This week's interesting finds

A chart worth discussing

“With AI-related debt driving new issuance of US$634B YTD, public credit investors are demanding a steep and widening premium for AI risk. AI spreads are now roughly double those of comparable ex-AI credit in both investment grade (IG) and high yield (HY).”

- Steven Lo

Other charts worth pointing out

Global air conditioner manufacturing by country

Short-term changes in Nasdaq volatility

Factor 30-day trailing return percentiles

MSCI US Momentum Index vs. Russell 1000 Equal Weight Index

S&P 500 Index – Equal-weighted and market-cap-weighted momentum performance

Monthly returns – Momentum (cap-weighted)

Small-cap performance - Profitable vs. Unprofitable

B and CCC high-yield corporate debt maturities

U.S. office market dynamics

Commercial real estate loan maturities and delinquencies

Infrastructure funding and investment needs

U.S. power generation by source

Data center capacity and energy use

Global shipping volumes and trade connectivity

Growth investing or gambling?

The financial markets play a critical role in the global economy because they act as the main conduit for capital formation. Companies issue debt and equity and invest the proceeds in plant, equipment and jobs. Investors receive the benefit of that capital formation as their equity shares appreciate, their dividends compound and interest payments are collected on the debt.

Despite their claims to the contrary, prediction markets act as mere gambling sites. It would be a stretch to say they somehow stimulate the economy and expand economic resources.

Yet, a recent study by Northwestern Mutual Life found that 40 per cent of Americans were investing or considering participating in the prediction and cryptocurrency markets. That gambling mentality now seems firmly embedded in the equity market, and such extreme risk-taking is a regular feature of financial bubbles.

Our research has shown that financial bubbles have five common characteristics: 1) available liquidity, 2) increased use of leverage, 3) increased turnover, 4) democratisation of the market and 5) record new issues.

The current AI mania certainly demonstrates all five characteristics. The Federal Reserve’s hesitancy to raise interest rates has kept financial conditions remarkably easy. Financial conditions have begun to somewhat tighten as stock and bond volatility has increased, but conditions remain loose by historical standards. Liquidity remains abundant.

Rampant use of leverage in US markets now seems the norm. So-called margin debt to buy shares is accelerating relative to credit card and mortgage debt, and options trading volume is at record levels. Trading volumes have skyrocketed. On the Nasdaq, they have never been higher than during the recent bull run.

Many observers have commented that individual investors are playing a larger role in the markets and the percentage of equities of household net worth is indeed at an all-time high. But BofA Securities shows that individual investors’ equity exposure is concentrated in risky, more volatile stocks. Given the rising leverage to build these positions, this sounds more like long-shot gambling than prudent savings for the future.

Record equity IPO issues and enormous bond issuance suggest the AI boom is sucking capital away from the remainder of the global economy. Companies used to gauge the success of a bond offering by the interest rate spread over government bonds that they’d have to pay. Today, though, technology-related bond offerings are deemed successful by the size of the issue with little regard for the accompanying interest rate.

Such a speculative environment seems to be fostering the extinction of true fundamental growth investors. Exciting stories and momentum have replaced sober fundamental assessments.
We screened the global equity market for “super growth” companies, ie, those companies with projected three- to five-year earnings growth of 25 per cent or more. There are presently more than 230 such companies of varying market capitalisations spanning many industries, and nearly 75 per cent are non-US.

In addition, non-US growth stocks currently sell at nearly a 30 per cent discount to US growth stocks. The MSCI All Country World index ex US growth stocks currently has a trailing PE ratio of about 20 times versus 29 times for the MSCI US Growth index.

One might expect fundamental growth investors to overweight non-US stocks given those growth and valuation characteristics, but that does not appear to be the case. According to Bloomberg, the 10 largest US-based actively managed global growth mutual funds currently have an average non-US equity allocation of 28 per cent. That is well under the 35 per cent share that non-US stocks have of the market capitalisation of both the global growth and overall global equity universes. Our analysis of data from the Federal Reserve and from the Investment Company Institute suggests individual investors’ portfolios are also similarly underweight to non-US stocks, with allocations between 15-25 per cent. 

Some might infer that I am bearish given my concerns about a market bubble. However, I view the risky momentum approach to equity investing and the overlooking of longer-term fundamental growth opportunities differently. This might present a once-in-a-career investment opportunity. That doesn’t sound at all bearish to me.

This week’s fun finds

A desert stirs to life: Chile's Atacama erupts in its biggest floral display in decades

This winter, heavy rains brought by the El Niño super cycle caused flash floods in the Atacama Desert, with some areas receiving the heaviest rainfall since records began in the 1950s.

