Plus: Make Canada freight again May 08, 2023 Sign Up | Made in Canada IN THIS ISSUE 7 mins read 💉 Wegovy at capacity 🏴‍☠️ Raider capers 🏭 Recapturing manufacturing Fictional Wall Street titan Gordon Gekko was inspired by real-life Wall Street titan Carl Icahn. And so was real-life short seller Nathan Anderson, who last week used Icahn's corporate-raider tactics to go after ... Icahn Enterprises. | 20th Century Fox THE WEEK IN MARKETS It’s the Super Bowl for market nerds: the heart of earnings season. It was also the Stanley Cup and the World Series, thanks to jobs numbers and central bank decisions. So yeah, we were pretty jazzed at TLDR. Markets started the week down on a fresh Fed interest rate hike and renewed banking sector fears. Through Thursday the TSX dropped 2% and the S&P fell 3%, but they did an about face after strong Apple earnings and jobs data (see below), ending the week basically flat. The story here is the push/pull of opposing forces. On one side you have high interest rates and the bank squeeze weighing on borrowing, spending, and profits. On the other side you have consumers saying: I don’t care, I’m going to keep spending! And last week ended in a stalemate. THE WEEK IN ONE NUMBER 17,500 The total number of buyers who received financial assistance from the First-Time Home Buyers Initiative, according to a new report. Launched in 2019, the program was supposed to help 100,000 families buy homes over the next three years. WHAT HAPPENED LAST WEEK IMPORTANT Surprise: more jobs! America added 253,000 jobs in April according to data released Friday, surprising investors and busting through expectations like the Kool-Aid Man — who creates at least one construction job every time he enters a room. Canada’s announcement on the same day — 41,000 new jobs, many of which were part time — was less exciting but still just fine. Overall, the message was that the economy remains very strong. Could the mini banking crisis in the U.S. (see below) get bigger and derail spending and hiring? Could inflation decide it’s no longer happy heading down? We’ll see. But right now it seems we’ve weathered the rate hikes better than anyone imagined. It was a tough week for banks with “West” in their name. U.S. Fed chair Jerome Powell had barely finished telling everyone the bank stress was behind us on Wednesday when Western Alliance and PacWest made a convincing counterargument: investors sent stocks for the two banks crashing by more than 60% after rumours they were exploring a sale (both recovered a bit by week’s end). One smart take: this is less a sign of financial apocalypse than concern that the weak will continue to be eaten by the strong — and at very unfavorable prices for shareholders. A couple worms couldn’t stop Apple. An expected drop in Mac and iPad sales bit into second-quarter revenue, but the big story from Apple’s earnings was that iPhone sales more than made up for it, trouncing expectations. In response, Apple stock went up by nearly 5% on Friday. Despite inflation’s drain on paycheques, consumers are clearly still indulging — it seems the market for luxury remains strong, even if some people have to live in their parents’ basements to afford it. INTERESTING The potential for anti-obesity treatment is anything but slim. There are as many as 1 billion obese people in the world, giving Big Pharma plenty of demand for new weight-loss drugs like Wegovy and Ozempic — assuming manufacturers can keep up. Despite beating sales projections Thursday, Novo Nordisk saw its stock fall 7%. Why? The company said it needed to cut back on new Wegovy prescriptions to ensure existing patients had enough. And competition in the estimated US$200 billion industry is only going to heat up: Eli Lilly’s upcoming drug, Mounjaro, is reportedly even more effective. The great raider got raided. Carl Icahn, the godfather of cutthroat investing (and the inspiration for Gordon Gekko), was targeted by notorious short seller Nathan Anderson of Hindenburg Research on Tuesday. After a similar report kneecapped the world’s (formerly) 4th richest man, Guatam Adani, Anderson’s newest claim says Icahn Enterprises overvalues its business empire and used a Ponzi scheme to pay dividends. Even though Icahn denies the whole thing, his company’s stock sank 40% on the week, erasing $7.5 billion of his fortune. ChatGPT did some raiding of its own. Tutoring services firm Chegg’s stock plummeted 42% following the company’s Monday earnings call. Rumour is the new kid at school, ChatGPT, does everybody’s homework for free. When reached for comment, ChatGPT just said, “Who’s next?” FROM OUR SPONSOR THE FOMO INDEX by Stacey Woods IMPORTANT 😢 Report: Loneliness is as unhealthy as smoking 15 cigarettes a day. If your only friends are cigarettes, it’s even worse. Source 🤖 Walmart finds AI is great at negotiating with vendors, but let’s see it take them