HEADLINES

GDP Data Indicates Recovery After Stalling in July

Canada's economy looks to have perked up again after stalling at the start of the summer, setting it up for cooler growth this quarter before a fresh squeeze from a ramp up in tariffs.

Gross domestic product was unchanged from the month before in July, snapping three straight months of expansion that included upwardly revised growth of 0.4% in June, Statistics Canada said. Advance industry accounts indicate growth resumed in August, with activity rising 0.2%.

July data show flat activity overall for the country's goods-producing industries despite a continued pick up in construction, as well as no growth broadly for services industries as retail and wholesale trade weighed. The data agency's early look at last month points to a recovery in mining and retail that was partially offset by further declines in oil and gas extraction.

Economists calculate the result has the economy tracking annualized growth somewhere ahead of the 1.5% pace projected by the Bank of Canada.

Economy Holding Up, But Tariffs Set to Weigh

Shell to Double Production Capacity at LNG Canada

British energy major Shell said it would double production capacity at its LNG Canada facility in British Columbia as it bets on growing gas demand in Asia.

Shell said Tuesday that it would build two additional liquefaction plants to double production capacity to 28 million metric tons a year.

The multibillion dollar investment in the Pacific coast facility will enable Shell to sell more gas to Asia, where growing populations and power hungry data centers are fueling rising demand.

The investment is another boost for Canada, where Prime Minister Mark Carney has sought to establish the country more prominently as an energy superpower.

Fluor, JGC Joint Venture to Work on Expansion of LNG Export Facility

AutoCanada Mulls Sale of Collision Operations as Part of Strategic Review

AutoCanada is considering a sale of its collision repair business as part of a broader strategic review of the segment.

The Canadian automotive retail group said that the board has formed a special committee to evaluate a range of strategic alternatives for the company, such as separating the business entirely, or a potential sale of all or parts of the business.

AutoCanada said the board believes the value and growth potential of the collision repair business isn't fully reflected in the broader company's full valuation at the moment.

Chief Executive Samuel Cochrane said that the segment has reached a scale that provides a strong foundation for continued organic growth and acquisitions.

Bell Canada, Cisco Plan to Jointly Develop Canadian Sovereign AI Infrastructure

Bell Canada and Cisco Systems have signed a memorandum of understanding to codevelop sovereign artificial-intelligence infrastructure for enterprise and government clients.

The two companies said that under the MOU they would collaborate on sovereign AI infrastructure in Canada, pairing Bell's Canadian data centers, network and operations capabilities with Cisco's AI, security, observability, infrastructure monitoring and management.

Bell, the telecom subsidiary of BCE, and Cisco said the focus would be to offer locally hosted AI infrastructure that is more practical for Canadian organizations to deploy, operate and scale.

Dye & Durham Reports Narrowed Loss, Restates Third-Quarter Results

Dye & Durham reported a narrowed loss in the fourth quarter, despite slightly lower revenue, and revealed a material weakness in its internal financial controls that required restating its previous quarter results.

For the three months ended June 30, the Canadian cloud-based legal practice management software company posted net loss of C$19.9 million, or C$0.32 a share, compared with a loss of C$29.6 million, or C$0.44 a share, in the comparable quarter a year ago.

Adjusted earnings before interest, taxes, depreciation and amortization rose to C$55.1 million from C$47.7 million.

Revenue fell 1% to C$104.2 million.

Xanadu Quantum, Bluefors Partner to Build Quantum Data Center Cooling

Xanadu Quantum Technologies has formed a strategic partnership with cryogenics manufacturer Bluefors to develop modular cooling infrastructure for utility-scale quantum computing data centers.

Under the terms of the agreement, the companies will jointly develop compact, mass-produced cryogenic modules designed to replace traditional, industrial-scale cryoplants. No financial details were disclosed, except that the partnership was described as a multi-million-dollar collaboration.

The two expect to engineer a mass-manufacturable cryogenic module tailored for single-photon detectors to eventually be used in quantum data centers.

TALKING POINT

Canada's Prosecution of Complex Financial-Crime Cases Improved but Still Lacking, Global Review Says

By Alexandra Posadzki of The Globe and Mail

Canada's anti-financial crime regime received a passing grade from the Financial Action Task Force, but the country needs to step up its investigation and prosecution of complex money laundering cases, according to a highly anticipated report from the global financial watchdog.

