The holidays are so close you can practically taste the eggnog and hear the faint sound of your out-of-town aunt warming up to ask you intrusive personal questions.
But before we can slap on our out-of-office notices we all have to get through the most important U.S. Federal Reserve rate decision of our lives. And as a stocking stuffer, we’ve got one of the wobbliest AI plays reporting results. If either goes sideways it might as well be lumps of coal for us all. Forgive the exaggeration, I minored in hyperbole.
Here are five things to know this week:
It all comes down to this: Once again the Bank of Canada and the Fed will make their interest rate decisions on the same day. The Fed is widely expected to cut rates, but that wasn’t the case even a month ago. It wasn’t until New York Fed President John Williams said rates should move lower in mid-November that investors priced it in. Stocks promptly moved from the red to the green. Watch for any dissent. The last Fed meeting had two members dissenting: one calling for rates to stay on hold and another calling for a 50-basis-point cut. Those calls are reflections of people who might as well live in two different countries.
Dustin Reid, chief strategist at Mackenzie Investments, which oversees $245-billion in assets, is a contrarian on what happens next. “It’s an important meeting because it’s probably the last cut of the cycle,” he said on my podcast last week. He thinks a combination of robust economic growth and higher inflation will keep the Fed sidelined, even with pressure from the White House.
Meanwhile, Canada is expected to stand pat on rates. This was basically set in stone after the economy posted its third month in a row of exceptionally strong job growth last week. Here too, Mr. Reid was a contrarian. “I disagree with that view [that the BoC is done],” he said. “I think that the bank will end up cutting at least twice more before the end of the first half of 2026.” Mr. Reid said housing weakness, slow population growth, and underlying weakness in the labour market will bring the Bank of Canada off the sidelines.
Canary watch: Oracle Corp. ORCL-N has become a favourite punching bag for the ills of the AI trade. Saddled with more debt than its peers and exposed to money-losing OpenAI as its biggest customer, shares are down 34 per cent since it last reported quarterly results on Sept. 9. Oracle has benefitted from demand for its cloud infrastructure from large-scale AI companies. In September it actually showed record results and the stock shot up 36 per cent in a single day. The giveback has been over concerns about spending plans and the cost to insure against potential debt default has spiked. “We view the concerns around Oracle’s debt health (rising default risk implied CDS prices) to be overstated as more of a thematic AI hedging dynamic,” Citi analyst Tyler Radke wrote, referring to credit default swap prices. If Oracle can demonstrate its debt is manageable and its consumer base is broadening this could be a win for shareholders. Mr. Radke thinks bookings could be 20 per cent above consensus, coming in at US$100-billion. Broadcom Inc. AVGO-Q will also report this week and is trading near a record high. “We estimate AI sales to grow 147 per cent year-over-year to roughly US$49.3-billion in F26 driven by Google GOOGL-Q, Anthropic, Meta META-Q and OpenAI,” Citi analyst Christopher Danely wrote in a preview note to clients.
Dollars and sense: Dollarama DOL-T will report Thursday as the stock sits atop a record high. Against this backdrop, BMO analyst Étienne Ricard said the company can clear a high bar. Mr. Ricard expects Dollarama to raise its full-year forecast for sales in Canada. “Recent retailer earnings and industry surveys suggest a modest shift toward discretionary, value-based purchases,” Mr. Ricard wrote. “Against this backdrop, we believe DOL is well positioned as a budget-friendly destination for holiday spending.”
Limber up: Watch Lululemon Athletica Inc. LULU-Q when it reports Thursday after the bell as it plumbs around the lowest level since 2020. Working in Lululemon’s favour has been a slew of retail reports in recent weeks, which have been much stronger than anticipated including American Eagle Outfitters, Inc. AEO-N, Victoria’s Secret & Co. VSCO-N and Gap Inc. GAP-N Lululemon slashed its forecast the last time in reported results and that could leave room for the company to beat expectations, said Rick Patel, a Raymond James analyst. Mr. Patel believes sales could surprise, in part because of its partnership with American Express and demand in response to Lululemon’s discounting efforts. A low valuation with a sales beat could be enough for a near-term rally, Mr. Patel said. But he won’t upgrade the stock because sluggish sales reflect “deeper-rooted issues” around not having compelling clothes and intensifying competition which clouds the outlook for profitability next year.
Bulking up: Costco Wholesale Corp. COST-Q is set to report results Thursday after the close in a year where the stock has languished. Costco shares are down 2 per cent in 2025 and are underperforming the S&P 500 on an annual basis for the first time in nine years. Valuation is the chief complaint and while Costco is consistent, it doesn’t blow the lights out and recent same-store sales showed a deceleration in activity.
In the Money with Amber Kanwar is Canada’s top investing podcast. New episodes out Tuesday and Thursday. Subscribe now at www.inthemoneypod.com