Your Portfolios in Brief
Affirm (NASDAQ: AFRM) is a major buy now, pay later (BNPL)player in the United States. Concretely, the platform plugs into checkout formerchants: instead of paying everything upfront (or carrying a revolvingcredit-card balance), the customer can spread the purchase over instalments,with the cost clearly disclosed from the start.
The company business model runs on a mix of levers:
- Merchant fees: the merchant pays for the BNPL option because it can improve conversion, average basket size, and approval rates at checkout.
- Interest income on certain plans (depending on the product, the merchant, and the risk profile).
- Risk management and funding: this is where everything gets decided. A high-performing BNPL platform is one that scales without losing control of credit quality and cost of capital.
Our on-the-ground read: Affirm isn’t just a payment feature.It’s an embedded credit platform for commerce, with an edge if it keepsexecuting on underwriting, partnerships, and profitability.
Highlights in 2025
• A volatile stock, but with momentum when the marketleans in
Affirm is one of those names that can move fast on headlines. Over the pastmonth, the shares posted strong performance (around +21.6%), which showsinvestor appetite when the “growth + discipline” story holds up.
• Improving Financial Performance: The Market Wants Profitabilityto Follow
The message the stock sent in 2025 is that growth alone isn’t enough anymore:the market wants proof that unit economics and the cost structure areimproving. Affirm delivered quarters with solid growth and better profitabilityversus the prior year, which helped support the stock’s re-rating.
• Adoption and repeat usage: the customer base becomes astrategic asset
A recurring point in discussions: a very large share of transactions comes fromrepeat customers. That matters because, in general, a repeat base improvespredictability and risk control (more mature cohorts, better-known behaviour,faster credit parameter tuning).
• Next Milestone: Market Expectations Are High
Consensus is looking for a strong quarter (revenue around $1.06B and earningsper share around $0.28). For the full year, expectations point to about $4.06Bin revenue and EPS around $0.99.
That sets the tone: investors are pricing in a robust growth path, and itraises the execution bar.
This Week: The “Credit-Card Rate Cap” Headline Stirredthe Market
The catalyst: Donald Trump floated the idea of a temporary10% cap on credit-card interest rates, for one year, potentially startingJanuary 20, 2026. The result was an immediate rotation: markets sold banks andcard issuers and looked toward alternatives like BNPL and personal loans.
Why the stock moved both ways (and quickly):
- Positive read (volume transfer scenario)
If a cap forces banks to reduce exposure to riskier profiles (credit limits cut, tighter criteria), some demand can migrate to alternative solutions. In that framework, Affirm becomes a potential beneficiary through market share gains. - Cautious read (political and regulatory execution is uncertain)
A nationwide cap on card rates isn’t just a soundbite: the legal and political lift is meaningful, and it would likely require a clear framework to be implemented. So the market quickly adjusted lots of noise, limited certainty near term. - The Real Point: Volatility Created an Execution Window
In the session, Affirm was bid early, then the move reversed. We saw a close around $76.39 with a drop of roughly -6.6% on the day. That kind of swing perfectly captures the profile: a name where market psychology can create attractive entry points … if the core thesis remains intact.
Why Did We Buy (and add to) Affirm?
Our decision isn’t driven by a headline. It’s driven byportfolio logic: build a position in a leader when the market gives us abetter entry point and the fundamentals remain consistent.
1) BNPL keeps becoming more mainstream
BNPL is no longer a niche trend. It’s becoming a standardpart of online payments, especially when consumers want budget control and toavoid the revolving-balance dynamic. For a leader like Affirm, that creates a multi-yeargrowth runway.
2) Affirm is positioned as a consolidator in the U.S.market
In BNPL, distribution is critical: being well placed atcheckout, on platforms and with major merchants, is a real competitiveadvantage. It reduces reliance on paid acquisition and improves volume quality.That’s a lever that supports our medium-to-long-term thesis.
3) Credit discipline remains the “number one KPI”
Our monitoring framework is straightforward: growth, yes—butnot at the cost of a credit blow-up. What we care about is Affirm’s ability to:
- keep underwriting parameters tight,
- adjust quickly as trends evolve,
- prove that higher volume doesn’t erode credit quality.
4) The market pays a premium: you have to execute theentry timing
Affirm often trades at a higher valuation than an “average”company because the market assigns it a stronger growth and optionalityprofile. The implication is clear: headline sensitivity is amplified.
In that context, adding on a fast pullback improves the risk-return setup(better average cost, more flexibility in position management).
