Plus: Google’s AI gamble. May 26, 2025 Sign Up | View online IN THIS ISSUE 8 min read 🤖 AI arms race 🏆 Stanley Cup economics 📊 Doubts about data Canada needs its leading, kid-shrinking scientists back! Below, we explain one idea to lure them home. | Walt Disney Pictures Worried, perplexed, confused, or just bored? We want to hear from you! Send us a voice memo with your most pressing macro or micro money questions, from the global economy to your own personal finances. You can leave a voicemail for us at 226-444-2833 or send a voice memo to tldrpodcast@wealthsimple.com. Thanks! Now, on to the newsletter. —The Editors THE WEEK IN MARKETS The Trump Strangle: it’s our favourite new financial phrase, coined by market watcher Byrne Hobart, to describe the confounding bind that President Trump puts investors in with his habit of confidently pursuing disruptive policies (like his trade war) when the markets are on the rise and retreating to business-friendly policies (like tax cuts) whenever the markets slump. And last week we got a classic case of the Trump Strangle: global stocks rallied to open the week, extending their warp-speed recovery since Trump’s 90-day tariff pause; the TSX, in fact, hit a new all-time high. But then on Friday — here we go again — Trump announced fresh tariff threats on the EU (50%) and Apple (25%), and the markets ended the week down more than 1%. Most investors are exhausted, but this pattern of behaviour has been a boon for retail “dip buyers,” who have been coming out in record numbers to buy every sell-off. Will they show up again after Friday’s dip? And if they don’t, will Trump backtrack on his latest tariff threats? We have five full days to find out! TGIM! THE WEEK IN ONE CHART WHAT HAPPENED LAST WEEK IMPORTANT How do we reverse Canada’s brain drain? One of President Trump’s pet grievances is that North American trade deals have bled the U.S. of factory jobs. Far less discussed, though, is how those same deals have driven many of Canada’s best and brightest to the States. How do we turn it around? Desjardins VP Jimmy Jean has a novel idea: instead of overspending to recruit foreign talent, Canada should capitalize on the turmoil in American academia and focus on bringing home Canadian researchers living in the U.S. — 83% of whom already say they’d like to return “in the medium term.” The government should be giving them a nudge, Jean says, by investing in research and creating “an environment that helps them pursue their scientific goals.” INTERESTING This week in the AI arms race! The AI newscycle spins so fast that we thought we’d summarize two top headlines rather than just pick one. Google tries to disrupt itself. Google has dragged its feet on AI, worried chatbots would cannibalize its search empire. But last week, the company unveiled “AI Mode,” a new search setting that replaces blue links with ChatGPT-style summaries. As The New York Times explained, Google is “essentially trying to disrupt its traditional search business before upstart A.I. competitors can disrupt it.” OpenAI partners with the guy who designed the iPhone. CEO Sam Altman announced that OpenAI shelled out $6.5 billion to acquire the design firm of former Apple designer Jony Ive. Ive’s mission? To create, as Altman put it, “a new family of products” that are tailor-made for the AI age. What will Ive’s magical new hardware turn out to be? An AI belt buckle? A ring? So many embarrassing possibilities! Canada’s Stanley Cup dreams depend on Edmonton (again). For a minute it looked like we might have three of the NHL’s four left standing, but the Winnipeg Jets and Toronto Maple Leafs flopped, so yet again the hopes of an entire nation ride on the Oilers. This isn’t just about civic pride: hockey is an $11 billion industry in Canada, and there’s big money at stake for Edmonton, which raked in $280 million during last year’s finals alone. Imagine if they’d won! —Abigail Covington & Vindhya Kolluru FROM OUR SPONSOR THE FOMO INDEX by Stacey Woods IMPORTANT 🚘 Stellantis postpones production of the 2026 electric Dodge Charger at Ontario plant. Workers won’t be affected, but tree-hugging gearheads will be crushed. Source 💊 Regeneron Pharmaceuticals is buying 23andMe and all its data. Can’t wait to send you meds for all the diseases you’re going to get! Source 📺 Sesame Street inks deal with Netflix. New season will be about the same, but, unfortunately, Big Bird goes down during Red Light, Green Light. Source 👖 Levi Strauss is selling the Dockers brand after 40 years. They finally got some proper dress pants for job interviews. Source CRASH & BURN TO THE MOON 🚽 Study finds using your phone on the toilet “dramatically” increases chance of hemorrhoids. Just more evidence the world still needs magazines. Source 🌐 Trump is coming to Canada for the G7 summit next month. Says he also wants to measure 24 Sussex for curtains. Source 🚕 Tesla promises robotaxis on the streets of Austin by the end of June. So, be off the streets of Austin by mid-June. Source 🏒 Slapshot of Love, Lady Stickhandling’s Lover: sales of hockey romance novels are booming. Source WHO CARES THE BIG IMPORTANT STORY DEPARTMENT OF WONKY Why Do Companies and Investors Make Rotten