Today
Equity markets continue to show resilience despite persistent inflation and geopolitical uncertainty. Futures are pointing higher this morning, with investors continuing to move into technology, AI infrastructure, and semiconductors. The Dow is set to break above 50,000 today while the S&P 500 and Nasdaq continue to reach new highs, suggesting that corporate profit expectations, especially around AI, are currently outweighing macroeconomic risks. However, this narrow leadership also heightens concentration risk, making the broader market more vulnerable if AI-related growth expectations or capex returns begin to disappoint. This comes as
April retail sales data suggests U.S. consumers remain resilient but may be beginning to feel the financial squeeze from rising energy costs. While overall spending continues to grow, the moderation indicates that elevated gasoline prices are likely diverting household budgets away from discretionary purchases, potentially marking the early stages of broader consumer strain. This dynamic is particularly important because consumer spending has been a core pillar of economic resilience, with any sustained erosion risking weakening growth even if employment remains stable.
The Trump-Xi summit, which started yesterday, could be one of the most consequential geopolitical meetings in years, with implications extending far beyond just trade. While this is a chance for significant economic and trade cooperation to advance, Taiwan remains a pain point for U.S.-China relations. Both powers appear ready to stabilize tariffs, energy flows, and business ties, however, core security disputes around Taiwan remain unresolved and could destabilize diplomatic gains. Markets appear hopefully for now, as successful progress on trade normalization, energy cooperation, and supply chain de-escalation could reduce several major macro risks, including tariff uncertainty and geopolitical commodity shocks.
A lot to digest. Dip buyers stepped back into U.S. equities yesterday despite hotter-than-expected inflation data, pushing the S&P 500 and the Nasdaq to another record close. Chip stocks led the rebound, with NVIDIA providing the largest boost, as market breadth remained narrow with about one-third of S&P 500 stocks advancing. Treasury yields initially rose following stronger-than-expected U.S. producer price data, before retracing some of the move as investors focused on softer underlying PCE inflation components. Meanwhile, a weak long-bond auction kept 30-year Treasury yields above 5%, their highest rate since 2007. Oil prices eased modestly, helping calm some inflation concerns ahead of the highly anticipated meeting between Trump and Xi Jinping, where tariff reductions are reportedly under discussion. Markets are also digesting the Senate confirmation of Kevin Warsh as the next Fed Chair, while policymakers continue signalling rates may stay elevated for longer.
Changing of the guard Fed chair. Kevin Warsh was confirmed as the next Fed chair yesterday, marking a milestone for the central bank. Warsh assumes leadership at a challenging time, with both inflation and political interference on the rise. Despite a desire from Trump for lower rates, Warsh inherits an economy where elevated CPI, accelerating producer prices, and persistent geopolitical energy shocks substantially constrain immediate easing flexibility. This creates a high-stakes balancing act between preserving Fed independence, maintaining inflation credibility, and navigating heightened political scrutiny. While Warsh may eventually reshape the Fed’s strategic framework and communication style, near-term monetary policy is likely to remain influenced more by inflation rather than Trump.
Take a look under the hood. Canada’s trade diversification strategy under Mark Carney may not be everything it appears to be. While some headline export growth figures suggest Canada is moving towards diversifying trade, much of the recent increase in non-U.S. exports has been driven by cyclical commodity strength, particularly gold and oil. This is an important distinction because we have not yet seen broad-based expansion into new sectors and products. Canada remains highly exposed to commodity volatility and still heavily dependent on U.S. trade, despite ambitions to reduce that reliance. Experts note that meaningful diversification will take time and require sustained infrastructure expansion, energy export development, and long-term industrial competitiveness.
Let’s make a deal. Alberta and the Canadian government are close to announcing a deal to raise the province’s industrial carbon price to an effective $130 per tonne by 2040, as part of broader negotiations around pipeline infrastructure, and energy investment. The talks reflect an effort to balance climate policy with industrial competitiveness and energy development. Industrial carbon pricing applies mainly to large emitters such as oil sands producers, requiring companies that exceed emissions benchmarks to either reduce emissions, purchase carbon credits, or pay into the system. The proposed agreement would also introduce escalating price floors to stabilize Alberta’s carbon credit market, where trading prices have recently sat well below the headline carbon price. Even with the changes, debate remains over whether carbon pricing meaningfully alters behaviour. Some producers argue they compete in a global commodity market where prices are set internationally, limiting their ability to pass higher costs on to consumers. In that view, carbon pricing becomes more of an added operating expense than a direct emissions incentive. Others maintain that a credible long-term carbon price is necessary to support investment in emissions reduction and carbon capture projects.
America’s Canadian hotspots? Canadians are travelling to the U.S. far less than they were two years ago, according to cellphone tracking data analyzed by the University of Toronto. Using activity from about seven million phones per month, researchers found visits to more than 250 U.S. destinations declined between April 2024 and March 2026, with some snowbird-heavy regions seeing drops of more than 60%. But buried within the data was one unusual trend researchers could not explain: three cities saw an increase in Canadian visitors. Gainesville, Cleveland, and Portland all posted gains ranging from 20% to 35%, despite the broader decline in cross-border travel. Researchers suspect the increase may have been tied to sports tournaments, conferences, concerts, or other one-off events, though no clear explanation has emerged. If you happen to know someone who travelled to Gainesville, Cleveland, or Portland recently, you may have better insight than the researchers do at this point.
Diversion:
Stuck the landing