Why This Is a Name to Watch In 2026
- Earnings and estimate revisions: the near-term driver
When expectations are high, every quarter becomes a credibility check. If results confirm the path (growth + margins + risk control), the stock can keep re-rating. If not, the downside can be sharp. - Credit Quality: Delinquency, Losses, Cohorts
This is the core dashboard. For a lender/platform, growth only matters if losses stay within the expected corridor. - Cost of Capital and Funding: Ability to Scale Cleanly
Even with strong demand, the capacity to absorb volume depends on funding and market conditions. In 2026, we’re watching discipline: grow, yes—but keep the model profitable and fundable. - Regulation: Lots of Noise, but Also Optionality
The “rate cap” file can keep moving the sector even without concrete changes in the short term. That adds volatility, but also upside scenarios if banks tighten access to credit for certain segments.
Conclusion
We bought and added to Affirm because we want exposure to aBNPL leader with a real platform, strong distribution, and a growth trajectorythat can extend. The rate-cap headline mainly served as a reminder: this sectoris highly sensitive to the news cycle, and the market can overreact.
This week, the pullback let us increase the position at amore attractive price, while staying highly disciplined on what we track:credit quality, funding, and earnings execution. This is exactly the kind ofname where active, structured management—aligned with the data—can create valuefor our clients.
Market Brief
Monday
Dow Jones: 49,590.20 (+0.17%)
S&P 500:6,977.27 (+0.16%)
Nasdaq: 23,733.90 (+0.26%)
S&P/TSX (Toronto): 32,874.70 (+0.80%)
Canadian Dollar
CAD/USD: 72.07 U.S. cents (up vs. 71.96 U.S. cents Friday)
The session was constructive, but very tightlyrisk-managed. The indexes finished higher, even though the tone was choppyearly in the day because of the debate around the independence of theFederal Reserve and the headlines targeting Jerome Powell. What matters forthe market read: the “headline risk” did not break momentum, but it clearly reroutedflows toward safe-haven assets. We saw it very clearly in precious metals:gold jumped and closed at a record level, which pushed materialsinto first place in Canada and allowed the TSX to post a new record close.
In parallel, investors started to “price in” a less favourablescenario for certain U.S. financials after the threat to cap credit cardinterest rates at 10% for one year. Even though this is still at theproposal stage, the market reacted right away by compressing multiples on themost exposed issuers. On the energy side, oil ended slightly higher, which alsocontributed to the resources bias in the Canadian market.
Stocks in Brief
- Synchrony Financial (SYF): −8.4%—sharp drop with the risk of a cap on card rates, meaning potential pressure on margins.
- Capital One (COF): −6.4%—same theme: fear of “pricing” compression and credit-related profits.
- American Express (AXP): −4.3%—contagion effect across the cards/financial ecosystem.
- Citigroup (C): −3%—banking sector under pressure in the rotation.
- Walmart (WMT): +3%—support via a flow catalyst (announced inclusion in the Nasdaq-100) and a more defensive/quality tone on the consumer side.
Sector Performance
- Canada (TSX): materials led (precious metals and base metals); energy also helped late in the session.
- United States: financials lagged (cards/banks), while pockets of consumers and technology supported the indexes.
Tuesday
Dow Jones: 49,191.99 (-0.80%)
S&P 500:6,963.74 (-0.19%)
Nasdaq: 23,709.87 (-0.10%)
S&P/TSX (Toronto): 32,870.36 (-0.01%)
Canadian Dollar
CAD/USD: 72.01¢ US (down vs. 72.07¢ US Monday)
The session was a day of readjustment after Monday’srecords. Inflation data initially provided a small tailwind: in December, theconsumer price index rose 0.3% month over month and 2.7% year over year, while“core” inflation was a bit softer, keeping alive the scenario of near-termstatus quo and rate cuts later this year. That said, momentum faded quicklybecause investors went back to managing risk around two very concrete files:bank results and the flurry of political announcements from the White House.
The focal point is that JPMorgan fell even after beatingexpectations. The market mostly retained the more nuanced read behind the largenumbers: some line items disappointed (including investment banking revenue)and the tone on the regulatory environment remained cautious, especially withthe idea of a one-year cap on credit card interest rates at 10%. Even if it isstill at the proposal stage, the market treated it as a direct risk to theprofitability of card issuers and, more broadly, to the supply of consumercredit. That explains why payments names and several financials were among thehardest hit.
