Plus: Stablecoins, too much weed, and a hiccup for Rogers/Shaw May 16, 2022 Made in Canada IN THIS ISSUE 😵‍💫 That crypto reckoning 📞 Rogers/Shaw merger on hold 🍎 Apple drops from the top spot WHAT HAPPENED LAST WEEK Dia Dipasupil for Getty Images | Andy Warhol's Shot Sage Blue Marilyn portrait being sold at auction IMPORTANT Remember that $26 billion merger between communications giants Rogers and Shaw? Canada’s Competition Bureau isn’t a fan , citing problematic aspects of a potentially merged wireless division. The agency says Rogers’ acquisition of Shaw would lead to “higher prices” and “poorer service quality.” But don’t fret, lovers of capitalism and high phone bills: The Bureau rarely totally blocks mergers, so the deal could still go through. With newly unstablecoin Terra plummeting last week (we’ll get into that more below), the thunder rumbled a little more loudly over Coinbase’s Q1 earnings report, which revealed that the company lost 19% of its monthly users and lost nearly $430 million. What Twitter found particularly ominous was the bit about how if Coinbase ever declared bankruptcy, you and your holdings could be SOL (not the crypto version, either). INTERESTING Oligarcha non grata Roman Abramovich is selling Chelsea FC to a consortium led by Los Angeles Dodgers part-owner Todd Boehly for $3.1 billion. If you’re keeping score on English Premier League ownership, the U.S. now leads Britain, 7-6. As the market continued to fall and pandemic winners turned into pandemic losers, Peloton lost $194 million last quarter —nearly 50% more than the $132 million analysts predicted. In response, the stock price plunged lower than a properly performed squat, and CEO Barry McCarthy admitted that Peloton is “thinly capitalized” for a company of its size. If acquisition wasn’t a threat before, it is now. Andy Warhol’s iconic 1964 portrait of Marilyn Monroe, Shot Sage Blue Marilyn, sold at auction to a private collector for $195 million. It’s the highest price ever paid for an American work of art, knocking Jean-Michel Basquiat’s 1982 painting “Untitled,” out of the top spot. A rare moment of OK-ness in asset markets last week. THE FOMO INDEX IMPORTANT ⛽️ The average price of a litre of gasoline is soaring, going past $2 in some places. Source 🚀 Remember when Zoom was worth more than Exxon? This week Exxon became worth 13x more than Zoom. Source 🥇 Oil beats fruit: Saudi Aramco takes top global market cap spot from Apple. Source 🥩 Meat, steel, wood, and fertilizer stocks are all up for the year. The coming of a "Settlers of Catan" economy? Source CRASH & BURN TO THE MOON 📺 Netflix adds ads, getting closer to the cable TV system it was meant to replace. Source 🐦 Elon Musk’s Twitter relationship seems off again—is the platform too robotic, or is the price suddenly too high? Source 🏈 Fox will pay Tom Brady $37.5M to talk football if he ever un-un-retires from playing. No rush though. Source 🍎 Apple’s iPod Touch, the Tom Brady of music players, finally retires. Source WHO CARES WHAT’S UP THIS WEEK WEDNESDAY May 18 The Bank of Canada will release its inflation data for April, revealing whether or not last month’s 50bps interest rate hike means we can finally stop reusing mouthwash. If there’s any reason for optimism, it’s that U.S. inflation in April dropped to 8.3%—a scant but welcome 0.2% lower than March. If they can barely do it, we can barely do it. THURSDAY May 19 Also thanks to that rate increase, the Canadian Housing Price Index for April is expected to show lower home prices across the country. (Although a little less than astronomical is still astronomical.) Sales numbers are also down, with April showing a 41% drop in home sales YOY in Toronto , 34% in Vancouver, and 26% in Halifax, as more buyers stepped out of the realty mosh pit to grab a quick drink of water. THE BIG IMPORTANT STORY CRYPTO Luna Falls to Earth Sure, crypto is volatile. But last week, one of the top coins imploded, leaving waves that make the market’s normal turbulence seem like a peaceful country lake. Luna, the counterweight to the stablecoin Terra, saw its value plunge more than 99%—knocking $200 billion off cryptocurrency’s total market cap in a single day. The crypto market was already struggling, right alongside other financial markets , thanks to inflation, war, and supply-chain hurdles. But this was different. Stablecoins like Terra are meant to be — and traditionally have been — well, stable. And suddenly, maybe they weren’t? Stablecoins make up only about a 10th of the crypto market, but they play a crucial role in allowing traders to hedge against the rest of the market's volatility. In the case of Terra/Luna, the coin was governed by an algorithm meant to keep it in balance: It was supposed to ensure that one Terra could be exchanged for $1 US worth of Luna, no matter Terra’s value. If Luna was trading at nearly $100, like it was last month, then one Terra could be swapped for 0.01 Luna and vice versa. (With us so far?) But that system was reliant on investors maintaining faith in Luna’s value. (For an in-depth explanation of how Terra operates, Matt Levine has a great analysis on Bloomberg.) That faith didn't stick. Investors started dumping both tokens , and the algorithm rapidly sent the entire system into a death spiral. The losses were devastating, especially for those who bought Terra to farm an unsustainably high 20% APY through its Anchor Protocol. Terra founder Do Kwon has offered an uninspiring recovery plan, but it'll be hard for the coins to mount a comeback—the blockchain has repeatedly halted production, and multiple exchanges delisted the tokens. So what’s the TLDR? Some folks are worried that crypto’s biggest stablecoin, Tether, could be next . Others are worried about crypto itself. But Terra definitely isn’t crypto’s lynchpin or even the sugar packet propping up the industry’s otherwise wobbly table at a diner. It was a single coin. Edward Moya, senior market analyst at OANDA, told TLDR that most stablecoins are backed by more reliable assets than Terra’s algorithm. Maybe, Moya suggests, the bloodbath can serve as more of a reminder for traders: Crypto’s still in its infancy. —Sarah Rieger TOTALLY NONESSENTIAL GOOD READS 🚨 A Texas Tale of Tinder, Millions in Stolen Crypto and Murder A crypto romance scam | Bloomberg 👗 Fast, Cheap, and Out of Control Inside Shein’s sudden rise | Wired 📰 Today in Tabs Another great newsletter with all the day’s best stories THE WISDOM OF TWITTER A short love story: THOUGHTS ON TODAY’S ISSUE? 🤑 Love it 🙂 Good 🙁 So so This week’s newsletter contributors: Devin Gordon (writer), Jared Lindzon (writer), Brennan Doherty (writer), Sarah Rieger (news writer), Rusty Foster (editor), Peter Martin (lead editor), and Kat Angus (managing editor). Full disclosure: contributors to this newsletter own Luna and Apple. Correction: In last week’s newsletter, we said that Shopify was headquartered in Toronto, when — oops! — it’s actually in Ottawa. 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