Plus, private equity’s creepy bet on grandma May 6, 2024 Sign Up | View online IN THIS ISSUE 8 min read 🏒 Amazon bets on hockey 👵 Hedge funds bet on death 🏦 How to bet on yourself Domino’s: the favourite pizza of Donatello and Michelangelo — and, more recently, Wall Street. We explain why below. | New Line Cinema THE WEEK IN MARKETS It's earnings season! Or what we call "fun season" here at TLDR. Numbers from Canada start rolling in this week, but down south 80% of U.S. companies have already reported and — bananas stat of the week — 96% of them beat expectations. We see some evidence that consumers are tightening their wallets (see McD’s earnings discussed below). But many companies are still raking it in, with Amazon's and Apple's earnings reports driving their stock prices up 2% and 5% respectively. One thing to note: yes, stocks finished at near all-time highs Friday, but they were down big to start the week. Which suggests a certain lack of conviction in investors, who are probably jittery about worrisome inflation data and the increasingly Godot-y wait for rate cuts. THE WEEK IN ONE CHART WHAT HAPPENED LAST WEEK IMPORTANT Canada’s trade deficit increased? Meh. You may have seen some ominous headlines about Canada’s exports falling unexpectedly by 5.3% in March, resulting in a $2.3 billion trade deficit. But is the economy actually in trouble? Let’s dig deeper. Yes, in most cases (though not all) you want to export more stuff than you import, because exports = money. And yes, the economy is no doubt slowing down. But at the same time, a $2.3B trade deficit is totally within the normal range. Private equity is betting your nana will croak soon. Bloomberg’s Matt Levine recapped a wild story in his newsletter, Money Stuff, about life-insurance fraud. Private-equity giant Apollo is being sued for allegedly using shell companies to buy US$20 billion in life-insurance policies on seniors, essentially wagering on, and profiting from, the person’s death. Buying those policies secondhand might not be tasteful, but it is legal — unless Apollo also coerced the seniors into taking on the insurance in the first place, which it is accused of doing. Here’s the real kicker: Apollo owns a bunch of hospitals and nursing homes — which, as Levine points out, kind of sort of means the company has “an economic incentive to murder you.” Or at least provide lousy end-of-life care. INTERESTING Domino’s stock rally is a window into our current psyche. Some major restaurant brands reported Q1 earnings last week. The big trend? Diners just want cheap food. They’re skipping chains that have jacked up prices — McDonald’s, KFC, Taco Bell — in favour of those that haven’t, like Domino’s and Chipotle. Ditto coffee: Tim Hortons’ parent company reported an 18% increase in quarterly profits, while pricier Starbucks announced its first sales drop since 2020, sending its stock south by 16%. Probably the most talked-about business interview of the week was with Starbucks CEO Laxman Narasimhan, who sounded like a first-year consulting analyst after trying to blame its earning miss on a failure to “communicate the value we provide.” Apple ❤️ buybacks. On Thursday, the House of Jobs announced that it’s buying US$110 billion of its own shares — the largest buyback ever. The knock on CEO Tim Cook has long been that buybacks are his only real product innovation, and indeed, since he took over he’s shrunk outstanding shares by 40%. The thing is, investors love it because it means every remaining share gets a bigger bite of Apple's steadily growing earnings. Rogers ropes in Amazon to recoup its NHL splurge. The telecom giant is somehow having a hard time making enough money on hockey in Canada. To help pay off the remaining two years on its 12-year, $5.2-billion deal to air NHL games, Rogers has sold off the broadcast rights for at least 26 games next season to Amazon Prime. The streamer is increasingly moving into sports to drive ad revenue — it struck a similar deal with the NFL last year. —Sarah Rieger FROM OUR SPONSOR THE FOMO INDEX by Stacey Woods IMPORTANT 📵 Ontario to ban smartphones in schools. Kids will just have to imagine the history lessons they’re missing on TikTok. Source 💔 Canada’s divorce rate at record low, mostly because people aren’t getting married. Mother-in-law jokes also on the decline. Source 🍁 Ottawa researchers develop a test strip for sap quality. Two lines means it’s clean, one line means it’s pregnant. Source 💰 Quebec is investing $603 million to protect the French language. First up: change “bonjour-hi” back to “bonjour-bonjour.” Source CRASH & BURN TO THE MOON ✈️ A second Boeing whistleblower dies in as many months. Must be a bad case of Blabbermouth Fever going around. Source ⛪ AI priestbot fired when it suggests using Gatorade for baptisms. Everyone knows Gatorade’s for exorcisms! Source 🍽️ A Disney World restaurant has been awarded a Michelin star, so if you go, please wear your formal mouse ears. Source 🎲 LinkedIn adds games to its site so people can entertain themselves while they’re not finding work. Source WHO