Trump Says US and Canada Working on Formula for Tariff Deal

Economic

Political

Summary:

The trade war has caused job losses and put a chill on business investment, pushing Canada’s economy to contract in the second quarter.

President Donald Trump said he expects the US and Canada can “get there” on a resolution to their dispute over sectoral tariffs on steel, aluminum and autos.

Trump made the remarks in an Oval Office meeting with Canadian Prime Minister Mark Carney on Tuesday, where the president described the disagreements between the countries as “natural conflicts” because they’re competing for the same business.

“That’s why I keep mentioning one way to solve that problem is a very easy way,” Trump said, an apparent reference to his suggestion that Canada should be the 51st US state, an idea that is widely opposed by Canadians.

“He wants to make cars, we want to make cars, and we’re in competition. And the advantage we have is we have this massive market,” Trump said as he sat next to Carney.

The meeting marks Carney’s second visit to the White House since becoming prime minister earlier this year — with a trading relationship worth $900 billion on the line. The former central banker won an election in April on a promise to negotiate a new trade and security deal with the US, but Trump has only hiked tariffs since then.

Carney told Trump that Canada is the US’s largest foreign investor, and suggested the pace of investment may accelerate — “probably $1 trillion in the next five years, if we get the agreement we expect to get. “

“There are areas where we compete, and it’s in those areas where we have to come to an agreement that works,” Carney said. “But there are more areas where we are stronger together, and that’s what we’re focused on.”

US tariffs on steel, aluminum, autos and lumber are battering key Canadian industries. And on Aug. 1, Trump raised levies on goods that don’t comply with the US-Mexico-Canada Agreement to 35% from 25%. The trade war has caused job losses and put a chill on business investment, pushing Canada’s economy to contract in the second quarter.

Canada is the largest foreign buyer of US-made vehicles, and exports most of its own automotive production to the US market.

Carney offered an olive branch to Trump in August when he announced the lifting of most of Canada’s retaliatory tariffs on imports from the US. Carney’s predecessor, Justin Trudeau, imposed counter-tariffs on about C$60 billion ($43 billion) of US products. Canada’s new policy on counter-tariffs is to apply them to areas where US tariffs are in place, such as steel and aluminum.

“We’re working on formulas and I think we’ll get there,” Trump said of the trade discussions.

Carney’s top negotiators, including his cabinet minister responsible for US trade, Dominic LeBlanc, and Canada’s ambassador to the US, Kirsten Hillman, are still pushing for a near-term deal that would see some sectoral tariffs lowered or dropped.

But Carney has begun to signal a shift in focus somewhat to the 2026 review of the North American free trade deal Trump signed in his first term.

Carney traveled to Mexico last month and pledged deeper cooperation with President Claudia Sheinbaum ahead of the review process. His officials have tried to pitch the US on the importance of fortified North American supply chains, especially in Canada’s wealth of critical minerals, as a counter to China’s dominance.

He has also attempted to address long-standing US complaints about Canada’s low military spending, agreeing to meet the North Atlantic Treaty Organization’s target of spending 2% of gross domestic product on defense this year and pledging to ramp up to 5% by 2035. Trump said he expected the two leaders would discuss the US’s proposed Golden Dome missile defense system during Tuesday’s meeting.

Source: Bloomberg

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Kevin Du

Central Bank

Federal Reserve Bank of Minneapolis President Neel Kashkari on Tuesday cautioned that any drastic cuts to interest rates would risk stoking inflation.

“You would expect to see the economy have a burst of high inflation,” Kashkari said Tuesday during a panel discussion on artificial intelligence and the economy hosted by the Minnesota Star Tribune. “Basically, if you try to drive the economy faster than its potential to grow and its potential to produce prices, you end up just going up across the economy.”

The Minneapolis Fed chief, who doesn’t vote on monetary policy this year but participates in the Federal Open Market Committee’s deliberations, cautioned that current economic data is showing some signs of stagflation given growth is slowing and inflation remains persistent.

“Some of the data that we’re looking at is sending some stagflationary signals,” he said.

