The energy trade has already delivered big gains—but David Szybunka says the cycle is far from over. The opportunity is simply changing. David Szybunka, Senior Portfolio Manager & Managing Director of the Energy Team at Canoe Financial, joins Amber Kanwar to explain why he believes energy has entered the “optimism” stage of a much longer cycle. After large-cap oil producers led the rally, Szybunka is becoming more selective, finding better value in natural gas, mid-cap producers and oilfield services.
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FROM AMBER’S DESK
We called one of those pest control companies that offers a lifetime guarantee. After looking at our house, they declined to offer us one. I’ve never been more grateful for my husband, an army of one in our battle against this rodent invasion.
Here are five things to know today
1.
Stocks in the green after falling yesterday
The usual suspects were at play: higher oil prices and higher bond yields conspired against equities yesterday. Today, oil prices are easing so the market is getting a bit of breathing room. There is not much to chew on today – some Fed speak and AI tech leaders meeting at the White House. Under the hood things are looking messy – especially for consumer facing stocks. Lennar, Casey’s General Store, General Mills, Decker’s Outdoor, Royal Caribbean Cruises are all down more than 30% from their recent peak. Pepsi, Expedia, UPS, Dollar General, American Express, and CVS are down 20% from their recent peak. All while the S&P 500 is 1.5% from a record high. Maybe this makes the case for index investing, but if you are a stock picker there is a lot that is being laid waste. Say it with me: corporate profits are growing. When earning season begins the S&P 500 is expected to see EPS growth of 35% compared to last year which is the best pace of growth since 2021. Even when you strip out tech, earnings are projected to grow 24%.
Having said all that, it is worth noting that IPOs are starting to stall. OpenAI already delayed their IPO to next year and this morning Oura (which makes the fitness tracker) said they would delay their IPO. This matters not just to the vibrancy of the IPO market, but also to the financials. Capital markets have been holding up their performance while other parts of their core business like lending struggle. If this starts to wane we could see bumps in the sector. Something a few of our guests have brought up (Gordon Reid and Ryan Bushell). Earnings season starts mid-October.
2.
LNG Canada approves expansion plans
The export terminal for liquefied natural gas, which is led by Shell and other investors, voted to double export capacity in order to reach Asian markets which are facing a severe supply crunch. This is significant for two reasons. First, it is a major project that is set to attract $23 billion in investment according to the Canadian government which has placed the expansion on its “major projects” approval fast track list. Prime Minister Mark Carney is expected to deliver the official announcement later today in Vancouver to underline the support.
Second, it brings Canadian producers one step closer to realizing global prices after being mired in a regional downturn for natural gas. “Global gas is $25 and it’s $1-3 in North America,” said David Szybunka on today’s episode, “And there’s a global gas crisis going on.” His view is that North American gas producers are the place to be for the next 12-18 months as they start to get favourable global pricing. He gives his favourite ways to play! Tune in!
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“Quit looking at the AECO economics. Look at: drill the well, put it on a ship…and send it off to another place that is actually experiencing higher prices.” — david szybunka, canoe financial |
TC Energy wasted no time capitalizing on the moment announcing plans to proceed with Phase 2 of its Coastal GasLink pipeline. LNG Canada will be managing the process with plans to start building in 2027 and could employ up to 2,100 people during construction. The reason for this structure is that the first phase of Coastal GasLink was a financial disaster for TC Energy with costs ballooning from the budgeted $6.6 billion to $14.5 billion. “We also believe CGL Phase 2 is likely to qualify for Canada’s new Mega Deduction, which could improve project economics through accelerated tax deductions on eligible capital projects,” wrote Aaron MacNeil of TD. He recently upgraded TC Energy following the sell-off as interest rates rose. “When we upgraded TC to BUY on September 14, we identified opportunity conversion as the key catalyst…(Coastal GasLink) adds a meaningful Canadian project-conversion capital project.”
3.
Canadian GDP cooled following strong Q2
The Canadian economy posted no growth from June to July and increased a modest 1.4% compared to last year. The advance reading for August shows just 0.2% which would leave the economy growing at around 2% for the year. “While that’s a deceleration compared to the strength seen in Q2, it would still be enough, if maintained, to gradually reduce slack within the economy,” wrote CIBC’s Andrew Grantham. However, he notes this data doesn’t include the recent escalation of tariffs between Canada and the US. So when it comes to guiding rate decisions, the upcoming employment report and CPI will be more informative. Right now the market is pricing in just under 50% chance of a rate hike in October.
4.
Anthropic IPO filing heavy on risks
Reuters got a sneak peek at the filing which hasn’t been made public yet. The details show the AI platform’s revenue has increased 12x to $4.6 billion in 2025. But it lost $8 billion and has spending plans of up to $518 billion. On top of that, there was a litany of risks highlighted that include “catastrophic or existential risks to humanity.” Between this and the SpaceX IPO, these prospectuses are starting to read like sci-fi novels rather than financial filings. If Anthropic goes ahead with its IPO it could be worth as much as $2 trillion when it debuts. Today US President Donald Trump will host the co-founder of Anthropic, Dario Amodei as well as Mark Zuckerberg to talk AI. It is a weird turning of the tables in which the industry is calling out for regulation but the government is against it preferring that they grow at all costs.
5.
AMD pops on deal to buy AI startup for $8.2 billion
The chipmaker is buying World Labs which is headed up by world renowned AI researcher Dr. Fei-Fei Li. “The acquisition will bring a world-class team of researchers and model experts to AMD, strengthening its ability to develop AI hardware, software and systems around the needs of emerging models and applications,” said AMD in a statement. This is the largest deal for AMD since buying Xilinx in 2020 and its second biggest deal ever. It’s an all-stock deal so the fact that shares are trading up signals investors like the transaction. World Labs is working on AI models that can run applications in the physical world: think robotics and factory equipment.
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