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Hello everyone, welcome to Economic Impact. We are Wednesday, February 18th, 2026. Stéfane, great to see you again.

Nice to see you.

What a week and we're only Wednesday.

It's a big week for Canada.

I know it's an amazing week for Canada. So before we start, the last time, I think we're going to do it every call because I love this. So, all the little brackets were on the right side of the line. So, can you tell us what happened in the last not even 4 weeks?

So, we had positive returns when we saw each other last month.

Yeah.

The year is still young, obviously, but it's actually more positive than it was last month. And notice, Nancy, positive for everyone except maybe 1 market, the U.S., which we'll speak to, but notice that, you know, everything related to the reflation trade that we spoke to last month shows positive returns. Emerging markets, the S&P TSX, Europe. So, all in all, it's still this concept that earnings are likely to accelerate this year with higher commodity prices.

And as it was in 2025, it's still very concentrated the investments that are being made. So, you have a slide that's very interesting about AI.

Well, what happened last year and what people said, well, okay, AI, if you look at the hyper scalers, they're investing a formidable amount of money in this. And for 2026, the investment plan is more than $680 billion. That's only four companies Nancy. So that would account for roughly 2.1% of GDP with just four companies.

Wow.

This has never been seen before. If you want to make a historical comparison to other big projects in the U.S., if you go back to 1850-1859 when they built the railroad system in the U.S., they were spending 2.2% of GDP all these companies put together. If people want to compare it now, the AI cycle versus the Internet cycle, well the Internet cycle was consuming 0.8% of GDP annualized. So the 2.1%, these people, are they spending too much? Will this be a fuel, a Dutch disease where the AI sector is taking all the capital and with diminishing returns? So, that's what we're seeing this year a little bit more concerned. So, when I said the US dollar, the S&P 500 was down year to date, it's mostly because of IT, because look at everything related to what we spoke to last month. U.S. reindustrialization, rebuilding the electrical grid, all these sectors are up 16, 21, 12%. So, it's a big sector rotation happening within U.S. equities.

So that means markets are thinking that this reindustrialization will work. That's what we're seeing here.

Yeah. And, and as you said before, and as you've told me before, does that mean the AI cycle is dead? No, but everyone was overweight AI coming into 2026. So, it's a sector rotation given the question marks regarding the profitability that was promised, will they deliver this year?

Yeah. And last time we spoke, we spoke about gold. So, I think it's going to be a subject of this conversation again today.

Oh, we have to because, so anything related to the energy sector, materials, industrials doing good in U.S., Canada, energy is doing well. If you're going to deploy, we spoke about it, you want to deploy AI, it's energy intensive. So, a big increase here. Notice materials however, it's up 18.3% and it's having a formidable impact on both our economy and the perception of what's really happening in the economy is being, I think, biased by gold. Let me explain. A lot of people are saying well Canada is finally diversifying out of the U.S. We have found a formula to diversify. Look at the exports to U.S. down 10%, which has never been seen outside of recession and non-U.S. exports are up 20%.

So, who's our new friend?

Well people are asking me name countries that are our new friends and I can't find any, Nancy, because it's not a friend, a country friend per se. It's really one commodity that is our best friend right now. It's gold prices at roughly $5000 an ounce. If you go back to 1791 and you price gold in 2025 dollars, that's well above the historical average of $650.

So, there's a funny story about the $650. So, talks about men’s suits. So, you want to tell us about it? 

Well, I can't, you know, I can only speak for men’s suit, unfortunately, on that one. But historically, people have associated the-.

The ounce?

Yeah, the equilibrium value of gold, 1 ounce of gold should be equal to your ability to buy a decent suit if you're a man. So right now, as you can see at $5000, those men at home that have a lot of, you know, some ounces of gold.

A lot of gold can have a very nice suit.

Or they can go shopping for many suits.

Yeah and 650 you can still have a reasonable suit in Canadian dollars today, right?

So, the point is we're well above the historical average. Last time we were there was 20 years ago. You can remain above 650 for quite some time. The geopolitical complex or backdrop is supportive of gold prices, but it stretched. So, our view for the next 12 months or so, it's a target range for gold of four to five, 6000. So, it might be volatile, but we're not collapsing it because we know the central banks are buyers. So, there is still some support and U.S. dollar is still set to depreciate.

And so, without gold, what would we look like?

Well, it really shows that we don't have really good friends right now, new best friends, because the reality is our trade balance is a negative, a deficit of $30 billion right now for Canada. If you were to exclude gold or surplus on gold, which is driven by prices, our trade balance would be a deficit of $80 billion, two and a half times greater. See how important that is? Because that's supporting the currency, it's supporting the stock market and it's supporting our exports.

Yeah. So, gold takes over all the other categories now. It's never seen before?

