualized pace in Q4, down significantly from 4.4% in the prior quarter and well below the 2.8% forecast, as weaker consumer spending and trade weighed on growth. The Bureau of Economic Analysis said the prolonged government shutdown during the quarter took away roughly 1% from GDP, contributing significantly to the slowdown. For the full year, the economy grew 2.2%. While personal consumption rose 2.4%, in line with expectations, PCE excluding food and energy came in slightly hotter at 3.0% vs 2.9%, underscoring lingering price pressures despite the softer growth backdrop.
That’s a big (negative) number. The U.S. trade deficit widened to $70.3 billion in December, bringing the full-year shortfall to $901.5 billion, one of the largest annual deficits since 1960, as imports rose 3.6% and exports fell -1.7%. The volatile trade patterns in 2025 were largely driven by tariff uncertainty, with businesses accelerating imports, especially gold, pharmaceuticals, computers, and AI-related capital goods, to avoid higher duties. While tariffs helped narrow the deficit with China to about $202 billion, which was the smallest in more than two decades, trade flows shifted to countries such as Mexico, Vietnam, and Taiwan, where deficits widened to record levels. Overall, economists expect trade to contribute little to GDP growth, with strong imports reflecting strong domestic investment, particularly in AI infrastructure, rather than weakening demand.
On the other hand, Canada’s trade deficit narrowed to $1.31 billion in December from $2.59 billion in November, beating expectations as exports rose 2.6%, driven largely by higher gold shipments and rising commodity prices. While exports to the U.S. increased slightly, their share of total exports fell to just over 67%, the lowest on record outside of the pandemic, reflecting a broader shift toward diversification. Exports to non-U.S. markets rose to an all-time high, now up 17% over the past year, highlighting Canada’s growing ability to reduce reliance on its largest trading partner. Overall, the data suggests Canadian trade remains resilient, supported by strong commodity demand and expanding global market reach despite ongoing currency weakness and global uncertainty.
The outlook for European corporate earnings has improved slightly, with Q4 profits now expected to decline just 0.6% instead of the previously forecast 1.1% drop, and 57.1% of STOXX 600 companies reporting results above analyst expectations so far. While revenue is still projected to fall 2.4%, the improvement reflects companies adapting to tariff-driven uncertainty through cost cuts, price increases, supply chain adjustments and front-loading exports. Still, European firms are still on track for their weakest earnings performance in seven quarters, and their outlook remains weaker than U.S. companies, where S&P 500 earnings are expected to grow 13.6%, highlighting a widening gap in corporate momentum between the two regions.
Great Resignation no more. The labour market in the U.S. has shifted from the high-mobility era to what some are calling the “Big Stay”, with fewer workers quitting, fewer job openings, and a narrowing pay advantage for switching jobs. Quits have fallen nearly one-third since their 2022 peak, job openings have roughly halved, and the wage premium for job switchers over stayers has dropped from 8.4% to just 1.9%, signaling reduced incentives to move. While unemployment remains low at 4.3% and layoffs under control, hiring has slowed and labour market enthusiasm has weakened, with most job growth concentrated in sectors like healthcare. This low-hire, low-fire environment reflects stability but also reduced opportunity for upward movement and productivity gains, as fewer workers transition into higher-value roles.
Canadian energy stocks have reached a record high for the first time since 2008, driven by rising oil and natural gas prices, improved company fundamentals, and renewed investor interest. The S&P/TSX Energy Index is up 19% this year, outperforming the broader market, as geopolitical tensions and winter-driven demand pushed oil and gas prices higher. Energy companies have strengthened balance sheets, reduced debt, improved cost discipline, and increased free cash flow, making the sector more attractive after years of underperformance. Policy support, including potential new export pipelines to Asia, has further added to optimism. We are also seeing investor capital rotating into energy from tech and ESG-focused sectors, though the outlook remains sensitive to commodity prices, geopolitical risks, and policy developments.
So close. It was a heartbreaking finish for the Canadian women’s hockey team in the Olympic gold medal game vs. the U.S. In a low scoring affair, Canada opened in the first period and carried a 1–0 lead into the final minutes of regulation, only to see the U.S. tie it with just over two minutes remaining after pulling their goalie. The game moved to the dreaded format of 3 on 3 overtime, where it ended on a backhand from Megan Keller, reminiscent of Mitch Marner’s earlier OT winner against Czechia that was also scored on a backhand. It was a tough loss for Canada’s veteran group, with players such as Natalie Spooner, Jocelyne Larocque, and captain Marie-Philip Poulin potentially playing in their final Olympics. While the tournament had its ups and downs, the gold medal game itself was a hard-fought performance that showed the standard this team continues to set, and we are proud of the effort they brought to the biggest stage. But we’re not done yet, with the men’s team facing Finland in the semifinal at 10:40 am EST. Go Canada.
Diversion: Guilty conscience
