Plus: the Tim Hortons pizza pivot August 29, 2022 Made in Canada IN THIS ISSUE Estimated read time: 7 min 🤖 Twitter’s bot problem 🎮 EA’s (brief) Bezos bump 📱 Taiwan’s chip giant WHAT HAPPENED LAST WEEK Apple’s chipmaker is suddenly at the centre of the Taiwan-China standoff. Read about it below. | Wealthsimple THIS WEEK IN MARKETS Last week was dull — until Friday, when Fed Chair Jay Powell spoke at a symposium in Jackson Hole. In short, JPow said the pain ain’t over. The Fed, much like the BoC, has been trying to smother inflation by jacking up interest rates. And inflation has fallen a bit! Still, Powell said the Fed will continue to act “forcefully,” even if a slowing economy hurts households and businesses. Investors really didn’t want to hear that, and global markets tumbled, with the TSX ending Friday south 1.5% and the S&P 500 falling nearly 3.5%. The big question now is not if more rate hikes are coming (investors are already betting that they are until at least early 2023) but whether inflation falls enough in response. Because if not, more pain surely awaits. IMPORTANT Germany won’t get Canadian natural gas. It’s just too expensive to ship all that way, Justin Trudeau told the PM of the energy-starved country last week. But Canada did pledge to deliver green hydrogen to Europe by 2025 — provided Canada, an aspiring hydrogen heavyweight, has a plant to do that by then. The trouble for Germany and the rest of Europe is that 2025 is a looong time from now, and winter energy prices are looking awfully scary. Royal Bank of Canada’s ($RBC) earnings report was, well, a bit yikes. Q3 net income at the bank fell 17% compared with last year. Still, RBC’s earnings didn’t paint an entirely grim picture. Its trading business got crushed, which isn't surprising, given the downturn in the markets. But! RBC has continued to make money from its plain-vanilla lending business (credit cards, mortgages, business loans). And that suggests the economy is still chugging along, recession concerns be damned. Will that continue? It likely depends on how much the BoC hikes interest rates in the future. INTERESTING AMC, the meme stock that also screens movies, introduced a new kind of stock. It’s called $APE, and it has nothing to do with the Bored Ape Yacht Club and everything to do with, let’s say, interesting business decisions. Money Stuff’s Matt Levine holds that issuing $APE was basically a way for AMC to get around limits on issuing new shares of its common stock, $AMC, so that it can continue to capitalize on its memeness to raise more and more cash. Maybe Musk was right about the Twitter bots. Let’s recap: First, Elon was like, Hey, listen, I’ll buy Twitter and fix the bot problem. Then he was like, Actually, I won't buy it! There are just too many bots! Then the internet had a big he-he at his expense. Now, following a whistle-blower complaint, U.S. regulators are wondering if, hang on, maybe there are too many bots, and maybe Twitter has known about it (and maybe also employed foreign intelligence agents)? Watch this space. 🍿 Ford ($F) canned 3,000 workers, including 120 Canadians. The cuts came from its combustion-vehicle divisions as it tries to reduce costs and shift focus to EVs. The PGA strikes — strokes? — back! Tiger Woods and Rory McIlroy unveiled an entirely new “tech-infused” golf league called TGL. It’s basically a PGA-backed counterattack against upstart Saudi-financed rival league LIV, which stands for “dictator blood money” (don’t fact-check us on that). LIV aims to be a faster, more-fun alternative to the PGA Tour — which won’t be hard? In TGL, three-man teams will play fast 18-hole virtual courses on Monday primetime TV. So like Monday Night Football, but with more rich people watching. SHARE TLDR WITH FRIENDS 🤝 Put this link in your group chats, in your Slack threads, on a tattoo on your back — whatever works for you! THE FOMO INDEX IMPORTANT 💸 TO firm files $1B lawsuit against Binance for letting Canadians make (allegedly) illegal leveraged trades. Source 🎨 Famous Winston Churchill portrait stolen from Ottawa’s Chateau Laurier. Netflix surely considering 10-part crime series you can half-watch. Source 🚗 California bans sale of new gas cars by 2035. “Or even sooner would be great, if that works!” says Earth. Source 🍺 Saddle up to a stool next to the Slurpee machine: Ontario 7-Elevens might start serving booze. Source CRASH & BURN TO THE MOON 🎙 Mark Zuckerberg talks to Joe Rogan for three hours. Who knew a podcast could be made entirely of hot air? Source 🎢 The Bezos giveth, the Bezos taketh away: EA’s stock soars, then drops amid Amazon acquisition rumours. Source 👔 Gen Z discovers “quiet