Canada To Hit NATO Defense Target Early

Political

Summary:

Canada will reach NATO's 2% defense spending target by the end of this fiscal year, Prime Minister Mark Carney announced Monday in a major shift that aims to reassert the country's role within the alliance and respond to heightened global security threats. The commitment marks Canada's largest increase in military outlays since World War II and comes nearly a decade ahead of the previous government's 2032 timeline for hitting that threshold.

The policy was unveiled during Carney's keynote at the University of Toronto's Munk School of Global Affairs, where he cast a sober assessment of the evolving global order. “We stood shoulder to shoulder with the Americans throughout the Cold War and in the decades that followed, as the United States played a dominant role on the world stage. Today, that dominance is a thing of the past,” Carney said.

The plan, estimated to require $18 billion to $20 billion in new investment, includes accelerated procurement of submarines, drones, ships, armored vehicles and Arctic surveillance tools. Also on the docket: boosting pay for military personnel, expanding health care infrastructure, and improving services for military families.

Strategically, the spending is not only geared toward achieving NATO's 2% guidance but is also designed to position Canada for proposed future targets as high as 3.5%, a scenario being discussed ahead of NATO's June summit in The Hague. Carney emphasized the broader context, stating, “Rising great powers are now in strategic competition with America. A new imperialism threatens.”

Recent NATO data pegged Canada's military outlays at just 1.45% of GDP for 2024, the fifth consecutive year the country fell below the alliance goal. Allies, particularly the U.S., have long criticized Canada for under-investing; calls for increased contributions intensified during Donald Trump's presidency, with added pressure on NATO members to match U.S. capabilities.

Carney's remarks framed the spending not as deference to external leverage but as a response to generational geopolitical change. “Our goal is to protect Canadians, not to satisfy NATO accountants,” he said, while highlighting the opportunity to transform Canada's economy through defense modernization and industrial investment.

In alignment with NATO's defense industrial pledge, Ottawa will commit to developing a strengthened domestic defense manufacturing base and investing in advanced technology across cyber, AI, quantum computing and space domains. These efforts aim to curb Canada's reliance on foreign suppliers and close longstanding capability gaps.

The dramatic shift in posture contrasts sharply with the policy of former Prime Minister Justin Trudeau, who as recently as 2023 downplayed the 2% target as a “crass mathematical calculation.” Carney, by contrast, called the present moment a “hinge moment” for Canada, underscoring a pivot not only in defense strategy but in foreign policy orientation.

Source: Investing

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Thomas

Economic

The stock market is now faster and more aggressive than ever before, which is both good and bad. Because there are now more participants than in previous years and decades, every move and situation is assimilated faster due to the sheer volume of capital and information distribution, leading to opportunities and risks that weren’t present for the previous generation of traders and investors.

Spotting some of these dangers is key for these investors to avoid unnecessary losses and setbacks in their portfolios and wealth creation.

Today’s market activity has created a warning that no one with any kind of exposure to financial markets should ignore. This reasoning is connected to fundamentals and expected behavior in a risk-off environment.

For this to work, investors will have to understand how to connect the dots between the price action in the iShares 20+ Year Treasury Bond (NASDAQ:TLT) ETF and other asset classes that are considered “safe” or attractive for institutional investors when the risks in the future stack up to be too high, such as the SPDR Gold Shares (NYSE:GLD) in the commodities space.

As investors will see, both of these names are now creating a significant headwind for the SPDR S&P 500 ETF Trust.

What Bonds Represent: The Most Important Indicator

One of the most important drivers of any economy is money itself, its excess or lack thereof, its expensiveness or cheapness. When it comes to bonds, investors have access to a live quote of the current market value through the yield these instruments offer.

Looking at the price action in the iShares 20+ Year Treasury Bond ETF, investors can note a decline of 7.4% over the past 12 months, underperforming the S&P 500 index significantly, but that’s not the most important thing. Bond prices move inversely to their yields. Therefore, this ETF yields up to 4.4%, and here’s what that means.

