Another round

Markets: Both Canadian and U.S. stock markets were closed for the Labour Day holiday.

Ding ding: Another round of Canada’s trade fight with the U.S. is underway.

What happened: Canada’s retaliatory tariffs on around $28 billion of imports from the U.S. take effect today, and are expected to draw further escalation by the Trump administration later this week. 

Why it matters: The counter-tariffs will drag on growth and raise consumer prices, according to analysis by Oxford Economics, but the greater risk is that the trade fight continues escalating, with the U.S. further ratcheting up attacks against Canada’s economy. 

Zoom out: So far, Canadians appear to support taking a firm line with the U.S. — 76% say “Canada did the right thing” by walking away from talks last month — but whether that will hold up as the economic costs mount remains to be seen.—TS

The far-right scored a victory in a German election. Alternative for Germany (AfD) won nearly 44% of the vote in an election in the German province of Saxony-Anhalt, leaving it with the most seats in the region’s parliament. It’s a major breakthrough for AfD, which was once regarded as a fringe party, but has steadily gained support in recent elections and now appears to have cracked the “firewall” of mainstream parties that have sought to prevent it from coming to power. If the AfD forms government in Saxony-Anhalt, it will be the first time since 1945 that the far right has reached power in Germany. (The Guardian)

Oil prices hit a six-week high. The price of benchmark Brent crude rose to nearly US$100 per barrel yesterday after the U.S. and Iran traded attacks over the weekend. Both sides struck ships in and around the Strait of Hormuz as they struggle for control over the vital shipping route. Oil facilities in Saudi Arabia were also targeted, though the extent of the damage wasn’t clear. Oil prices did retreat after Iran announced it was close to formalizing an agreement with Oman to manage shipping through the strait. (Bloomberg News) 

A European competitor to SpaceX conducted its first successful rocket launch. Isar Aerospace, a German company, sent a rocket into orbit for the first time. It’s a milestone for the European space industry, which is looking to build domestic capacity for commercial launches that could ultimately eliminate its dependence on U.S. companies. (CNBC)

📡 What else is on our radar: 

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“This is a time that calls for extreme caution…I am concerned no one is prepared for the consequences of a continued rapid rise in machine intelligence,” OpenAI Chief Scientist Jakub Pachocki wrote in a blog post on Sunday, warning that it won't be long until AI models can improve themselves without human intervention. 

Why it matters: The people who are closest to cutting-edge AI models are sounding the alarm that the pace of their development is creating urgent safety issues. With rogue AI incidents becoming concerningly common, Pachocki and other industry leaders are calling for a voluntary slowdown in the AI race before they lose control of the technology.

With a new head honcho at the helm, Canada’s biggest apparel brand will try to turn things around one pair of $100 leggings at a time. 

Driving the news: Former Nike exec Heidi O’Neill takes the reins as CEO of Lululemon today, just one week after the athleisure brand saw its stock sink to an eight-year low. As O’Neill takes over, shares in the Vancouver retailer are down over 50% on the year. 

Catch-up: Slumping sales and high-profile product mishaps were already hampering the brand, but things went from bad to worse in May when Lulu mistakenly used a Japanese taiko drum at a Chinese yoga festival on the Great Wall. Public blowback was fierce, and comparable sales in the crucial Chinese market fell 8% last quarter (after 13% growth in Q1). 

Why it matters: Lululemon basically invented workout clothes that look cool enough to wear outside of the gym, but it’s been steadily losing its grip on the athleisure category. Lulu’s share of the athleisure market shrank 10 percentage points in August, according to one analysis, while rivals Alo Yoga and Vuori each grabbed a bigger share. 

Our take: Lululemon’s brand can still open wallets, but if it continues to cling to the styles that made it a household name in the 2010s, its cultural cachet (and the premium price point it permits) will eventually disappear.—LA

💰 5.6%. Salary increase that Canadians who hopped jobs last month saw, according to an ADP analysis. Those who stayed at their jobs saw a 3% year-over-year salary bump. In the U.S., workers who jumped jobs received lower pay bumps on average than those in Canada.

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Shake off that long weekend rust with today’s mini crossword, the daily sudoku, Codebreaker, and Who’s Who!