Source: Bloomberg Europe

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Adam

Commodity

One of the biggest gold bulls on Wall Street is starting to sound a little more cautious as the precious metal pushes closer to $4,000 an ounce.

The commodity team at Bank of America was among the first to highlight the $4,000 target at the start of the year, saying it wouldn’t take much renewed investment demand to reach those levels.

However, with the target now in sight, BofA technical analyst Paul Ciana said the precious metal has achieved much of its upside potential and now appears slightly overbought.

“A variety of multiple time-frame technical signals and conditions warn of uptrend exhaustion as gold nears $4,000/oz,” he said. “If so, a consolidation or correction could follow in Q4. Trend-following/risk management favors raising stops, hedging, or reducing some long exposure. A contrarian trader view can consider 4–6-week puts.”

The comments come as spot gold trades at $3,960 an ounce, up nearly 2% on the day. Meanwhile, the precious metal has gained 50% so far this year, marking its best annual rally since 1979.

Ciana noted that this year’s rally is comparable to major bull markets in recent history. However, he added that those bull markets were often preceded by significant selloffs.

He pointed out that from the lows of 2015 to 2020, gold prices rallied 85% before sharply correcting 15% in 2022, and that the current rally has since lifted prices another 130%. However, he also noted that gold’s latest bullish cycle remains smaller compared to the rallies seen in the early 2000s and the 1970s.

“The 1970–1980 boom totaled +1,725% with a correction in the middle. The bust from 1980 into 1999 was about -59%,” said Ciana. “The 1999–2011 advance was about +640%, with a mid-cycle correction also occurring. A -38% bear market followed into 2015.”

Looking at gold’s potential, Ciana said that if the current bull rally matched the 400% gains seen after 2015, prices could break through $5,000 an ounce. If it mirrored the 2000s bull market, gold could trade closer to $7,000 an ounce.

Ciana added that while he doesn’t rule out those moves, he warns that the current rally is already mature and could be vulnerable to a mid-cycle correction, similar to previous bullish phases.

One particular technical pattern Ciana is watching is gold’s impressive weekly streak: the precious metal has closed higher for seven consecutive weeks.

However, he added that in all 11 previous instances, gold prices were lower four weeks later.

Ciana is also paying close attention to gold’s long-term moving averages. He noted that the yellow metal is currently about 21% above its 200-day moving average, “where peaks are increasingly common.”

He also observed that gold is roughly 70% above its 200-week moving average, “a condition seen only three times (Sept 2011, Mar 2008, May 2006).” Finally, gold is 140% above its 200-month moving average.

On the downside, Ciana sees initial support at $3,790 and warns of potential risks extending as low as $3,525.

Source: kitco

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Adam

Economic

The Covid pandemic, the war in Ukraine, questions about transatlantic relations... "There is clearly a growing awareness of the need for European sovereignty," said Thomas Zlowodzki, head of equity strategy at Oddo BHF, at a press lunch held at its headquarters on Friday, October 3.

He says that European sovereignty has indeed become an economic and security imperative, with profound implications for investors. "Europe has realized that it must take greater responsibility for its defense, secure its supplies and build champions in critical sectors."

A doubled European financing plan

The bank reports that the issue of EU sovereignty has not escaped the attention of EU politicians, as evidenced by the 2028-2034 multiannual financing plan, which has been increased to €2 trillion, double the previous amount, and which focuses on energy, digital technology, research, and defense. "Even though the European Union is a slow-moving beast due to its size, there are still some fairly positive signs," Thomas Zlowodzki notes.

Member states, starting with Germany and France, are multiplying national measures, whether it be the France 2030 plan or the special German fund of €100bn to modernize its army.

Five pillars for investing in sovereignty

In this context, the financial sector is expected to play an increasingly important role, with the emergence of thematic funds and the mobilization of private capital around strategic projects. With this in mind, Oddo BHF has broken down the theme of sovereignty into five pillars:

Military,

Digital,

Energy and raw materials,

Industrial infrastructure,

Health and food.