This yield is a proxy for the cost of money today and, therefore, a proxy for how hard it can be for businesses to deliver on future growth. This yield tells everyone that money has become significantly more expensive than it was just three years ago.

The fact that money is now more expensive has had an impact on the American consumer, as companies in the consumer discretionary sector have already shown signs of weakness, as consumers now see their budgets tightening and credit becoming less accessible.

Recent examples are Lululemon Athletica (NASDAQ:LULU) Inc. and The Gap Inc (NYSE:GAP)., stocks that have dropped by double-digit percentage points during their latest quarterly earnings reports.

Gold’s Performance Signals Appetite For Safety

Historically, gold has been regarded as the best inflation and volatility hedge in the markets due to its limited supply, which not only helps mitigate the printing of fiat currency but also provides a more straightforward pricing mechanism during volatile markets like today’s.

With ongoing trade tariff negotiations between the United States and other nations, investors perceive too much risk in American bonds and currency, and the same applies to other international assets as well. Therefore, the only sensible approach is to go “risk off” and invest in a commodity like gold.

That theme might explain the 42% rally that the SPDR Gold Shares gold ETF has delivered in just 12 months, signaling an apparent rotation and preference for the benefits that gold can offer during volatile and uncertain markets, such as the one most are experiencing today.

Of course, all of this behavior, in bonds and gold, will eventually affect the S&P 500 and its current valuation.

It All Comes Down to Stocks

Understanding that more expensive money, as seen in bonds, will likely become a headwind in future earnings, valuations in the S&P 500 would have to be adjusted inevitably to reflect this fact. Knowing that this fact occurs in every cycle, investors have been flocking to gold instead, but here’s what really matters.

During the so-called “Liberation Day” of April 2025, when President Trump announced the tariffs to be implemented in the economy, the S&P 500 breached a 20% decline from its 52-week high, throwing it into an official bear market.

Since then, the price has recovered in record time.

However, price, along with volume, has now stalled just shy of its all-time high, meaning that confidence and momentum have not been enough to finalize this upside move. This effectively reflects the recent price action in gold driven by fears caused by bonds.

Source: Investing

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Adam

Stocks

Nvidia (NVDA) rose Monday amid trade talks between the U.S. and China taking place in London on Monday.

Investors sent shares rising even in the face of news that China exports to the U.S. plunged 35% in May. Is Nvidia stock a buy or a sell now?

Treasury Secretary Scott Bessent and other top Trump administration officials were set to meet. Monday. That follows President Donald Trump's call with President Xi Jinping on Thursday.

Earlier, Trump accused China of violating the two nations' trade truce, set in place on May 12. Though Trump did not mention any specific sector, reports said China's slow approval for rare earth minerals may be causing the friction. China responded citing its concerns over U.S. export control guidelines for artificial intelligence chips and chip design software among others.

Trade developments have been in focus with recent court decisions about the Trump administration's global import tariffs swinging back and forth. A U.S. appeals court on Thursday temporarily reinstated levies in response to the U.S. Court of International Trade's decision that President Donald Trump had exceeded his authority to impose reciprocal tariffs under the International Emergency Economic Powers Act of 1977.

Meanwhile, analysts at Jefferies recently noted that capital expenditures among Chinese AI plays Baidu (BIDU), Alibaba (BABA) and Tencent (TCEHY) was up 100% from the prior year.

Broadcom last week said its partners were "doubling down on inference" with big investment plans. Broadcom competes with Nvidia for some chips but the surging overall demand trumped the rivalry between the two biggest AI chip leaders.

In other recent moves, Barron's reported that Nvidia's Chief Executive Jensen Huang is set to sell more than $800 million in Nvidia stock through planned transactions.

