Market Recap: U.S. and Canada

Things were moving along swimmingly for the first half of the week, but everything changed on Friday when a sharp and broad selloff hit the markets hard. Tech bore the brunt of the damage, with the growth-heavy indices falling well off their midweek highs.

As for the numbers, the Dow Jones was the lone bright spot, managing to close the week essentially flat at +0.01%. The TSX pulled back just a bit, finishing at -0.79%. The S&P 500 had a tough Friday and ended the week down 2.40%. The Nasdaq 100 was the hardest hit, dropping 4.22% as the week’s late selling fell heaviest on high-multiple technology names.

Major Economic Stories This Week

Canada’s Labour Market Surprises To The Upside

Employment jumped by 87,800 in May, pushing the unemployment rate down to 6.6% — the strongest job growth since December 2024.

This is a genuinely strong report. The headline number crushed expectations of a 10,000 gain by nearly nine times, and the drop in unemployment from 6.9% to 6.6% came entirely from real job creation rather than people leaving the workforce. Participation held steady at 65%, which means the improvement is clean. That matters because there’s been legitimate concern that Canada’s labour market was buckling under the weight of trade uncertainty and elevated rates. This report pushes back against that narrative, at least for now.

• Unemployed population: fell by 84,000 to 1,482,400

• Declines in joblessness seen across both core-aged men and core-aged women

• Total employed: 21,121,500

• Forecast vs. actual: market expected 10,000 new jobs; actual came in at 87,800

US Jobs Remain Resilient, But The Picture Is Nuanced

The US added 172,000 jobs in May, more than double the forecast of 85,000, with upward revisions adding another 93,000 to prior months.

The headline number is strong, full stop. Leisure and hospitality led the way with 70,000 jobs, local government added 55,000, and health care contributed another 35,000. The upward revisions to March and April figures add further weight to the report, and it looks like the labour market isn’t cracking under pressure from higher energy costs or trade friction. That said, the composition is worth a closer look. Financial activities lost 22,000 jobs, concentrated in insurance and commercial banking, and transportation and warehousing were essentially flat. The gains are real, but they’re concentrated in sectors that don’t always signal broad economic acceleration.

• Unemployment rate: 4.3%, unchanged, matching market expectations

• Labour force participation: 61.8%, unchanged, lowest since October 2021

• U-6 broader unemployment rate: 8.1%, down from 8.2%

• Employment rate: 59.2%, up from a four-year low of 59.1%

US Job Openings Climb Back Toward Recent Highs

Job openings rose by 731,000 to 7.618 million in April, the highest level since November 2024 and well above the expected 6.88 million.

This is an important data point because job openings are a leading indicator of hiring intention, and the April figure tells us that employers aren’t pulling back. Professional and business services drove most of the gain, adding 668,000 openings, while gains were spread across three of the four major regions. Finance and insurance moved in the opposite direction, shedding 135,000 openings, which aligns with the actual job losses in that sector reported in the May payrolls data. Hires and total separations both edged lower on the month, and quits held steady at 3.0 million, a level that still points to worker confidence, even if it’s off its post-pandemic peak.

• Regional breakdown: openings rose in the Northeast (+133,000), South (+171,000), and West (+439,000); fell in the Midwest (-11,000)

• Hires: 5.1 million, down on the month

• Total separations: 5.0 million, down on the month

• Layoffs and discharges: 1.7 million, little changed

TOP INSIGHTS

Canada’s Jobs Report Is Good News, But One Month Doesn’t Rewrite The Story

The May employment number out of Canada was actually quite attention grabbing, but it deserves some caution. One strong month after a prolonged stretch of weakness is encouraging, but the underlying fragility hasn’t exactly gone away. Trade uncertainty with the United States hasn’t been resolved, (more on that in our top story below), interest rates are still restrictive, and the economy posted two consecutive quarters of contraction. The labour market can surprise to the upside and still be operating in a structurally challenged environment.