Decisions? Maybe It’s Data Dan Davies, the British author and reigning darling of the Big-Thinker Space, has serious credentials as a capitalist: he’s a former Bank of England economist and a former equities analyst for investment banks. And he believes that the way many institutions, and entire economies, work nowadays is corrosive. In his view, reductive metrics, like quarterly earnings, are too often used to justify mistreating customers and dumping useful employees, among other bad decisions. Davies’s book is called The Unaccountability Machine, and its North American edition was just released — so we rang him up to ask what regular investors can learn from all the thinking he’s done. Here are four takeaways. Be cautious about using WW2-era metrics for present-day decision-making. Two of the most commonly cited numbers in finance are the price-to-earnings ratio and price-to-book ratio, both of which speak to whether a stock is a good or bad deal for the price. The trouble, in Davies’s view, is that neither metric accounts for intangible assets, like whether a company has a durable brand or cutting-edge algorithms — which is now a primary source for profit growth. “Comparing stock prices to accounting numbers is an idea that’s nearly 100 years old, and the world’s gotten hugely more complicated,” says Davies. “If you’re asking whether Tesla is overvalued at 51 times earnings, you might as well ask whether it’s overvalued because the paper the stock is printed on is the wrong colour. You’re just talking about a category that no longer has any relevance.” Which leads us to… Understanding a business trumps knowing its numbers. Investors should focus less on data, Davies argues, than on a company’s purpose and whether it’s fulfilling that purpose for customers. Investors also need to have a view on how the company will fare in the future. Take Nvidia: to know whether its stock is fairly priced, “you have to have ideas about what role AI is going to play in society, what role specific technologies are going to play in AI.” The answers to those questions, he says, are probably more important than whether Nvidia has hit its quarterly earnings projection. Beware of companies that neglect their customers. Company leaders can get seduced by numbers just as easily as investors. “[Executives] can make a change that seems to be beneficial in the short term because it saves money, but in the long term you’re actually undermining your model,” he says. “Cutting customer service at a bank, for example, always looks like it’s going to save money. But people don’t change banks that often, so it just might be that you’re not getting feedback from your customers about the change for several years. An organization that’s managed purely on the basis of financial numbers can drift a very, very long way from reality before something disastrous happens.” Boeing’s gradual decline in quality, culminating with the 737 Max fiasco, is a (tragic) prime example, he says. The big winners see the bigger picture. It’s often said that “the market” pressures CEOs to deliver growth every quarter in perpetuity. But Davies contends that the market’s best performers ignore that imperative and focus on building great businesses: “Take your Canadian investor whose S&P 500 index fund has recently been going up about 15% a year. Now take out Tesla from their portfolio, because that’s not a company that’s managed on the basis of what looks good on financial reports.” Ditto Amazon. “Then take out Nvidia, which is not managed around financial reporting at all and is instead driven by a thesis about where technology is going.” And yet these companies generate incredible profits. Davies’s point? “If you look at the high-performing companies that are actually generating value, how many of them operate on a make-your-numbers-at-any-cost model?” Not many. —Ben Mathis-Lilley OTHER VERY GOOD READS ⚡ Forget America. Build an East-West Power Grid. Is it time for a national power grid? | Maclean’s 🇨🇳 How Much Should We Blame Trade With China for Devastating Job Losses? Perhaps less than one might think. | The Hub 🧑‍⚖️ My Father Prosecuted History’s Crimes. Then He Died in One.* A son grapples with the murder of his Nazi hunter father. | The New York Times Magazine *Article is paywalled, which, yeah, is kind of annoying. But we think good journalism is worth paying for. THE WISDOM OF SOCIAL The U.S. wants to build a new missile defence system with Canada… 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), Maude Campbell (copy editor), Sara Black McCulloch (fact checker), Mohini Tailor (lifecycle marketing manager), Eva Grace Clement Cruz (editorial producer), Matthew Karasz (markets editor) Jared Sullivan (senior editor), Peter Martin (senior 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 VIEW IN BROWSER PRIVACY POLICY UNSUBSCRIBE Self-directed investing is offered by Wealthsimple Investments Inc. (WSII). WSII is a member of the Canadian Investment Regulatory Organization (CIRO). Customer accounts held at WSII are protected by Canadian Investor Protection Fund (CIPF) within specified limits in the event WSII becomes insolvent. 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