Nvidia in late May said first-quarter earnings per share of 81 cents rose 33% from the same quarter a year ago. Sales grew 69% to $44.1 billion. Analysts polled by FactSet had projected 88 cents in earnings per share on sales of $43.2 billion.

Focus on China H20 chips

Nvidia is working on a new China chip, according to reports.

Huang told CNBC in early May that being blocked from the Chinese market would be a "tremendous loss" for Nvidia. He expects China's burgeoning AI market to reach $50 billion in two to three years.

Nvidia had written off $5.5 billion after the Trump administration said the company would need a license to sell its H20 chips abroad. Analysts believe the company may not be granted the license.

Huang this month said Nvidia's system would be open to other AI chipmakers to integrate their custom chips around its standard rack design for data centers.

U.S.-China Trade Deal

A recent deal between the U.S. and China to temporarily slash tariff rates on each other boosted Nvidia shares. Another factor driving optimism was the Trump administration's rescinding of a so-called AI diffusion rule related to export controls on advanced AI chips, a rule put in place by the Biden administration.

Nvidia expects to write off another $8 billion from the H20 chip ban in the current quarter, and predicts $45 billion in sales. The stock also rose on news it will supply its artificial intelligence chips to Saudi Arabian AI company Humain.

Meanwhile, on IBD MarketSurge, Investor's Business Daily's premium stock research platform, one chart feature turned bullish. Although the 200-day moving average has crossed above the 50-day moving average in what is known as a "death cross," the 50-day moving average is beginning to slope upward for the first time this year. The move is bullish for chart setups.

Big Tech Confirms Huge Spending Plans

Nvidia stock had risen above the 50-day moving average after Amazon (AMZN) earnings released May 1. Amazon's run-up in capital expenditures in the first quarter was largely due to demand for its artificial intelligence services.

Amazon's capex for the first quarter jumped to $24.3 billion from $13.9 billion in the same quarter a year ago.

Magnificent Seven leaders Meta (META) and Microsoft (MSFT) recently reported quarterly results that beat estimates. Meta increased its capital expenditure for 2025 to support its "artificial intelligence efforts."

Alphabet (GOOGL), an Nvidia partner, crushed estimates and maintained its $75 billion capital spending plan.

But Nvidia stock in late April was given a sell rating at Seaport Research as it initiated coverage with a $100 price target. Analysts see "significant complexity required for deployments of Nvidia systems in comparison to traditional data centers." They also see the artificial intelligence spending boom slowing in 2026.

Nvidia stock had declined following news that China's Huawei Technologies is testing a new artificial intelligence chip that could have higher capabilities than Nvidia's H100.

Nvidia Stock: Volatility Amid Tariff Risk

A flurry of tariff news spurred volatility in Nvidia stock in April. Nvidia stock surged amid a historic rally when Trump announced a 90-day tariff pause for most countries. But Trump followed that up by increasing tariffs on China to 125% after that nation imposed tariffs of 84%.

Trump exempted semiconductor products from those steep tariffs. On Truth Social, however, he mentioned that nobody was getting "off the hook." U.S. Commerce Secretary Howard Lutnick said sector tariffs on semiconductor imports would land in about a month.

Meanwhile, Nvidia had announced plans to make AI supercomputers entirely in the U.S. The company's blog says it has "commissioned more than a million square feet of manufacturing space to build and test Nvidia Blackwell chips in Arizona and AI supercomputers in Texas." Mass production is expected to ramp up in 12 to 15 months.

The Trump administration added several Chinese companies to an export blacklist on national security concerns. U.S. companies selling chips to those firms will need to get government approval first.

Won't Hurt 'In Short Term'

At the GTC conference in March, Nvidia Chief Executive Jensen Huang noted that tariffs would not hurt the company "in the short term" as it seeks to move more chip production to the U.S.

In terms of its 12-month price performance, Nvidia has outperformed 87% of all other stocks in Investor's Business Daily's database.

