Plus: a $9 billion defence-budget boost June 16, 2025 Sign Up | View online IN THIS ISSUE 8 min read 🏗️ Condo conundrum 🪖 Defence dollars 📱 Apple announcement Steve Jobs was an innovator — and also a heckuva showman when it came to announcing new products. Does Apple need to rev up the theatrics once again? We explain below. | Getty Images THE WEEK IN MARKETS Why bad news for the world = good news for gold Big rally! But not for stocks — the markets actually took a tumble on Friday as the Israel–Iran conflict threatened to metastasize into a wider war. No, we’re talking about gold, which was already up 45% this year and then surged again on Friday to nearly US$3,500, or C$4,755, for the same reason that stocks tumbled: instability in the Middle East. Why does gold always do so well when the world, uh, doesn’t? Because it’s tried and true, historically stable, and beyond government control. Also: global crises lead people to expect interest rates to fall and therefore for the return on cash (another safe haven) to decrease. Gold’s value has doubled since 2022, as private investors sought refuge in inflation-proof assets and central banks looked for sanction-proof stores of value after Russia invaded Ukraine. The gold rush could taper off if Israel and Iran de-escalate — but the experts seem to be betting they won’t. THE CHART OF THE WEEK WHAT HAPPENED LAST WEEK IMPORTANT Canada’s defence budget gets a $9 billion raise. Ottawa announced that it will increase military spending this year from $53.4 billion to $62.7 billion. The additional cash is a bid to placate the U.S., which has long complained that Canada doesn’t meet its NATO funding targets; plus, some Canadians have grown uneasy about the U.S.’s reliability as a friend or protector. This investment could benefit industrial development and innovation, two areas where Canada is sorely lacking. But studies show that defence spending usually doesn’t drive long-term economic growth, unless you get lucky and create something like the internet. At the very least, maybe our soldiers will get sleeping bags warm enough for Canadian winters. INTERESTING Meet the Chinese emigre billionaire buying up Hudson’s Bay locations. Weihong “Ruby” Liu began her career as a teen apprentice in a Chinese shoe factory; now, she owns 28 of HBC’s former department stores, which she plans to reboot as a cross-Canada retail chain. Liu made her fortune in commercial real estate, and, after selling a Shenzhen mega-mall in 2019, she immigrated to Canada and started buying up malls around B.C. Liu hasn’t said much about her vision for the former HBC stores, but her past redevelopment projects suggest they’ll be ultramodern, with arcades, Asian-style food halls, playgrounds, and maybe even a zip line. Asian malls have bucked the trend of declining brick-and-mortar retail, so perhaps Liu is on to something. Apple watchers wanted AI. They got “liquid glass.” The iPhone juggernaut has conditioned the tech community to expect flashy, futuristic reveals at its annual developers conference, so, after Apple made some big AI promises at last year’s event, attendees were a bit deflated to learn that this year’s showstopper was … a new translucent software interface? Investors clearly left disappointed: $AAPL dropped by 2.5% post-conference, putting it 19% south on the year. But Stratechery’s Ben Thompson makes the case that investors should be encouraged by Apple’s refocusing on its core strength — that is, designing objects we use every day. Improving these designs, he writes, “will have a far more positive impact on my life than the company struggling to catch up in AI.” —Sarah Rieger Correction: Last week, we wrote that the U.S. charges Canadian investors a 15% withholding tax on dividends in tax-advantaged accounts (like TFSAs and RRSPs) and a 30% tax in non-registered accounts. This wasn’t quite right. In truth, Canadian investors pay no withholding tax on dividends in RRSPs and a 15% withholding tax on TFSAs and non-registered accounts. We regret the errors. FROM OUR SPONSOR THE FOMO INDEX by Stacey Woods IMPORTANT 🤭 Criminals selling information on lost RCMP flash drive. Mounties kicking themselves for not attaching it to a big wooden spoon. Source 🧠 Mark Zuckerberg reportedly assembling a team to build a “superintelligence.” No word yet on the design for the capes. Source 🧑🏻‍💻 Elon Musk says he regrets some of his posts about Donald Trump. Didn’t think anyone could hear him from inside a K-hole. Source 🎭 The three actors from the “SmartLess” podcast launch their own mobile phone company. It was either that or do Shakespeare in the Park. Source CRASH & BURN TO THE MOON 🥃 Saskatchewan joins Alberta in lifting ban on American-made liquor. Guess there’s only so much Crown Royal a person can drink. Source 🌯 Chipotle plans to use AI to open a new location every 24 hours. Circadian rhythm to become Chipotlean rhythm. Source 🏭 Abandoned St. Mary’s fish sauce plant finally getting cleaned out after two decades. Be advised, marauding gangs of pho eaters. Source ✈️ The U.S.’s TSA asks people to stop trying to use their Costco cards as ID. Costco isn’t a country yet. Source