out and get them hammered. Source 🪧 The CRA strike ends. They didn’t get everything they wanted; they just missed your taxes too much. Source ✌️ “Godfather of AI” GeoffreyHinton resigns from Google to speak freely about dangers of AI once M3GAN lets him out. Source CRASH & BURN TO THE MOON 🛁 Canadian investor wants old Bed Bath & Beyond stores for new chain called “rooms + spaces.” No beyond. Source 📞 Study finds Canadians get more fraud calls than Americans, or at least more survey calls about fraud calls. Source 🩺 Patients consider ChatGPT more empathetic than doctors when giving medical advice, but much worse at threading catheters. Source 🧊 Man from Dildo, N.L., goes viral with discovery of penis-shaped iceberg. A bachelorette party can’t be far behind. Source WHO CARES WHAT’S UP THIS WEEK U.S. inflation numbers come in (Wednesday). Something to scratch the itch while we wait for Canadian data to come in next week. The BlackBerry movie premieres. (Friday) It’s got as good a shot at making money as what’s left of BlackBerry does. SHARE TLDR WITH YOUR FRIENDS 🤝 Put this link in your group chats, your Slack threads, tattoo it on your back — whatever works for you! THE BIG IMPORTANT STORY INDUSTRY The Race to Restart the Making-Stuff-in-Canada Economy Seventy-five years ago, back when fedoras didn’t mark you as desperate for attention, one in four Canadians had a job making appliances, planes, tractors, and other stuff. Then, in the early 2000s, everything changed. The economy kept growing, but domestic manufacturing declined as companies saved money by shipping their factories off to China after it joined the World Trade Organization. Two decades later, manufacturing accounts for just 10% of Canada's GDP. Dimitry Anastakis, who teaches Canadian business history at the University of Toronto, talked with TLDR’s Sarah Rieger about why it’s not great that Canada stopped making stuff — and how we might start doing it again. Why does it matter if we make stuff in Canada? Manufacturing supports a lot of well-paid jobs, especially when you’re making cars, semiconductors, or other complex stuff. That’s partly why there’s been a tremendous shift in global wealth to places like Singapore, Japan, Korea, and China. At the moment, Canada’s economy is mostly service- or extraction-based — not manufacturing-based. Our dependence on fossil fuels is challenging, because at some point the party will end. Are there dangers to outsourcing so much? Manufacturing is essential to a country’s well-being and security. Without it, Canada has faced supply-chain challenges and has less leverage when trading with other countries. Take pharmaceuticals, for example. Insulin was discovered in the Connaught Labs at the University of Toronto in 1921. Connaught grew into a significant pharmaceutical manufacturer before being purchased by a French firm in the 80s. Then, in 2020, the pandemic came along and illustrated that we no longer have the capacity to make our own pharmaceuticals at scale. How big of a deal could the new Volkswagen battery plant be? The transition from the internal combustion engine into the EV era is what I like to refer to as the greatest tech upgrade in history. The standard rule of thumb in automotive is that each assembly job creates as many as 10 jobs down the line. The plant will cost the government around $13 billion in subsidies, but the numbers are mind-boggling in terms of employment, secondary or tertiary jobs, and taxes that it will support or generate. Is there more the government can be doing to help? While subsidies can be effective, there’s something to be said about having an industrial policy that’s more interventionist. We’re essentially in the fourth industrial revolution, and it’s critical that we have infrastructure to make everything from EVs to robotics. Many Canadians have been of the mind that we don't need to build stuff here, that we've digitized the economy. If you're a guy on Bay Street, that's great. But at the end of the day people always need to transport themselves, shelter themselves, and communicate. And it really makes sense in terms of economic well-being to have the ability to produce those goods. This interview was edited for clarity and concision. OTHER VERY GOOD READS 🤖 My Weekend With an Emotional Support A.I. Companion* Can robots help people with their emotions? | The New York Times 🗣️ The Radical Reinvention of the English Language Why is our language evolving so quickly? | Inside Higher Ed 🤑 How to Make Your Money Make Money What’s the right method for you? | Wealthsimple *Article is paywalled, which, yeah, is kind of annoying. But we think good journalism is worth paying for. THE WISDOM OF TWITTER This new version of Wheel of Fortune is a bit more exhausting to watch. 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). 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