You can truly risk nothing and get paid. February 20, 2023 Sign Up | Made in Canada IN THIS ISSUE Estimated read time: 7 mins 🏠 Airbnb in the black 🔍 Crypto in the sights 💃🏽 Rihanna in the air Airbnb’s journey to profitability (see below) took a little longer than Frodo’s trip to Mordor, but it did involve similar lodging — like this rentable hobbit house in the Kootenays. | Airbnb THE WEEK IN MARKETS “No Landing” Is Wall Street’s New Favorite Buzzword The major markets bounced around but managed to end the week flat — relief rally intact. The S&P 500 and TSX both remain up about 6% since Jan. 1. Even more notable has been the continued rebound in more speculative assets (the return to risk-taking!). The ARK Innovation fund ended the week up 7% (37% YTD), while Tesla was up 9% (90% YTD). What gives? Well, you know how people have been arguing about whether the economy is in for a “hard landing” or a “soft landing”? People are now batting around a new phrase: the “no-landing” scenario — meaning the economy will not only avoid a recession but grow despite rate hikes. And we got some more data points in that direction this week. Read more below. SMART CHART No one said living through history would be fun: the average price of a Canadian home has slid by 15-ish% from last February, when prices topped $935,000. That’s the steepest fall from peak in Canadian history. WHAT HAPPENED LAST WEEK IMPORTANT Sorry for the jinx, but ... where’s that recession? Since the start of all these rate hikes, everyone’s been waiting for two things: inflation to come down and the economy to crash. While the first is happening, albeit slowly, there’s still no sign of the second. Instead of mass layoffs and penury, Canada added 150,000 jobs in January, and Wednesday’s new retail-sales numbers showed that Americans are shopping like a scorned Julia Roberts in Pretty Woman. We’ll see if the other shoe keeps refusing to drop on Tuesday, when our inflation and retail numbers come in. Big Tech’s not losing that nickname anytime soon. In his new, interesting-enough-to-click-through-all-104-slides presentation, tech analyst Benedict Evans explores just how tight Big Tech’s grip is on shopping. The answer? Tight! Sure, shopping hasn’t gone 100% virtual like some people thought it would during the pandemic, and updated stock valuations (sorry, Carvana) show that. But our boosted interest in getting things like groceries and car parts delivered to our doors hasn’t fully gone away — and will probably continue to rise. Speaking of tech, Airbnb is finally profitable. With so much pent-up COVID demand rushing back into the travel industry, the company that made vacations start with a hunt for hidden cameras announced that it netted nearly US$2 billion in 2022. Like the last cottage you rented, total bookings were slightly below expectations, but those earnings and next quarter’s forecasts were enough to make the stock pop by 20% for the week. As people burn through their pandemic savings and get forced back into the office, we’ll have to see how long the success can last. INTERESTING Ottawa shot down something Chinese too! Instead of a balloon, the federal government took aim at joint research projects between Canadian universities and Chinese military scientists, cutting off their funding last week. The move — which feels a little like McDonald’s suddenly realizing it shouldn’t be doing security checks with the Hamburgler — was prompted by a Globe report showing just how much cutting-edge technology was being shared. The other Super Bowl MVP? Rihanna. Her surprise pregnancy reveal and imperviousness to heights may have distracted you from something else: she’s a financial juggernaut worth $2.3 billion. She has a lingerie line and had deals with MAC Cosmetics and Dior, but most of her money comes from her cosmetics brand, Fenty Beauty, which she launched in 2017 with the booze and luxury-fashion conglomerate LVMH. If you’re tracking RiRi’s ROI, Fenty doubled its revenue last year, according to LVMH’s recent earnings report. She’s not a bad singer, either. U.S. regulators aren’t letting up on crypto. A week after the SEC forced a staking service to stop U.S. operations, New York state’s top financial regulator shut down the third-largest stablecoin — a cryptocurrency backed by real money so that it can be traded without worrying about all the crazy price fluctuations — because of its relationship with Binance, the world’s biggest crypto exchange. The whole thing probably thrilled Berkshire Hathaway’s Charlie Munger, whose feelings toward the industry are less than generous. Can’t wait to see what’s next! FROM OUR SPONSOR THE FOMO INDEX by Stacey Woods IMPORTANT 🤖 New AI-powered Bing spills guts, declares love to reporter, who will now have to start ghosting it. Source ☕️ Triumph of the West: Pakistanis line up outside country’s first Timmie’s to spend too much on bad coffee. Source 🕹 Grazie, Mario! As other tech companies lay people off, Nintendo gives everyone a 10% raise. Source 🥞 Global warming resulting in more maple syrup for Canadians and less for Americans. Pancakes might also be affected. Source CRASH & BURN TO THE MOON 🐦 Musk reportedly summons engineers in middle of night to fix Twitter’s biggest problem: not enough people see his tweets. Source 🧢 Gucci and Adidas collab on $840 baseball hat with two bills so you can look stupid both coming and going. Source 😲 Netflix finally drops unpopular “Surprise Me” button but is still far from ready to make things easy to find. Source 🍁 What would Rob do? Doug Ford says Toronto mayor John Tory shouldn’t resign over affair. Source WHO CARES WHAT’S UP THIS WEEK Tax season officially begins! (Monday) In case you need a reason to file early, CRA workers are thinking about striking. Canada’s newest inflation and retail-sales numbers come out. (Tuesday) Here’s to the continued streak of people having jobs and the world not imploding. 