Funds own 40% of Nvidia's outstanding shares, according to IBD MarketSurge. Going by its Accumulation/Distribution Rating of C, it would seem that funds are neutral. The rating measures price and volume action over the last 13 weeks.

Big Techs Confirm Huge Spending Plans

Earlier this year, Amazon indicated it planned to increase its spending by 27% or $105 billion – mostly on AI data centers. But that was topped by Alphabet which plans to increase its spending by 57% for a total of $75 billion.

"Most AI (computing) has been driven by Nvidia chips, and we obviously have a deep partnership with Nvidia and will for as long as we can see into the future," Amazon CEO Andy Jassy said on its fourth-quarter earnings call in February.

However, Microsoft's spending on AI data centers is set to slow next year. Microsoft announced in December that the company faced no chip supply constraints.

Nvidia Stock: Market Cap

Nvidia replaced Intel (INTC) in the Dow Jones Industrial Average in November, becoming the fourth Magnificent Seven stock to join the list of blue chips. The others are Apple, Amazon.com (AMZN) and Microsoft (MSFT).

The stock has also moved ahead of tech titan Apple (AAPL) in terms of market cap.

The AI chip behemoth has top-level Earnings Per Share Rating of 99. Further, the stock's all-around strength, or Composite Rating, sits at 97.

IPhone Moment Of AI

Nvidia's graphics processing units help accelerate computing in data centers and AI applications.

The company pioneered graphics processors used in such industries as health care, game machines, automobiles and robotics.

In March 2023, generative AI took a leap forward with OpenAI's ChatGPT. According to CEO Huang, Nvidia's AI-capable chips paved the way for the "iPhone moment of AI."

That helped Nvidia turn the tide on its results. It had reported three quarters of declining year-over-year sales. It also showed four quarters of tapering earnings in late 2022 and early 2023.

But then the company achieved record top- and bottom-line growth in the seven most recent quarters.

Is Nvidia Stock A Buy?

Looking at chart signals and technical measures can help investors assess whether Nvidia stock is a buy or sell now.

Nvidia has broken out from an alternate entry at 143.44. Shares are in a buy zone. That makes Nvidia a buy now.

source : investors

Risk Warnings and Disclaimers

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Gerik

Political

A Bipartisan Push Meets Executive Hesitation

The 2025 Russia Sanctions Bill, introduced by Senator Lindsey Graham, has gained overwhelming bipartisan support with 82 senators backing it—well above the number needed to override a presidential veto. In the House, a similar version led by Representative Brian Fitzpatrick also enjoys broad support from both parties.

However, the Trump administration has been quietly lobbying for revisions that would dilute the bill’s force. Congressional aides revealed two key demands from the White House:

Adding waiver clauses allowing President Trump to selectively exempt individuals or entities from sanctions.

Replacing the term “shall” with “may” to remove the bill’s mandatory enforcement provisions.

These changes aim to grant the president greater discretion in shaping foreign policy, avoiding strict legislative constraints that would bind diplomatic flexibility, especially as Trump seeks improved ties with Russia.

Punitive Measures vs. Presidential Authority

The bill, in its current form, includes sweeping penalties—targeting key Russian sectors and individuals, and imposing a 500% tariff on imports from countries that purchase Russian fossil fuels, uranium, and other goods. This is designed to cut off funding for Russia’s war efforts in Ukraine.

Senator Richard Blumenthal, a Democratic co-sponsor, confirmed discussions with the White House but withheld specific details, noting only that “progress is being made” in negotiations.

President Trump, speaking during a joint press conference with German Chancellor Friedrich Merz, criticized the bill as “too harsh” and declared, “They’ll follow my lead—that’s how it has to work.” The administration has argued that the Constitution grants the executive branch the sole authority over foreign relations, meaning any sanctions regime must allow for strategic diplomatic maneuvering.

Internal GOP Fractures and Democratic Caution

Despite being an ally of Trump, Senator Graham has not publicly endorsed the requested changes. He has, however, signaled a willingness to adjust the bill, particularly to exempt countries providing military or economic aid to Ukraine—effectively shielding European allies from the punitive tariffs.