What this report does is buy time. It takes some pressure off the Bank of Canada to cut in the near term, and it gives policymakers a bit of breathing room to assess whether the weakness of the past several months was a temporary soft patch or something more entrenched. Also, a genuine improvement in employment conditions,  especially with participation holding steady, means the income picture is at least stabilising.

My read is that this report shifts the balance of risk slightly in a positive direction, but it doesn’t change the fundamental outlook. Watch whether the quality of job creation holds up in June. That will be a key. If full-time employment is driving the gains and the unemployment rate continues to drift lower, the narrative starts to shift.

The US Labour Market Is Doing Something The Bond Market Hasn’t Priced

Two consecutive months of strong US payrolls, upward revisions to prior periods, and job openings climbing back toward recent highs doesn’t sound like a labour market on the edge of a slowdown. But bond markets have been pricing in rate cuts for months, and the Fed has been holding steady while the data continues to come in firm. At some point, something has to give.

The risk here is that the Fed stays on hold longer than markets expect, and the repricing, when it does come, hits rate-sensitive assets hard. Equity valuations, especially in high-multiple technology names, are built on assumptions about the cost of capital that look increasingly optimistic if rates stay elevated. The Friday selloff in the Nasdaq is worth paying attention to in this context. It could be the market is beginning to absorb what the labour data is telling us.

For everyday investors, the implication is straightforward. A labour market this resilient, combined with sticky inflation, means the path to lower borrowing costs is longer than the optimists have been assuming. That has real consequences for mortgages, consumer credit, and the affordability picture more broadly.

The Recession Debate In Canada Is A Distraction From The Real Question

Whether or not Canada is technically in a recession matters less than what comes next. I agree with the C.D. Howe Institute pushing back on the two-consecutive-quarters ‘rule’, and they note that it’s a blunt instrument that doesn’t capture the full picture of economic health. But the debate itself is obscuring a more important question: is the economy positioned to recover, or is the weakness becoming self-reinforcing?

We now have two quarters of contraction, a labour market that only just showed signs of life, and a consumer under pressure from elevated rates and energy costs. That’s not a recession by the official definition, but it’s certainly not a healthy economy either. The distinction matters for both policymakers and investors. Calling it a recession triggers certain responses and not calling it one risks complacency.

The number I’m watching is whether the May jobs strength translates into consumer spending in the months ahead. Employment is a necessary condition for recovery, but it’s not enough. If Canadians are working more but spending cautiously, things like paying down debt and rebuilding savings, then the GDP numbers may stay soft even as the labour market improves. That’s the scenario that keeps the Bank of Canada in a difficult position well into the second half of the year.

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TOP STORY
Trump’s Latest Tariff Push Targets Canada Over Forced Labour Claims

• Nearly 90% of Canadian exports are shielded by CUSMA rules of origin

• The forced labour rationale has drawn sharp criticism from trade experts and human rights groups alike

• The tariffs cannot be imposed immediately and face a public comment period starting in July

• The move is widely seen as an attempt to replace broad tariffs struck down by the Supreme Court in February

In a blatant attempt to get around the Supreme Court tariff ruling, the Trump administration announced plans this week to impose new tariffs on more than 60 countries, including Canada, alleging they’ve failed to prevent goods made with forced labour from entering US supply chains. Canada would face a 10% tariff on exports that don’t comply with CUSMA rules of origin, but since roughly 90% of Canadian exports do comply, the practical impact on bilateral trade is more limited than the headline would suggest. Prime Minister Mark Carney acknowledged the forced labour concern as one Canada shares, but also noted the tariff would not affect the vast majority of Canadian trade.

The Forced Labour Justification Isn’t Holding Up To Scrutiny

Trade experts are questioning the credibility of the US investigation, which concluded that all 60 trading partners, all at the same time by the way, failed to meet the bar on forced labour enforcement. David Henig of the European Centre for International Political Economy called the logic “preposterous,” and the human rights group whose research the US cited to justify targeting Canada has publicly objected to how its findings were used. The group’s director was clear that the tariffs aren’t a genuine response to forced labour concerns but rather an attempt to work around the Supreme Court ruling that struck down the administration’s earlier broad-based tariffs.

