{"id":435515,"date":"2026-08-06T00:13:20","date_gmt":"2026-08-05T17:13:20","guid":{"rendered":"https:\/\/www.swingfish.trade\/blog\/market-news\/scotiabanks-chart-book-quietly-makes-the-case-that-the-ai-trade-has-changed-435515\/"},"modified":"2026-08-06T00:13:20","modified_gmt":"2026-08-05T17:13:20","slug":"scotiabanks-chart-book-quietly-makes-the-case-that-the-ai-trade-has-changed","status":"publish","type":"post","link":"https:\/\/www.swingfish.trade\/blog\/market-news\/scotiabanks-chart-book-quietly-makes-the-case-that-the-ai-trade-has-changed-435515\/","title":{"rendered":"Scotiabank’s chart book quietly makes the case that the AI trade has changed"},"content":{"rendered":"
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Scotiabank’s Portfolio Strategy team released its August Monthly Chart Book and there are some notable things worth highlighting.<\/p>\n

Start with earnings, because they’re the reason the market has done so well. Q2 so far has been strong with a 13% aggregate beat with 85% of companies topping estimates and a median beat of 5.9%. Top-line growth is running 13% y\/y and EPS growth is up 38% \u2014 though the strategists flag that headline number is “boosted by Alphabet’s unrealized gains on its stakes in Anthropic and SpaceX.” <\/p>\n

The sharpest section is on the AI trade itself. Scotiabank notes consensus now calls for MAG-7 capex to top $1 trillion over the next 12 months, with free cash flow rolling over as spending surges. More important is the leverage point: with hidden off-balance-sheet obligations included, the AI basket’s net debt\/forward EBITDA has climbed to 2x. The team’s framing is the incisive part \u2014 U.S. tech thrived for 15 years on an asset-light, no-debt model, and “this model is morphing,” which “could lead to higher volatility (but not necessarily the end of the trade).”<\/p>\n

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They stay slightly overweight U.S. tech on beats and positive revisions \u2014 Tech leads S&P 500 forward EPS revisions at +18% over three months \u2014 but the debt is real and growing. At some point it will matter and there will need to be real returns on AI.<\/p>\n

On the dollar, they note that the DXY has fallen below 100 following U.S.\/Japan intervention to support the yen, and Scotiabank believes the downtrend extends. If so, “it could mark the end of rainy days for gold,” which has retreated from its $5,500 peak to a floor near $4,000 and now trades a full standard deviation below its 200-day average. That was a precient call as gold surged $165 today but it might only be the start as a\u00a0stretched pullback plus a peaking dollar is about as clean a setup as gold bulls get.<\/p>\n

On Canada, the TSX outperformed in July (+2.3% in USD terms) on a 6.9% Energy surge, and the earnings picture is genuinely strong: 2026 TSX EPS was revised up to C$2,104, implying 28.9% growth, with 11.4% more in 2027. The index trades at 15.7x forward \u2014 a 21% discount to the S&P 500 versus a 29% five-year median discount. TSX small caps are up 51.2% y\/y on a total return basis and still trade at 13.9x forward earnings against a 17.2x average. The chart pairing U.S. software stocks with Canadian names weighed down by AI disruption fears (CSU, SHOP, OTEX, TRI and friends) is speculative \u2014 even the authors admit “time will tell if the relationship holds” \u2014 but with IGV breaking higher and the Canadian basket lagging, it’s a relationship worth watching.<\/p>\n

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Finally, they highlight something I’ve been saying for years: stop watching consumer confidence. It’s been falling for years across all income groups while Redbook same-store sales accelerate despite tariffs and elevated gasoline prices. The K-shaped economy is real and unfortunate, but “the ‘haves’ continue to do the heavy lifting” and it’s not about to change. It matters if you’re investing in dollar stores or McDonald’s but not in most of the S&P 500. <\/p>\n

This article was written by Adam Button at investinglive.com.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"

Scotiabank’s Portfolio Strategy team released its August Monthly Chart Book and there are some notable things worth highlighting. Start with earnings, because they’re the reason the market has done so well. Q2…<\/p>\n","protected":false},"author":216,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[86],"tags":[],"class_list":["post-435515","post","type-post","status-publish","format-standard","hentry","category-market-news"],"_links":{"self":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/435515","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/users\/216"}],"replies":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/comments?post=435515"}],"version-history":[{"count":0,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/435515\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/media?parent=435515"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/categories?post=435515"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/tags?post=435515"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}