WHO CARES THE BIG IMPORTANT STORY INVESTING Markets Have Been Bananas. Is It Time to Hold Defensive Stocks? In case this is your very first time reading TLDR this year — news flash! — stocks have been bouncing around a lot. After cratering in April, the TSX is back up 6.4% for the year, with the S&P 500 lagging behind at only 1.8%. The tariff-related volatility has sparked a lot of chatter, both in fancy business papers and on Reddit, about so-called “defensive” stocks, which refers to shares in boring, stable companies that generate a lot of cash. We decided to examine whether the buzz is warranted. What’s a defensive stock anyway? Sounds scary. Just so we’re clear, defensive stocks are not the same as defence stocks, like Lockheed Martin. There’s no hard-and-fast rule about what qualifies as a defensive stock, but they tend to be well-established companies whose share prices don’t fluctuate much because they sell stuff we all need to live. Think groceries, fast food, utilities, telecom, etc. Companies in these industries tend to have a stable cash flow, because weak economic conditions don’t radically change the demand for their goods or services. If you lost your job, you would cut back on a lot of things before you, say, start skipping grocery runs. The catch is that in boom times, defensive stocks don’t typically boom quite as high as the rest of the market.. So how do defensive stocks stack up? A good proxy for defensive stocks is the consumer staples indexes for the TSX and the S&P 500. The TSX version includes Loblaw, Metro, George Weston, and Alimentation Couche-Tard, while the S&P 500’s has Coca-Cola, Kraft-Heinz, and Walmart, among other blue-chip royalties. So far this turbulent year, both indexes have delivered steady, modest growth in line with what investors would expect: the TSX’s consumer staples index, as tracked by $XST, is up about almost 10% YTD, besting the TSX’s (very solid) 6.4% return and the S&P 500’s (far less solid) 1.8% return. The story is similar when it comes to the S&P’s consumer staples index. $VDC, which tracks the sector, is up 4% YTD, putting it ahead of the broader American market. What if you zoom out? The story gets a little more complicated if you look at the past decade. Since June 2015, American consumer staples have risen about 120% (total return), underperforming the S&P 500 by about 60%, which is in line with what you’d expect. Far more surprising, Canadian consumer staples have risen by 181%, trouncing the TSX by about 100% and (impressively) keeping pace with the S&P 500. Which is not what you’d normally anticipate and says one thing about Canadian grocery chains: they’ve made a lot of money since COVID. So should you hold defensive stocks? We’re not in the business of telling people which securities to buy, in part because we don’t know your risk tolerance or, for that matter, what the market will do next. That said, American and Canadian defensive stocks have, as noted, generated solid returns in recent years. Advisors tend to tell conservative investors to devote 30% to 40% of their equity holdings to defensive stocks. But fair warning: over the past century, just 2% of all U.S. stocks have generated 90% of the market value, meaning that any investor who’s made serious money has almost certainly needed to hold those stocks. And in recent years, tech companies have carried the value-creating baton. The tech-heavy Nasdaq 100, tracked by $QQQ, has soared by 430% over the past decade, easily outperforming defensive stocks and the S&P 500’s 185% return and the TSX’s 81% return. Will tech companies repeat that performance? That’s a matter of debate. But if you’re young and/or able to take some risk, keep in mind that risky, innovative companies — be it AT&T and GM in the 1950s or Amazon and Google today — have long tended to drive the biggest returns, and playing it safe with defensive stocks carries a risk of its own: missing out on hefty returns you might need to reach your savings goals. —Brennan Doherty OTHER VERY GOOD READS 🪿 Canada Goose’s Bet on China How the luxury parka maker dodged geopolitics and local pushback. | The Walrus 🚢 Why Isn’t Canada a Shipping Superpower? We’re bad at transporting stuff. But there is a solution. | Maclean’s 🏘️ Nova Scotia’s Bold Plan to End Institutional Living Can the province help people with disabilities live independently? | Broadview THE WISDOM OF SOCIAL Leave it to a creative genius to shout out a movie with a 9% Rotten Tomatoes score. THOUGHTS ON TODAY’S ISSUE? Love it Good So so This week’s newsletter contributors: Ben Mathis-Lilley (writer), Devin Gordon (writer), Stacey Woods (writer), Sarah Rieger (news writer), Ambrose Martos (fact checker), Ciara Rickard (copy editor), Maude Campbell (copy editor), Sara Black McCulloch (fact checker), Mohini Tailor (lifecycle marketing manager), Eva Grace Clement Cruz (editorial producer), Matthew Karasz (markets editor) Jared Sullivan (senior editor), Peter Martin (senior editor), and Devin Friedman (editor-in-chief). Disclosures: Contributors to this newsletter own shares in Google and Amazon. 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