The Timeline Gives Room To Negotiate

It’s important to note that the tariffs aren’t immediate. The process requires public hearings starting in July and a comment period before anything takes effect. Canada also faces the added complexity of an existing 10% tariff on non-CUSMA goods set to expire July 24, and the new tariff is described as additional, meaning it could stack on top. For investors tracking Canada-US trade exposure, the situation remains fluid, but the CUSMA carve-out provides insulation for now.

 Full story here.

The Trump administration’s latest tariff threat puts Canada in the familiar position of facing pressure from Washington with limited good options and a domestic audience watching closely. How Canada responds matters not just for this particular dispute, but for how the broader trade relationship gets managed through what is shaping up to be a turbulent few years. I’m asking you about whether diplomacy, public pushback, or a pivot toward other trading partners is the right call. I’m curious to learn what our community thinks.

LAST WEEK’S POLL RESULTS

In last week’s poll, I asked which consumer stress signal concerns you most for the broader economy. Credit card delinquencies came in as the clear winner at 56%, with retirement account withdrawals second at 28%, and the savings rate at a 22-year low drawing 16% of the vote. Thanks to everyone who voted.

READER COMMENTS

Retirement Accounts

"Interesting question this week. All of the choices are concerning but withdrawing and spending retirement funds that are in place to protect the future you are especially worrying." — purplesky4jay

Credit Card Delinquencies

"I load 16 tons, and what do I get? Another day older and deeper in debt...... (Not me personally)" — suebeeseed

"All are very concerning, but I went with credit card delinquencies. Why? It's a real-time metric showing consumer financial stress is at levels not seen in 15+ years. This takes us back to the aftermath of the Financial Crisis. Today is now being compared to a generationally challenged period and that's rarely a good thing..." — callawayguy

"Low income high expense" — khmer35

"This is the beginning it will go higher as the government keeps spending more just like us we will end up just defaulting. " — angellodarko

THE CANADIAN ECONOMY

Canada Isn’t In A Recession — Or is it?

• Two quarters of GDP contraction haven’t triggered an official recession call

• The C.D. Howe Institute uses a three-part test that goes beyond the technical definition

• Economic weakness is real but not yet widespread or persistent enough to meet the bar

• A stronger May jobs report complicates the narrative in both directions

Two consecutive quarters of economic contraction have sparked a heated debate in Ottawa, but Canada’s unofficial recession arbiter isn’t ready to use the R-word. The C.D. Howe Institute’s Business Cycle Council applies a three-part test; whether weakness is pronounced, persistent, and pervasive. They concluded this week that the recent GDP decline doesn’t yet clear that bar. The margin of contraction is smaller than in past recessions the council has officially called, and the first-quarter figures are still subject to revision.

The Three P’s Matter More Than The Rule Of Thumb

For those who aren’t sure, the two-consecutive-quarters definition is a rule of thumb, but not a standard. As I noted in the economic summary above, Canada’s May jobs report showed the strongest employment gain since December 2024, which complicates any straightforward recession narrative. The council’s framework looks for  evidence of broad sectoral weakness, and while the economy is clearly under pressure, that breadth hasn’t materialised yet. That said, the Conservatives and Liberals are already trading blame, with Prime Minister Carney framing the contraction as a transitional cost of reducing reliance on the US economy.

The Label Matters Less Than What Comes Next

Whether or not Canada officially enters a recession in the record books, the conditions affecting households are real. Real issues such as restrictive interest rates, elevated energy costs, and trade uncertainty aren’t abstract. The more important question is whether the May employment rebound signals a genuine turning point or a one-month reprieve. If the weakness broadens into more sectors and persists through the summer, the council will have a harder time holding the line, and the policy response will need to match.

 Read the full story here.

