Drone on

Good morning. Zara has learned the hard way that it’s not always a good thing when your product is the most-talked-about item in fashion.  

The fast fashion brand's wide-legged trousers have earned the nickname the “Zara death pants" after multiple women shared their experiences of tripping on the excess fabric and injuring themselves. One Torontonian even broke her wrist and cracked open her face. 

We’ve all heard the phrase “beauty is pain,” but this is taking it too far.

Today’s reading time is 6 minutes.

Markets: Canada’s main stock index and top Wall Street indexes rose yesterday as new U.S. inflation data eased investor fears of a renewed interest rate hike cycle from the Federal Reserve. Relatedly, investors today are awaiting the Bank of Canada’s rate decision.

Ottawa’s Buy Canadian program has a very generous definition of what counts as Canadian.

Driving the news: The federal government has given more than 70% of its contracts under its new Buy Canadian procurement policy to foreign-owned companies, according to The Logic, more than half of which went to foreign pharma giants. Between December 2025 and June 2026, only four of the 14 contracts went to Canadian-headquartered companies. 

Catch-up: Many of Canada’s international trade deals stipulate that once a government contract exceeds a certain dollar amount, it must be open to foreign companies too. That means, even if it wanted to, Ottawa isn’t really allowed to favour homegrown firms for major procurements. 

Why it matters: The scope of the Buy Canadian approach has its practical limits, as protectionist policies can discourage foreign investment and spark retaliation from countries that argue we’re breaking our trade agreements. 

Our take: The reality is that for a lot of major procurements (like a $100 billion fleet of submarines), the best, and sometimes only, option is outside of Canada.—LA

IBM’s stock sheds US$70 billion in its worst-ever day of trading. After releasing its worse-than-expected second-quarter earnings, IBM’s stock plunged 25.2% — the steepest single-day decline in the company’s 115-year history. IBM’s brutal day had ripple effects across the industry: Canadian software companies, including OpenText, CGI Group, and Constellation Software, all dropped by at least 4% yesterday. (Wall Street Journal) 

Google’s AI chief wants a frontier model watchdog. Demis Hassabis, the CEO of Google DeepMind, is calling for the creation of a regulatory body to test new frontier AI models for national security threats before they are released to the public. While top labs including Anthropic and OpenAI say they voluntarily share their new models with government agencies and companies for stress testing, it’s not a requirement that they do so. (Axios)

First Nations groups to invest $1 billion in LNG infrastructure deal. Five First Nations groups will take an equity stake in a planned LNG Canada storage tank at its B.C. export terminal (which will be about the size of a 12-storey building). The deal, contingent on LNG Canada making a final investment decision in the terminal expansion later this year, would make the First Nations groups the majority owners of the tank and its infrastructure. (Globe and Mail) 

What else is on our radar: 

Caribou is building AI-powered infrastructure for home care workers, America's largest and fastest-growing workforce, and doing so with culture at the forefront. It's a massive market, and they're one of Canada's fastest-growing companies, ranked #10 in technology by the Globe and Mail. But what actually keeps people there? Probably this:

They just posted a new Customer Success role, and a new wave of hiring is coming soon! Follow Caribou on LinkedIn so you're ready.

🤝 Meet Ronnen Harary. He’s the co-founder and chairman of Spin Master, the $2.2 billion Canadian toy company behind PAW Patrol and many more childhood staples. We sat down with Harary to talk about his new book, No Experience Necessary, the advantages of starting a business in your 20s, and what you learn after turning down a $100 million movie deal. 

Why do you believe your twenties are the best time to start a business?

First, no one sees you as competition, everyone's rooting for you. I remember calling Alan Hassenfeld, one of the founders of Hasbro, in our early days, and he'd take the call and give us advice, because he was excited about young people entering the toy industry. He didn't see us as competition, he wanted us to win. There's an advantage to being a little less risk-averse — a little naive. Your brain isn't yet filled with conventional ways of thinking, so you're tapping into your own intuition. 

The other thing about your twenties is the zeitgeist. You're practically living it. Your ability to tap into what's happening in culture, music, fashion, and how people spend their time creates white-space business opportunities. Your twenties are also the first time you have real agency to actualize how you see the world, rather than just observing it while living at home and going to school. 

How did you deviate from that approach as you got older?  

I’ll tell you a story about Bakugan. I spent three years trying to get a live-action film made, and finally got Universal to agree to greenlight a $100 million film in 2011. Conventional wisdom in the toy industry said you can relaunch a franchise after it declined if you waited seven years. Ben and I figured doing the film would delay the relaunch by two or three years, and we didn't know if the film would even revive the franchise, so we decided not to do it. I'm probably the only person in Hollywood who's turned down a $100 million live-action film, and I did that based on conventional wisdom about relaunch timing. It was one of my worst decisions.

Your PAW Patrol franchise is now in 160 countries and has grossed $14 billion in sales. What was the secret to the success of that franchise? 

PAW Patrol was born at the lowest point in Spin Master's history. We went from $1 billion in sales down to $450 million in two years. We had to let go of 350 people, and had to restructure the business. That's when it was born. It came from a collective of incredible Canadians — and one British guy — who came together to tell the story and create the characters with love. None of them were thinking about PAW Patrol becoming a franchise in 160 countries, it was about making kids connect with the characters and making them aspirational. I was cautiously optimistic going in, but it exceeded all my expectations. 

This interview has been edited for length and clarity. Read the full Q&A here. 

Everyone in defence is droning on about drones today, and the feds have been listening. 

What happened: Ottawa announced a new facility in Mirabel, Quebec, where it will test drone defence technology. It is the second facility in a planned national network of hubs focused on areas of sovereign capabilities as identified by the Defence Industrial Strategy.

Catch-up: Military drones have been around for a while, but they’ve really had a breakout year in 2026. Developments in Ukraine and Iran have led many analysts to believe they are the future of warfare, spurring a rush of global investments in drone technology firms.

Why it matters: A little like AI, Canada was an early innovator in drone defence but has since fallen behind. The feds have made catching back up a priority in its defence spending push, looking to develop sovereign equipment and methods to fast-track acquisitions.—QH

💰 61%. Share of Canadians who say that at least half of their pay is already committed to bills, debt, and regular expenses before it arrives, according to the latest MNP Consumer Debt Index. The financial pinch has increased what MNP’s president called “lifestyle shrinkflation,” where people are cutting back on the nice-to-haves they previously enjoyed.

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