What does the financial community truly know about AI? Not enough says Malcolm White at BMO Global Asset Management who is both a fund manager and an AI programmer. He has been a TopGun Investing Mind in Canada four years in a row. Short sellers like Michael Burry don’t understand how the AI tech works and bears don’t understand how fast the technology is evolving, argues White. “What was a year of internet time is a month of AI time,” he says on the podcast. Don’t miss it!
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The house is being torn apart looking for Child 1’s “Benchball” jersey. This feels like that nightmare where you wake up and have to take an exam you forgot to study for. It is the first we are hearing about the jersey and also the first time we are hearing about the “sport”. Based on her hurried description I gather it is similar to dodgeball, but redesigned to survive a lawsuit.
Here are five things to know today:
Where are you Christmas: The TSX and S&P 500 will be looking to recover after three days in a row of losses. This morning oil is in focus after the US effectively blocked Venezuelan crude oil exports and prepares sanctions against Russia if they reject a peace deal. This comes after oil fell to the lowest level in four years. Crude is still below $60/barrel but rallying 2% higher which could support energy stocks. Recall, on the podcast with Hussein Allidina, the Head of Commodities at TD Asset Management, he says investors haven’t been paid to trade geopolitical events since the fall of Muammar Gaddafi in 2011. This morning Fed Governor Christopher Waller was speaking at an event and said he supports lower interest rates but is in no rush to cut. With less than 10 trading days to go for the S&P 500, the folks at Bespoke took a look at how that typically goes. According to data going back to 1952 (the start of the five day trading week in its current form FYI), there have only been five years when the S&P 500 declined more than 3% and the overall median gain is nearly 1% with gains 71% of the time. So go ahead, put up your feet for the rest of the year (famous last words??)
Plot twist: Jared Kushner’s Affinity Partners is backing out of support for Paramount’s bid for Warner Brothers. Paramount is mounting a hostile bid for Warner Brothers after the company agreed to a blockbuster deal with Netflix. Some had speculated that Kushner’s involvement and US President Donald Trump’s friendship with the Ellisons (who back Paramount) could sway regulators in favour of Paramount’s offer. However, Trump may have cooled on the Ellisons saying “If they are my friends, I’d hate to see my enemies.” This morning, Warner Brothers urged shareholders to reject Paramount’s hostile bid calling the financing uncertain and saying it offers inadequate value.
Cracks in the foundation: Homebuilder Lennar is falling 5% in the pre-market after profit missed expectations and its outlook was bleak. Not that we need another reminder that US housing remains weak, but Lennar is proof with the company resorting to discounting to sell homes. Furthermore, its forecast for orders, deliveries and margins for the upcoming quarter were all below expectations signaling we may not be at the bottom yet.
Ever blazing: Is the pot sector plotting a major comeback? US President Donald Trump lit a fire under the sector after saying he was “very strongly” weighing an executive order to reschedule the drug. Canadian and US cannabis producers have surged, although long term investors are still well underwater. The US ETF MSOS is up 7% in the pre-market again after a 20% rally. No one mentioned this sector on the podcast this year, but I know of at least two hedge funds in Canada that dabble in smaller stocks and special situations that are back playing these names. ATB’s Frederico Gomes notes that rescheduling would allow these businesses to start deducting normal business expenses which they are currently prohibited from doing. This would improve earnings and cost of capital, and support higher valuations according to Gomes. What about the huge rally we have seen so far? “Despite Friday’s strong gains, valuations retain substantial upside,” wrote Gomes in a note to clients on Monday. “Tier 1’s trade at 7.6x (estimated next 12 months) EV/EBITDA, well below the ~10x seen after the 2024 HHS recommendation. Furthermore, our Fall 2025 Survey indicates institutional investors view +10x multiples as fair and the MSOS ETF trading >$10 (vs. $5.80 today) upon rescheduling,” said Gomes.
Consumer crunch: General Mills is mildly higher after reporting better sales than expected. The owner of Cheerios and Betty Crocker has struggled over the past year because “consumers continuing to feel significant economic pressure” according to the CEO. As a result, they are purchasing more of their food on promotion. The company expects much of this to continue and is calling for flat sales and a drop in profitability. But with the stock run over, investors (like me) will look for signs of stabilization in the business. At 13x earnings and a 5% dividend yield, I’m willing to give it a shot!
Don’t miss our holiday special!
