Morning. The trade war with the U.S. is hitting like a bad summer cold. We just want to enjoy the sunshine, but we can’t shake the headache. Today, with another round of tariffs approaching, we’re looking at five ideas to build a healthier Canadian economy. Even the worst colds pass, after all. Also in today’s edition: How should investors play the AI rebalancing act?
Up first
In the news
Trade: Canada-U.S. Trade Minister Dominic LeBlanc and Janice Charette, Canada’s chief trade negotiator, are in back D.C. this week “for a series of trade-related engagements.”
Cyber security: A software flaw disclosed by Toronto-based Coinkite Inc. has been tied to a hack that reportedly drained well more than US$100-million worth of bitcoin, rattling the cryptocurrency community and raising new concerns about hardware-wallet security.
Travel: Flight disruptions at WestJet appeared to be tailing off as the airline ramps up following a brief work stoppage over the long weekend.
ILLUSTRATION/THE GLOBE AND MAIL/SOURCE: PEXELS/ELEMENT5 DIGITAL
In focus
Suggestions, please
From owning quantum to embracing the country’s growing love for soccer, writers in The Globe’s Prosperity’s Path series share five ideas to strengthen Canada’s economy.
1. AI data centres are the future. Canada must overcome the backlash.
💡 With more data centres being built, anti-AI sentiment is growing – and some communities are putting their foot down. But the answer is not to block construction, Kevin Yin argues. It is to design a better bargain:
Data centre owners should be required either to provide their own power or to finance equivalent new supply and grid capacity. This supply matching would need to occur at a reasonably high frequency – it should match what the data centre uses at all times. Matching total electricity use over a month or year is not enough if residents still have to pay much more during peak-demand hours. The approval process needs to be strict enough to ensure that tech companies cannot avoid these requirements through clever accounting.
2. If Alberta’s new pipeline has no private backer, it’s Ottawa’s fault. Ottawa must fix it.
💡 Years of neglecting industry voices and wrapping the sector in layers of red tape came with a cost. Investors need government to remove the risk, Dmitriy Frolovskiy argues:
Unfortunately, there is no other way to ensure a project can be built without the ability to tap Ottawa as backstop. The government is running deficits and any money would ultimately draw from the same well of any federal spending: debt. But this is a project that is worth the spend. And Ottawa can take some equity in the pipeline or a share of the toll in return to get some of the money back.
A government reluctant to keep its own money out cannot expect a private board to carry the uncertainty that government created. The solution costs something. This cost, like the risk, has to be something Ottawa is willing to take on if it is serious about the project after all.
3. Globalization gutted Canada’s manufacturing. Here’s how we make things ourselves again.
💡 If we act now, we will be a country that can produce far more of what it consumes at a profit, Fen Osler Hampson and Tim Sargent say:
Canada should treat physical AI and additive manufacturing as core components of its industrial strategy, not as afterthoughts. That means accelerating the deployment of AI‑enabled factory platforms, investing in 3-D printing capabilities and skills and removing regulatory and tax obstacles that deter capital from backing new plants on Canadian soil.
4. Ottawa spends $6-billion subsidizing trades – for young men. What about young women?
💡 Canada needs more skilled-trades workers. But it also needs early-childhood educators, Ilona Dougherty and Brett House write:
While Ottawa addresses the challenges faced by young men, do we need an equivalent program to bolster other critical sectors of the economy – such as child care – that are predominantly staffed by women? The answer is yes. This is partly about equity, but critically, parallel investment in training and wages for early childhood educators is essential if we hope to proactively address demographic and employment shifts and support broad economic prosperity.
5. FIFA gets big bucks. Canada’s out $1-billion. How can we actually make money off soccer?
💡An entire economic ecosystem could be constructed, encompassing communities across the country beyond the big three hubs, Thomas Law says:
Canadian soccer is defined by competing parties jealously guarding their turf. To achieve its full potential, all these parties need to learn to co-operate, to grow the pie rather than seek to dominate their small patch. That means ending the lawsuits, working together to fund mutually beneficial projects like academies, broadcasting more of each other’s content, collaborating over scheduling to maximize viewership, and working together to pitch various funding proposals to benefactors and governments alike.
💡 What else should the country be considering? Let me know what you think: cws@globeandmail.com
Charted
Rebalancing act: Much of what investors have spent the past couple of years worrying about has recently come to pass, The Globe’s Tim Shufelt writes. Momentum behind the AI trade faltered – and still, the stock market was unfazed. Which way should investors turn?
Quoted
Does getting rid of Max Scherzer, George Springer and Shane Bieber at year’s end let successful newcomers like Dylan Cease and Kazuma Okamoto assume control of the clubhouse? And if so, is that a good thing? I’m sure the Jays have many ideas, but I doubt they have any clue.
With the power of friendship sapped from the Blue Jays, Cathal Kelly writes, Ross Atkins got busy at the trade deadline.
Up next
More files we’re following
Before the bell: Domestic earnings include Shopify Inc., Manulife Financial Corp., and Kinaxis Inc. On Wall Street, investors are watching Ebay Inc., Uber Technologies Inc. and Walt Disney Co.
By the numbers: Ahead of Friday’s key jobs report, Statistics Canada reported the country’s merchandise trade surplus increased in June as a weaker loonie pushed trade values higher. New U.S. tariffs set to go into effect on Aug. 19 are threatening to stall the modest momentum both measures have suggested in recent months.
Morning update
Global markets were muted as investors weighed robust corporate earnings against continued Middle East tensions.
Wall Street futures were mixed, while TSX futures pointed higher after the TSX, Dow and S&P 500 closed at record highs yesterday.
Overseas, the pan-European STOXX 600 was 0.05 per cent in morning trading. Britain’s FTSE 100 rose 0.14 per cent, Germany’s DAX gained 0.04 per cent and France’s CAC 40 declined 0.05 per cent.
In Asia, Japan’s Nikkei closed 3.66 per cent higher, while Hong Kong’s Hang Seng advanced 0.24 per cent.
The Canadian dollar traded at 71.10 U.S. cents.