In all, the bank has identified 127 listed stocks that fit the sovereignty theme, including "7 magnificent" companies, presented as "undisputed leaders in sovereignty," and "20 rising stars," smaller companies with strong growth potential.

The "Magnificent Seven" champions of sovereignty

The "Magnificent Seven" form the core of Oddo BHF's sovereignty portfolio. They include Rheinmetall, the German defense giant; Thales, the French pillar of security systems and satellites; and ASML, a key player in semiconductors and the world's only supplier of certain lithography technologies.

Alongside them are Schneider Electric, a specialist in energy efficiency and industrial automation; Siemens Energy, committed to energy transition and green electricity production; and SAP, a European heavyweight in management software and artificial intelligence applied to businesses. More surprisingly, Lonza, a Swiss company positioned in pharmaceutical bioproduction, is also included.

These companies share a critical mass, recognized technological expertise, and a strong contribution to European indices. According to data from Oddo BHF, they are expected to post average annual EPS growth of 24% between 2024 and 2027. Since February 2024, the basket of these seven stocks has already risen by 57%, demonstrating investors' growing interest in this theme, the bank points out.

The "rising stars": the future pillars

Alongside these established champions, Oddo BHF highlights twenty smaller stocks, presented as "rising stars," capable of becoming the pillars of sovereignty tomorrow. Their expected earnings growth reaches 44% p.a. over 2024-2027, an even faster pace, but driven by a riskier profile.

In Defense & Security: Hensoldt, Renk, Exosens, Exail Technologies, Frequentis

Tech & Industry: BE Semiconductor, Adesso, Technip Energies, Knorr-Bremse, Sulzer, Vossloh

Energy & transition: Vopak, Elia Group, Nordex, Grenergy Renovables, Nexans, Spie

Raw materials & healthcare: K+S, Sartorius AG

Strategic real estate: Merlin Properties

For Oddo BHF, European sovereignty is thus emerging as the new guiding principle for investment, at the crossroads of security, technology, and energy transition.

Source: marketscreener

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Devin

Central Bank

European Central Bank President Christine Lagarde renewed her call on Tuesday for a beefed-up global role for the euro currency, arguing that the bloc is now an innocent bystander, suffering shocks created in Washington and elsewhere.

The euro, the world's second most-used currency behind the dollar, has appreciated sharply this year as investors fled the U.S. currency on policy uncertainty, picking up safe assets, like gold and top-tier European bonds, among others.

But the 20-nation currency bloc's market for investment grade sovereign debt and stocks is relatively small compared to the U.S., putting it at risk of volatility in case of such flows.

"We are innocent bystanders of policy decisions made in Washington and of portfolio allocation decisions made worldwide, which we don’t have much influence over," Lagarde said in Paris. "It is not a sustainable position."

"We cannot remain a passive safe haven, absorbing the shocks created elsewhere," Lagarde said in a speech. "We need to be a currency that shapes its own destiny."

Critics argue that a larger market share would mean appreciation for the currency, an unwelcome trend putting exporters at a disadvantage.

The argument is that foreign demand for reserve assets would mean a steady inflow into the bloc and that would strengthen the currency and not just lower borrowing costs.

But Lagarde argued that there is no such mechanical relationship and the bloc could mitigate such risks by shifting more of its foreign trade to euros and expanding domestic trade.

In any case, many of Europe's economic difficulties were self-inflicted that could be resolved by bolder policy initiatives, she argued.

"Our weaker performance compared with the United States largely reflects internal barriers of our own making: including fragmented regulations, tax regimes, bankruptcy rules and incomplete capital markets," she said.

"Structural challenges such as high energy costs, low productivity and reluctance to finance common projects are also, to a large extent, within our own control."

Source: TradingView

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Adam

Economic

In 2020, two young brothers at a 135-year-old Gulf merchant family approached one of its money-managers with an idea: bet on Bitcoin.