CARES THE BIG IMPORTANT STORY CAREER A Simple(ish) Five-Point Money Plan for Young(ish) Canadians Here at TLDR, we try to help you get the most out of your money. Our reporting tends not to be very age-focused, but, in many cases, the best things for you to do at this exact moment in your financial life depend on where you are at this exact moment in your IRL life. So we put together checklists of five things you should be doing in each stage of your life/career. We’ll cover middle- and late-career stages in the coming weeks. But first up, naturally: EARLY CAREER (age 20 – 30) [1] Focus on your future earning power. Use your 20s to invest in your career by going to school, say, or learning a variety of skills. That way, you can maximize your future earning power when you reach your peak money-making years (see chart). Waiting tables might allow you to make decent money now, but your future earning power might be limited. A desk job or learning a trade, on the other hand, might pay peanuts at the start but set you up for a big salary down the road. [2] Take some (smart) career risks. One of the beauties of being young is that you can take some big swings — by switching jobs, say, or launching a company, or relocating to a city with more career opportunities. And if the whole thing is a flop, you’ve got time to recover. Taking big, potentially lucrative, potentially career-defining risks gets harder as you enter your 30s, thanks to kids and other Very Adult Responsibilities. [3] Pay off your debts and build a financial base. Next, kill your high-interest debt — that is, any debt with a 7% interest rate or higher. It’s really hard to come out ahead financially if you’re getting gouged through the eyeballs by credit-card debt. This is particularly important when you’re young because the nature of compounding interest means your debt has a lot of time to get bigger. Once your debt is paid off and your mind is at ease, build an emergency fund. [4] Then save! In an organized way! Start socking away money habitually, because it gets really, really hard to catch up the longer you wait. This is annoying, eat-your-peas advice, we’ll admit, but time is on your side when you’re young, and you really should take advantage. A good rule of thumb is to have your savings — that is, everything you have invested, not just what’s in your bank account — equal your annual salary by the time you reach 30. Creating and sticking to a budget, like so, will help get you there. [5] Invest in somewhat risky stuff. History suggests you’d be wise to put a lot of your savings into the stock market to help it grow. Something like 57% of early-career Canadians take a safe route, keeping all their money in cash, which risks kneecapping their potential portfolio growth. Thanks to the power of compounding returns, if you invest $50,000 in a stock index fund at age 25, that money will grow to $351,000 by the time you’re 65 (assuming a normal-ish 7% annual return and 2% inflation). Cash in the bank will only grow to $74,400 (assuming a 3% return and 2% inflation) over that same time. That is, to state the obvious, a huge difference. A stock-heavy portfolio will likely suffer some rough years: the Dow Jones has fallen 20% about every five years. But your portfolio will almost certainly recover if it’s diversified. There are lots of ways to do this — there are, for instance, thousands of exchange-traded funds (ETFs), which track everything from the entire global stock market to high-growth companies to the semiconductor industry. Whichever you choose, many financial advisors suggest investors in their 20s hold a portfolio composed of 80-90% equities (i.e., ETFs and stocks) and the rest bonds and maybe a smidge of gold. But that’s not a hard-and-fast rule; your allocation should depend on your risk tolerance. OTHER VERY GOOD READS ⛷️ Slippery Slope How private equity shapes a ski town. | Harper’s 📱 Apple’s Garden Walls Are Tumbling Down A reflection on the smartphone’s fall from beloved gadget to commodity. | The Verge 🏭 The Mississauga Factory Using a Known Carcinogen Or at least every Canadian | Wealthsimple Magazine THE WISDOM OF X Does interpreting financial charts count as a talent? If so, we have one talent to contribute. THOUGHTS ON TODAY’S ISSUE? Love it Good So so This week’s newsletter contributors: Ben Mathis-Lilley (writer), Devin Gordon (writer), Stacey Woods (writer), Sarah Rieger (news writer), Ambrose Martos (fact checker), Ciara Rickard (copy editor), Clare Douglas (copy editor), Sara Black McCulloch (fact checker), Mohini Tailor (senior lifecycle marketing specialist), Matthew Karasz (markets editor) Jared Sullivan (senior editor), Peter Martin (senior editor), Kat Angus (managing editor), and Devin Friedman (editor-in-chief). 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 Managed accounts are offered by Wealthsimple Inc., a registered portfolio manager in each province and territory of Canada. Self-directed investing is offered by Wealthsimple Investments Inc. (WSII). 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