Plus: the ETFs that are predicting recession. September 6, 2022 Made in Canada IN THIS ISSUE Estimated read time: 7 min 🛢️ An Alberta windfall 🌊 An OpenSea drought 🦗 A cricket conspiracy WHAT HAPPENED LAST WEEK Vitalik Buterin’s Ethereum blockchain is getting a long-awaited overhaul this month. See below for why that’s such a big deal. | John Phillips THE WEEK IN MARKETS The world’s most boring action film, “Everyone Against Inflation,” dragged on. And people were worried inflation was winning. The week saw markets getting pummeled again (both the S&P and TSX were down 3%, and tech stocks did worse than that) because … America released a solid jobs report and investors were afraid the central banks were going to raise rates more. Right now the freak-out is still more in the market than the economy (as Q3's surprisingly strong corporate earnings and those decent jobs numbers showed). Does it seem like every week is about investors guessing how central bankers are going to feel? If it does it’s probably because it’s true. Tune in next week for more guessing. IMPORTANT About those U.S. employment numbers: businesses hired another 315,000 people in August (slightly fewer than the month before), and even more people started looking for jobs again (enough that the official unemployment rate ticked up to 3.7%). That’s two signs the economy remains strong — and that more rate hikes are coming. We’ll see if Canada can do better (by doing worse) when we get August’s job report this week. In other economic news, we finally got Canada’s GDP numbers for the second quarter. They showed the economy slowing from its blistering pace, fortunately without collapsing. (Growth shrank to 3.3% last quarter — more than a percentage point lower than the 4.4% growth expecters were expecting.) Some evidence here that a “soft landing” could be possible. We’ll see. INTERESTING On Wednesday, Alberta updated its revenue forecast to “rolling in it.” All those months of high gas prices had a $14.6 billion upside for the oil-pumping province (that might still be mad at TLDR for that Stampede joke — sorry!). Instead of sending out another prosperity bonus, Alberta’s government decided to pay down 15% of its debt, since it’s hard to know when they’ll be feeling this flush again. Nobody’s swimming in NFT marketplace OpenSea. Transactions on the world’s most popular NFT marketplace dropped 99% in the past four months. In other bad NFT news, you’re not gonna believe this but lots of those Bored Ape Yacht Club collectors are defaulting on their debts, which may force lending service BendDAO to collateralize their pixel collections, which could in turn trigger a “death spiral for the BAYC ecosystem." Is a recession coming? The people pouring money into utilities sure think so. When the budget gets tight, it’s easy to cut back on haircuts or pause your Snap+ membership, but most people will always need gas, electricity, and the internet. That’s probably why ETFs built around those things are thriving right now. Can’t doomscroll if you can’t charge your phone! THE FOMO INDEX by Stacey Woods IMPORTANT ✉️ Stationery plays its last card: global envelope shortage sends (slow) shock waves across Canada. Source ✍️ Twitter tests edit button that lets paying subscribers revise instead of delete their old racist tweets. Source 👫 UN projects an equal number of males and females by 2050, and female dominance after that. Those T-shirts were right! Source 💸 Crypto.com notices it gave a woman $9M instead of $89. With mistakes like these, who needs hackers? Source CRASH & BURN TO THE MOON 🦗 Conspiracy theorists fear new London, Ont., cricket pet-food plant will force people to eat bugs and maybe even kale! Source 🎤 VMAs have Snoop Dogg and Eminem perform in the metaverse and it’s just as riveting as in the regularverse. Source 🏦 BoC takes to Twitter to say it’s not printing money. Totally silent on the crickets, though. Source 🤨 Inflation comes for Botox and no one even raises an eyebrow. Source WHO CARES STUFF THIS WEEK Apple announces new stuff! (Wednesday) In case you haven’t coveted lately, Apple’s expected to announce four new iPhones (maybe even without that pesky camera notch taking up screen space) and some tougher, smarter watches. Another likely rate hike from the Bank of Canada! (Wednesday) Our intrepid inflation fighters are likely to raise rates another 0.75%, which some optimistic and/or deluded people think may be the last of the year. And one from the European Central Bank! (Thursday) After finally joining the rest of us at the anti-inflation party, the EU is expected to get a 0.5–0.75 percentage point increase of its own. THE BIG IMPORTANT STORY CRYPTO The ETH Merge is almost here. Probably time