Plus: Tiny cars take over November 28, 2022 Made in Canada IN THIS ISSUE Estimated read time: 7 mins 🏚️ Mortgage madness 🪙 Bothersome bitcoins 🏗️ Wetland woes WHAT HAPPENED LAST WEEK As the crypto winter deepens, venture capitalists are shifting their money to other tech. Or, in the case of mini-EVs, new-old technology. Read more below. | Getty Images THE WEEK IN MARKETS If you follow this space, you know the story in the markets lately is a mystery titled “Are We Racing Toward a Recessionary Cliff, or Is It Possible That We Thread the Needle for a So-Called Soft-Landing?” Spoiler alert: no one knows! But, while last week was relatively quiet (and short, with U.S. Thanksgiving), it was an up week: TSX +2%, S&P + 1.5%. Adding to the subtle aroma of optimism in the air: Over the last few weeks, gas prices have slid 10ish% While stocks have gained nearly 10% While bond yields have fallen about 0.5% Is that the sweet, sweet smell of a fresh-baked recovery cooking in an oven somewhere? Maybe! Some investors seem to think so. That said, we’ve smelled optimism before only to find something a lot stinkier as time passed. Still: we’ll take it over the pessimism of the early fall. THE WEEK IN ONE NUMBER 999 Number of days Disney CEO Bob Iger was retired before rejoining the company last week, after Disney’s streaming services reported a US$1.47 billion quarterly loss. IMPORTANT Trigger (rate) warning: mortgage payments are going up — and up. Thirty percent of Canadians have variable rate mortgages. Of those with variable payments, many have seen their mortgage bills jump by hundreds or even thousands of dollars, all while home values fall. Of the homeowners with fixed payments, half have hit their trigger rate: when rates are so high that the set payment is only enough to cover interest — so it has to go up. It’s brutal, and it’s kind of the point of rate hikes. Sucking money out of the economy starves the inflation beast, hopefully quickly enough not to starve families, too. Last week in wobbly crypto dominos: Grayscale Bitcoin Trust ($GBTC). Less than two weeks after the collapse of FTX, the first publicly traded crypto fund — which is currently worth more than $14 billion — watched its share price hit a record low: 45% less than the value of its actual crypto. The less Grayscale shares are worth, the more investors get spooked and the greater the possibility of a bank run. Bad for Grayscale — and for whatever domino it falls into. INTERESTING Who needs wetlands when you can have market-rate housing? After two decades in court, an Ontario developer looks like it’s about to win the right to build new homes on protected Greenbelt land, which would ever-so-slightly ease the housing crisis for humans and create a whole new one for owls. Cargill doubles down on meat. The agriculture company that processes more than half of Canada’s beef raked in a record US$6.7 billion this fiscal year — and celebrated by promoting its head of cowicide to the corner office. The company, which is the largest private firm in the U.S. and known for its secrecy, seems to be signalling a larger shift from grains to meat packing, which has an even higher profit margin — and, fine, a few more severed fingers. The news out of the World Cup has already been hotter than a soccer match played before sundown in the desert: Qatar rented fans (and then cancelled their payments when word got out)! Lionel Messi and Argentina were upset by Saudi Arabia! Budweiser paid $100 million to sponsor a now dry tournament! Nobody had the guts to wear those armbands! And, ugh, Canada lost to Belgium. And Croatia. THE FOMO INDEX by Stacey Woods IMPORTANT 😬 Alexa, remind me what you do again? Amazon’s voice assistant projected to lose US$10 billion this year. Source 🎙️ A New Ye Forward: Kanye puts finishing touches on own destruction with presidential run. Source 👾 ARK Invest founder Cathie Wood says Bitcoin will hit US$1 million by 2030. (2030 might not make it though.) Source 🐦 Sacré bleu! Head of Twitter France quits. Source CRASH & BURN TO THE MOON 🦖 Christie’s pulls auction of T-rex skeleton when some of its replica bones, and possibly its handbag, appear to be knockoffs. Source ✈️ Pearson, world’s official worst airport, excited to unveil $80 million runway renovation for you to be delayed on. Source 🧑‍💻 Meta denies rumours that Zuck is retiring next year to spend more time with the metaverse. Source 🚗 New Zealand homeowner offering new Tesla with purchase of house. Will throw in family if you pay cash. Source WHO CARES FROM OUR SPONSOR Auto-Deposits are Foolproof 💰 We know, because we write about it