Plus: Kleenex is Kleenexiting Canada. August 28, 2023 Sign Up | View Online IN THIS ISSUE 7 min read 🏗️ Building homes 💻 Buying chips ⚡ Boiling water You have to respect Nvidia CEO Jensen Huang for turning his company into an AI superpower. You also have to respect his commitment to wearing black leather jackets. | Getty Images THE WEEK IN MARKETS A Tale of Two Jackson Holes Last week was a tale of two Jackson Holes. In 2022, at the U.S. Fed’s annual symposium in Wyoming, chair Jerome Powell signalled that the central bank planned to keep hiking interest rates until inflation was under control — and the markets dropped a painful 3.5%. Last week, back in Jackson Hole, Powell more or less repeated himself: beware of high rates! And yet the markets... basically did nothing. Why? It’s all about surprises. Unlike last year, rate hikes are already priced into the markets, so Powell’s speech provided no surprises. The market has also priced in some upside news: last week, Nvidia beat its earnings expectations (read more below) and the market... didn’t do much. (The major indexes finished the week flat.) The lesson? News doesn’t necessarily move markets. Surprising news does. What’s the next surprise? If we all knew that, it wouldn’t be a surprise. WHAT HAPPENED LAST WEEK IMPORTANT Montreal home builders didn’t build any affordable homes. Two years ago, Montreal told developers that they had to build more affordable units or pay a fine. Well, CBC reported last week that Every. Single. Developer opted to pay the fine. (The total so far: $24.5M.) This policy failure illustrates how hot demand is and also why it’s so tough to address Canada’s affordable-housing crisis. Economist Mike Moffatt argued last week that the situation is so dire that it demands a “war-time-like effort” from the government. His recommendation? Ottawa needs to create a national workforce strategy to turbo-charge construction. Nvidia nailed it. Last week, we told you about how some investors had wildly high hopes for chip company Nvidia, which has become an AI bellwether, while others suspected it was overvalued. On Wednesday, Nvidia proved the doubters wrong (for now), announcing that it had generated 20% more revenue than it projected and that it expects its revenue to grow by another 27% in Q3. Nvidia — whose stock is now up an improbable 222% YTD — made clear that demand for AI gear is red hot. But the skeptics still have some questions, like: Will the company face competition in the future? And will it suffer if the startups buying its chips don’t find AI use cases soon? We’ll see. INTERESTING WeWork, once valued at nearly US$50 billion, is probably going bust. That’s according to The Wall Street Journal, which reported on Thursday that the company’s lenders are hashing out a potential bankruptcy plan. WeWork’s fall is a good reminder for startups that no matter how big you grow, you eventually need a path to profitability (which probably doesn’t involve paying your former CEO a billion-dollar exit package). Kleenex is pulling its name-brand tissues out of Canada, due to the “unique complexities” of our market. Which is corporate-speak for “we’re not making money.” Company reps told The Globe and Mail that inflation is part of the problem (along with competition from Scotties), since budget-minded shoppers are opting for off-brand products to save cash. Discount stores have been popular for similar reasons and will likely continue to be, with Canadian consumer confidence hitting its lowest point in August since the outbreak of the pandemic, largely thanks to rising mortgage rates. —Sarah Rieger FROM OUR SPONSOR THE FOMO INDEX by Stacey Woods IMPORTANT 🏠 New, smaller American houses being built without bathtubs or dining rooms, leaving more space for essential panic rooms. Source 📸 Passive income win! Toronto speed camera brings in $3.3 million in 16 months by just sitting there. Source ⛵ Eco-friendly cargo sailing ship makes its maiden voyage. Pedal-powered rockets not far behind! Source 🥖 Arby’s owner agrees to buy Subway for $9.6 billion. Still deciding between peppercorn ranch and Baja chipotle sauce. Source CRASH & BURN TO THE MOON 🎸 Make room for one more invisible trophy! Japan’s Nanami Nagura wins Air Guitar World Championship for the third time. Source 🔥 Those who don’t remember the cheese sandwiches are condemned to re-eat them: Tickets now on sale for Fyre Festival II. Source 🧊 Keep cool in your holiday heat dome with Starbucks’ new iced drinks for fall. Source 😺 Missouri cat breaks Guinness World Record for jumping rope because no other cats would even consider doing that. Source WHO CARES WHAT’S UP THIS WEEK The U.S. Open…opens? (Monday) The only tennis story this writer cares about is the upcoming steamy Luca Guadagnino movie, so she’s hoping an editor who actually cares about sports steps in here with a helpful note about what readers should watch for. More Canadian banks release earnings (Tuesday – Friday). Last