Launch Pad

Today

Stop me if you’ve heard this one before. Iranian and U.S. negotiators are exploring a phased agreement that could reopen the Strait of Hormuz in exchange for the U.S. lifting its blockade of Iranian ports. Iran is said to have proposed reopening the strait for seven days if certain conditions are met, including an immediate end to the U.S. naval blockade, access to frozen Iranian assets, and an end to the broader conflict. The proposal resembles the agreement reached in June (the one that collapsed), highlighting the uncertainty surrounding the latest negotiations. Oil markets reacted quickly to signs of progress, with Brent crude retreating toward $106 a barrel after gaining more than 7% over the last two sessions. 

All pomp and no circumstance. While the summit between Trump and Xi was a good photo op, many of the tensions that exist between the two countries remain. Progress on tariff reductions and a new bilateral communication channel on AI have not been announced, with Chinese equities in Hong Kong declining amid the limited policy news. Trump emphasized his personal relationship with Xi and the potential for cooperation, while Xi focused more heavily on policy issues, including fair treatment for Chinese companies in the U.S., AI safety, and U.S.’s position on Taiwan. Despite the friendly faces both leaders put on, large disagreements remain over trade, technology, AI leadership, and geopolitical issues. 

The Canadian consumer may have more life than July’s weak retail numbers suggested. Stats Canada’s advance estimate points to a 1.3% rebound in retail sales in August following a -0.7% decline in July, the first monthly drop since December 2025. July’s weakness was broad-based, with sales falling in eight of nine subsectors including a -1.9% decline in general merchandise. Ontario was hit the hardest, with sales down- 2%, including a -4.7% decline in Toronto, while Alberta bucked the trend posting a 1.4% increase. The July decline fit with signs that Canadian economic growth was losing momentum after a strong Q2, with preliminary data showing real GDP was flat that month. The estimated rebound in August, however, complicates the economic picture a bit as policymakers weigh softer underlying growth against persistent price pressures. 

Should pension plans be required to invest more at home? The Canadian Shield Institute thinks so, calling on Ottawa to require pension funds to put 3% of their assets into high-growth Canadian companies. The institute, which is backed by former BlackBerry CEO Jim Balsillie, says the allocation could direct $70 billion to $90 billion into domestic growth companies. Phased in over a decade, that could amount to $7 billion a year, enough to provide meaningful capital to Canadian companies looking to scale without overwhelming the market. The idea adds to Ottawa’s push to get pension funds and other institutional investors to put more money to work at home. The bigger question is whether that investment should be encouraged or formally mandated. 

While we’re on the subject, Canadian institutional investors are shifting some capital away from U.S. equities and toward domestic opportunities, with more than half of Canadian asset managers recently surveyed planning to reduce U.S. equity allocations over the next year. The trend is already showing up in capital flows, with Canadian investors selling a record $31 bln of U.S. shares in July, while the federal government is encouraging more domestic investment through infrastructure projects and tax incentives. Commitments highlighted around the recent Canada Investment Summit includes planned investments from Canadian banks, the Maple Fund, and BCE, while foreign investment has also picked up, with inflows across Canadian asset classes totaling $211 bln US over the past year. Infrastructure is attracting the most interest, with 66% of Canadian asset owners planning to increase allocations. Elevated inflation is also influencing portfolio construction, with 41% of managers considering inflation-linked assets and nearly 38% increasing cash holdings to increase their dry powder. 

Three games left, but the verdict is already in. There are plenty of places to assign blame for the Blue Jays’ disappointing season. The offseason was short after playing into November (though the Dodgers seem to be managing just fine), several Jays went straight into the WBC for even more baseball, and injuries tore through the roster. Eventually, though, it comes back to the bats. The Jays rank 29th in MLB in runs scored, have hit the fewest home runs in the American League and saw their OPS fall off a cliff from last season. A healthy rotation can steal games, and a great bullpen can protect a lead, but neither can do much when there aren’t enough runs. Then there is Vladdy. He had by far the worst season of his career and somehow didn’t hit his first home run at Rogers Centre until September. His comment that he earned a massive contract for his PAST play rather than his future play hasn’t landed well, especially after many fans stood by him through this year’s slump. There will be plenty of time to dissect what went wrong, but “underperformed” probably covers it sufficiently. It wasn’t all bad. Louis Varland emerged as one of baseball’s top relievers, while Brett Bateman arrived in August and gave a fading season a badly needed spark. It was a small sample, but maybe a glimpse of what could come next for the 24-year-old. Management will have plenty to address this winter, including George Springer’s future as his contract expires. Perhaps it’s too soon to talk about a turnaround, but after a season in which seemingly everything that could go wrong did, it is fair to wonder what a healthier Jays team could look like in 2027. For the fans who kept Rogers Centre full through a frustrating season, there are at least a few reasons to look forward to. Till next year… 


Diversion: Did he make it? 

Commodities

The oil rollercoaster ride continues with crude benchmarks lower this morning as U.S. and Iranian negotiators explored a deal to reopen the Strait. Skepticism remains as the two countries have been close to a deal before, only for talks to collapse. Despite Brent lower by –1.2% at $105, and WTI down nearly –2% at $92 this morning, crude remains on track for a weekly gain. Despite the pullback in futures, the market is still signalling tight near-term supply. Brent remains in backwardation, with buyers paying a premium for crude delivered sooner rather than later, typically a sign of a tight physical market. In Europe, Dated Brent, a critical physical-market indicator, has been trading at a wide premium to futures. Some European refiners were told earlier this month they would be allocated no crude in October under long-term agreements with Saudi Arabia, after the kingdom’s East-West pipeline was shut because of attacks. More importantly, on the economic side, Trump’s advisers are looking into the ramifications of a potential short-term ban on American diesel exports as prices for the essential transport fuel surge to record levels.  

Grain prices fell in Chicago after the presidential summit in Washington offered few details on the U.S.-China trade negotiations that markets had been looking for. Commodities markets have been on edge awaiting details on trade in agriculture and energy between the two nations, including Chinese purchases of U.S. crops and natural gas. The U.S. and China have discussed cutting tariffs on certain goods and traders are expecting more Chinese purchases from the U.S. if duties on energy products like gas, and crops such as soybeans, corn and wheat, are removed. Soybeans in Chicago declined as much as -1%, extending losses to a fourth day in the longest losing streak since June. Corn and wheat both fell to one-month lows, dropping as much as -1.8% and -2.5%, respectively.   

Fixed income and economics

Chart of the day

Markets