Also: Porsche, a pipeline, pensions, and other non-P-words October 03, 2022 Made in Canada IN THIS ISSUE Estimated read time: 7 mins ❤️ Hope for Alzheimer’s 🧓🏽 Rescue for pension funds 🐦 Nicknames for Jack Dorsey WHAT HAPPENED LAST WEEK If you look beyond the headlines, the world is actually becoming less nasty, brutish, and short. (Read below.) | Shutterstock/Wealthsimple THE WEEK IN MARKETS Another week, another sell-off. Both the S&P and Nasdaq fell 3%, putting them down 25% and 33% for the year, respectively. The less tech-focused, more energy-dependent TSX fared a bit better, but is still down 12% since January. The most interesting thing, no kidding, was currencies: the U.S. dollar surged to 20-year highs, flushing pretty much every other major currency down the toilet. It got so extreme that governments intervened. If the foreign exchange market can have fireworks, this is it. More ⬇️. IMPORTANT Why is the USD so strong? Lots of reasons: war-mongering tends to send investors running for their favorite global reserve. Energy shortages, a strong U.S. economy, and the juicy yields on U.S. treasuries thanks to all those Fed rate hikes help, too. The effects are more potent in countries with already weak economies, limited energy sources, or any kind of proximity to Russia. That’s why the euro, pound, and yen have slid more than 20% this year. One relatively bright spot? Canada! Thanks to a relatively strong economy and Fed-sized hikes, the loonie’s down only around 9% for the year — and way ahead of just about everybody else. Not satisfied with a currency crisis, Britain opts for a pension crisis too. The country’s new PM implemented giant tax cuts that investors worried would cause more inflation. Scared of the specter of big rate hikes (and the sinking bond prices that come with them), some investors started pulling their money out of government bonds. That drove prices down, which panicked more investors, who sold more bonds, which drove prices further down ... and led to the biggest government bond sell-off since 1957. Pension funds, which rely on long-term bonds to stay afloat, were about to sink — until the Bank of England spent 65 billion pounds to drive prices back up. The upshot? It’s all likely to make inflation worse and lead to bigger rate hikes. Pharma firms Eisai and Biogen announced a new Alzheimer’s drug that slows cognitive decline by 27%. That may not sound like much, but it’s the first treatment ever to have meaningful results. It had meaningful results on the companies’ stock prices too: Eisai jumped 60% and Biogen was up 40%. INTERESTING Psst, want to buy a pipeline? Calgary-based Enbridge, which owns 5,000 km of oil pipeline in North America (and hasn’t always had the friendliest of relationships with Indigenous people), agreed to sell a 12% stake in its northern Alberta business to 23 First Nations and Métis communities for $1.12 billion. It’s one of at least three such partnerships in the works and an opportunity for Indigenous communities to benefit from projects built on traditional lands. Porsche blows right through the IPO stop sign. It’s a tough time to IPO. With valuations down across the board and markets sinking, late-stage VCs wouldn’t even be able to light their cigars with real money. But like a new 911 driver asked to park in only one space, Porsche didn’t care. Buoyed by its legendary brand status and a strong appeal to retail investors, the carmaker successfully spun off from parent Volkswagen in one of Europe’s biggest IPOs ever. THE FOMO INDEX by Stacey Woods IMPORTANT 🐦 Just-released Twitter trial texts reveal Elon calls Jack Dorsey “jack jack.” No word yet on what jack jack calls him. Source 🛀 Bed Bath & Beyond quarterly profits announced and they’re 28% down. Not goose down, down down. Source 💸 Average salary in Canada expected to rise by 4.2% next year. “Aw, cute!” says inflation. Source 🚀 Wrong space, wrong time: innocent asteroid struck by rude NASA scientists testing Earth-defense system. Source CRASH & BURN TO THE MOON 🇷🇺 Edward Snowden granted Russian citizenship. Putin must need help setting up his router. Source 😬 Member of YouTube sensations The Try Guys tries not to cheat on wife with co-worker or lose his job. Fails. Source 🤷 Alberta oil-and-gas companies can’t fill high-paying entry-level jobs. Does no one want to lay pipe anymore? Source 🍁 It’s not golden and there’s no chocolate, but Canadian Tire hid $100 vouchers around the country for its 100th birthday. Source WHO CARES WHAT'S UP THIS WEEK Quebecers head to the polls (Monday). Legault again, probablement. Constellation