week, TD and RBC reported higher expenses and a so-so outlook for the rest of the year. This week, we’ll see how BMO, Scotiabank, and CIBC are doing. —Sarah Rieger DON'T BE A TLDR HOG 🐷 Like TLDR? The first five million people to click this link can share it with a friend for free. (You can share it with enemies too but only if you’re ready for them to love you.) THE BIG IMPORTANT STORY POWER Nuclear Is (Probably) the Next Big Thing. Will Canada Be Ready? Earlier this month, researchers at the Lawrence Livermore National Laboratory, in California, announced that for the second time since December, they’d triggered a nuclear fusion reaction that produced a net gain of energy. Which is a huge deal! That’s because a lot of people think fusion and other forms of nuclear power will help meet growing global energy needs as countries decarbonize. That possibility has led governments and tech bazillionaires, including Jeff Bezos, Peter Thiel and Marc Benioff, to invest heavily in the space. The stakes are high because whoever masters the nuclear industry might not only save the world but also carve out a lucrative chunk of the $10 trillion-a-year global energy sector. Here’s what’s happening now: FUSION! Fusion involves hydrogen isotopes colliding and becoming helium, which releases energy — a lot of energy. The sun is basically a giant fusion reaction. (The Livermore created their own mini-sun by shooting 192 lasers at a diamond.) Creating commercially viable fusion energy has been a physics Holy Grail for seven decades. That’s because fusion would provide humans with an almost limitless supply of cheap, clean power, and with that power, we could do all sorts of life-improving stuff, like grow crops in efficient vertical farms or desalinate ocean water to alleviate droughts. THEN THERE’S FISSION! Utilities have been generating power with fission, which involves splitting uranium atoms, since the ’50s. But nuclear power plants got so expensive to build that utilities mostly stopped making them in the ’90s. Now, given climate change’s threat, power providers are investing in scaled-down, cheaper-to-build fission reactors known as small-modular reactors, or SMRs. One SMR company, NuScale, won U.S. regulatory approval this year and has 19 contracts to build plants around the world. Another startup, TerraPower, founded by Bill Gates, is developing molten-salt reactors that it claims will operate at lower, and safer, temperatures than traditional nuclear-power plants. SO IS NUCLEAR POWER GOING TO BE A BIG DEAL? Probably! Demand for nuclear power is expected to triple by 2050. Unfortunately, fusion is still pretty moonshot-y. Fusion startups have only raised US$6 billion ever, compared to the US$14 billion AI companies raised in the first half of 2023. If fusion seemed viable in the near future, it would attract more investment. But fission is getting funded. Last year, President Biden signed a law that included US$30 billion in tax credits for existing nuclear-fission producers and funding for nuclear research. Canada’s most recent budget contained similar provisions. And, as TLDR reported recently, Ontario plans to build the world’s largest nuclear-power plant, and it committed $970 million to finance SMRs. How might a shift to nuclear affect the Canadian economy? Long term, the number of clean-energy jobs is expected to grow globally as countries decarbonize, and nuclear-power jobs tend to pay the best. Which is good. But sustainability advocates have warned that at the moment, Canada is overly dependent on fossil-fuel extraction. (The sector employs some 200,000 residents and accounts for about 5% of Canada’s GDP.) In a country that some say is ill-prepared for a drop in oil-and-gas demand, nuclear power could be — as a very enthusiastic new movie-themed Ontario Power Generation ad campaign puts it — “a true hero.” If, you know, it all works. —Ben Mathis-Lilley OTHER VERY GOOD READS 🪧 The Summer of Strikes that Wasn’t Work stoppages across Canada are actually on the decline. | The Maple ✂️ What Happened to Wirecutter?* The product-recommendation site has changed. Is the internet to blame? | The Atlantic 💰 The Racial Wealth Gap Is a Problem And fixing it will demand transformative thinking. | Wealthsimple Magazine *Article is paywalled, which, yeah, is kind of annoying. But we think good journalism is worth paying for. THE WISDOM OF TWITTER We don’t give financial advice, but we can safely say that spending up to $8,000 on the sequel to the all-time worst festival is a slight risk. 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), Nikki Holmes (copy editor), Sara Black McCulloch (fact checker), Mohini Tailor (senior LifeCycle specialist), Jared Sullivan (senior editor), Peter Martin (senior editor), Kat Angus (managing editor), and Devin Friedman (editor-in-chief). 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 No purchase required. 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