THE AI BATTLEFIELD
Kevin O’Leary’s Data Center Dream Runs Into A Legal Wall

• A lawsuit challenges the constitutionality of the body overseeing the Stratos Project

• Residents allege an unelected authority has been granted sweeping control over public land and taxation

• O’Leary has already agreed to a 75% reduction in the project’s original scale

• The legal challenge could delay or permanently reshape one of the most ambitious AI infrastructure proposals in the US

Kevin O’Leary’s planned 40,000-acre AI data center campus in Utah’s Hansel Valley is facing its most serious challenge yet. A progressive nonprofit and five anonymous Box Elder County residents filed suit this week against the Military Installation Development Authority, the unelected body overseeing the project, alleging that MIDA has been granted powers the Utah Constitution never authorized. The lawsuit argues that residents have been effectively cut out of decisions affecting public health, taxation, land use, and zoning across a significant stretch of county territory.

The Constitutional Challenge Goes To The Heart Of The Project

The plaintiffs allege that two sitting Utah legislators, Senate President J. Stuart Adams and state Senator Jerry Stevenson, are serving simultaneously on MIDA’s board, which may violate the state’s prohibition on holding more than one public office at the same time. If the court agrees, it could render the project’s approval null and void. O’Leary has already been forced to scale back significantly: he conceded to Adams’ demand for a 75% reduction in size, along with commitments on water allocation to the Great Salt Lake and land set aside for open space and agricultural use.

The Broader AI Infrastructure Story Is Watching

The data center build-out is one of the defining capital spending cycles of this era, and the Stratos Project’s legal troubles are a reminder that the infrastructure ambitions underpinning the AI trade face significant friction;  permitting, environmental review, community opposition, and now constitutional challenges. O’Leary told NBC News he is working to address every concern raised, but the project is still in its earliest stages. If you’re tracking AI infrastructure exposure, the gap between announcement and execution is getting wider.

Read the full story here.

INITIAL PUBLIC OFFERING SEASON
SpaceX Sets The Stage For A Record-Breaking IPO

• The offering would be the largest in history, topping Saudi Aramco’s 2019 record by a wide margin

• AI is now a cornerstone of SpaceX’s valuation, not just its rocket and satellite business

• Musk would retain over 80% of voting control after the offering

• The debut will test whether AI euphoria can sustain trillion-dollar valuations for companies without clear profit paths

Elon Musk’s SpaceX filed plans this week for a $75 billion IPO that would value the company at roughly $1.77 trillion, by far the largest public offering in history. The company plans to sell 555.6 million shares at $135 each, a fixed price rather than a range, which itself signals confidence in current market conditions. Musk, who owns roughly half of SpaceX today, would retain 82.4% of voting control after the offering, meaning public shareholders are buying economic exposure without any real governance influence.

AI Is Now Central To The SpaceX Story

When SpaceX launched in 2002, it was a rocket company. Today, after merging with Musk’s xAI and expanding Starlink into a global internet business, artificial intelligence is a cornerstone of both its operations and its valuation pitch. The IPO documents highlight AI ambitions and plans for space-based data centers alongside the traditional space exploration narrative. As we all know, the AI trade has concentrated enormous capital around a single theme, and SpaceX’s debut will be the most visible test yet of how far that enthusiasm extends.

 Profit Remains An Open Question

SpaceX won’t be alone in asking investors to bet on future earnings. Anthropic has already announced IPO plans, and OpenAI is expected to follow. Together, these offerings represent a wave of trillion-dollar-scale companies coming to market without any solid demonstrated paths to profitability. Wall Street is pricing in a future that may arrive, but the timeline and the economics remain genuinely uncertain.

 Full story here.

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The Relative Strength Indicator (RSI) can provide a signal that suggest a stock is either overbought or oversold.
📈A stock that has an RSI over 70 is considered to be in “overbought” territory. This might suggest that the stock is due for a pullback, however it is not a recommendation to sell.
📉A stock that is trading with an RSI below 30 is considered to be in “oversold” territory. This might suggest that the stock is due for a recovery, however it is not a recommendation to buy. Always perform your own due diligence.

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