Well, if you think this is interesting, well, at least the next one, which shows that the market capitalization of gold stocks surpasses energy for the first time ever in Canadian history. So, that speaks to the importance of gold because that's been a key driver of the S&P TSX. So, gold is still popular with investors going into 2026 because a lot of people were not overweight gold. So, there's some catch up there. You have to go back to neutral. So, it is supportive and as I said, the backdrop is supportive, but it's important to tell our clients that this is a stretched.

Rebalancing, diversification. Those are the principles, right?

It's a crowded trade. Doesn't mean that you don't remain crowded for a while, but be wary of how gold is impacting the economy and the stock market.

So, we have a couple of minutes left. Can we talk about the announcement from our Prime Minister, Mr. Carney?

Okay so we need to find new friends, right?

We do.

And one way. So in order to find new friends, we need to reindustrialize and we have spoken to that last month or in previous discussions. And the reality is that was the big news that came yesterday where the federal government is pledging to spend billions of dollars in order to find us new friends. How do we do this? By reindustrializing. And, it's a big deal, Nancy, because it's the first time that I can recall in many years that we're deploying in industrial strategy based on our defence spending with a procurement system that might favor our domestic corporations. And you know what? It's so big. And the money spent, 5% of GDP. We haven't seen this since the Korean War. It might entice people to come from overseas.

And invest.

And invest here in Canada with a transfer of intellectual property to actually build stuff in Canada to benefit, obviously.

Our economy.

And the manufacturing sector, right?

And therefore, if we are investing, all of this will create jobs. We'll create good jobs. How does it look right now?

We need jobs.

We need jobs.

Yeah, well, it depends where you live. But really the reality is Quebec and Ontario, who are mostly or the biggest manufacturing hub in the country, have seen disappointing job markets. So, full time jobs, they're barely up in the territory, they're down in Quebec, but total employment is down in Ontario. So, out West, if you want to look at the four large provinces, in order to simplify the chart, there's a regional divergent so you can see who's being hit with the uncertainty about the manufacturing sector. Hence the importance of this plan that was unveiled yesterday. Finally, we are willing to reindustrialize and that's how we make new friends.

Well, Stéfane, thank you for this great conversation. Looking forward to next month, there's going to be a lot of things happening, I'm sure. Thank you for all of us for attending this little conversation, and we'll see you again next month.

Hello everyone and welcome to Economic Impact. We are December 9th, 2025. First, I want to say a big thank you to my colleague Denis Girouard, who was the lead of this little video for more than two years. And I also want to thank him because he was, for more than 30 years, a strong pillar at National Bank. So, Denis, happy retirement and thank you for everything that you did. So, I'll take a minute to introduce myself. I am Nancy Paquet, Head of Wealth Management at National Bank, and I have the privilege of having this conversation with Stéfane Marion today. Stéfane is our Chief Economist as you know him. So, Stéfane, what can you tell us about 2025?

Well, I thought since you're here with me this morning, Nancy, that I would start, Wealth Management would start with the returns that we've seen across different asset classes so far. The year's not over Nancy.

Yeah, two weeks, but still, everything is positive.

Everything is positive, so everything is in the black, you'll be happy about that. And notice the performance of the Canadian stock market.

Wow.

Who would've guessed?

Who would've guessed in January when it was the first day of the American new presidency and we were so worried and not knowing really what was going to happen. This is amazing, but how can this happen?

Well, if you put some historical perspective on this 30%, it's, you know, we're looking and there's still possibility that we could chase, you know, beat the record that we saw in 2009, Nancy. But I think it's a reflection of resilience in equity markets. Yes, gold prices were up, but also banks did very well. But banks won't do well if the economy doesn't do well. And I think one of the most surprising factors, the stock market was surprising, but every stock market in the world finished a year in positive territory, but what was surprising is the performance of the economy where the unemployment rate, as of last Friday, the day that was published shows that the jobless rate in Canada is now lower in November than it was at the start of the year and we went through a very scary period here, over 7% and now back at 6.5%.

But hopefully this is the beginning of a trend and not just a statistic hiccup. So, do we know the quality of those jobs? Because that could have a major impact.

It's a good question. Maybe it was the people that just left the labour force. So, it's not a quality reading on the jobless rate. So let me reassure you, Nancy.

Oh, that's good.

More than 380,000 jobs so far in 2025, mostly full-time. That's great. Well-distributed private, public sector, mostly private this time around, which is good news and concentrated in industries that pay more than the average across industries. So, all in all, a good structure to support the economy.

Good. Looking forward to seeing the next graph next, in a month when we're going to do the next video because it would be amazing that it really is the beginning of a trend.

Yeah, well, be careful. It's super volatile. But I have to say the past three months have been surprising. So, even if we, finishing a year below 7% on the jobless rate was quite an accomplishment and with these types of full-time job creation, I think is supportive and brings us hope for 2026 that the economy shows resilience at the end of this year was good news.

