Plus: Remember Our Lady Peace? Crypto does. August 08, 2022 Made in Canada IN THIS ISSUE 🚕 Uber makes money ⚽ Alphonso makes us proud 👵 A pension fund makes a mistake Estimated read time: 6 minutes WHAT HAPPENED LAST WEEK Just protecting himself from falling prices! He hopes. BoC governor Tiff Macklem's in a tricky spot. | Getty Images The week in markets Does it feel like we’re at an inflection point? A fork in the road? A precipice? It does to us. We’re coming off 5 weeks of a relief rally in the markets (markets are up 5-10% since July 1st, with tech stocks up much more). But no one seems sure what happens next. Will strong earnings and falling gas prices ease pressure on central banks so they don’t have to keep jacking up rates? Or will inflation and recession fears drag us all down? Apparently we couldn’t decide and not much happened. The S&P 500 drifted up 2% on solid earnings. Everything else — the TSX, government bond yields, crypto — stayed flat. IMPORTANT Jobs numbers are in: we’ve still got a lot of ’em! On Friday, Canada’s July unemployment came in at a record low of 4.9%, and the U.S. somehow added jobs, dropping to 3.5%. What did stock markets do on news of such fantastic numbers? They ... fell — a sign that investors are more worried about what strong jobs numbers could mean for inflation and the moves central bankers might take to fight it. Maybe we’ll be able pull out the confetti next week when inflation numbers come in. Hang on, did Uber ($UBER) just turn a profit? Stock for the company that made it feel normal to hop into a stranger’s minivan hit surge pricing on Tuesday, jumping 17% after the tech giant announced it had doubled revenue and become cash-flow positive for the first time ever. All it took was 13 years of building and hooking an enormous clientele, a food-delivery side gig that got it through the pandemic, and, sure, a few regulatory shenanigans. DoorDash should maybe pay attention. INTERESTING Grandma got run over by the crypto crash. Caisse de dépôt, which manages Quebec’s $420-billion pension plan, is being roasted for investing $150 million into now bankrupt crypto lender Celsius — after it was under investigation. While that’s a relatively small amount of money (and pension funds have gotten into plenty of other risky territory lately, like car dealerships and office buildings), the lack of due diligence — or the failure to take that diligence into account — is a big red flag for a lot of folks, given that we’re talking about, you know, people’s retirement. The reviews are in for Q2 earnings season, and they’re meh-gnificent. As equities blogger Mr. Blonde (great follow, btw) pointed out, we’ve gotten to the point where several analysts celebrated the fact that 65% of companies posted an improvement over Q1, which is actually not so great given that that number is usually around 70%. But this is what the expectations game has made of us: parents who clap every time their toddler doesn’t eat paint. THE FOMO INDEX IMPORTANT 🤳 Report shows Gen Z uses TikTok like Google. So, to look up Harry Styles’s shoe size? Source 💸 People are paying $50K to be on podcasts. “Why were we against that again?” wonders Old Media. Source 🚗 Canada hits a record high: 5.8% of new cars sold in Q1 were EVs. Coming for you, Norway! Source ⚽️ Alphonso Davies will donate his World Cup earnings to charity. All other players strangely silent. Source CRASH & BURN TO THE MOON 🦇 Batgirl film gets axed, possibly for tax reasons. Netflix asks if it can still do that with Space Force. Source 🍫 Hershey warns of Halloween shortage. That’s cool, it's not a big candy holiday. Source 🍭 Online Canadian candy shop is hiring Chief Candy Officer! $100k a year plus medical and dental – lots of dental. Source 🛥 Rotterdam won't dismantle bridge that’s too low for Jeff Bezos’s yacht. They need it for all the Amazon deliveries. Source WHO CARES TLDR is better with friends! 👯 Share this link in the group chat, Slack thread, or print it out and mail it to anyone who wants to sign up. WHAT’S UP THIS WEEK TUESDAY August 9 The annual Blockchain Futurist Conference kicks off in Toronto. That’s probably a disappointment to those who assumed it’d be held in the metaverse by now, but on the bright side, Ethereum co-creator Vitalik Buterin and Our Lady Peace frontman Raine Maida will be there. Look for lots of talk on Ethereum’s energy-saving shift to proof-of-stake — and hopefully some ideas on how to slow down all these recent hacks. WEDNESDAY August 10 Hut 8 ($HUT) releases its latest earnings. The Canadian crypto-mining giant hasn’t sold a single bitcoin even as companies like Tesla have speedily dumped their holdings. Hut 8 isn’t simply HODLing and HOEPing (is that a thing? It should be) though. The plan is to increase mining while nurturing the company’s side hustle — cloud computing —just in case it turns out Tesla is right and Raine Maida is wrong. THE BIG IMPORTANT STORY Potaytoh potahtoh The battle over the “r” word Have you been following the most exciting (depending on what you think is exciting) public argument in the past few weeks? It’s about whether we are, or will soon be, in a recession. The economy in the U.S. shrank for two consecutive quarters, which for some is the official definition of a recession. In Canada, the economy most likely grew over the first half the year, albeit much more slowly than it did a year ago. After that, things get murky. First, let’s define what we mean by recession: a self-reinforcing downturn in spending, hiring, and profits that leads to falling asset prices and wealth destruction. By that standard, we’re almost certainly not in a recession recession yet. That said, let’s get into the prevailing arguments about whether a recession is coming. We’ll hit a soft recession in 2023. The main argument is simple: inflation is still extremely high, central banks are poised to jack up rates to fight it, and we haven’t felt the full force of the rate increases that have already happened. But the force might not be that forceful. RBC expects we'll see a baby reccession (i.e., GDP growth of less than 1%) in 2023. Why? Real estate, for one. Interest rates have risen and could hit the market hard — some estimates have real estate prices falling by 12% in the next year. Which can come with negative effects — decreased wealth, decreased economic activity, etc. We may luck into a “soft landing.” This argument hinges on inflation falling relatively quickly. Evidence that it might happen? Gas prices, which have fallen for fifty straight days. Supply chains, which might be improving. Companies like Apple, who are still reporting solid earnings despite everything. This scenario could mean a recovery in equities markets, further economic expansion in the future, and other nice things. Welcome to the “vibecession.” Coined by the writer and influencer Kyla Scanlon, a vibecession is when things feel pretty crappy, even if the economy’s doing OK enough (i.e. we have the vibes of a recession if not the technical reality of one). Sounds familiar to Canadians: high mortgage payments and grocery bills are no fun, even if basically everyone has a job. What would a pronounced vibecession be like? Inflation falls enough to keep central banks from crushing the economy, but not enough to make normal people who have to buy milk feel happy. Think of it like the inverse of a soft landing. What happens now? We wait for more numbers, and argue more about who’s right. The market is waiting to see who’s right, too. — Brennan Doherty OTHER VERY GOOD READS ⛵ The Haves and the Have-Yachts The ultra-rich are buying luxury ships in record numbers | The New Yorker 🌊 A Doomed Paradise Where the Sea Ate a Drive-Thru Quebec’s Magdalen Islanders face a stark choice | Hakai Magazine 🧑‍💻 Why the Old Elite Spend So Much Time at Work The average age of achievement is rising | The Atlantic THE WISDOM OF TWITTER Just when you think you’ve got it figured out: 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), Jim Stanford (economist and director of the Centre for Future Work), Ambrose Martos (fact checker), Ciara Rickard (copy editor), Clare Douglas (copy editor), Peter Martin (senior editor), and Ria Elciario (editorial producer). Full disclosure: contributors to this newsletter own ETH and stock in Apple. 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