The evaluation of Canada's ability to tackle financial crime took place over 14 months, culminating with a three week on-site visit last November. The assessors, a team made up of individuals from other jurisdictions including Britain, Italy, Australia and China, interviewed more than 700 representatives from the federal and provincial governments, the private sector and non-profit organizations.

The review placed Canada in the regular follow-up category, rather than the enhanced review process that requires additional assessments of a country's remedial actions. That represents an improvement from the last mutual evaluation of Canada's financial crime controls in 2016, when the country was placed on enhanced follow-up.

However, the report from the FATF and the Asia/Pacific Group on Money Laundering, or APG, says Canada needs to secure more money-laundering convictions and take a more risk-based approach to supervision, including by beefing up oversight of non-financial sectors such as real estate and precious metals and stones dealers. (The APG is a regional body with 42 members that also participated in the evaluation. Canada belongs to both organizations.)

The assessors also found that provinces and territories vary in their implementation of corporate beneficial ownership registers and their efforts to seize proceeds of crime.

The Globe and Mail reported in June that Canada would likely avoid being put on the FATF's grey list of countries found to be deficient in managing financial crime risks. Some industry experts had raised concerns about that possibility after Toronto-Dominion Bank became the first lender in U.S. history to plead guilty to conspiracy to commit money laundering following a decade of moving money for criminal organizations.

The task force also maintains a blacklist of countries deemed high risk owing to what the organization calls "serious strategic deficiencies." Being grey-listed or blacklisted can have serious negative consequences for a country's economy, for instance by curtailing foreign investment.

The report, published Tuesday, is Canada's first assessment under new, more stringent criteria that place more emphasis on risk and on the effectiveness of a country's anti-financial-crime regime, rather than on technical compliance.

Its publication comes during escalating tensions between Canada and its largest trading partner. U.S. President Donald Trump has designated fentanyl as a "weapon of mass destruction" and has previously used allegations about the flow of the drug into the United States to justify the imposition of tariffs.

"As a major global economy, Canada has a strong understanding of the illicit finance risks it is facing, and has taken significant steps to strengthen corporate transparency and the use of financial intelligence since its last mutual evaluation," Giles Thomson, president of the FATF, said in a statement.

"However, with the threats posed by fraudsters, organized crime networks and professional money launderers, Canada must step up efforts to investigate and prosecute complex money laundering cases, and strengthen oversight in the sectors most vulnerable to abuse," he added.

The FATF found that Canada faces what it called "persistent challenges" in prosecuting professional money laundering. Prosecutors often withdraw money laundering charges in order to secure convictions for predicate offences, such as drug trafficking or fraud, that carry higher maximum penalties through resolution agreements.

For example, during the five-year period assessed, which spans from fiscal 2019-20 to fiscal 2023-24, nearly half of the 703 cases involving a charge of laundering the proceeds of crime resulted in a finding of guilt, on either the money-laundering charge or the predicate offence. However, only 10 per cent of the actual money laundering charges resulted in a guilty decision. In 86 per cent of the cases, the money laundering charge was withdrawn, dismissed, discharged or stayed.

"This is despite money laundering being the key enabler for organized crime in Canada and reinforces the findings ... that the Canadian system lacks a strong appreciation of social and economic harms caused by money laundering," the report notes.

Salvator Cusimano, executive director of anti-corruption organization Transparency International Canada, called the evaluation a "call to action" that sets out a roadmap to deterring financial crimes, holding perpetrators accountable and making victims whole.

"Solutions are within reach, but only if we act quickly and collectively to counter increasingly sophisticated threats," he said in a statement.

The FATF lauded Canada's "sophisticated capability" in seizing cryptocurrency assets, and noted that civil forfeiture was strong in British Columbia, Alberta, Manitoba and Saskatchewan. However, it found that other regions of the country have been taking a more conservative approach to the practice. Ontario is currently mulling the adoption of unexplained wealth orders, a legal tool that would make it easier to seize assets believed to have been obtained with the proceeds of crime.

The Financial Transactions and Reports Analysis Centre of Canada, Canada's anti-money-laundering watchdog, said in a statement that it is "pleased the FATF evaluation recognized that its financial intelligence is, to a very large extent, supporting the operational needs of Canada's law enforcement and national security agencies."

