Today
U.S. futures are in positive territory after a mixed session yesterday. Canadian futures are also pointing higher as investors turn their attention to bank earnings, which kicked off this morning with Bank of Montreal and Bank of Nova Scotia (more in Co. News below). Meanwhile, auto parts stocks tumbled yesterday after the U.S. threatened to impose tariffs on Canadian auto parts, which had previously been excluded from the new levies. Martinrea, Linamar, and Magna fell -9.7%, -8.6% and -6.6%, respectively, while U.S. automakers were not spared, with Ford down -3.3%. Given the deeply integrated North American auto industry, it’s no surprise that companies on both sides of the border are feeling the impact of the latest escalation. Industry leaders are hopeful negotiators will return to the table before Canada’s retaliatory tariffs are expected to take effect after Labour Day.
The gloves are off. Canada is weighing its next move, with PM Mark Carney saying Ottawa is considering a “range of options.” Rather than trying to match the much larger U.S. economy dollar for dollar, Carney said retaliation must be targeted where it will have the greatest impact, with critical minerals, energy, and other exports potentially in play. Counter tariffs on U.S. steel, dairy, appliances, agricultural equipment, electronics, and pulp and paper are already planned for Sept. 8, although the final list is still being worked out. Carney accused the U.S. of seeking terms that would weaken Canada’s steel, aluminum, and auto industries over time, but left the door open to renewed negotiations if Canada’s sovereignty and independence are respected. For a sense of just how strained relations have become, the name calling is getting hard to miss. Trump once again referred to Carney as “governor,” called Ontario Premier Doug Ford a “flunky” and warned Canada to “fall in line” or face “far WORSE” consequences. Ford returned fire, calling Trump a “dictator” and a “loser,” while comparing him to a schoolyard bully and arguing Canada should be prepared to use electricity and critical minerals as leverage. Beyond the rhetoric, Trump has threatened to double tariffs on Canadian autos to 50% and extend duties to auto parts beginning Jan. 1.
Turning the screws. Scott Bessent announced a plan aimed at cutting Iran off from the global economy yesterday, warning that countries continuing to do business with Tehran could face U.S. sanctions. The initiative targets five of Iran’s key economic lifelines, including digital assets, technology, gold, aviation and shipping. Bessent said Treasury could act unilaterally against countries that fail to comply and that no one is beyond the reach of U.S. sanctions, including foreign financial institutions facilitating Iranian trade. The strategy expands the administration’s earlier campaign as it attempts to loosen Iran’s control over the Strait of Hormuz. The announcement gave the U.S. dollar a lift, with the Bloomberg Dollar Spot Index gaining about +0.2% against all G10 currencies as the threat of being cut off from the dollar based financial system reinforced the greenback’s role in global trade, spurring some safe haven buying. Despite the tough talk, the effectiveness of the new measures remains uncertain. Iran has already endured decades of sanctions, and experts note that many of the most obvious targets for U.S. economic pressure have already been sanctioned.
Canadian retail sales are expected to decline -0.8% in July, which would mark the first monthly drop in seven months, following a 0.6% increase in June. Despite the projected pullback, Q2 data points to resilient household spending, with retail sales rising 2.2% over the quarter, the strongest gain since late 2024. June sales increased across seven of nine subsectors, while inflation-adjusted volumes jumped 1.5%, their largest monthly increase since March 2025, suggesting growth was broadening beyond the earlier boost from higher gasoline prices. General merchandise led the June advance, while motor vehicle and parts sales rose 1% and clothing sales climbed 3.1%. The figures add to evidence that Canadian consumption and economic activity rebounded in the second quarter after a year of slow growth.
Memory and storage stocks have lost momentum after earlier gains this year, as investors rotate toward other trades and become more cautious about the broader AI investment boom. Sandisk and Western Digital have fallen over 30% from their peaks, while Micron and Seagate are down about 20%, despite all four remaining among the S&P 500’s strongest performers this year. The weakness appears driven more by positioning and profit-taking than deteriorating fundamentals with memory demand remaining strong, margins still healthy, and hyperscalers continuing to commit to AI infrastructure spending. Rising Treasury yields, higher financing costs, and concerns about circular financing have, however, made the sector more vulnerable to shocks, reducing investors’ willingness to chase momentum.
Rent relief, unless you’re in Quebec. While rental markets have cooled across much of Canada, Montreal and Quebec City continue to buck the trend. According to The Globe and Mail, rents rose 10.5% in Montreal and 9.7% in Quebec City in 2025, compared with 3.5% in Toronto and 2.1% in Vancouver. The difference largely comes down to supply and who is competing for it. Montreal and Quebec City have historically benefitted from a large stock of older duplexes and triplexes that kept rents relatively affordable, but those cheaper units are now in high demand. New construction isn’t providing much relief, as high building costs have pushed most new rental development toward the higher end of the market, with newer two-bedroom units typically renting for $2,500 to $3,000. Adding to the pressure, Quebec has a high proportion of renters living alone, increasing competition for the smaller, more affordable units that are already in short supply. Despite the increases, affordability remains better than in Toronto and Vancouver, with renters in Montreal and Quebec City spending an average 26% of income on rent vs. 32% in Toronto and Vancouver.
HFM meets the PGA. Parents of young kids likely first encountered “HFM” in a daycare or parent group chat, but this time it showed up on the PGA Tour. Scottie Scheffler revealed he played the BMW Championship over the weekend with hand, foot and mouth disease, battling a sore throat and blisters that made gripping a club difficult. The highly contagious virus is most common among young children, and as a dad of two young kids, Scheffler certainly has access to the usual suspects. Despite admitting that withdrawing might have been the smarter call (his PGA mates would likely concur), the world’s #1 golfer played all four rounds and finished with a 2-under 68 on Sunday. No official word on how he caught it, however, parents of young kids are free to draw their own entirely unscientific conclusions.
Diversion: Play it as it lies