House Speaker Mike Johnson and Senate Majority Whip John Thune both voiced support for a tough stance against Russia, citing widespread bipartisan demand for stronger actions.

Still, some Democratic lawmakers are wary of a diluted final version. Senator Tim Kaine warned, “There’s a risk it gets watered down to a point we can’t accept, but I don’t think Graham will allow that.”

Diplomacy vs. Deterrence: A Political Balancing Act

This behind-the-scenes clash highlights a broader strategic dilemma: how to apply pressure on Moscow without closing the door to diplomacy. The Trump administration’s recalibrated approach—aiming to broker peace talks—stands in contrast to Congress’s hardline response to continued Russian aggression.

Even as Senators Graham and Blumenthal traveled to Ukraine to celebrate recent battlefield successes, Trump allies like Steve Bannon criticized them for “provoking” further conflict.

Ultimately, while the bill is likely to pass due to its bipartisan momentum, the final version may reflect significant compromises, balancing legislative resolve with presidential pragmatism. As the Ukraine conflict drags on, the outcome of this legislative battle could define America’s diplomatic posture for years to come.

Source: Wall Street Journal

Risk Warnings and Disclaimers

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Adam

Economic

A revived AI trade and $1 trillion of buybacks will help lift the stock market

It was by just a fraction, but the S&P 500 closed last week above the 6,000 mark again. Another 2.4% advance and the Wall Street benchmark will be back in record territory.

Unsurprisingly, the stock market's 20.4% surge off the mid-April low has left a succession of analysts executing some swift U-turns. S&P 500 SPX targets for 2025 from early in the year were slashed several weeks ago and are now being pushed up again.

Scott Chronert and the team at Citigroup are the latest to turn more bullish. At one point they had an end-of-2025 S&P 500 target of 6,500. That was cut to 5,800 on concerns trade tensions would damage growth. In a new note published late Friday, they argue for 6,300.

That 5% upside from here recognizes the danger of policy shocks, but assumes the market will continue to accept that the worst of the tariff angst is in the rear view mirror, as trade deals are stuck and some White House actions are curtailed by the courts.

"Trading moves aside, we expect investors will tend to look through shorter term policy noise in aggregate," says the Citi team. "Consensus GDP growth expectations for next year have also bottomed, moving higher in recent weeks as the out-year labor market outlook also improves on the margin."

The less bad economic backdrop allows Citi to raise its full year S&P 500 earnings per share to $261 from the previous $255, though that's below the $270 they were forecasting heading into this year.

And better sentiment amid less perceived risk will allow the S&P 500 to maintain a price-to-earnings multiple of 21, helped by corporations adapting to the uncertain policy environment, Citi reckons.

"Longer term, existing and future...technology enhancements should lessen historic earnings sensitivity to business/economic cycles, thus supporting higher multiples relative to history," says the bank.

Such a valuation will be supported by two factors in particular. First, Citi thinks the AI trade is regaining momentum and that this will be reflected in sturdy aggregate capital expenditure.

"[P]ersistence of capex spending intentions has mostly held thus far this year, despite the policy uncertainty. This provides some comfort to structural fundamental growth expectations," says Citi.

Next are buybacks, which according to Citi have increased on a net basis, and which may come to an aggregate $1 trillion this year. "This aligns with a call we made earlier in the year that equity market volatility around policy concerns and investment spending question marks could translate into an increase in aggregate and net buyback activity," they say.

The Citi team argue that their price target vacillations reflect "the volatility path that has come with Trump administration policy uncertainty," but they believe that analysts, companies and investors alike are becoming more used to this.

"With some experience behind, we are comfortable that fundamental volatility will be less than policy volatility," they say.

