Plus: the Toronto housing market actually...cooled? May 9, 2022 Made in Canada IN THIS ISSUE 📈 Rates go up 🏠 Toronto housing prices go down 💩 Three rules for investing in a crappy market WHAT HAPPENED LAST WEEK Andrew Francis Wallace/Toronto Star via Getty Images IMPORTANT The U.S. Federal Reserve, as expected, raised its benchmark interest rate by half a percentage point — the biggest jump since the dot-com boom — in an effort to smother inflation. And stocks shot up! A lot! But only for a day. Thursday and Friday were a blood bath, continuing a pattern of (mostly downward) swings. Analysts expect inflation to drop soonish, but the big question moving forward is how soon. If prices don’t come down quick, central banks will have to keep raising rates to crush the economy. Fresh U.S. inflation data out this week will shed some light on how aggressive central banks will need to be. (More below.) Did the Famously Hot Toronto Housing Market get Famously Less Hot? Major meltdowns aside, housing prices seldom drop, hence why people pour their life savings into them. But home prices in the GTA did slide in April, by a not-unsubstantial 1.6%. Why? Interest-rate hikes are making money more expensive to borrow and cooling the economy. The not-fantastic news — for prospective home buyers, anyway — is that prices in the city of T.O. itself rose by 1%, and the average home sold for $1.3 million. Womp womp. INTERESTING Shares in Canadian drop-shipping giant keep dropping. Missed quarterly earnings drove Shopify’s stock down 10% last week, bringing its YTD decline to 72% — the worst performance in the TSX index. The fall represents a $155 billion YTD loss in value. You read that right: $155 BILLION gone since Jan. 1. What gives? A super-sized slowdown in pandemic purchasing, for one, plus repricing of high-growth tech stocks. The Information also revealed (excerpts here) that Amazon’s new Shopfiy-like merchant tool poses an existential threat to the Toronto company. Bad timing abounds: Peloton is trying to raise capital, and Wall Streeters are quitting banking jobs to chase crypto riches. Godspeed. Omaha Oracle Warren Buffett said, very on-brand, that he wouldn’t buy all the bitcoin in the world for $25. Which, predictably, dragged down crypto prices . (Bitcoin fell 9% Thursday, but that’s a whole ’nother story.) The leaked draft decision suggesting the U.S. Supreme Court might overturn Roe v. Wade is still reverberating. Some data to chew on: reproductive health-care restrictions suck more than US$100 billion/year from the U.S. economy owing to women’s reduced workforce participation; studies suggest such restrictions harm low-income women who already have children the most. Then there’s this horrific estimate: pregnancy-related deaths could rise 21% if abortion is banned. THE FOMO INDEX IMPORTANT 🚨 A whistleblower accuses the CRA of giving a multimillion-dollar tax deal to a major overseas company (name redacted). Source 📉 NFT trading volume has fallen an apocalyptic 92% since its Sept. peak. Source 💩 Demand for Canadian fertilizer grows thanks to disrupted Russian supply. Source 🎟 The government plans to ban companies from tacking on sneaky checkout fees for concert tickets, etc. Source CRASH & BURN TO THE MOON 🤦🏽‍♀️ A guy thought NBA star Dwayne Wade was the “Wade” in abortion case Roe v. Wade. Source 💥 A typo by a trader triggers flash crash that temporarily wipes out €300 billion from European markets. Source 😧 James Earl Jones celebrates Star Wars Day by revealing that long, long ago he was paid US$7K to voice Darth Vader. Source 👔 A member of The Youth™ boldly asks, “What the f--- do you do at an office job?” in top-shelf post-capitalist TikTok. Source WHO CARES WHAT’S UP THIS WEEK WEDNESDAY May 11 U.S. inflation numbers for April are expected Wednesday, which could affect markets globally. Many analysts suspect price gains peaked with March’s eye-popping 8.5% increase. And basically every investor is praying that that’s true, so the Fed doesn’t have to keep raising interest rates a bunch. One concern, among many, is that rising energy and food prices could keep consumer prices stubbornly high. THURSDAY May 12 Freshii — the Toronto-based chain famous for its salads and infamous for paying its virtual cashiers in South America $3.75/hour — will release its Q1 earnings report. The company is trying to evolve from a restaurant chain — it has nearly 500 locations across 17 countries — to a health-and-wellness brand , with a line of supplements and vitamins. It also acquired e-commerce brand Natura Market. Earnings will speak to how well the strategy pivot is working. THE BIG IMPORTANT STORY STOCKS Three rules for investing in a crappy market You’ve seen the news by now: stocks and bonds are getting hammered . We could fill a book (or at least a long blog post) with explanations why: a quick pandemic recovery, war, inflation, etc. Given all the turmoil and the not-unlikely chance you might be low-key freaking out right now, we thought it would be a good time to reflect on the core principles of long-term investing, which people like Warren Buffett really want us to remember. Here they are, with apologies to Mr. Buffett (who didn't write them). Remember your goals: Or, rather, HAVE long-term goals if you don’t already. Like saving for retirement. Then keep investing. Markets go up over time, despite wars and recessions and whatever else, and investors are often rewarded for toughing out downturns. Don’t panic: If you’re diversified, panic-selling will probably just cost you money. It’s like getting bangs after a breakup. Yes, they’ll grow out, but you probably should have taken 24 hours to think through that move first. Assess your cash needs: Things might get worse before they get better. You always want to keep some cash in an emergency fund. But also, if you know you have a big upcoming purchase, you probably don’t want all your money tied up in the markets right now, or ever for that matter. — Sarah Rieger TOTALLY NONESSENTIAL GOOD READS 🚂 The Debt Engine Predatory lenders are making Canadians go broke | Briarpatch 🎸 The Shadowy Business of International Education Foreign students are exploited for profit |The Walrus 🧀 The Ministers of Cheese Inside the Canadian family behind the Cheese Boutique |Toronto Life THE WISDOM OF TWITTER I AM the dip. THOUGHTS ON TODAY’S ISSUE? 🤑 Love it 🙂 Good 🙁 So so This week’s newsletter contributors: Sarah Rieger (staff news writer), Jared Lindzon (writer), Devin Gordon (writer), J.R. Sullivan (senior editor), and Kat Angus (managing editor). Full disclosure: contributors to this newsletter own bitcoin. 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. Wealthsimple Media Inc. does not endorse any third-party views referenced in this content. 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