Morning Markets for Thursday, June 25, 2026

Key Concepts

• Memory/Storage Shortage: A critical supply-demand imbalance driven by AI data center expansion, impacting tech giants like Apple and benefiting manufacturers like Micron.
• Quality Stocks: Companies with stable fundamentals, consistent earnings, and reliable dividends, currently undervalued due to the market's focus on high-growth tech.
• Geopolitical Fragmentation: The increasing impact of global conflicts (e.g., Iran, Ukraine) on supply chains, defense spending, and market volatility.
• CUSMA (Canada-United States-Mexico Agreement): The trilateral trade deal currently facing a critical review, with uncertainty impacting business investment.
• Secular Growth Themes: Long-term trends driving market opportunities, specifically in defense, healthcare (aging demographics), and industrial robotics.

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1. Market Performance and Tech Sector Dynamics

• BlackBerry: Shares surged following a 26% revenue increase and a fifth consecutive quarter of profitability, driven by QNX and cybersecurity units.
• Apple: Shares declined due to price hikes on Macs and iPads, a move intended to offset rising memory costs caused by unprecedented demand from AI data centers.
• Micron Technology: While Micron’s earnings beat expectations, the market reaction was mixed. Experts note that while Micron benefits from high memory prices, companies reliant on these components (like Apple and Dell) face margin pressure.
• Market Outlook: Analysts suggest the market has risen like a "rocket" rather than an "escalator." Investors are advised to expect periodic 5–10% pullbacks, consistent with historical data.

2. Economic Indicators and Consumer Spending

• Consumer Spending: US inflation-adjusted spending rose 0.3% in May, despite economic shocks.
• PCE Index: The Personal Consumption Expenditures price index climbed 4.1% year-over-year, marking the highest level since April 2023.
• Investment Uncertainty: High interest rates and trade uncertainty are suppressing business investment, contributing to a period where job growth has stalled.

3. Geopolitical Strategy and Defense

• Canada’s Indo-Pacific Pivot: Canada is increasing its military footprint in the Indo-Pacific, focusing on deepening ties with Japan, South Korea, and the Philippines.
• Defense Spending: Canada has reached the 2% GDP defense spending target five years ahead of schedule.
• Strategic Partnerships: Canada is pursuing a "recalibration" of its relationship with China while simultaneously strengthening defense industrial ties with Japan, including potential procurement of military technology.
• Lockheed Martin: Identified as a value play in the defense sector, as nations look to replenish missile and fighter jet stockpiles.

4. Trade Policy: The CUSMA Review

• The Stakes: The July 1st review of CUSMA is critical. Canada and Mexico are pushing for a 16-year extension to 2042 to provide business certainty.
• Risk of Failure: If an agreement isn't reached, the deal triggers an annual review process, which would "crystallize uncertainty" and likely deter long-term capital investment.
• Tariff Impact: CUSMA currently keeps Canadian tariffs 2.5 to 3 times lower than the global average. Compliance with "rules of origin" has surged (80–90% for Canada/Mexico), highlighting the necessity of the agreement for exporters.

5. Investment Strategies: Quality and Diversification

• Healthcare: Despite being "left in the dust" by tech, healthcare is highlighted as a top secular growth sector due to aging global demographics and the need for innovation in drug development.
• Industrials: Described as a "trifecta" opportunity driven by:
  1. AI infrastructure spending.
  2. Global increases in defense budgets.
  3. The global energy crisis necessitating new industrial solutions.
• Commodities: A "strategic super cycle" is emerging in agricultural commodities (due to volatile weather and supply constraints) and base metals (copper, palladium) required for industrial buildouts.

6. Nuclear Energy Innovation

• Lightbridge Corporation: CEO Seth Gray discussed new nuclear fuel designs currently being tested at the Idaho National Laboratory.
• Technical Innovation: The fuel uses an extruded metal design with increased surface area, which allows for higher power output and potentially cuts fuel waste by 50%.
• CANDU Integration: There is potential for this technology to be applied to CANDU reactors, which remain a focus for international markets like India, Romania, and Argentina.

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Synthesis

The current market environment is characterized by a divergence between high-flying AI-related tech stocks and "unloved" quality stocks in the healthcare and industrial sectors. While AI-driven demand for memory is creating short-term supply chain bottlenecks, the broader economic landscape is defined by geopolitical uncertainty and the need for trade stability via CUSMA. Investors are encouraged to look beyond the tech rally, focusing on diversified, high-quality companies that benefit from long-term secular trends like defense, aging demographics, and the global energy transition.