"As we turn to the second half, '26 earnings improvement on the other side of '25 policy implications on fundamentals will be a key determinant. We allow for mid single digit 2H [second half 2025] gains from here, implying an ongoing mantra to buy pullbacks more so than chasing rallies," Citi concludes. Their S&P 500 target for mid 2026 is 6,500.

Source: morningstar

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Gerik

Political

Changing Perceptions Under Trump’s Return

In a striking shift in Russian public opinion, only 40% of respondents now consider the U.S. Russia’s main adversary, a sharp drop from 76% just one year ago, according to the Levada Center’s latest poll. This marks the first time since 2012 that the U.S. has not ranked first on Russia’s list of least-friendly countries.

This turnaround in sentiment coincides with Donald Trump’s return to the U.S. presidency. Since resuming office, Trump has made gestures toward improving bilateral ties with Russia and has even positioned himself as a potential mediator in the ongoing Russia–Ukraine war. These diplomatic signals appear to have softened Russian public attitudes.

Germany Rises to the Top of the 'Unfriendly List'

The new “most unfriendly nation” in the eyes of Russians is Germany, cited by 56% of respondents. The shift appears tied to the foreign policy direction of newly appointed German Chancellor Friedrich Merz, who succeeded Olaf Scholz in May. Merz has taken a markedly tougher stance toward Moscow, lifting restrictions on the range of German-supplied weapons to Ukraine and openly considering the transfer of long-range Taurus missiles to the Ukrainian government.

This aggressive posture has made Germany the focal point of Russian ire, especially among those who previously viewed Berlin as a more moderate actor. In 2021, only 16% of Russians identified Germany as a primary adversary.

The United Kingdom and Ukraine follow closely behind Germany, with 49% and 43% of Russians respectively labeling them as “unfriendly.”

Trusted Allies: Russia’s Inner Circle

On the other end of the spectrum, Belarus remains Russia’s most trusted ally, with 80% of respondents expressing a positive view. China follows at 64%, reflecting a growing political and economic partnership. Kazakhstan (36%), India (32%), and North Korea (30%) round out the top five most friendly nations according to Russian public opinion.

This pattern suggests a consolidation of alliances within Eurasia and the Global South, particularly among countries either neutral or supportive of Russia in the Ukraine conflict. Notably, North Korea’s presence in the top five shows how geopolitical friction with the West can draw previously peripheral actors into tighter alignment with Moscow.

Trump Diplomacy and European Tensions Shift Russia’s Global Outlook

The dramatic drop in anti-American sentiment in Russia highlights the tangible impact of Trump’s second-term diplomacy. At the same time, escalating tensions with European leaders—especially Germany’s hawkish turn—are redrawing the public’s map of friends and foes.

While long-standing distrust of the West remains, the ranking reshuffle signals a nuanced recalibration of Russia’s perceived threats, driven by real-world policy changes and leadership shifts on the global stage.

Source: RT

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Daniel Carter

Central Bank

Economic

Spain's central bank has adjusted its economic growth forecast for the year, lowering it to 2.4% from the previous 2.7%, according to Governor Jose Luis Escriva. The revision, announced on Monday, is attributed to ongoing global trade tensions, although Spain's projected growth still surpasses the euro zone's average.

In addition to the adjustment for this year, the Bank of Spain has also slightly decreased the growth outlook for the following year, bringing it down to 1.8% from 1.9%. This is a step down from the 3.2% expansion experienced last year, a reduction that Escriva attributes to diminished growth in other economies due to the uncertainty brought about by the ongoing tariff war involving the United States, China, and Europe.

Escriva noted that Spain's central macroeconomic scenario incorporates moderate tariff increases and a fiscal boost in defense spending. This comes as the European Central Bank has projected an average growth of 0.9% across the common currency area in 2025, and 1.1% in 2026.

In addition to the growth forecast, the Bank of Spain has also made adjustments to the inflation forecast for this year, lowering it to 2.4% from the previous 2.5%, as stated by Escriva.