Today
Welcome to the club. The tech rally continues with the $1 trillion market cap club welcoming two new semiconductor names, Micron and SK Hynix. Micron became the 12th U.S. company to surpass a $1 trillion valuation, getting there just 48 days after crossing the $500 billion mark, according to Dow Jones Market Data. It took NVIDIA about 490 days to make the same jump after hitting $500 billion, while Meta Platforms and Alphabet took substantially longer. For reference, it took old economy conglomerate Berkshire Hathaway more than 1,500 trading days to double from $500 billion to $1 trillion. Micron shares have soared as investors continue to pile into AI-linked semiconductor names. The company has sold out its 2026 supply and plans to invest up to $200 billion in capacity expansion to keep pace with demand. Meanwhile, South Korean chip maker SK Hynix rallied more than 10% overnight, extending the momentum across the memory chip space. Stock futures are again pointing higher this morning, while Brent crude has eased back toward $96 a barrel as the U.S. and Iran remain at the negotiating table despite recent clashes. In Canada, bank earnings season kicks off before the open with results from BMO, BNS, and National (see company news below for more).
Low hire, low fire. Bank of Canada Deputy Governor Nicolas Vincent said Canada’s labour market may be going through a more structural shift rather than a typical cyclical slowdown, complicating the path for monetary policy. The Deputy Governor pointed to a “low hire, low fire” environment where companies are reluctant to both lay off workers and hire new ones, reducing labour market flexibility and slowing the reallocation of workers across sectors. At the same time, long-term unemployment has climbed to its highest level outside the pandemic period, while youth unemployment has risen above 14%. Vincent noted that an aging population, skills mismatches, immigration-driven labour supply growth, and potentially AI-related disruption may all be contributing factors. He cautioned that rate cuts may not fully address structural labour market issues and could instead risk creating inflation pressures while delaying necessary economic adjustment.
It’s complicated. Exxon and ConocoPhillips are exploring a potential return to Venezuela after nearly two decades away, enticed by some of the world’s largest oil reserves combined with higher crude prices. Both companies are reportedly in talks with Venezuela’s government, though they are demanding stronger legal protections, international arbitration rights, and mechanisms to recover billions in compensation still owed to them from past nationalizations. The discussions reflect a geopolitical shift, with both the Trump administration and Venezuela showing interest in reviving the country’s oil sector while reducing Russian, Chinese, and Iranian influence in the region. Skepticism, however, remains high. Venezuela’s regulatory framework continues to give the government power over royalties and taxes, and oil companies remain wary of investing heavily unless political and contractual stability materially improves.
No worries here. Bank of America strategists are downplaying concerns that hyperscalers’ massive borrowing needs tied to AI and data center spending will overwhelm credit markets. Despite a recent debt surge from companies like Meta, Amazon, and Oracle, BofA estimates hyperscaler debt currently totals about $450 billion within major investment-grade indexes, still well below exposure levels in bank and telecom issuers. The bank expects debt issuance tied to AI infrastructure spending to continue growing through 2027 before moderating, while noting that suggested cash flow growth at major tech firms is still outpacing capital spending. Interestingly, spreads on hyperscaler debt have widened even as broader investment-grade spreads tightened. BofA sees that weakness less as a warning sign and more as a relative value opportunity.
Shifting the risk. European banks are expanding their use of so-called SRTs, or significant risk transfer trades (finance loves acronyms), complex transactions that allow lenders to offload portions of corporate loan default risk to hedge funds and other investors to free up capital and improve profitability metrics. About $509 billion, or roughly 11% of corporate loans at major European banks, were tied to SRT structures at the end of last year, nearly double the level in 2022. Lenders including Santander, UniCredit, and Barclays have become active users as they look to support lending growth, acquisitions, and shareholder returns. The market’s rapid expansion is now drawing scrutiny from regulators, who are concerned about growing links between banks and non-bank investors, rollover risk if markets seize up, and the possibility that leverage used to finance these trades could reintroduce systemic risk into the financial system.
Last call? Beer stocks moved lower yesterday after new industry data from NielsenIQ and Circana showed alcohol sales continuing to weaken. Molson Coors, Constellation Brands, Boston Beer, and Anheuser-Busch all declined after beer category sales fell 6% y/y over the latest four-week period. Industry volumes have weakened since late April, with higher gas prices potentially pressuring discretionary spending and consumer purchasing behaviour. Constellation Brands showed some relative improvement, likely helped by Cinco de Mayo demand for brands like Modelo and Corona, though broader trends remain soft. Beverage weakness extended beyond beer, with Pepsi volumes also declining, while Coca-Cola continued to outperform. Investors are now watching whether summer events like the World Cup and July holidays can help stabilize demand. If you’ve recently cut back on social outings, or alcohol purchases, you may already see these trends anecdotally, even without the data.
Dr. Paycheck. If you’re wondering where the “big” money is in America, the answer is healthcare, with doctors and medical specialists dominating the list of top-paying jobs across much of the U.S. An analysis of Bureau of Labor Statistics data found that healthcare-related roles were the highest-paying occupations in about half of the states, while CEOs topped the rankings in 14 others. Cardiologists and radiologists continue to command large pay packages even as broader hiring slows. The report also highlights a deeper economic trend, with healthcare becoming a big engine of U.S. employment growth. The sector accounted for more than 100% of net job creation this year, meaning the rest of the economy lost jobs. Stats Canada unfortunately does not publish directly comparable province-by-province rankings, and Canada’s universal healthcare system creates a very different compensation structure structure than the largely private U.S. model. However, an aging population, labour shortages, and high healthcare demands suggest the sector could continue to be a larger driver of Canadian employment and public spending, even if compensation remains more constrained.
Diversion: I should pay more attention in class 