So, we saw the markets doing well. We saw the unemployment rate going down and tomorrow, we're Wednesday, with the announcement of Bank of Canada. So, what do you think?

They can't lower rates. They're going to stay put. U.S. will drop rates, but not Canada. The economy is doing somewhat better, inflation’s about target, but nonetheless you can't justify reducing rates at this point in time. So, the Bank has done a good job. They were pre-emptive. They were concerned about the economy. Now they posit, Nancy, and we'll see what happens in the next few months. But for now, I think suffices to say that you remain on the sidelines.

Okay, so all of this should lead to our snowbirds being happier. Is the dollar improving so that they can go South and enjoy the sun?

Yes, snowbirds will be happy, but also people that try to have a forward view or longer-term view on Canada because I think the currency is less susceptible to a decline given the macro backdrop, but also what the federal government has deployed in recent weeks in terms of budgets. But also, you know the Memorandum of Understanding with the U.S. The Alberta sorry. So Canadian dollar has gained 3 cents. So yes, if you travel overseas or to the U.S., you have a somewhat stronger Canadian dollar and that's good news because that helps maintain their standards of living.

Absolutely. And with all this, I mean we can create our own jobs and our own companies, but to increase our productivity, we also need to have foreign dollars coming to Canada, and I don't think that's a good number yet, right?

No, and you're right, that's why I want to be prudent for 2026 to sustain the job growth that we've been speaking to into next year. I need to bring investment back to Canada. So, we had two good positive quarters, but then we're back into negative territory. And notice Nancy, you know, we haven't been able to attract investment in this country for the past decade. So, hopefully what the federal government has done with the agreement with Alberta, there's a perception now that the energy sector is no longer stranded. So, you can come to Canada, invest, build factories, and have access to energy. If you want to do data centres, you can use natural gas to supply your data centres. So, that is a possibility that you bring foreign direct investment. So, the policies that have been deployed are structuring, but I need to confirm them. You're absolutely right to maintain a strong bid on my labour markets in 2026. Can't do it without business investment. You're absolutely right. We need to see that in 2026.

Absolutely. And what about our neighbors from the South? How are they feeling?

I don't know if they're disappointed because of what's happening to Canada, but their consumer confidence in the doldrums. Maybe there's some jealousy here.

That's surprising.

Yeah. So, it reflects frustration because whether or not the politicians will admit to it or not, if you impose a tariff structure of roughly 15% on your imports, which is what the U.S. is doing right now, it's showing up on inflation. And the U.S. household sector doesn't have access to the generosity of the social safety net that we have in Canada, so every bit of inflation bites even more, right? So, yes, quite the frustration. Lowest consumer confidence since COVID. So, I'm sure the U.S. president is looking at this saying "Well, you know that's not sustainable. Maybe I need to reframe my tariff structure in 2026, it could give me some little bit of appeasement on the CPI.".

And there isn't a lot of time to be able to do that because midterm is November.

That's why you might say that in midterm election year, the White House will do everything in its power to bring consumer confidence back up. And I don't think it's with higher tariffs, it's with lower inflation and lower interest rates.

Okay, so what about mortgages in the States? Well, I'm getting a little lower interest rates with the Fed again tomorrow, Nancy. Will be below 4%, but the problem is the frustration comes from the fact that the 30-year bond yield is not coming down. So, if the government bond yield doesn't come down, then the 30-year mortgage rate's not coming down. So, unlike a homeowner in Canada, in the U.S. they're not feeling the impact of monetary easing because long term rates remain very sticky on the upside.

So they have inflation and they have their mortgages payments not going down, so that's a frustration.

That explains the lack or the low level, the low reading on consumer confidence.

Absolutely. And what about government spending? What's happening in Canada, U.S.?

It's a global phenomenon, so you have to be careful what you wish for in 2026. So we've had good growth this year, but it's been supported by massive government stimulus across the planet. So, unless I deploy productivity gains in 2026, at some point you'll have to pay the piper on that one. So, for financial markets, we've had low volatility because stronger than expected economic growth, but does that come back to bite us in 2026 is the big question. So, unless I deploy productivity gains in the next few quarters, you might want to reassess the valuations on your global financial markets. So, 2025 was a spectacular year on the back of government spending. 2026 I need to deliver on productivity gains to justify these high valuations.

Productivity meaning AI, agentic AI, review of processes, investment in plants so that they can do. 

You're so right.

So much more.

You're so right. So everybody, we're seeing the investment, now does it translate into productivity. You and I will have a lot of conversations next year on that topic.

Definitely. So Stéfane, looking forward to hearing you again in 2026 to see what it will bring to us. I want to thank you for taking the time to listen to this little time with Stéfane and I want to wish you a happy season. Take the time to rest. It's two weeks where you can spend time with family and friends. So, looking forward to seeing you again in January. Thank you, Stéfane.

Thank you.