all the time: trying to time the market doesn't work. The good news is that the smartest way to invest is also the easiest: automate it. Turn on auto-deposits and take the guesswork (and dumb decisions) out of the equation. Set up auto-deposits WHAT’S UP THIS WEEK Canada’s Big Five banks announce earnings (starting Tuesday). Don’t worry, they’re still making money. Just not quite as much. OPEC+ settles a bet (Sunday). Time to find out just how true those rumours are about the oil bloc pumping 500,000 more barrels a day into the market to counter a price cap on Russian oil. THE BIG IMPORTANT STORY PRIVATE EQUITY Crypto Crashed. Now Tech Investors Have to Bet on Another Next Big Thing This time last year, crypto was The Really Hot Thing in Silicon Valley, thanks in no small part to venture capitalists, who invested US$33 billion in crypto and blockchain start-ups in 2021 — more than all previous years combined. Then the crypto winter hit and VC money began to go elsewhere, fast. So what emerging technologies are VCs betting big on now, and how promising are they? Here’s a sampling of VCs’ new favourite sectors: 💻 Generative AI Artificial intelligence is already everywhere, like Google Docs telling me what to type next when I wrote this sentence. But VCs are now especially interested in generative AI, a deep-learning technology that can auto-create text, images, code, and other assets that are currently labour- and time-intensive to produce and thus costly for businesses. One promising example, DALL-E 2, generates digital art based on keywords, while the writing platform Jasper spits out marketing copy and blog posts. From January to September of this year, VCs invested some US$48 billion in such AI start-ups. 🪖 Defense This year’s market downturn slowed not just crypto investing but also tech funding generally. One big exception is defense start-ups — like Shield AI, which builds AI-powered aircraft and raised US$165 million this past summer. Other defense companies, like Hawk Eye 360 and Anduril, have raised similarly hefty sums. Everyone’s vying for a government contract, with the U.S. military’s 2023 budget request calling for a record US$130 billion in R & D funding. 🚗 Minimobility Low-emission e-scooters are great. Except when it’s freezing. Or when another vehicle hits you. Which is maybe why e-scooters haven’t taken off as well as Silicon Valley hoped. Many VCs have moved on to three- and four-wheeled minimobility companies, like Eli Electric. There are a bunch of similar products — Zbee, E-Wan Lite, Nimbus — that aim to usurp the place of Earth-killing gas-powered cars. VCs invested nearly US$33 billion in mobility tech from Q1 to Q3. THE UPSHOT No one knows whether these emerging technologies might low-key change the world or if VCs are just looking for other places to put their money after they fomented a giant crypto bubble. (And, to be sure, some VCs are still very bullish on crypto.) “We — VCs — are in the business of generating outsize returns for our investors,” Sarah Applebaum, a partner at Pangaea Ventures (which doesn’t invest in crypto), tells TLDR. And that drives some VCs to take risky bets on trends, she adds, and could cause them to be over-optimistic about new technologies. Let’s just hope that this time VCs will do better due diligence than they did with some crypto start-ups. — Abigail Covington 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! FOLLOW US If you love TLDR (or even just like it a little) and you haven’t fled Twitter yet, follow @Wealthsimple for money news, bad jokes, and non-boring financial insight. OTHER VERY GOOD READS 👑 Twitter King Dril on Musk’s Chaotic Reign* An interview with the “patron saint of the internet” | The Washington Post 🚨 How Michael Goguen Got Conned* A VC starts a “virtuous Blackwater” — and makes an awful hire | New York Magazine 💊 Drugs, Death and Denial on the Job When construction workers report problematic substance use | The Tyee 🎵 The 100 Greatest TV Theme Songs of All Time The “Golden Girls” theme should have ranked higher, IMHO | Rolling Stone *Article is paywalled, which, yeah, is kind of annoying. But we think good journalism is worth paying for. THE WISDOM OF TWITTER Listen, if we start on it now, we can have it done in time for next year. THOUGHTS ON TODAY’S ISSUE? Love it Good So so This week’s newsletter contributors: Brennan Doherty (writer), Devin Gordon (writer), Stacey Woods (writer), Abigail Covington (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). 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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