Fifth-generation twins — Abdulaziz and Abdulla Kanoo — had been venture capital investors but hadn’t previously pitched a trade to the family office. James Burke, who oversees their family’s public markets investing unit, was concerned the bet could backfire and began writing a paper disproving the pitch. But, ultimately, he realized the 22-year-olds could be onto something.

Burke took it to the Kanoo Group’s investment committee, which voted for it — barring a few older members. He put a small amount into Bitcoin and last year sold at a profit. The twins, now 28, have their own separate digital assets financial services firm that invests in crypto for outside clients and other family offices. The family office, meanwhile, has continued its exposure to crypto, opting to do so via hedge funds.

The willingness to test a new asset class offers a window into the shifts emerging in one of the world’s biggest pools of familial money: Rich Middle Eastern families, who are expected to transfer an estimated $1 trillion to the next generation in the coming years and are increasingly turning to professional money managers.

Globally, the rich are embracing new asset classes. Yet the shifts within Middle Eastern families are stark and being closely watched because, for decades, they primarily funneled money into real estate or their own businesses. Foreign firms had few opportunities to make inroads into this vast pool of money.

Now, banks from Citigroup Inc. to Barclays Plc to Deutsche Bank AG are hiring in the Gulf to bolster local wealth divisions. Some family offices like the Kanoo Group’s have been investing in hedge funds and private credit for years, but as more jump in both industries are poised to benefit.

“A lot of the wealth that has been generated in the Middle East is facing a new transition event at a magnitude that has never been seen before,” Mathias Gonzalez, Barclays Plc’s private bank’s head of investments in the Middle East and Switzerland said in an interview. That shift is drawing attention from advisors, law firms and others in the estate planning space.

Dubai’s financial hub has become home to more than 70 hedge funds, while neighboring Abu Dhabi is home to giants like Brevan Howard Asset Management and Marshall Wace.

The growing presence of hedge funds in the region has encouraged investments because managers can meet families directly, said Edwin Lawrence, CEO at Nettlestone Capital Advisors in Dubai, which acts as an intermediary between hedge funds and regional allocators. Investment teams within family offices are also getting more sophisticated and able to conduct their own due diligence, rather than following bank recommendations, he added.

“A $5 million ticket can be meaningful for a smaller hedge fund, and family offices like that diversification,” Lawrence said.

Still, winning money from Gulf family offices isn’t easy. Middle Eastern family office portfolios are still much more liquid and have higher real estate holdings than North American or European counterparts, according to an HSBC and Campden Wealth report.

Their moves into riskier asset classes like hedge funds, crypto currencies and private credit remain small. And advisors say they often grapple with differing views between younger and more conservative older generations. Some families use several layers of checks and balances before deploying money.

“As a family business you have a lot of layers of governance and risk that you need to go through,” Abdulla Kanoo said in an interview. The Kanoo Group has roots in Bahrain, while the twins were born in Saudi Arabia and now live in Dubai.

Even so, more money from Middle Eastern family offices already appears poised to flow into assets around the world.

Bhaskar Dasgupta, Middle East and India chairman of Apex, a firm that provides hedge fund services, said local families are now hiring professional investment managers who are more comfortable with hedge funds.

“Among local Emirati families, crypto is very popular,” he said, adding that overall investments in hedge funds are steadily climbing. As the younger generation has looked for more institutional investments they are investing in hedge funds with exposure to digital assets, tokenized funds, or tokenized real-world assets like property, Dasgupta said.

At one Abu Dhabi event organized by Apex last year, at least four or five hedge fund strategies — like long/short and macro — were in the top ten of all strategies requested by allocators of local family money, he said.

Next generation family office principals are also getting more comfortable lending their Gulf equity assets to hedge funds through securities lending programs, and their expectations for returns are higher, according to James Augustine, who heads BNP Paribas’ Middle East and Africa prime brokerage sales and capital introductions.

Meanwhile, over 70% of the 34 Middle Eastern single family offices surveyed by Tharawat, a regional family business forum, said they participated in private equity as co-investors.

Just under 60% also invest in venture capital, looking for opportunities to fund start-ups.