to understand it... One of the biggest gripes about cryptocurrencies is that they use huge, earth-wrecking amounts of power. Because, well, they do. That could soon change. Beginning on Sept. 6th, the Ethereum blockchain is undergoing a gut-level overhaul, called the Merge, that will entirely change how it operates. The update has been in the works for, oh, six years or so, and there’s a lot riding on its success — since Ethereum is, after all, the most-used blockchain and its currency, $ETH, has the largest market value behind only Bitcoin ($BTC). Here’s our best jargon-free explanation of what the Merge is and why no one will shut up about it: So what will the Merge actually do? As you probably know, there’s no centralized authority, like a bank, that executes transactions on a blockchain. Instead, transactions, like buying or selling ETH, are carried out by computers around the world that are all in consensus — i.e., in agreement about what’s happening. The Merge will change how Ethereum reaches consensus. Proof-of-Work (PoW), Ethereum’s (and Bitcoin’s) current consensus protocol, involves computers racing to crack complex math problems to verify transactions. This is crypto mining. The catch is that since these math problems require tons of energy to solve, a single ethereum transaction uses as much power as the average U.S. household does in a workweek. Proof-of-Stake (PoS), Ethereum’s new consensus method, resembles a voting system in that so-called stakers put up crypto as collateral to validate transactions. Then, once there’s agreement that a transaction looks OK, the blockchain rewards the stakers for their help with some money. But if a staker tries any funny business (e.g., voting for fishy transactions), they lose their collateral. This process requires 99% less energy than PoW. What does the Merge mean if I own ETH? You and your fellow ETH holders will no longer have a carbon footprint that’s larger than Singapore’s. So there’s that. Functionally, nothing should change with your ETH — though its value could. ETH climbed roughly 10% last week in anticipation of the Merge; that trend could reverse if the update goes awry. If I don’t own any ETH or crypto, why should I care? Whereas the Bitcoin blockchain has only one purpose — buying and selling BTC — all sorts of applications are built on Ethereum, and its developers want it to find broader mainstream adoption by expanding its uses. The Merge works toward this goal by laying the groundwork to make Ethereum more efficient and thus more scalable. If the Merge works, more of your tech life could be heading to the blockchain. THE UPSHOT Inside the crypto world, one of the big questions surrounding the Merge concerns centralization. Cryptocurrencies and web3 were founded on the idea that tech, finance, and the world generally should be less centralized and more egalitarian. The thing is, there’s concern that PoS could make Ethereum far more centralized. (Even Mr. ETH himself, Vitalik Buterin, is a bit worried about this possibility.) What average investors mostly care about, though, is whether ETH will overtake BTC in market value and how much they stand to gain. And if the Merge does translate into serious market momentum for Ethereum, its gamble to switch to PoS will have paid off and perhaps signal that crypto’s philosophical underpinnings increasingly matter less than popularity or profits. — Sarah Rieger 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 📸 A Million-Dollar Instagram Verification Scheme That coveted blue checkmark can be lucrative | ProPublica 🛍 Can the American Mall Survive?* But what will happen to all the Hot Topics?! | The New Republic 💩 The Death Cheaters Fecal transplants, biohacking, and a quest to live forever | Toronto Life 🎹 Why Don’t Millennials Have Hobbies? We’re just so tired all the time | The Walrus *Article is paywalled, which, yeah, is kind of annoying. But we think good journalism is worth paying for. THE WISDOM OF TWITTER The guy who sang the "heart in a blender" song has a point: 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). Full disclosure: contributors to this newsletter own ETH and stock in Apple. Wealthsimple Media Inc. 80 Spadina Ave Suite 400 Toronto, ON, M5V 2J4 Replies to this email address are not monitored. Have questions? Visit our Help Centre or submit a request to our Client Support team. VIEW IN BROWSER PRIVACY POLICY UNSUBSCRIBE TLDR is offered by Wealthsimple Media Inc. and is for informational purposes only. Any views expressed are those of the individual author and/or of Wealthsimple Media Inc., not of Wealthsimple Financial Corp or any of its other subsidiaries or affiliates. 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