Floodwaters in July and August destroyed or damaged dozens of homes, forcing hundreds of people to evacuate.

But the floral bloom that followed has been the largest and most colorful in 30 years — and perhaps ever.

This week's interesting finds

A few charts worth discussing

“Spending intentions vs. reality.”

- Geoff MacDonald

“The dispersion continues...”

- Derek Skomorowski

Other charts worth pointing out

Global oil consumption by country

Market breadth in emerging markets

S&P 500 Index low volatility stocks vs. Nasdaq 100 Index – monthly returns

S&P 500 Index low volatility stocks vs. Nasdaq 100 Index – four-month correlation

MSCI World Index performance by investment style

Nasdaq 100 Index – market capitalization changes

AI-related companies – credit risk comparison

U.S. capital spending cycles

Semiconductor trade activity – U.S. vs. Taiwan

Taiwan Semiconductor Manufacturing Co. (TSMC) – revenue by customer

Historical technology adoption and cost reduction

Blackstone and Leading Canadian Institutional Investors Announce $3.1B Investment in Mitsubishi Corporation’s Interest in LNG Canada

NEW YORK – November 2, 2026 – Blackstone today announced that funds managed by Blackstone Credit & Insurance, in partnership with leading Canadian institutional investors, have agreed to invest $3.1 billion to acquire a 49.9% non-controlling interest in a Mitsubishi Corporation ("MC") subsidiary that holds MC’s interest in the LNG Canada liquefaction business.

The Blackstone-led investor group includes Canada Pension Plan Investment Board (CPP Investments), through wholly owned subsidiaries of CPPIB Credit Investments Inc., Ontario Municipal Employees Retirement System (OMERS), the Investment Management Corporation of Ontario (IMCO) and The Public Sector Pension Investment Board (PSP Investments).

LNG Canada is Canada’s first and only large-scale liquefied natural gas (LNG) export terminal. Once complete, its Phase 2 expansion will double the facility’s production capacity to 28 million tonnes per annum, making it one of the largest LNG facilities in the world.

“We are proud to join Mitsubishi Corporation, a global leader with more than 50 years of experience across the LNG value chain, as a financial partner to support one of Canada’s most significant energy projects. This project will help meet rising energy demands across global markets,” said Rick Campbell, Senior Managing Director, Blackstone Credit & Insurance.

“This announcement builds on our deep conviction in Canada, our partnership with the country’s leading institutional investors and our ability to provide large corporates with flexible solutions to unlock value from their most critical assets,” added Zachary Rubenstein, Managing Director, Blackstone Credit & Insurance.

“LNG Canada is a high-quality, globally strategic asset with strong long-term fundamentals and attractive return potential for the CPP Fund,” said Geoff Souter, Managing Director, Head of Real Assets Credit, CPP Investments. “We see this as a compelling opportunity to invest at scale here in Canada alongside Mitsubishi Corporation, Blackstone and our Canadian peers.”

MC, one of Japan's largest LNG suppliers, will remain the controlling partner and retain its full share of LNG offtake.

Blackstone’s Infrastructure and Asset Based Credit platform manages $140 billion and has over 100 investment professionals, among the largest in the asset-backed marketplace.

Over the past two years, Blackstone has announced a number of large-scale corporate solutions investments in Canada and with companies building critical energy infrastructure globally, including a CDN$7 billion investment in Rogers, a CDN$2.5 billion investment in Aeroplan, a $16 billion partnership with Kuwait Oil Company, a $7 billion investment in Sempra Infrastructure Partners’ Port Arthur LNG Phase 2, a $5.34 billion investment in a joint venture with Williams, a $3.5 billion investment in a joint venture with EQT, among others.

This week’s fun finds

Anthony, from the Investment Team, hosted a great moai featuring a variety of fresh Italian sandwiches, giving everyone a chance to connect and unwind together. It was a nice chance to connect and take a mid-day break together. Thanks, Anthony!

British adventurer Karl Bushby completes 28-year journey

In November 1998, the former paratrooper, then aged 29, set off from Punta Arenas, Chile, to complete an unbroken path back home, without breaking two self-imposed rules: not to return to the UK until the end of the journey, and not to use transport to advance.

Earlier, crowds gathered in Hull's city centre to welcome Bushby, before he set off to complete the final few miles home to his mother Angela Bushby. 

Reaching the front door, he said: “It’s good to be home. It feels surreal." 

