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.

 

This week's interesting finds

A chart worth discussing

“Chase credit card data is showing consumer spending accelerating.”

- Jason Liu

Other charts worth pointing out

Chinese car exports to Europe

Battery EV prices – China vs. Europe

Business research & development spending by country

Year-over-year change in New York restaurant counts

Technology fund flows by year

Private client equity allocations

Days per year of broad 2%+ technology declines

AI-related high yield credit spreads

AI-related investment grade credit spreads

Credit default risk prices for AI-related issuers

U.S. project finance bond issuance

Project finance issuances by industry

High yield project finance bond ownership by investor type

Credit spread percentile rankings by region and credit quality since 2000

Credit spread percentile rankings by region and credit quality since 2010

Cross-asset class correlation

Asset class performance by year

Biotech start-ups turn to reverse mergers to fast-track listings

Twenty-three biotechs have announced they are pursuing reverse mergers this year, according to investment bank William Blair — up from four last year. That surge has come despite a revival in biotech IPOs, which have also risen to 23 this year, from 12 in 2025.

In these deals, a private biotech can go public by merging with a listed company, usually one that has suffered a significant setback such as the failure of a main drug candidate, enabling it to bypass the traditional IPO process.

More biotechs have turned to this type of deal in the past year thanks to a ready supply of listed merger candidates following a pandemic-era jump in biotech IPOs and a growing number of sophisticated investors willing to finance them.

Those investors have helped to boost the sums raised in such deals. In July private biotech Caldera Therapeutics secured $278mn from investors including Bain Capital Life Sciences, Atlas Venture and Janus Henderson to merge with Synlogic. A month later Obsidian Therapeutics raised $350mn from Atlas and Janus Henderson among others to merge with Galera.

Lawyers and biotech executives said some companies were choosing reverse mergers even as the IPO market picked up, attracted by their relative speed and greater certainty over financing. Unlike a listing, where investor demand and pricing can be unpredictable, reverse mergers allow biotechs to agree valuations and secure financing upfront.

The recovery in traditional biotech IPOs has also given promising companies a route to market following a years-long drought, however. Recent listings include Alamar Biosciences, whose shares have risen about 15 per cent since it went public in April.

One life sciences investor stressed that companies would continue to evaluate both reverse mergers and IPOs, cautioning that after a string of such deals, the number of attractive merger candidates — cash-rich companies with clean balance sheets and no ongoing litigation — was dwindling.

This week’s fun finds

The World’s Happiest Country Is Hosting a ‘Quietchella’ in a National Park—Where Nature Is the Headliner

Could the answer to happiness be the sounds of the mire? Finland, aka the happiest country in the world, suggests you give it a go.

This month, the Nordic country will host the inaugural Festival of Nature Listening in Valkmusa National Park, a 90-minute drive east of the capital, Helsinki. Hiljaa Fest, which translates to “quietly fest,” will begin on October 10 and, after its opening day, will continue throughout the fall as an unguided experience in the nearly seven-square-mile park, home to 40 different mire (wetland and bog) habitats and diverse wildlife.

According to the organizers, the lineup includes “13 unique nature stars of Valkmusa” from the plant and animal kingdoms, who will make appearances across four “stages.” “Every performer appears on their own terms, in their own habitat, and according to their own schedule,” the cheeky festival announcement reads. Guests can expect to see and hear local “artists” like black grouses, cranes, purple-bordered golds (a type of moth), peat moss, marsh Labrador tea (an evergreen shrub), and other native flora and fauna.