quitting,” what every other generation has called “coasting,” but more power to ’em. Source 🍕 Tim Hortons pivots from violating customer privacy with app to violating customer taste buds with pizza. Source WHO CARES STUFF THIS WEEK Lululemon earnings (9/01): Buoyed by strong brick-and-mortar sales, the Vancouver-based athleisure brand is expected to see 22% YoY revenue growth. Still, its stock ($LULU) is down 19% YTD. Other clothing retailers have begun cutting profit expectations amid recession concerns, so we’ll see how Lulu fares. THE BIG IMPORTANT STORY TECH The Chipmaker in the Middle of the Taiwan-China Standoff, and Global Trade The odds of war breaking out between Taiwan and China are, unfortunately, becoming less remote by the day, as Beijing escalates its threats to seize the island nation. And one big reason why Western countries (cough cough, the U.S.) will probably come to Taiwan’s defence involves a huge (like, bigger than ExxonMobil, Meta, or Walmart) but relatively obscure company called TSMC, a chip-making foundry that controls 54% of the global semiconductor market. Every new iPhone runs on a TSMC chip, as do NATO fighter jets (including some Canada has on back order) and anti-tank missile systems. Hence the company is not just hugely important to the economy but also to the national security of Canada and the U.S. TLDR recently spoke with Thomas J. Shattuck, of the Foreign Policy Research Institute, who explained what it would mean (and it would mean a lot) if something happened to TSMC. First, what’s so special about TSMC semiconductors? TSMC produces the most advanced semiconductors, meaning the smallest ones around. While other companies are making ones at seven nanometres in length, TSMC is at five and, soon, at three and at two. These tiny, powerful chips are what’s at stake here. TSMC has manufacturing facilities in the U.S. and in China. But TSMC’s most advanced fabrication facilities (fabs) are in Taiwan, since Taiwanese law prevents TSMC, for security reasons, from building its most advanced chips in China, which wants to be a semiconductor powerhouse. Why can’t China just build its own advanced factories? Making a fab costs tens of billions of dollars, for one. Apple can’t afford to do it, and Apple is huge. But even if China starts building a new fab today, by the time it comes online, eight years from now, TSMC will have already developed more advanced tech. No one will catch up to TSMC unless something dramatic happens. Speaking of dramatic, a conflict over Taiwan is no longer out of the question. How much do you suspect TSMC influences China’s desire to seize Taiwan? China wants Taiwan no matter what, but the semiconductors would be a perk. The catch for China is that taking Taiwan by force would destroy the entire semiconductor industry. China wouldn’t target the fabs, but, if Ukraine is any indication, stuff would get destroyed regardless of its strategic value, and the fabs surely wouldn’t go unscathed. What kind of problems would arise if the TSMC fabs went offline? Basically everything relies on chips, and not having them would probably cause a global depression. We’d all have to use our old phones and computers for a long time, to say the least. What are you following to gauge whether tensions are escalating? If China imposes trade restrictions against Taiwan’s semiconductor industry, that would be a big red flag. Because it would mean that China has accepted that peaceful reunification can’t happen, that it can’t do business with TSMC, and that it’s ready to move in. Read a longer version of this Q&A here. Interview by J.R. Sullivan. OTHER VERY GOOD READS 📸 The Age of the Instagram Face* It’s like a sexy ... baby ... tiger | The New Yorker 👑 Inside the QAnon Queen’s Cult: ‘The Abuse Was Non-Stop’ Shocker: Romana Didulo is a bit unhinged, followers say | Vice 🏝 What Comes After Ambition? When you want more life in your work/life balance | ELLE 👾 More Than Half Of All Bitcoin Trades Are Fake* Crypto trading volumes could be half as high as reported | Forbes *Article is paywalled, which, yeah, is kind of annoying. But we think good journalism is worth paying for. THE WISDOM OF TWITTER Boomers are nonetheless convinced you can bootstrap your way into home ownership: 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), Ciara Rickard (copy editor), Sara Black McCulloch (fact checker), Jared Sullivan (senior editor), Kat Angus (managing editor), and Devin Friedman (editor-in-chief). Full disclosure: contributors to this newsletter own stock in Amazon. 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. 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