Bushby's journey took him to four continents, with key moments including navigating through the dense jungles of the Darién Gap, crossing the frozen Bering Strait and, more recently, swimming the English Channel.

During a press conference that followed the reunion with his mother, he confirmed: "I'm hanging my boots up."

This week's interesting finds

Pieces of wisdom

In this episode of EdgeWise, Tye Bousada shares some of the investment lessons he's learned over the years that he believes could benefit advisors and end investors.

A chart worth discussing

“Recovery rates for US$ first lien loans and senior unsecured bonds are both at historically low levels.”

- Tracey Chen

Other charts worth pointing out

Toronto Stock Exchange IPO Activity

Candy prices vs. consumer inflation

Corporate discussion of supply chains, inflation and material costs

Sources of household income by age

Shareholder proposals – Japan

Corporate profits – Japan

Medium-sized corporate profits – Japan

Earnings growth – Europe vs. U.S. 

U.S. household assets - equities vs. real estate

Sector weights – U.S. equities

Market concentration by region

Technology drawdowns and asset class performance

Canada could increase exports to the EU by nearly $60B, report finds

As Canada looks to develop closer economic ties with the European Union (EU), a new report suggests there is billions of dollars’ worth of untapped demand for Canadian goods and services in Europe.

The report, published by TD Economics on Wednesday prior to the Canada-EU summit taking place in Montreal on Thursday and Friday, said current Canadian access to European markets is limited due to regulatory hurdles, geography and other factors.

They said this week’s summit is an opportunity to “build momentum and advance cooperation in priority sectors,” as Canada looks to diversify its trading partnerships amid an ongoing trade war with the U.S.

“European demand increasingly overlaps with Canadian capabilities and the two sides’ strategic interest in diversifying economic ties,” the report said.

“The upside for Canadian exports is meaningful. Product-level analysis suggests demand for nearly $60 billion in additional goods exports could exist, under certain conditions, including roughly $50 billion in energy.”

The report listed the defence, energy, critical minerals, digital markets, and financial and other professional services sectors as those with the “largest long-term opportunities” in an expanded Canada-EU trade partnership.

“The biggest gains will need to be unlocked through expanded infrastructure and deeper cooperation to expand investment, improve market access, and build new supply chains in critical areas,” it said.

Trade currently limited 

The EU accounts for around five per cent of Canada’s total international goods exports, the report noted, roughly in line with Canadian exports to the U.K. and China. Last year, it amounted to $43 billion worth of merchandise, which was just one per cent of the EU’s total imports.

“Canada’s main exports to the EU include crude oil, aircraft, aluminum, uranium, iron, canola, nickel and diamonds,” the report said.

“Even with this hefty product mix, Canada typically runs a goods trade deficit with the EU. In 2025, it amounted to $50 billion, with Canada importing high-value manufactured products like pharmaceutical products, automobiles and medical instruments.”

Trade, the report argues, is the “most obvious place” for Canada and the EU to deepen their economic partnership, and the report authors said there are two main ways to think about the opportunity.

“The first is to look for products Canada already exports competitively but sells only in small amounts to Europe,” they said.

“The second is to focus on strategic sectors – such as energy and critical minerals – where governments on both sides want to build new supply chains and deepen economic ties, even if trade is limited today.”

Breaking down economic and trade barriers for goods and services is something both Prime Minister Mark Carney and European Commission President Ursula von der Leyen have advocated for as Canada and the EU discuss what a closer relationship will ultimately look like.

This week’s fun finds

23 dazzling panoramic images from the 2026 Epson International Pano Awards

The Epson International Pano Awards celebrate the huge beauty of panoramic with stunning images from Chile to Iceland and New Zealand to New York City. Landscape and aerial Photographer Daniel Viñé Garcia of Spain took top honors as the Open Photographer of the Year for a beautiful photo at the Parinacota Volcano in Chile.

This year’s competition drew 4,084 entries from photographers in 93 countries.

This week's interesting finds

Third quarter commentaries are now live!

This quarter, Jeff Hyrich discusses where we believe we're finding opportunities in the markets today while Derek Skomorowski explains why he believes a piñata is the perfect metaphor for private credit.

A few charts worth discussing

“Morgan Stanley’s tech momentum index has already seen more daily moves exceeding 5% in either direction in 2026 than in 2000 and 2001 combined. The split between big up days and big down days is also intriguing. I wonder how many people would guess that declines of more than 5% accounted for 41% of those outsized moves in 2000 (15 of 37 days), compared with 57% so far in 2026 (37 of 65 days).”