Meanwhile, energy acted as a counterweight: oil jumped ontensions around Iran, which supported several oil names, particularly inCanada. Gold, for its part, caught its breath after Monday’s surge. In the end,bond yields moved very little: the day did not “change the game” on the ratepath, but it clearly shifted preferences toward quality and caution.
Stocks in Brief
• JPMorgan (JPM): -4.2%—down despite good results; the market mainlypunished weaker line items and a more cautious tone.
• Visa (V): -4.5%—pressure tied to the credit card rate-cap file.
• Mastercard (MA): -3.8%—same theme: fading confidence in thecredit-linked payments ecosystem.
• Goldman Sachs (GS): -1%—down via sector read through acrossfinancials.
• Moderna (MRNA): +16% to +17%—sharp rise after more optimistic commentson 2025 sales.
Sector Performance
• Canada (TSX): energy and base metals helped, but financials weighedand offset the advance.
• United States: financials and payments down; energy held up betterthanks to higher oil prices.
Wednesday
Dow Jones: 49,149.63 (-0.09%)
S&P 500:6,926.60 (-0.53%)
Nasdaq: 23,471.75 (-1.00%)
S&P/TSX (Toronto): 32,916.47 (+0.14%)
Canadian Dollar
CAD/USD: 72.05¢ US (up vs. 72.01¢ US Tuesday)
Wednesday’s session was an exercise in controlleddecompression after recent highs, with a clear message: the market remainsconstructive in the background, but it tightens risk governance as soon as“headline risk” and corporate results fail to feed the ideal scenario. TheNasdaq led the decline, reflecting a rotation out of duration and profit-takingin tech, while the Dow held up better thanks to a more “value” composition andsome timely support from resources.
The main catalyst was twofold. On one hand, the data weredecent, but not “comfortable” enough to restart a re-rating: November PPI camein softer than expected, but the read-through from the components kept thedebate alive around underlying inflation that remains sticky. On the otherhand, bank earnings season continued to act as a filter: even when banks beatexpectations, the market wants 2026 outlooks and revenue/margin trajectory thatsupports today’s valuation. Result: a cold and sometimes punitive reaction,notably on Wells Fargo, and a lack of enthusiasm for Bank of America andCitigroup despite numbers that topped consensus.
In parallel, the geopolitical premium played in thebackground. Oil was volatile: Iran-related fears supported prices early in thesession, then the tone cooled with signs of de-escalation. That volatilitynevertheless maintained a “resources” bias and helped energy outperform,particularly in Canada. Finally, the political backdrop remained an irritant:the discussion around Fed’s independence and the noise around tariffs arekeeping friction elevated, pushing investors to favour quality, liquidity, andmore defensive pockets.
Stocks in Brief
• Broadcom (AVGO): -4%—notable pressure on semis;rotation and profit taking across the AI chain.
• Nvidia (NVDA): -1% to -2%—China/H200 noise and the sector’ssensitivity to export and supply-chain issues.
• Micron (MU): -1% to -2%—same theme: weakness in semis in a moderated“risk-off” tape.
• Wells Fargo (WFC): -4%—revenue below expectations; the marketpenalized execution and growth drivers.
• Bank of America (BAC): down—results above consensus, but a moredemanding read on what’s next and on credit profitability.
• Citigroup (C): down—beats on some line items, but a lukewarm reactionin a sector where the market wants “forward.”
• Trip.com (TCOM): -15% to -17%—drop after the announcement of aregulatory investigation in China.
Sector performance
• Canada (TSX): energy and certain resource pocketssupported the index; the market held up better than U.S. tech.
• United States: tech and semiconductors lagged; energy was moreresilient; financials were volatile after earnings.
Thursday
Dow Jones: 49,442.44 (+0.60%)
S&P 500:6,944.47 (+0.26%)
Nasdaq: 23,530.02 (+0.25%)
S&P/TSX (Toronto): 33,028.92 (+0.34%)
Canadian Dollar
CAD/USD: 71.95 U.S. cents (down vs. 72.05 U.S. cents Wednesday)
(Washington) Markets finished higher on Thursday, in asession where falling oil prices took some pressure off the tape. Crude pulledback after more conciliatory comments from Donald Trump on Iran, whichinvestors read as a sign of de-escalation. In plain terms: when the risk ofsupply disruption fades, the geopolitical premium that had been building intoprices tends to come out fast.
That move immediately changed positioning. Lower oil easedconcerns about energy costs and inflation, which made it easier for investorsto rotate back toward growth- and rate-sensitive areas, especially tech. Inthat setup, Wall Street got a lift from semiconductors: TSMC deliveredstrong results and reignited enthusiasm around the artificial intelligencetheme, pulling several chip names higher with it. The Nasdaq managed to steadyand rebound after two choppier sessions.
