📈 Neck and neck

Good morning. In the latest instance of prediction market insider trading, Donald Trump’s longtime teleprompter operator Gabriel Perez is under federal investigation for allegedly placing Kalshi bets on the contents of the president’s speeches, earning around US$100,000 in the process. 

Hmmm, that sounds concerning, but we’re sure this problem will sort itself out.

Today’s reading time is 5 minutes.

Markets: Canada’s main stock index fell yesterday from its previous record closing high as the price of gold dropped, sending shudders through the materials sector and mining stocks.

Chinese companies are staging quite a comeback in the AI race. 

Driving the news: Moonshot, one of China’s top AI startups, is set to release a new model that can reportedly exceed the performance of those at frontier U.S. labs, including Anthropic’s Claude Opus 4.8 — its second-most powerful publicly available model. 

Catch-up: Chinese models still aren’t on par with top-tier systems like Anthropic’s Fable, but the performance gap is shrinking as the price gap widens. The best open-weight models are 10–60 times cheaper than those at top labs, which have raised their token prices over the past year to offset massive computing costs. 

Why it matters: Companies blowing through their AI budgets on tokens from Anthropic and OpenAI are realizing that they don’t necessarily need the best-performing (and most expensive) models for every task.

Zoom out: OpenAI and Anthropic have accused Chinese startups of mass distillation — the practice of training smaller models on the outputs of top-tier systems — which allows them to replicate their performance without paying for the costly computing resources. 

What’s next: The U.S. government (which has already restricted public access to top models) could ban American companies from using Chinese models over national security concerns.—LA

Citigroup is bullish on Canada. The U.S. lender bought a new office in Mississauga last month and is hiring ~1,000 new Canadian workers over the next few years as it expands its presence here. Citi’s CEO said the expansion is part of its long-term bet on Canadian talent (they sure know how to flatter us). Citi, which doesn’t offer consumer banking services in Canada, says it’s seen a recent surge in multinationals wanting to invest in the country. (The Logic)

Ottawa’s Major Projects Office wants to overhaul the Port of Vancouver. An upgrade of the country’s largest port has been referred to the MPO for fast-tracking, the 18th project sent by the feds for consideration, none of which have been designated so far. Transport Minister Steven MacKinnon said the upgraded container terminal would add $100 billion in new annual trade capacity, potentially contributing $3 billion to Canada’s GDP each year. (CTV News)

Wildfires continue to burn across northern Ontario. There are about 180 active wildfires in the province, 136 of them in the northwest region, as of writing. Smoke from the fires continued to blanket cities on both sides of the border, and an Environment Canada meteorologist said the air quality in the Greater Toronto Area was "much worse" yesterday compared to levels on Wednesday (when Toronto had the worst air quality in the world). (CBC News)

What else is on our radar:

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Spotify founder Daniel Ek’s body-scanning company Neko Health raised US$700 million in a funding round backed by a group of billionaires and celebrities, including Mark Zuckerberg, retired tennis player Maria Sharapova, and record executive Jimmy Iovine. 

Why it matters: Super health-conscious rich people love getting full-body MRIs, but most folks can’t afford them. Neko Health is targeting a wider clientele with £299 scans — far cheaper than most full-body scans, which typically cost between $1,500 and $3,000 in Canada. The company says more than 350,000 people have already signed up for a scan.

Canada’s athletic wear titan is investing in the three Rs.

What happened: Lululemon participated in a US$30 million Series A funding round for Syntetica, a French startup that has developed a method to recycle the two most commonly used types of nylon in clothing. Nylon is abundant across the fashion industry, but is difficult to reuse because of high costs, chemical complexities, and material degradation.

Catch-up: Syntetica isn’t the only startup that’s caught Lulu’s eye. In 2023, the company made its first minority investment in a recycling startup, partnering with Samsara Eco, which uses enzymes to break down materials like nylon and polyester. And earlier this year, it participated in a funding round for Epoch Biodesign, which makes similar tech.

Why it matters: Nylon is an emissions-heavy material; the ability to reuse it could play a sizeable part in the fashion industry reaching its goal of reducing carbon emissions by 45% from 2019 levels by 2030. Right now, the industry is not on track, and emissions actually went up in 2023. Missing the target would be bad for both the environment and bottom lines.—QH

🌎 Hint: This riverside city is known for its towering Gothic cathedral, which is one of the tallest churches in the world and a UNESCO World Heritage Site. It’s also famous for hosting one of Europe’s largest Carnival celebrations, brewing a distinctive pale beer served in small glasses, and a crispy potato pancake often served with applesauce. 

Have any guesses? Lock in your answer here. 

⚡️ US$12.6 billion. Funds raised in energy company IPOs in the first half of the year, the highest first-half total on record and nearly three times higher than last year’s total. More investors are parking money in energy companies to gain exposure to the AI infrastructure boom. 

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