We start this edition of Market Factors with the red hot (compared to other real estate subindustries) senior living sector and follow with a bullish outlook for the Canadian dollar. The diversion focuses on my favourite podcast and there’s some quick thoughts at the end as usual.
Sectors
20 per cent total return expected for senior living companies
I can’t think of a REIT and real estate analyst that doesn’t believe that seniors housing is currently the best part of the sector for investment. One of these analysts, Scotiabank’s Himanshu Gupta, published a report Wednesday outlining how seniors REITs benefit from demographics, government subsidies and predictable revenues, making them a solid choice for investor portfolios.
Mr. Gupta’s report centered on long-term care (LTC) facilities rather than retirement homes. The former includes 24-7 support and significant public subsidies for nursing, nutrition and personal care. Retirement homes are resident-pay while LTC facilities are a co-pay arrangement between residents and government.
Demand is not an issue in the LTC sector. In Ontario, for example, there is currently a waiting list of 48,000 people. Even those who aren’t picky about where they find a bed are waiting a minimum of six months. Demand will only intensify as a greater share of the population reaches age 75 when they are likely to require support.
Scotiabank predicts that existing LTC operations will continue to generate predictable same-property net operating income roughly matching the inflation rate. Further upside in LTC revenues comes from the heavily subsidized construction of new facilities. Sienna Senior Living Inc. (SIA-T) just completed projects in North Bay and Brantford and will soon open another in Keswick. Extendicare Inc. (EXE-T) has six redevelopment plans underway.
Extendicare and Sienna Senior Living are the major players in LTC and Chartwell Retirement (CSH-UN-T), while more focused on retirement homes, is also a significant presence.
The sector offers an attractive risk-reward profile exhibiting both downside protection and growth. It has offered the most adjusted funds from operations (the real estate version of profits) growth of all real estate subsectors.
Mr. Gupta considers current valuations reasonable, specifically with respect to PE to growth ratios. The connection of net operating income with inflation means that unlike most REITs, senior living companies will not be hit hard by rising rates.
Mr. Gupta has “outperform” ratings on Chartwell and Sienna (he doesn’t cover Extendicare). He expects a highly attractive total returns of 20 per cent for both companies in 2026.
Currencies
Speculators like the loonie
BofA Securities global foreign exchange strategist Howard Du outlined a bullish argument for the loonie. He reports that Canadian dollar strength is “supported across all quant models.”
Call options on the loonie have seen strong demand after economic data releases breezed past forecasts. Equities have performed well, attracting more Canadian dollar demand, and copper prices have climbed, which attracts even more. Canadian miners receive U.S. dollars for copper and then exchange those funds into loonies.
The CADUSD rate is currently about $0.73 and economist forecasts indicate $0.74 on average for 2026. Mr. Du expects bigger gains for the domestic currency against the Japanese yen.
Andor (Diego Luna) in Lucasfilm's ANDOR Season 2Des Willie/Disney+
Diversions
Top TV of 2025
My favorite podcast hosts picked their favourite tv shows of 2025 and despite the fact I listen to it every week there were still some surprises.
I like The Watch with Chris Ryan and Andy Greenwald because Mr. Ryan is hilarious and Mr. Greenwald is both a terrific foil and, as a producer, has insider knowledge of the entertainment business.
The top two shows picked were predictable in Andor and Adolescence and it wasn’t a surprise that The Task ranks highly, not least because both hosts grew up in Philadelphia, which is the setting for the show. Critics’ favourite Pluribus was there despite being a recent show.
There were also surprises. The BBC’s Blue Lights, about police in present day Belfast, was not expected. The Beast in Me and The Chair Company I know only peripherally but were also on the list.
Platonic, Mr. Greenwald’s “comfort food” watch, was selected as was White Lotus (a show I refuse to watch because all the characters in the first few episodes of season one I saw seemed deeply horrible) and the scandal-ridden English Teacher. Mr. Ryan was adamant about the quality of Death by Lightning and really excited about Shoresy.
The foreign language shows Families Like Ours and Eastern Gate sound really interesting.
Other shows discussed as top picks were Dept Q, The Studio, the Lowdown with Ethan Hawke and The Pitt.
The essentials
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Globe Investor highlights
TD’s chief economist thinks the Bank of Canada will stay on hold for two years
Ted Dixon has some possible stock buys for the tax-loss selling season, using insider activity as a key indicator. And Brian Donovan of StockCalc presents an even lengthier list of beaten-down TSX stocks that could now be end-of-year buys
Mike Dolan points out that the investment herd got it mostly right a year ago about 2025
A number of big-name analysts are expecting gold to glitter again in 2026
David Berman lists five surprises for investors in 2025
Quick hits
The word recession is received with horror but I think that’s too simplistic. Recessions are bad, don’t get me wrong, but I’d rather have two consecutive quarters of 0.5 per cent GDP contractions – a typical recession - than a quarter with a 3.0 per cent contraction followed by a 0.25 per cent expansion, which would not be considered a recession.
The line that divides strategists on both sides of the border is whether market leadership will broaden or if markets will remain narrowly led in AI-related tech. Most strategists believe stronger growth will motivate more leaders but enough of them are on the other side to make it a legit point of view. I think I lean with the minority but it changes by the day.
i rarely write about technicals in isolation but the U.S. index charts are starting to look sick. I posted the Nasdaq 100 chart on the new markets blog here
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