Brands reports its quarterly earnings (Thursday). The pandemic may be “over,” but the success of America’s largest beer importer hints that people are still drinking like it just began. Payroll numbers for Canada and the U.S. drop (Friday). The latest episode in this never-ending season of “Are We in a Recession?” THE BIG IMPORTANT STORY WEALTH Life Might Be ... Getting Better? Scanning news headlines is bleak business these days: climate change, market turmoil, WWIII. And, though we don’t want to downplay the Very Scary Stuff happening, human life is improving in profound ways, and, in the spirit of Thanksgiving*, we thought we’d talk about some of them. So pump the brakes on your doom-and-gloom spiral for one hot second because — to paraphrase economist Max Roser — it’s true that the world is awful, but it’s also true that the world is getting better. Income WORLD: Let’s start broad: odds are, if you’re reading this sentence, you’re among the 1% wealthiest humans ever (congrats!). As J. Bradford DeLong points out in his new book, Slouching Towards Utopia, 70% of the world’s population lived in extreme poverty until about 1870, when technology sparked rapid wealth growth. Worldwide, the average person today is 10 times as rich as the average person in 1870, and 4.5 times as rich as the 1950 average. It’s hard to grasp how drastic that increase is until you see it charted (below).** There’s tremendous inequality, no doubt, but all regions are better off than they were. CANADA: Canada has one of the world’s highest GDPs per capita. As a result, its middle class is among the world’s richest, with a median per-capita income of $66,800 in 2020, a more than 20% jump from 2000. Go us. Poverty WORLD: To be sure, the massive technological and economic changes of the past century have caused a ton of dystopian fallout. But market reforms, education, and industrialization have also made life far less horrid for billions of people. That 70% global poverty rate we mentioned? It now stands at less than 9%. And get this: an estimated 49% of the world’s population is now middle class, up from roughly a quarter in 1975. CANADA: Canada has had a lowish poverty rate for a long time. But between 2015 and 2020, its rate fell from 14.5% to a mere 6%, largely thanks to a basic-income guarantee for families with children, which took effect in 2016. Life Expectancy & Wellbeing WORLD: With greater wealth come better standards of living and medical care — which explains why people live almost 40 years longer today than they did a century ago. (Life expectancy in 1913? 34 years.) Moreover, the average person today receives more than twice as many years of education compared to 100 years ago and is 10 times less likely to lose a child. CANADA: Canadians are croaking at age 82 on average, up from age 59 in 1920. School-wise, since 1980, the proportion of Canadians with post-secondary education has risen from 31% to 64%, the second-highest rate among OECD countries, behind only Korea. THE UPSHOT What’s interesting now is that, after all these years of dizzying growth, a lot of smart people have realized that our progress has slowed. The prevailing thought is that society has progressed so much that, by some measurements, it’s getting harder to invent new ways to make life better. And, honestly, that’s a pretty good problem. — Sarah Rieger *Of course, totally cool if Thanksgiving isn’t your thing. **GDP doesn’t reflect individual prosperity, but it’s a good measure of a country’s or region’s general wealth. SHARE TLDR WITH FRIENDS 🤝 Put this link in your group chats, in your Slack threads, on a tattoo on your back — whatever works for you! OTHER VERY GOOD READS 👔 The Incentives to Get Workers Back to the Office Aren’t Working But a few things might help | Slate 🔎 I tried replacing Google with TikTok It worked better than expected | The Verge 🚲 The Most Dangerous Road in America No bike lanes, no medians, and wider than the interstate | Bicycling 🦌 The Mamalilikulla’s long journey home An Indigenous nation declares its own conservation area | The Narwhal THE WISDOM OF TWITTER Yeah, we had to google “Try Guys,” too… THOUGHTS ON TODAY’S ISSUE? Love it Good So so This week’s newsletter contributors: Brennan Doherty (writer), Devin Gordon (writer), Stacey Woods (writer), Sarah Rieger (news writer), Ambrose Martos (fact checker), Ciara Rickard (copy editor), Sara Black McCulloch (fact checker), Jared Sullivan (senior editor), Peter Martin (senior editor), Kat Angus (managing editor), and Devin Friedman (editor-in-chief). 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