Today
The S&P 500 is on track to finish the week higher, which would mark its eighth straight weekly gain and its longest winning streak since late 2023, when the index posted nine consecutive positive weeks before the run ended in January 2024. Despite lingering uncertainty around U.S. and Iran talks, equity futures are higher this morning. Markets appear to be greeting reports of a potential Iran deal with a degree of caution as Brent crude is still trading above $105. U.S. Treasury yields remain elevated as well, hovering near 4.55% after briefly approaching 4.60% intraday yesterday. Overseas, equities in both Europe and Asia are generally higher, led by Japan’s Nikkei 225 as shares of SoftBank Group surged for a second day in a row. Currency markets are also drawing attention, with the yen weakening further against the U.S. dollar and trading above ¥159 per dollar, keeping pressure on Japanese policymakers to possibly intervene.
Toll roads through Hormuz? Iran is reportedly in discussions with Oman about creating a permanent toll system for ships transiting the Strait of Hormuz, a change that would formalize Tehran’s control over one of the world’s most important energy chokepoints. Iran argues that securing and managing navigation carries costs that users of the route should help pay, though it did not raise similar concerns prior to the war. Not surprisingly, the U.S. and Gulf states have pushed back against the idea, warning it would undermine freedom of navigation and set a dangerous precedent. When asked about the proposal, Trump responded simply, “we want it open, we want it free, we don’t want tolls.” The Strait of Hormuz normally handles roughly 20% of global oil and LNG flows, meaning any attempt to add transit fees or tighten Iranian control risks keeping energy markets, shipping costs, and inflation pressures higher even if hostilities cool.
Germany’s latest trade data highlights a structural shift in the global economy, with China’s importance as a supplier to Europe continuing to rise even as demand for German exports within China weakens. Although China narrowly remained Germany’s largest trading partner in the first quarter, the sudden 12.5% decline in German exports to China suggests China’s economy is becoming less dependent on high-end European manufacturing and instead competing directly with it, particularly in sectors like EVs and industrial technology. At the same time, the U.S. remains Germany’s largest export destination despite softer trade flows, reinforcing how German industry remains heavily tied to American demand even amid rising geopolitical and trade tensions.
Correction or opportunity. Metal and mining stocks have declined this year, however, some strategists are noting that the recent correction may present an attractive entry point. While the sector has sold off roughly 12% amid concerns about weaker industrial demand and declining earnings expectations, the structural drivers behind metals demand, including AI infrastructure, electrification, reindustrialization, grid expansion, and data center growth, remains intact. Copper stands out because it sits at the center of both cyclical manufacturing recovery and secular AI-driven infrastructure expansion, while long-term supply growth remains constrained by deteriorating ore grades, underinvestment, permitting bottlenecks, and disruptions at key mines. Although higher energy costs and elevated real yields are pressuring miner profitability in the near term, a stabilization in Middle East tensions, lower oil prices, or eventual central bank easing could improve conditions for the group.
What worked and what didn’t. Staying on the topic of returns, Canada Pension Plan Investment Board (CPPIB) reported a 7.8% return for its fiscal year ended March 31, lifting net assets to $793.3 billion despite currency headwinds and weaker private equity performance. Public equities were the primary driver, returning 17.5%, led by U.S. tech and communication services stocks, while real assets gained 12.2% helped by data center and industrial real estate investments. Private equity lagged with a 2.9% return, partly reflecting weakness in software holdings exposed to AI-related disruption concerns. CPPB also continued expanding its exposure to digital infrastructure, including financing a hyperscale data center expansion in Cambridge, Ontario, and committing US$1.5 billion to a diversified global credit mandate managed by Blackstone Inc. Results were hurt by a weaker U.S. dollar, which contributed to a $12.4 billion foreign currency loss, and losses on government bonds as rate-cut expectations shifted.
Is it worth it? Hosting the FIFA World Cup comes with a big price tag. A new report estimates Canadian taxpayers will spend nearly $1.1 billion to host 13 World Cup matches in Toronto and Vancouver this summer, with security, stadium upgrades, infrastructure, driving much of the bill. That works out to roughly $82 million per game across all levels of government, keeping the bill broadly in line with prior tournaments in Brazil and Russia. Noteworthy, much of FIFA’s direct revenue from tickets and sponsorships flows back to the organization itself, while local governments shoulder transit, policing, and cleanup costs. Supporters argue the tournament will boost tourism, global visibility, and economic activity, while critics question whether the public return justifies the cost. Whether it is all worth it will likely depend on who you ask. Let the debate begin.
Diversion: Send them back
