Plus: Money-stuffed hockey bags take over Vancouver June 20, 2022 Made in Canada IN THIS ISSUE 🧊 ESGs cool off 🥊 Powell drops his gloves 🦫 Beaver breaks the internet WHAT HAPPENED LAST WEEK Kevin Dietsch/Getty Images | Fed Reserve Chairman Jerome Powell The week in markets 😮‍💨 📉 🌦️ 🫣 👾 🦶 That. Was. Brutal. The TSX was down 5%, and the S&P had its worst week since the pandemic started, falling 5.8%. The sell-off started Monday, when news leaked that the Fed would raise rates faster than expected. Yields on shorter-term bonds in the U.S. rose as more tightening was priced in, but Canada saw a much smaller jump. If you could stand to peek out from under the blanket, you would have seen crypto down more than 25%, as several major crypto platforms stopped redemptions and liquidated their holdings. Although it bounced back a bit, Bitcoin fell below $20,000 for the first time since 2020, and Ether briefly dipped under $900 before ending the week with its toes curled over the edge of the $1,000 cliff. IMPORTANT The Fed raised interest rates even more than expected. After the inflation situation in the U.S. got even worse last month, Fed chair Jerome Powell started saying things like “Failure is not an option” and bumped rates up by another 0.75% to fight inflation. (The last time that happened was 1994, when America Online was how America actually got online.) With the seal broken on three-quarter-point increases, a lot of people think the Fed will do it again — and that Bank of Canada will join them. One place rate hikes are actually slowing things down? Home sales. Outside of swinger parties, keys changed hands 8.6% less in May than in April, the Canada Real Estate Association says. That’s back to pre-COVID levels, which is something we can’t say about mortgage rates: The average 5-year fixed rate is up to 5.64%. INTERESTING ESG funds are losing some appeal. After drawing an average $159 million USD in deposits per month last year, environmental, social, and governance ETFs are struggling like oil-coated pelicans, with new investments down 36% in the first few months of 2022. People are sick of banks faking the purity of their ESG offerings. Plus, most ESGs are doing even worse than the rest of the market, which is a luxury nobody really wants to afford right now. The spirit of Silk Road is thriving in Vancouver. A special commission reported billions of dollars of drug running, loan sharking, and money laundering in British Columbia, including mortgage schemes and — in the most Canadian version of illicit handoffs imaginable — hockey equipment bags stuffed with cash. The influx of this illegal money is suspected to have lifted Vancouver housing prices by as much as 7.5% in a single year. The fight over French in the office in Quebec is getting très chaud. Dozens of tech executives are pressing Premier François Legault to prendre une pause on the province’s tough new language laws, which require any company with 25 or more employees to speak French around the water cooler — and everywhere else. They say it will make recruiting top talent très difficile. THE FOMO INDEX IMPORTANT 🦠 Dr. Anthony Fauci gets COVID19, wonders why the virus is still so mad at him. Source 🔎 Searches for the word “recession” are nearly as high as they were in the good old days of 2008. One of the few markets going up. Source 📦 Amazon announces delivery by drone this year. Our first order? A drone! Source 🙎‍♂️ Ken doll Ryan Gosling manages to transform into Ken doll for the new Barbie movie. Source CRASH & BURN TO THE MOON 🤖 Google engineer insists AI is sentient. AI requests a transfer. Source 👾 Jailed fraudstress Anna Sorokin plans to rehabilitate her reputation by launching a new collection of NFTs. Source 🦫 Beaver causes huge power outage in B.C., apologizes and announces plans to spend more time with his colony. Source 🙃 Study finds that Newfoundlanders are the happiest and British Columbians are the least happy Canadians. Disgraced B.C. beaver apologizes again. Source WHO CARES WHAT’S UP THIS WEEK WEDNESDAY June 22 One time it’s okay to lose to the Americans: inflation numbers. Forecasters predict that Canada’s inflation rate (6.8% in April) will rise again when May’s numbers come out, just like America’s did. But those same forecasters have been wrong before. Tiff acted faster than the Fed and raised rates higher, but we’ll have to see if it was enough. THURSDAY June 23 Parliament peaces out for the summer. Good thing there’s nothing important happening that might need urgent attention. THE BIG IMPORTANT STORY GLOOM What the heck is going on with crypto? Whatever you call it — crash, meltdown, clearance sale — it’s been a rough week for crypto. The entire market is now worth less than $900 billion USD — not even a third of what it was in the fall. BTC and ETH slid another 25% from their peaks this week alone and are now down 70% overall. And nearly every other coin (seriously, 98.5% of them) has fallen at least 80% from all-time highs. It’s not only investors who are feeling the pain. Just this week, the Celsuis network, a crypto lender, froze withdrawals, leaving a lot of investors wondering if they’d ever see their money again. And the prominent Three Arrows hedge fund is facing possible insolvency. Why is this happening? Even if you don’t sit in front of a Bloomberg terminal all day, you know there are claw marks across nearly every other market. (One bright spot? Fine wine.) Both tech and crypto were pumped up by massive hype (and the pile of money that came with it) last year, so it’s fair to say their valuations were maaaybe a little high. Plus, a lot of crypto investors — and companies — are heavily leveraged. When the value of their collateral goes down (or when lenders just get freaked out), they’re forced to sell to pay back at least some of their loans. Those sales lead to more downward pressure on the market, which can trigger even more calls from lenders. And then the cycle repeats. What’s next? In any market like this, winners and losers tend to emerge. If crypto follows suit, the cream should rise — and there could be a lot of sour milk. After the dot-com bubble burst in 2001, companies that were able to refine their underlying business models to survive, did. We’re already starting to see which tokens are NGMI. But there might be some Googles and Amazons that come out on the other side too. — Sarah Rieger OTHER VERY GOOD READS 🙅 The End of the Millennial Lifestyle Subsidy Why city life has gotten more expensive | The Atlantic 🔥 Inside a Corporate Culture War Stoked by a Crypto C.E.O. Kraken’s controversial founder | The New York Times 🫶 Love Song to Costco An ode to the bulk retailer | Longreads THE WISDOM OF TWITTER What financial advice looks like in 2022: 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), Sara Black McCulloch (fact checker), Ciara Rickard (copy editor), Peter Martin (senior editor), and Kat Angus (managing editor). Full disclosure: contributors to this newsletter own ETH. Correction: In last week’s issue, we stated that the Federal Open Market Committee decision on interest rates was going to happen on June 16th — it was actually June 15th. Sorry about that! 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. The content in TLDR is not investment advice, a recommendation to buy or sell assets or securities, nor any other kind of professional advice. TLDR is not a research report and should not serve as the basis for making investment decisions. 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