Plus: Does the Nasdaq love Bennifer? August 1, 2022 Made in Canada IN THIS ISSUE 👾 Crypto’s regulation 🤝 Alberta’s bipartisanship ✈️ Drake’s private jet Estimated read time: 6 minutes WHAT HAPPENED LAST WEEK Is this Kylie Jenner’s “I’m gonna ruin your social media brand” face? | Getty Images The week in markets 🥳 ⛽ 💍 📈 Nice relief rally. How was your July? If you’re the S&P, you can say it was your best month in two years. Maybe it was the lower gas prices and bond yields or a slew of stronger-than-expected earnings. Maybe (probably?) it was Bennifer. Either way, both the S&P 500 and Nasdaq were up more than 4% this week after positive numbers from Apple ($AAPL), Amazon ($AMZN), Microsoft ($MSFT), and Google ($GOOG). The TSX also rose but a bit less. Finally, crypto joined the relief too: Bitcoin and Ethereum each jumped about 10%. IMPORTANT The sheriff comes to crypto’s wild west. Code may be law, but nobody told the SEC, which pinned on a badge (without consulting the townsfolk!) to charge a former Coinbase ($COIN) manager with insider trading before moseying over to look into Coinbase itself. It’s an unwelcome sign for the crypto world — if anything, they’d prefer the laid-back peacekeeping of the CFTC to the SEC’s no-nonsense swagger. The question now is how long will it be till other regulatory deputies line up (and till we fully exhaust this metaphor)? The fight dividing America: what’s a recession anyway? The Fed raised interest rates this week another three-quarters of a point, but for many investors, inflation’s become less scary than a recession. So will the U.S. get one of those? Another quarter of shrinking GDP has some saying it’s already here. Fed chair Jerome Powell doesn’t “think we have to” have one, Senator Elizabeth Warren says he’s causing one, and Biden straight-up changed the definition to buy himself another quarter without one. Choose your fighter. INTERESTING E-comm comes back to earth. Remember when the pandemic had us all so scared to go outside that we bought everything online? Internet sales jumped 43% and people said we’d changed the way we shop. Well, we changed back. Last week, Ottawa-based e-comm giant Shopify ($SHOP) saw its stock dive 20% on news of layoffs and CEO Tobi Lutke admitting his “big bets” were wrong. Toronto’s Clearco, an online retail investor, was forced to cut 25% of its staff too. Bipartisanship isn’t dead, but it can’t do much about gas prices. Alberta’s government suspended a 13-cents-per-litre gas tax, and now both the UCP and NDP are wondering why nobody’s seeing those savings. They say Albertans pay more than they would in Toronto, where politicians care about their constituents only enough to cut 5.7 cents of tax per litre. Premier Jason Kenney blames price-fixing, but the Competition Bureau says high prices don’t necessarily mean anyone’s colluding on anything. THE FOMO INDEX IMPORTANT ✈️ Drake’s jet is making 15-minute trips, and people are mad. Drake says relax, he wasn’t even on it. Source 🏠 Doing his part to lower housing costs: Doug Ford relists his home for $400K less. Source 🐷 Gen Z saving more for retirement than previous generations — in piggy banks gifted by their parents, but still. Source 💎 Largest pink diamond in 300 years discovered. Elizabeth Taylor comes back to shop for a setting. Source CRASH & BURN TO THE MOON 📷 Kim, Kylie, warn Instagram not to be too much like TikTok. Instagram bows, backs away slowly. Source 🍦 Small, vocal group of fans mourn death of the Choco Taco. Too little, too late, says Choco Taco. Source 🍩 Tim Hortons offers a free coffee and donut to the customers it spied on. Their diaries said they liked those. Source 👃 Investigation underway to find source of weird smell plaguing Calgary for ages. Don’t look at us, say Flames. Source WHO CARES TLDR is better with friends! 👯 Share this link in the group chat, Slack thread, or print it out and mail it to anyone who wants to sign up. WHAT’S UP THIS WEEK MONDAY August 1 Earnings season wraps up. If you’re loving all these quarterly reports (what, just us?), good news: this week we’ll hear from Bell ($BCE), Starbucks ($SBUX), Airbnb ($ABNB), Activision Blizzard ($ATVI), LG ($KRX), Sun Life Financial ($SLF), eBay ($EBAY), Restaurant Brands International ($QSR), and a bunch more we couldn’t fit here. It caps an earnings season that showed revenue and profit growth slowing from last year’s scorching pace but not nearly as much as investors feared — which at this point we’ll take as a win. THE BIG IMPORTANT STORY BUBBLES Housing prices coming down could be a good thing — with some very bad side effects Canada just went through one of the biggest housing booms in the history of the world. (Seriously: it makes the U.S. in the 2000s look like a blip.) And it affected everything — from where people worked to whether or not they wanted new drapes. Lately, though, prices are headed in a different direction: after four rate hikes, they have started to drop — they’re down 8% between the first and second quarters, and RBC says they could slide as much as 38% in Ontario and 45% in B.C. by next year. Of course, there are good things about falling house prices. For one, some new buyers may finally be able to...buy. But if the exploding stars align, there could be huge negative economic side effects too. According to Rob McLister, mortgage columnist at the Globe & Mail and writer of the Mortgage Logic newsletter, a lot of it rests on mortgage rates. Owners who need to renegotiate rates soon could see their costs rise by as much as 45%. Some of those people may no longer be able to afford their monthly payments, forcing them to sell and putting even more downward pressure on the market. That could lead to a few things: ☔ Falling wealth effect. When you feel like money is tight, you’re less likely to spend it. And when nobody spends any money, the economy struggles. 🌊 Underwater mortgages. When homes are suddenly worth less than the owners owe, it feeds the cycle of decreasing demand. Those people don’t want to sell, which means fewer buyers on the market, which means even lower home prices. 🏗️ Fewer new homes. Not as many people want to build new when all the old stuff is on sale, which means fewer construction jobs and less money going into the economy. 😞 Lost jobs. Housing-related stuff (everything from construction to renos to sales) accounts for about 10% of Canada’s economic activity — double what it is in the U.S. What’s all of this mean? Any housing crash — “if a crash means prices falling hard and fast into bear market territory, we’re almost there now,” McLister says — would hurt all of us, whether we’re shopping for houses or not. — Sarah Rieger OTHER VERY GOOD READS 🤦 Facebook Employees Shaken By Zuckerberg’s Shake-Up “There are...people at the company who shouldn’t be here” | The Verge 💅 What Happens When An Influencer Couple Breaks Up? Hey, we’ll always have brand deals | Marketing Brew 🏡 A Fascinating Real Estate Battle in Muskoka Cottage lovers versus mansion builders | Maclean's THE WISDOM OF TWITTER The butterfly effect, Jenner-style: 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). 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