Precious metals told the same story. With geopoliticalstress cooling off, the bid for safe havens softened. This wasn’t a regimechange—more of a tactical reallocation: less “protection” exposure and morefocus on sectors that benefit when the backdrop feels more stable.
Financials were also better supported as another round ofquarterly results came through. Investors rewarded banks that showed cleanexecution and a coherent message on what comes next, especially those withstronger leverage to capital markets activity and wealth management. Bottomline: the market stayed selective, but the tone improved—risk went back to theright places, with fundamentals back in the driver’s seat instead of pureheadline noise.
Stocks in Brief
• Taiwan Semi (TSM): +4.47%—strong results; renewedinterest in the AI and semiconductor theme.
• Nvidia (NVDA): +2.10%—sector read through; AI appetite returned withchips leading.
• AMD (AMD): +1.93% — same dynamic; catch-up move across semis.
• Broadcom (AVGO): +0.92%—better tone after recent volatility; semisstabilized.
• Morgan Stanley (MS): +5.81%—results beat expectations; the marketresponded positively.
• Goldman Sachs (GS): +4.63%—finished higher after robust quarterlyresults.
Sector Performance
• Canada (TSX): industrials supported theindex; energy was held back by the sharp oil drop; the rest of themarket held up well.
• United States: tech and semiconductors led; financialswere better bid; energy lagged on the crude pullback.
Friday
Dow Jones: +100 points (+0.20%)
S&P 500:+0.30%
Nasdaq: +0.50%
Canadian Dollar
CAD/USD: ~71.9 U.S. cents (fairly stable vs. recent levels)
The market is clearly trying to finish the week on astronger note. The engine is still tech, especially semiconductors: after aweek packed with headlines, investors are going back to what they can “model”more easily — earnings, visibility, and capex — rather than chasing politicalnoise.
The signal right now is the traction in the AI/hardwaretheme. After Thursday’s chip-driven session, we’re seeing the logicalfollow-through: the major names in the space are catching a bid again, and thatshows up with the Nasdaq firmer than the Dow. That said, under the surface, themarket remains tightly managed: breadth is soft (not that many stocks areadvancing), which looks more like a leader-driven rebound than a broad-basedreturn of risk appetite.
On the backdrop, “headline risk” is still in the mix andcontinues to dictate risk governance: Iran, Greenland, and the Fed file thatremains an irritant. Result: capital goes into structural winners, but one handstays on the brake. This is a market that wants to grind higher, but doesn’twant to get caught offside.
Stocks in Brief
• Nvidia (NVDA): +1% and up—renewed appetite forsemis; AI is taking back leadership.
• Tesla (TSLA): +1% and up—a “beta” name that moves higher as the tonestabilizes.
• IBM (IBM): +1.9% — supporting the Dow; quality/execution profile.
• Honeywell (HON): +1.6%—solid industrial tone; bias toward qualitynames.
Sector Performance
• United States: tech and semis leading; the marketis still narrow (a concentrated rally).
• Canada (TSX): tone is decent but still tied to resources; afterThursday sharp oil drop, the market is mainly watching whether crudestabilizes.
Conclusion
This week kept a constructive tone, but with risk tight. Thetape flipped almost daily between two drivers: on one side, fundamentals(earnings, outlooks, the AI/semis engine) that kept pulling buyers back intothe leaders; on the other, headline risk (Iran, Greenland, Washington noise,the Fed independence debate) that forced investors to tap the brakes andreprice uncertainty. Net result: indexes held up, but the upside was less“broad,” more concentrated, with fast rotations whenever the tape got shaky.
Tech did the heavy lifting, but profit-taking showed upquickly when comfort faded. The late-week pivot was clearly chips: as resultsand visibility (notably through TSMC) brought the focus back to demand andinvestment, the tone stabilized, especially for the Nasdaq. Financials,meanwhile, were the real filter: even with beats, reactions were often mutedbecause the market wants hard proof for 2026, revenue path, margins, and creditquality. In other words, beating expectations isn’t enough anymore; you need acredible forward setup.
On the macro side, oil was a major volatility lever. Themarket moved from a geopolitics-driven premium to a sharp drop as the Iraniantone softened, shifting the inflation/rates read day by day and influencingrelative sector performance, particularly in Canada, where energy carries moreindex weight.