FinTRAC's statement added that over the past year, the centre has "increased significantly the scope of its oversight and supervisory activities" and will continue to do so. (Activities that took place after Nov. 21, 2025 were not factored in to the FATF review.)

Federal Finance Minister François-Philippe Champagne said the government has taken action to strengthen Canada's anti-money-laundering regime over the past year, including banning crypto ATMs, introducing legislation to establish a new federal law enforcement agency focused on financial crimes and taking steps to crack down on extortion.

"This outcome represents not only an improvement of Canada's last evaluation in 2016 but a validation of the work the government is undertaking with agencies and provinces together to better protect Canadians against fraud and the financial system against nefarious activity," Mr. Champagne said in a statement.

He added that the report identifies opportunities to "strengthen Canada's regulatory supervision, beneficial ownership transparency, investigations, prosecutions and asset recovery processes."

Mr. Champagne said the government will review and act on the recommendations made in the report.

The Canadian Bankers Association said its members devote "significant resources" to continuously improving their financial crime controls and will work with the government to address the report's recommendations and "continue the evolution of the Regime into a more risk-based, principles-driven system."

Expected Major Events for Wednesday

01:00/JPN: Aug Steel Imports & Exports Statistics

04:30/JPN: Aug Preliminary Report on Petroleum Statistics

05:00/JPN: Aug Housing Starts

05:00/JPN: Aug Construction Orders

06:00/UK: 2Q Balance of Payments

06:00/UK: 2Q Business investment revised results

06:00/UK: 2Q UK quarterly national accounts

06:00/GER: Aug Foreign trade price indices

06:00/GER: Aug Retail Trade

06:45/FRA: Aug PPI

06:45/FRA: Aug Household consumption expenditure in manufactured goods

06:45/FRA: Sep Provisional CPI

07:55/GER: Sep Labour market statistics (incl unemployment)

08:00/ITA: Sep Consumer Confidence Survey

08:00/ITA: Sep Business Confidence Survey

08:00/GER: Sep Brandenburg CPI

08:00/GER: Sep Bavaria CPI

08:00/GER: Sep North Rhine Westphalia CPI

08:00/GER: Sep Saxony CPI

08:00/GER: Sep Hesse CPI

08:00/GER: Sep Baden-Wuerttemberg CPI

09:00/ITA: Sep Provisional CPI

09:00/ITA: Sep Cities CPI

11:00/US: 09/25 MBA Weekly Mortgage Applications Survey

12:00/GER: Sep Provisional CPI

12:15/US: Sep ADP National Employment Report

12:30/US: 2Q Revised Corporate Profits

12:30/US: 2Q 3rd estimate GDP

12:30/US: Aug Advance Economic Indicators Report

12:30/US: 2Q State Quarterly Personal Income

12:30/US: Aug Personal Income and Outlays

12:30/US: 2Q GDP by State

13:45/US: Sep Chicago Business Barometer - ISM-Chicago Business Survey Chicago PMI

14:00/US: Aug Metropolitan Area Employment and Unemployment

14:30/US: 09/25 EIA Weekly Petroleum Status Report

23:01/UK: CBI Financial Services Survey

23:50/JPN: 3Q Tankan Survey of Enterprises in Japan

All times in GMT. Powered by Onclusive and Dow Jones.

Expected Earnings for Wednesday Bassett Furniture Industries Inc $(BSET)$ is expected to report $0.12 for 3Q.

Bio-Path Holdings Inc $(BPTH)$ is expected to report for 2Q.

Cal-Maine Foods Inc (CALM) is expected to report $-0.77 for 1Q.

Conagra Brands Inc (CAG) is expected to report $0.29 for 1Q.

Factset Research Systems Inc (FDS) is expected to report $3.88 for 4Q.

Jabil Inc (JBL) is expected to report $3.39 for 4Q.

Micron Technology Inc (MU) is expected to report $31.35 for 4Q.

Obsidian Therapeutics Inc (OBX) is expected to report for 2Q.

Progress Software Corp $(PRGS)$ is expected to report $0.38 for 3Q.

Taylor Devices Inc (TAYD) is expected to report $0.82 for 1Q.

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This article is a text version of a Wall Street Journal newsletter published earlier today.