- Tye Bousada

“Private investors now own about 70% of U.S. federal debt, including hedge funds holding nearly a tenth of the Treasury market, raising concerns about how quickly yields could shift if better opportunities emerge elsewhere.”

- Steven Lo

Other charts worth pointing out

U.S. TV-viewing time by distributor

Monthly household childcare costs by amount

Retail chain locations across housing markets

Relative home values vs. proximity to retail chain locations

Monthly corporate AI token spending

10-year bond yields – U.S. vs. China

Relative returns by region – MSCI Growth vs. Value Indexes

Relative returns by region – Small vs. large caps 

Relative returns by region – MSCI Cyclicals vs. Defensives

Relative returns by region – Momentum Indexes vs. markets

Forward P/E ratios – small vs. large caps by region

Capex growth by investment cycle

Who’s paying for the AI build-out? Probably you 

Stijn Van Nieuwerburgh of Brookings estimates the AI infrastructure boom will cost the equivalent of 3.6 per cent of US GDP a year over the eight-year period to the end of 2032 — equalling the annual spending on the railroad boom of the late 19th century, plus the interstate highway projects of the mid-20th century, plus about two-thirds of the electrification spending of the early 20th century. Total bill: $10.3tn, an estimate including only tangible expenditures, not intangibles such as software. 

Who pays? Substantially all of the profits of some of the world’s most profitable companies — the so-called hyperscalers — have been staked. Add to this the new debt these mega-companies are taking on directly or guaranteeing, supplemented by more speculative debt and equity financing for smaller companies. Almost every big pool of capital, from every corner of the developed world, has been tapped. In short, if you have invested savings, you are financing the AI build-out. 

The details are not easy to nail down, but hyperscalers’ direct investments are the most transparent. Alphabet, Amazon, Microsoft, Meta, Oracle and SpaceX are expected to generate $760bn in cash flow this year. All of this and more will be invested, meaning “free cash flow” will be negative, a situation Wall Street expects to persist for several years, even as profits at the companies are projected to grow at a breakneck 30 per cent a year. 

Equity investors can console themselves with the idea that a big chunk of the hyperscalers’ investment converts into profits at semiconductor companies. But remember that these companies are investing heavily, too: capital expenditures at the 30 largest are set to pass $200bn this year, double the level of three years ago, and to grow from there.

There is another layer of financing flowing from the hyperscalers and chipmakers: equity investments in AI labs and other AI start-ups. Nvidia, for example, carries $94bn in private and public equity investments on its balance sheet, including stakes in OpenAI, Anthropic and CoreWeave. In a gold rush, it is often said, the real profits are made selling picks and shovels. In the AI gold rush, the shovel companies are investing part of their profits to buy mines. 

The six hyperscalers and the big global chipmakers together are worth $31tn, or a staggering 20 per cent of the world’s stock market capitalisation. American families hold a particularly big portion of this equity risk: stocks account for almost a third of household assets, not including the equities backing pension entitlements. 

Turning to debt. So far this year, $466bn in AI debt has been issued, according to Morgan Stanley. This figure may not be comprehensive, given the rainbow of asset-backed securities, convertible bonds and preferred shares that have come to market. Despite the intrinsically speculative nature of investment in a new technology, the debt supporting data centres is mostly rated investment grade — either because it carries guarantees from the highly rated hyperscalers, or is secured against the GPU chips. Is it a bit worrisome that a group of companies that are devoting all of their profits to a set of projects is also guaranteeing a lot of the debt financing of those same projects? And that much of the rest of the debt is secured against physical assets that will become less valuable if demand for AI services disappoints? 

It is. But there is no way for AI infrastructure to be built without the investment-grade bond market. Over $2tn of US IG bonds were issued over the past year. Whatever needs to be done to secure investment-grade ratings will be done. This is the same reason why the hyperscalers are issuing bonds in the UK, Canada, Switzerland and Australia.

The significance of the investment-grade ratings, from the point of view of savers, is that they allow AI debt a bigger role backing pensions, annuities and life insurance policies. If you own any of these things, you are increasingly invested in AI infrastructure.

This week’s fun finds

A little comfort goes a long way. Shakira from the Compliance Team, served up a lunch that was tasty, filling and tough to resist.

Winner, Winner: The Chicken McNugget Story

In March 1980, McDonald's put a new item on the menu at 15 restaurants in Knoxville. Within weeks, Chicken McNuggets made up 20% of sales at those stores, and within 100 days its supplier had built another plant to keep up with demand. The success looked instant, but refining the process had taken years, and the full story, from chicken to Chicken McNugget, spans three decades.