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 MONEY 2023 Why Savers ❤️ High Interest Rates At this point you’re likely all too familiar with the downsides of the Bank of Canada’s recent program of interest-rate hikes: in the last year, stocks have gone way, way down while mortgage rates have gone way, way up (as we dug into recently). But there are some upsides for investors, too, in the form of the pretty significant yield you can earn on cash — like higher interest rates on savings. Unfortunately, banks don’t typically pass the full rate on to their customers, so taking advantage can require some figuring out. That’s where our guide to the yield bonanza comes in — read on to figure out which products have the right balance of returns, flexibility, and natural plant protein. Kidding about the plant protein. NO-RISK STUFF* High-Interest Savings Accounts: HISAs are savings accounts that have — and you’ll never guess this — high interest rates. And right now, by “high,” we mean yields in the neighbourhood of 4%. That’s a lot more than you’d get in a standard bank savings account, with rates currently around 1.5%. If you’ll need your money soon, HISAs are a great choice because you can take out your cash any time you want with no real penalty. The catch is that HISA rates are subject to change — like, for instance, if the Bank of Canada raises or lowers its benchmark rate. Guaranteed Investment Certificates: Most Canadian banks sell GICs, which are no-fee, government-backed (and thus effectively risk-free) investments with a guaranteed return. And that return tends to be higher (about 5% at the moment) than that of a HISA. The trade-off is that you lose some flexibility, since you usually have to leave your money in a GIC for a one- to 10-year term, and you'll take a small penalty if you withdraw your money before the term ends. *By “no risk,” we mean as close to no-risk as possible on planet Earth, or at least in Canada. CDIC protects $100,000 of whatever money you put into a HISA or GIC. VERY LOW RISK High-Yield ETFs: The exchange-traded funds (ETFs) you’re probably most familiar with spread your money among dozens of assets, often stocks and bonds. High-yield ETFs, however, are a special, extra-low-risk variety that invest all their holdings in high-yield bank deposits (aka cash that’s earning interest). And, since these ETFs hold 100% cash, they pay dividends equal to or better than the interest you’d earn if your money sat in an HISA — but they spare you from having to schlep to the bank to actually open a HISA; you can just buy a high-yield ETF through your brokerage app and sell it whenever, or put your money in a managed portfolio that holds such funds. SOME RISK Private Credit: With private credit, you get to cosplay as an über-rich banker or institutional investor, minus the yachts. Here’s how it works: investors pool their money and lend it to companies, which pay back the loan with interest. Private-credit funds carry more risk (as in, you might lose money) than the other investments we cover here, because there’s always a chance companies fail to make their payments. Also, fair warning: private-credit funds tend to have tight withdrawal restrictions that can affect how quickly you can get your money. But with yields as high as 8% to 10%, private-credit funds offer the juiciest potential returns of any asset on this list. Some banks and brokerages offer such funds, but you’ll often need to meet minimum investment requirements. —Sarah Rieger OTHER VERY GOOD READS 🩺 How For-Profit Virtual Care Came to Canada Health start-ups are coming for our health-care system | Canadian Business 🚗 Why is Ontario Still Building Highways? New roads won’t solve congestion, yet construction continues | The Narwhal 💰 RRSP vs TFSA: What’s the Better Choice? A battle royale between tax-sheltered accounts | Wealthsimple Magazine 🎢 Spirited Away to Miyazaki Land* The famed animator (finally?) gets his own theme park | The New York Times *Article is paywalled, which, yeah, is kind of annoying. But we think good journalism is worth paying for. THE WISDOM OF TWITTER The fact that Bing even has use cases feels like a real win: 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). Last week, in “Other Very Good Reads,” we included “The World Is on Fire. Yet Life Is ... Getting Better?” but we linked to the wrong article. Sorry about that! You can read the story here. 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. 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