And groceries (shocker!) rise once again February 6, 2023 Sign Up | Made in Canada IN THIS ISSUE Estimated read time: 7 mins 🔋 Batteries 🥓 Groceries 🛢️ Oligarchies Loblaws’s Galen Weston Jr. (above): great at labeling his sweaters, less great at making people feel good about rising food prices. For more on grocery chains’ thawing price freezes, see below. | Loblaws THE WEEK IN MARKETS The Ralliers Are Winning, At Least Right Now It was a week of big important numbers. The most important one: 0.25%. That’s how much Fed Chair Jerome Powell raised interest rates — the smallest jump since we can remember. But what drove a 2021-style melt-up in stocks was what Powell signaled afterward: that we may be nearing the end of interest-rate hikes. The second important number was 517,000 — the U.S.’s very strong January jobs growth. But in our bizarro world where good employment news is bad for markets (because it could spell more rate hikes) that was a drag on stocks. Who won the week? The ralliers. The major stock indices ended the week up between 1% and 4%. Since Jan. 1, the S&P 500 is +8%. TSX: +7%; Nasdaq: +15%. The final set of important numbers last week? Corporate earnings, which were weak (but not as weak as they easily could have been). See below for more on that. THE WEEK IN ONE NUMBER 40% The drop in the number of home sales in Calgary in 2022. New listings in the city are at the lowest level in about 25 years. WHAT HAPPENED LAST WEEK IMPORTANT After a brief holiday pause, grocery bills are headed up again. The price of groceries rose more than nearly everything else last year — and that’s despite the oh-so-generous marketing stunt price freeze from Loblaws ($LBLCF) and blackouts at other chains, many of which ended last week. Right on cue, PepsiCo’s ($PEP) Frito-Lay hiked prices by 11%. Our best hope? The long-awaited greedflation investigation — and getting to the spring, when we’re a little less reliant on food imported from the U.S. That’s a lot of lithium. On Tuesday the Vancouver-based Lithium Americas ($LAC) announced a US$650 million investment from automaker GM ($GM) to help develop a 6,000-acre mine in the U.S. that could produce enough lithium for as many as one million EVs a year — assuming eco-warriors with no sense of irony don’t kill it in court. INTERESTING Bitcoin miners headed to the House of Commons (hopefully after tucking in their shirts). With Canada upping its regulatory scrutiny of crypto, the past year brought proposals to revoke tax breaks for energy-guzzling bitcoin miners and, in some provinces, ban them from the electrical grid. On Wednesday, miners offered an ultimatum to the Standing Committee on Industry and Technology: drop the proposals or force them to go somewhere with less clean energy — where they’ll destroy the environment even faster. Superman is sick of getting his butt kicked. Over the last decade, Marvel trounced DC in box office revenue — US$23 billion to $9 billion. Last week, DC’s parent company, Warner Bros. Discovery ($WBD), unveiled plans to change that: a sprawling new Superman universe, with 10 new movies and TV series set to roll out over five years. That’ll include (another) Man of Steel resurrection, more Batman, and someone called Booster Gold — who we were disappointed to discover is a time-travelling former football star and not the flying commodities trader his name suggests. Superhero fatigue may be real, but so is a demanding board of directors. A Moment of Self-Promotion The novelist Nico Walker robbed 11 banks. Which — and you won’t believe this — landed him in prison. There, he wrote an acclaimed novel, Cherry, based on his experience, and also learned a thing or two about capitalism. Read the essay he wrote for Wealthsimple Magazine about the money lessons he picked up behind bars. FROM OUR SPONSOR Weekly draws from Jan. 23 to Feb. 13. Three prizes of $30,780 and seven prizes of $6,500. Must be new or existing Wealthsimple client. Make a deposit or transfer of at least $1 or essay method to enter. Each dollar deposited will earn one entry. No purch nec. Canadian residents and age of majority+ only. STQ required. Full rules wsim.co/maxout. THE FOMO INDEX by Stacey Woods IMPORTANT 🦤 Scientists working to bring the dodo bird back to life. Promise it will be different this time. Source 😢 Quebec’s groundhog sidesteps inaccurate weather prediction by dying on Groundhog Day. Source 🤔 I’ll take self-centred provinces for $1,000 please: Ontario gets its own category on Jeopardy. Source 💰 Adulting is easy! Ontario girl turns 18, buys first lottery ticket, wins $48M. Source CRASH & BURN TO THE MOON 🧹 The life-changing magic of making a mess: Marie Kondo says she’s giving up tidying up. Source 😬 Singapore man sues woman for saying she just wants to be friends. She counter sues him for being weird. Source 👟 Just Don’t Do It: Nike suing Lululemon for patent infringement over shoe designs. Source 🦈 Food influencer fined $25k for cooking & eating great white shark. Sticking to butter boards, ramen hacks from now on. Source