Plus: How the U.K. made car insurance cheaper January 27, 2025 Sign Up | View online IN THIS ISSUE 8 min read 🛃 Trump tariffs 🏗️ Trendy towns 📦 Au revoir Amazon The Canadian dream of buying a home and living in relative comfort is slipping away. Or at least that’s the perception. Below, we investigate whether it’s actually true. | Getty Images THE WEEK IN MARKETS Stocks are still up. What gives? Here’s a question: how exactly, in the face of an American president threatening trade wars with seemingly half the world, do global markets, including the TSX, continue to flirt with all-time highs? One big factor is the AI arms race, which is fuelling an otherworldly level of investment. Just last week, three separate ventures got 11-figure-plus spending promises: (1) A consortium led by OpenAI committed US$100 billion to R&D on its Stargate AGI project (though no one’s sure whether the consortium actually has $100B to commit). (2) When asked about the big check possibly written by his competitors, Microsoft CEO Satya Nadella said, “I'm good for my US$80 billion.” (3) Not to be outdone, Zuck said Meta planned to spend US$65 billion on AI data centers. All that spending benefits stock markets by juicing the profits of companies directly in the AI space — but it also helps companies that develop materials and generate energy for giant data centers, like Brookfield Renewable. Expect even more monster numbers from Big Tech this week, when nearly all of them report Q4 earnings. WHAT HAPPENED LAST WEEK IMPORTANT The Diet Coke button is back in the Oval Office, which means Donald Trump is officially the U.S. president again. He wasted no time in signing a flurry of executive orders, concerning everything from LGBTQ+ issues to burdensome regulations. Among them was an order to investigate the U.S.’s trade deficit with countries like Canada. Trump has given myriad reasons for threatening to levy 25% tariffs on our goods — fentanyl! migrants! — but his rationale generally doesn’t hold up under scrutiny. The thing he’s clearly most miffed about is the fact that the U.S. imports more stuff from us than we do from them (to the tune of $65 billion in 2024). In Trump’s view, tariffs will fix the trade imbalance, and boost U.S. manufacturing, by making Canadian imports more expensive. Scotiabank’s Derek Holt is skeptical: “At the core is flawed logic that if you damage other countries, you will motivate stronger investment in the U.S.” Other economists tend to agree. Toronto is already too attractive — let’s make Whitehorse extra wonderful! Here’s a novel idea for solving the housing crunch via think tank C.D. Howe Institute: Canada needs to stop making its big cities even bigger and instead turn more small cities into larger ones. The thinking goes that building more houses in Toronto, Vancouver, et al., only makes more people want to move there, which erases gains in housing supply and drives up prices that are already impossibly unaffordable. (More on housing below.) Instead, we should lure people away from big metros by making smaller cities more attractive; that means building more houses and also having better jobs, public infrastructure, schools, karaoke bars, etc. INTERESTING The U.K. lowered speed limits. You’ll never guess what happened next. Actually, you’ll totally guess what happened: people got into fewer wrecks. And all it took was implementing a default 20mph (or 32 km/h) speed limit in built-up areas. Car-insurance premiums have dropped by 16% in jurisdictions that adopted the policy. Meanwhile, here in Canada, premiums jumped by 12% last quarter. Amazon to Quebec: Á plus tard! The e-commerce giant is closing all seven of its warehouses in the province and laying off nearly 2,000 employees. Could this have anything to do with a successful employee unionization drive there last year, or the fact that Amazon is currently fending off a similar effort in B.C.? Nah, we’re sure it’s totally unrelated. Bezos & Co. plan to use third-party carriers to handle deliveries in Quebec. —Sarah Rieger FROM OUR SPONSOR THE FOMO INDEX by Stacey Woods IMPORTANT 🌧️ Canadian banks withdraw from global climate coalition to develop their own climate strategies. Say they’re gonna make it rain. Source 🏅 Nothing gold (or silver or bronze) can stay: LVMH medals from the 2024 Olympics are already deteriorating. Source 👃 FDA approves a nasal spray for depression. Probably great if you’re depressed about allergies. Source 🤳 Instagram offering huge bonuses to lure creators away from TikTok. Meta determined to be the first name in brain rot. Source CRASH & BURN TO THE MOON 🍗 Georgia suspends all poultry operations over bird flu. American children have been briefed on chicken nugget situation and are standing by. Source ⛄ Houston, Texas, has no snowplows to deal with unexpected snow. Might just try shooting into it a bunch. Source 🏏 Toronto might get another cricket team. Great news if your cricket needs are not being met by Toronto’s existing cricket team. Source 🩺 Surgeon performs vasectomy on himself and puts it on Instagram. Went so well he might try to repipe the guest bathroom. Source WHO CARES THE BIG IMPORTANT STORY MACRO Just How Hard Is It to Get Ahead in Canada Anyway? The Canadian dream is on life support. Or at least that’s what an essay in The Globe and Mail argued not long ago, and a significant number of Canadians share the view. According to a new report by the Pew Research Center, a mere 16% of Canadians expect that children today will be better off than their parents as adults, down from 27% a decade ago. That is remarkably pessimistic. But is it really harder for young Canadians to get ahead than it was in the past? To answer that question, we looked at how much Canadians earn relative to how much things cost. Once you start parsing the data, some interesting things appear: Incomes have stayed ahead of overall inflation! The average income throughout Canada grew by 95% from 2000 to 2022 (the year the latest data was available) in nominal dollars, while inflation was up 55% during that same time. Median income followed an almost identical trajectory. That means folks are generally richer now than they were in Y2K! Another positive trend for anyone trying to get ahead: rent, despite rising sharply in some cities, has risen more slowly than CPI or wages, as have many nice-to-have products — alcohol, clothing, TVs, etc. Unfortunately, inflation for some items is rough. The big issue is that goods and services that have risen faster than CPI tend to be associated with upward mobility and raising a family — namely education, textbooks, and child care (which only dropped after the government began to roll out its $10-a-day child-care initiative a few years ago). And that’s to say nothing about the cost of purchasing a home. It’s not breaking news that Canadian home prices are nuts — we’ve covered the topic many times. Still, the chart above is remarkable. Income roughly doubled from 2000 to 2022. But, with home prices up 422% over that same period, many young people feel, justifiably, locked out of the housing market. And that can feel like being shut out of prosperity, since owning a home has traditionally been one of the main ways Canadians have built wealth. So did we publish this piece just to bum you out? No! The picture isn’t totally doom and gloom: it’s good that incomes have stayed ahead of overall inflation. And it’s good that the wealth of tens of millions of Canadian homeowners — rich and poor, native born and newcomers — has reached record highs as property values have increased, much to the benefit of their children or next of kin. The flip side is that rising real-estate values have no doubt hurt economic mobility, and restoring home affordability will take serious time and effort. So, to answer the question we posed in the intro: yes, in some key respects, getting ahead today is harder than it was in the past. So where does that leave young Canadians? For starters, bear in mind that housing isn’t the only, or perhaps even the best, way to build wealth in Canada. Stocks have done better at times, for instance. You can use the price-to-rent ratio to gauge whether you’re more likely to get ahead by trying to scrimp and save for a house or by renting and investing heavily. It’s a judgment call! Also, Canada has cooled dramatic housing inflation at least once before, and it’s not out of the question that prices could flatline again. The world and country are in flux. And that could create an environment for meaningful change. —Andrew Thompson OTHER VERY GOOD READS 🏋️ Smells Like Protein Spirit The (maybe unhealthy?) quest for 200 grams per day is changing how we eat. | Taste 👟 Nike Is Broken. Can Elliott Hill Fix It?* A prodigal son returns to save the struggling shoemaker. | Fortune ⛺ The Death in Peel A surge of asylum seekers has left suburbs struggling to respond. | The Local 🏝️ Cubicle Escape Plan How to semi-retire years before most Canadians. | Wealthsimple Magazine *Article is paywalled, which, yeah, is kind of annoying. But we think good journalism is worth paying for. THE WISDOM OF SOCIAL 2025: The Year of the Toblerone Diet 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 (lifecycle marketing manager), Matthew Karasz (markets editor) Jared Sullivan (senior editor), Peter Martin (senior editor), Kat Angus (managing editor), and Devin Friedman (editor-in-chief). Disclosures: Contributors to this newsletter own shares in Google. 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