Today
Equity futures held firm this morning as strong corporate earnings and confidence in the U.S. economy’s resilience supported investor sentiment. The S&P 500, TSX, and Nasdaq extended gains yesterday with all indexes closing at record highs, helped by early Q2 earnings that have so far outpaced expectations. While TSX has hit a new all-time high, some investors remain cautious. Despite outperforming the global benchmark in common-currency terms this year, Canadian equities may have difficulty sustaining this momentum due to constrained earnings outlooks in the heavyweight financial and energy sectors. Elevated household debt poses a downside risk to financials, particularly following recent stock re-ratings, while the global oil glut continues to pressure energy earnings despite stable U.S. export volumes.
Another read on consumer health is coming later this morning with the release of the University of Michigan’s consumer sentiment gauge. It comes against the backdrop of a noticeable gap between so-called “hard” economic data, like job growth, retail sales, etc., which have remained relatively resilient, and “soft” data, such as consumer and business sentiment, which have been trending lower for much of the year. That divergence has started to narrow in recent weeks, with sentiment indicators picking up somewhat. The disconnect, and now partial convergence, underscores the complexity of the current environment, where actual spending and economic activity have held up better than many expected, even as confidence has wavered.
In news that likely surprises very few, buying a home in Canada often requires a financial boost from family, with 70% of recent buyers and 58% of all respondents in a recent survey reporting they couldn’t have purchased without help. The report highlights housing affordability issues, especially for Canadians under 35, who are often priced out of the market. For the younger buyers who got into the market during the low interest rate period of 2020-2022, many are now either reducing their real estate footprint or shifting focus to debt repayment. Over half of Canadians believe now is a bad time to buy, and 60% feel many purchased homes during the7 rate drop who shouldn’t have. Despite affordability concerns, most Canadians still expect prices to rise another 5–10%, especially in Alberta and Quebec.
Congress has passed the first federal legislation regulating stablecoins, marking a big win for the crypto industry. Championed by Republicans and Trump, the bill introduces government oversight of dollar-backed digital tokens, aiming to legitimize and expand the $265 billion market. Supporters argue it will enable faster, cheaper payments, while critics warn it lacks consumer protections and could lead to future bailouts. The legislation comes amid Trump’s broader “Crypto Week” push and is expected to disrupt traditional banking. Big banks like JPMorgan and Bank of America have acknowledged the threat and are exploring involvement in the space. The bill mandates stablecoin issuers hold dollar-for-dollar reserves and is viewed as light-touch regulation that benefits U.S.-based issuers like Circle. Meanwhile, questions have been raised about government officials’ and GOP party backers’ financial ties to crypto ventures, some of whom have benefitted substantially from the legislation and the recent gains in crypto markets.
Auto stocks have rebounded over 40% since April, outperforming broader indices, but investor optimism is being tested as earnings season approaches amid fresh trade tensions and sector uncertainty. While shares have rallied after Trump’s paused many tariffs, the rally has lost some steam due to affordability concerns, rising competition (we’re looking at you China), and unclear tariff impacts. Analysts warn the setup into earnings is murky, especially with expectations falling for companies like GM, Ford, and Tesla. European automakers are also struggling, with VW, Porsche, and Mercedes reporting weak sales in China and the U.S., while suppliers like tiremakers are faring better by passing on costs. In any case, the upcoming earnings reports from major global automakers will be closely watched for insights on resilience in the face of geopolitical and macroeconomic headwinds.
U.S. companies are increasingly turning to euro put options and zero-cost collars to hedge against a potential downturn in the euro, fearing it may have risen too far amid uncertainty surrounding U.S. trade policy and tariffs. Although the euro initially rallied following Liberation Day, recent data and market trends suggest reduced conviction in further dollar weakness. As a result, firms are buying euro puts to lock in favourable exchange rates and protect revenues, especially after the dollar’s recent 12% drop. Euro/dollar options activity remains high, though shifting away from euro calls toward puts, signaling growing bearish sentiment on the euro. Strategies like zero-cost collars, which pair selling euro calls with buying euro puts, are gaining popularity among corporates, particularly in healthcare, as they offer attractive hedging ranges not seen in decades. With tariff uncertainty lingering and exchange rates volatile, U.S. companies are acting to protect next year’s earnings and budgets from further currency swings.
A fan of Coldplay and HR. During a Coldplay concert in Boston, the kiss cam zoomed in on an unsuspecting pair who clearly did not want the attention. The “couple” in question? Andy Byron, CEO of tech firm Astronomer, caught embracing Kristin Cabot, the company’s Chief People Officer, in a moment that looked far more romantic than professional, even to an untrained eye (most likely against their company HR policy). The instant they realized they were live on the big screen, Kristin covered her face (too late my dear), while Andy tried to duck out of view from the camera. Chris Martin, never one to miss a moment, joked, “Either they’re having an affair or they’re very shy.” The clip has since gone viral, and now Byron and Cabot are left to face the fallout both personally and professionally. Good luck explaining this one.
Diversion: The Immaculate (wedding) reception