Portfolios are becoming more diversified, with large allocations to the US, some to Europe, and increasingly also to Asia, said Hannes Hofmann, global head of Citi’s family office group.

Dubai and Abu Dhabi are already home to wealthy families from other parts of the world. This massive migration of wealth is exposing regional family offices to new trends.

Ahmed Alahmadi, CEO of Albaher Real Estate, helps run his family office based in Abu Dhabi. The 32-year-old, who has worked at an international bank and local sovereign wealth funds, says that in recent years the family has become more active in alternative investments in partnership with reputable players. It has, for example, focused on mid-market private credit in the US.

“We also adapted a hedge fund mentality in-house and became more active with options and derivatives trading for yield enhancement,” he said.

The younger generation in the Gulf is now looking beyond just profits. Thirty-one-year-old Kevin Chalhoub, a scion of the Franco-Syrian luxury retail family group, runs an electric vehicle rental and leasing business in Dubai and says he tries to make the case for ESG investments within the family.

“I wouldn’t say it’s next-gen versus old gen, but I do think there is this sense that sustainability matters,” Chalhoub said in an interview. “As a family, you care about your children and what planet you leave for them.”

Source: Bloomberg

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Adam

Economic

A deal that closes the loop

AMD has committed to providing up to 6 gigawatts of GPU capacity to OpenAI over several years, starting with an initial gigawatt in 2026. But more notably, AMD has granted OpenAI a warrant (a call option) for 160 million shares, representing approximately 10% of the capital, if various milestones are reached (delivery, performance, share price up to $600). In other words, OpenAI pays AMD for chips, but also obtains the right to become an AMD shareholder. This type of transaction creates a financial loop (or "circularity") in which revenue streams, investments, and technical transactions intertwine.

Why is this circularity strategic (and risky)?

Alignment of interests... but increased dependence

This mechanism incentivizes AMD to deliver and succeed so that its stock price rises, which benefits OpenAI - both as a customer and as a shareholder. But it also creates mutual dependency: AMD's performance becomes critical to OpenAI, and vice versa.

Strengthening the grip of tech giants

Such a structure signals a form of implicit vertical integration in AI: those who consume "compute" become co-owners of the "compute provider." It's another way of locking down the ecosystem. Nvidia, already known for building a "moat" around its architecture (hardware, software, interconnections), follows a similar logic to make its customers captive to its technological environment.

Pressure on margins and cash flow

For AMD, giving up shares or warrants in exchange for a contract may reduce immediate profitability, but it is betting on future valuation. For OpenAI, paying for chips while receiving shares is tantamount to partially subsidizing its purchase, but this bet is only profitable if AMD's share price reaches the set milestones.

Risk of excessive circularity

By feeding off itself, this type of arrangement can create loops of financial dependency. If AMD's share price stagnates or declines, certain milestones will not be reached, undermining the profitability of the deal for OpenAI. This creates a "circular dance" in which companies are simultaneously customers, suppliers, and investors, making their financial stability more sensitive to external shocks.

Impacts for Nvidia, AMD, and the AI ecosystem

AMD is gaining legitimacy in the field of GPUs for AI: its stock jumped over 20% after the announcement. Nvidia, meanwhile, is reconfiguring its role: it recently signed a massive agreement with OpenAI to supply its own GPU systems, while also investing in the company. OpenAI is thus seeking to diversify its suppliers (Nvidia, AMD, Broadcom) in order to reduce its dependence on a single player and obtain better supply conditions. Finally, the AI ecosystem as a whole seems to be moving towards greater interdependence, through cross-alliances, reciprocal equity investments, and multi-year contracts that combine financing, technology, and capital.

The partnership between OpenAI and AMD is not just a simple sale of hardware. It illustrates a structural transformation of the artificial intelligence economy: financial, industrial, and technological flows are becoming circular, boundaries are blurring, and the giants of the sector are building closed ecosystems where everything (from silicon to revenue) circulates in a loop. This circularity can accelerate innovation, but it also makes the entire system more vulnerable: if one part falls, the whole chain falters.