Launch Pad

Timely discussions. NATO allies announced at least $50 billion in defense deals at their summit in Turkey, aiming to demonstrate that Europe and Canada are responding to the U.S. admin’s demands for higher military spending. The agreements include purchases of drones, surveillance systems, and military aircraft, with some deals shifting procurement toward European suppliers. NATO members also plan to invest more than $40 billion in counter-drone capabilities over the next five years. Despite the commitments, Trump didn’t appear too pleased, renewing his criticism of the alliance after its perceived lack of support during the U.S. war with Iran. Trump has been the odd man out at this year’s NATO summit, disrupting effort to project unity by criticizing allies over defense spending. Trump singled out Spain for refusing to commit to the alliance’s target of spending 5% of GDP on defense by 2035 and renewed his push for U.S. control of Greenland, a territory of Denmark.

Canada’s merchandise trade surplus widened to $4.2 billion in May, the largest in four years, as exports rose 0.9% to a record $77.1 billion while imports edged down 0.2%. Export growth was driven by a rise in shipments of metal ores and non-metallic minerals, including sulphur and gold products sent to China, offsetting a decline in crude oil exports. Canada’s trade surplus with the U.S. expanded to $11.6 billion, the highest since January 2025. Although the headline figures were strong, export volumes were essentially unchanged, suggesting higher prices played a role in the improvement. Economists expect net exports to provide a solid boost to Q2 growth, reinforcing the view that the Canadian economy has remained more resilient than recent data may have implied.

Things don’t look as good south of the border, with the U.S. trade deficit widening in May to -$77.6 billion, the largest gap in more than a year, as imports rose 3.3% and exports fell -3.2%. Imports reached their highest level since March 2025, with gains across capital goods, consumer products, industrial supplies and vehicles, potentially reflecting strong domestic demand and companies rushing to bring in goods ahead of additional tariffs and supply-chain disruptions. Capital-goods imports hit a record, helped by purchases of semiconductors and equipment tied to the data-centre buildout. The widening deficit is expected to weigh on Q2 economic growth, with the Atlanta Fed estimating that net exports could subtract more than 1.6% from GDP.

The recent rotation in U.S. stocks toward small caps may be vulnerable because markets appear to be pricing in much stronger economic growth. Optimism has grown as lower oil prices and weak June employment data reduced expectations for Fed rate hikes, helping riskier parts of the market outperform. However, markets appear to be implying roughly 3.5% annualized U.S. GDP growth compared with actual growth of about 1.3% over the past two quarters, leaving the recent rotation exposed if economic data weaken or Fed Chair Kevin Warsh maintains a stronger focus on inflation. Strategists are warning that if volatility rises and the growth narrative disappoints, investors could begin to retreat from small caps and cyclicals.

A ‘rare’ opportunity. Rare earth elements are emerging as an important market theme as demand increases across defense, robotics, AI infrastructure, and the energy transition. China currently controls more than 90% of global refining and nearly 94% of high-performance magnet production. The West’s biggest vulnerability is not access to raw materials but the technically complex separation, refining, and magnet-manufacturing stages, prompting calls for government support to compete with China. Demand is high for heavy rare earths like dysprosium and terbium (apologies for the chemistry lesson), which allow magnets to withstand extreme temperatures in military systems and AI infrastructure. Growth in humanoid robotics is also expected to increase demand for lighter rare earths such as neodymium and praseodymium. Analysts are highlighting opportunities spanning the full mine-to-magnet chain, however, government support will likely be needed to reduce dependence on China.

7.7.7. It was a fitting date for Kyle Lowry to retire as a Raptor. The player who wore No. 7 signed a ceremonial one-day contract on July 7, bringing to a close a 20-year NBA career, including nine seasons with the Raps. The journey began on July 11, 2012, when the Raptors acquired Lowry from Houston in what would become one of the most consequential trades in franchise history (though some fans may have another trade in mind). Over the next nine seasons, Lowry helped transform the Raptors from a regular playoff team into NBA champs, bringing Canada its first NBA title in 2019. Lowry was traded to Miami in 2021 as the Raptors entered a new chapter and no longer required his veteran leadership. Even then, he made it clear that Toronto was “home” and that he intended to retire as a Raptor. On Tuesday, he kept that promise. The organization signed him to a symbolic one-day contract while announcing that his No. 7 jersey will be raised to the rafters during the upcoming season. It’s a fitting tribute to the player who many call the GROAT, the Greatest Raptor of All Time. There are plenty of stats to support that claim, but they only tell part of the story. Instead, we’ll end with a short montage celebrating some of the moments that cemented his legacy.

Copper prices are lower at the lower end of a narrow trading range seen since the interim peace deal was signed. The deal eased concerns that the Federal Reserve will raise interest rates to counter the war’s inflationary impact, but the ongoing hostilities continue to weigh on risk appetite and the broad macroeconomic outlook. While aluminum, which was rocked by disruptions to Middle Eastern supplies at the outbreak of the war, is up 0.5%, climbing for a third day. Inventories in warehouses tracked by the LME have slumped during the war, reaching the lowest since 2022 on Wednesday and holdings in China have also plunged a quarter from their April peak.