North American Equities: September Recap - AI, Policy Shifts, and Market Implications

Transcript

Good day, it is October 6, 2025. Peter Hofstra here with an update on North American Equities, or would you rather an update on the Toronto Blue Jays? How about them Blue Jays? Anyway, exciting stuff. Interesting month, September, but probably more incremental. We didn't get the big downdraft that you can often get in September, as we alluded to prior, that it tends to be the most negative month, with October being the most volatile, so we’ll see whether we get big moves up or big moves down, or whether we just continue to grind through. It seems it doesn't matter what happens, the market just grinds higher. [PH] Now, it’s just one of the years so far that Canada is outperforming the U.S. I guess that's the gold rush. But to go through September, the event at the beginning, which actually seems so long ago in the market we’re in, but there was a ruling in favor of Alphabet, or Google, that allows them to keep Chrome as part of the overall business. It was considered a very positive ruling for the firm, and I think then that was reflected more broadly in the tech market, that people assume that the regulatory framework is going to be much more positive toward the mega-caps, the big techs, that they can continue to do their thing, and I think probably the big defense is there is a massive shift going on in this thing called Artificial Intelligence. Alphabet or Google has never been more under threat in terms of their core Search business, but using their Gemini platform to really try to push back, but I think that was sort of positive for the tech world. AI spending continues, and we’ll talk a bit about that maybe, because there’s certainly risk that there’s circular financing. You know, there is risks in there, certainly not cavalier about these things. Again, the multiples aren’t crazy, so is this a red-light alarm, get out? Nah, we would say no. Probably want some yellow lights here and there, Nvidia putting 100 billion into OpenAI. They were given the opportunity to invest, and they’re a big believer in Sam Altman and OpenAI, so they took the opportunity, but it has no strings attached, but then today, there was an odd deal between AMD and OpenAI, so OpenAI seems to really be positioned as a cornerstone of all that needs to build out, and they’re not making money. I mean this felt so much better when it was the Metas and the Amazons and the Googles and the Microsofts, using their free cash flow to build this out. Now, when we’re depending on capital markets and private markets, if that's where OpenAI continues to raise money, maybe that does introduce some risk, so it will be critical to see their user growth, their revenue growth, so a few things, yes, definitely put some yellow lights on those, and we’ll keep a close eye on that as we charge ahead. Otherwise, we’ve got rate cuts in Canada and the U.S., I think it’s pretty much as expected, some certainly softening employment picture in the U.S., so we’ll see whether we see some continued cuts. Cuts tend to be good for markets, but then it’s sort of a trade-off. How bad is the economy getting? How late is the Fed in their cutting cycle? Are they too late, and damage is done, or are we going to have a Santa Claus rally because consumer spending can hold up? So those are things that often impact October, and we’ll see how those roll through. But we don't have a U.S. government right now, so we’re not going to get any statistics on it anyhow, anyway, so we’ll see how that progresses, but yes, the U.S. government did shut down. The market seems to have shrugged it off, I guess they assume these things get typically resolved fairly quickly, but we do have a unique administration, so we’ll see how that plays through. So certainly, a couple of things to watch through October, and I would submit, if you have some gold and you have some tech, never a bad time to sort of rebalance around those. The undercurrents that are supporting those two markets remain in place, but again, it doesn't hurt to sort of put things back on track if you’ve had some strong outperformance in parts of the portfolio. I hope those are maybe some useful insights, maybe an incremental month more than anything, but be well, and we will check in with you in early November.