WHO CARES WHAT’S UP THIS WEEK Canada’s January employment numbers come out (Friday). A good test of Tiff's timing on that rate-hike pause. Super Bowl LVII (Sunday). It’s so much harder to know who to root against without Tom Brady. SHARE TLDR WITH FRIENDS 🤝 Put this link in your group chats, in your Slack threads, on a tattoo on your back — whatever works for you! THE BIG IMPORTANT STORY EQUITY It’s Earnings Season. So Far Things Are Going OK? Earnings season is here! It’s that wonderful time of the quarter when companies tell investors how much they made and whether we should all light cigars, or instead grab some tissue, a tub of ice cream, and cry. We’re about halfway through this e-season, so we rounded up four major companies whose performances have revealed something interesting about how people are spending money. Apple Over the past decade, Apple ($AAPL) has become a central part of life for vast swaths of humanity. (Would you ever really ditch your iPhone?) And, no surprise, its revenue and profits have been bananas since about 2010. Well, the first hint that Apple’s business is slowing arrived Thursday, when it missed earnings estimates and posted a 5% quarterly revenue decline, its largest drop since 2016. Profits slid 13%, to US$30 billion. CEO Tim Cook blamed a “challenging environment” — aka a slowdown in consumer spending — along with production SNAFUs. But, honestly, the earnings miss was really only news because it’s Apple. You’d expect any company its size to slow whenever the economic boat wobbles. Amazon Amazon’s revenue soared during the pandemic, with millions of us stuck at home Priming the days away. Which was great, except for the fact that, as revenues rose, Amazon overbuilt and over-hired, and its revenues have taken a hit now that consumer spending has cooled. On Thursday, the company announced it barely eked out a profit over the holiday season and had an annual net loss of nearly US$3 billion. Which helps to explain why Amazon rang in 2023 by pink-slipping 18,000 workers. It’s in cost-cutting mode now. Tesla Now some non-bleak news: fan favourite Tesla pleasantly surprised forecasters with proof that it’s growing fast: its revenue rose 33% year-over-year, and it brought in US$24.3 billion in Q4 ’22 — US$160 million more than expected. CEO Elon Musk explained that slashing car prices would boost demand further and that affordability would be key to growth. Investors sure hope so; they have high expectations that the world is shifting to EVs in a hurry and that Musk will be the guy who puts most of them on the road. Tesla’s latest earnings didn’t disabuse them of this possibility. Exxon Speaking of the energy transition: it’s happening but not fast enough to rain on Exxon’s oil-gushing parade. It made a company-record US$56 billion in ’22, thanks partly to Vladimir Putin. Oil prices have fallen recently, dampening Exxon’s outlook. But it’s still making mountains of money and returning most of its spare cash — some US$30 billion last year — to shareholders. That wasn’t the case a decade ago, when oil companies invested most of their extra money in new projects. But now investors have a dim view of fossil fuel’s long-term outlook and consider oil companies cash-generating businesses, not growthy ones. And not even the war in Ukraine has changed that. THE UPSHOT Heading into earnings season, the vibe was grim. But it turns out that, though earnings have painted a darker picture than they did during the frothiness of 2021, they were fine enough to lead many investors to wonder, Hey, maybe 2023 won’t be so bad after all? Some things have changed. People don’t seem to be buying as much online as they were during the peak pandemic, for one. But there are enough OK-ish signs — strong demand for Tesla; that Apple is still raking in tens of billions of dollars each quarter — that investors have reason to believe that earnings will remain resilient in the months ahead, interest-rate hikes be damned. —Brennan Doherty OTHER VERY GOOD READS 🗣 This is How Canada Talks A look at our lexicon blah blah blah | The 10 and 3 💵 Brian Tyree Henry Tells His Money Story The Oscar nominee is no nepo baby | Wealthsimple 🚗 The Government Wants You to Own an Electric Car Which, great. But who can even afford one? | CBC THE WISDOM OF TWITTER Thinking of this for no particular reason: 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), Peter Martin (senior editor), Kat Angus (managing editor), and Devin Friedman (editor-in-chief). Disclosures: Contributors to this newsletter own shares in Amazon and Google. 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. 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. When you invest, your money is at risk and it is possible that you may lose some or all of your investment. Past performance is not a guarantee of future results. Historical returns, hypothetical returns, expected returns and images included in this content are for illustrative purposes only. Always research before investing. © 2023 Wealthsimple Media Inc.