Plus, Birks ‘n’ stocks September 18, 2023 Sign Up | View Online IN THIS ISSUE 7 min read 📈 IPOs 🏘️ Housing woes 🚧 Productivity no-shows Huge news for shameless socks-and-sandal wearers: you’ll soon be able to buy stock … in Birkenstock. Read below about why investors care about the company’s IPO. | Getty Images THE WEEK IN MARKETS Stocks’ Surprise-Free Summer You can file last week under “more of the same” — the S&P 500 finished down 0.7%, while the TSX edged up 2.5%. Stocks have been trading in the same range for months. Goldman Sachs even pointed out recently that this summer was one of the calmest market periods since the 1990s and that pros don’t see these calm conditions going anywhere. Of course, people expecting smooth sailing also means that a surprise will be even more surprising and lead to some big swings. Until then, we’ll see if this will turn out to be the boring autumn investors expect. THE WEEK IN ONE NUMBER 2.3 million The number of iPhones sold during the product’s first quarter on the market. Now Apple, which announced the iPhone 15 and iPhone 15+ last week, sells about as many phones every four days. WHAT HAPPENED LAST WEEK IMPORTANT The U.S. inflation numbers weren’t so bad, actually. August’s 0.6% increase in prices, to 3.7% year-over-year, was the biggest jump of 2023. Which is why you probably saw some ominous headlines about it. But, once you strip out volatile food and fuel prices, so-called core inflation fell by 0.4%, to 4.3% YoY, and that’s the number the U.S. Fed cares about most, since it’s more suggestive of inflation’s (still-downward) trajectory. Fund managers are chanting U-S-A! U-S-A! Every month for nearly three decades, Bank of America has asked 300 of the world’s top fund managers to share their views about markets — and to reveal what assets they bought. The big takeaway from the latest survey? Fund managers are optimistic about American stocks and have fled Chinese equities in a hurry. Which explains why the S&P 500 is up almost 17% YTD and why Chinese stocks have fallen. The question now is whether U.S. stocks will continue to outperform the rest of the world — or if emerging markets will catch up now that fund managers have already shifted back into U.S. equities. INTERESTING Dollarama is getting rich from cheap ramen. Canada’s leading low-cost-everything chain announced that its profits jumped by 27% in Q2 and that it expects sales growth to double (double!) this year. And no wonder. Dollarama sells non-perishable food at prices often 25% lower than what supermarkets charge, and shoppers are flocking to it and other discounters to lessen the sting of very-inflated grocery prices. Lawmakers (still) think developers will save us. During the feds’ much-anticipated housing announcement on Thursday, Ottawa said it will scrap GST on rental construction and encourage provinces to drop HST, too, in a bid to boost the housing supply. We already saw how financially incentivizing developers went in Montreal, but, sure, maybe this time tax breaks will help fill Canada’s 3.5-million-home gap. IPOs get a shot in the Arm. Companies generally want to go public when the stock market is booming so their early investors can make more money. And since stocks definitely did not boom in 2022, we’ve been in an initial-public-offering ice age over the past 18 months. But on Thursday, chip designer Arm decided to test the waters and go public. And its stock finished the day up 25%, giving the company a US$65 billion valuation (though it lost some steam Friday). Birkenstock and Instacart also intend to go public before the year’s end, so we’ll see if their IPOs and Arm’s big debut tempt other companies to reverse the trend. FROM OUR SPONSOR THE FOMO INDEX by Stacey Woods IMPORTANT 🤖 Coke launches new flavour co-created by AI. It tastes like all the things machines like: human hearts, minds, souls… Source 🤧 FDA says drug found in many OTC decongestants doesn’t work. That sound you hear is Big Tissue snickering. Source 📶 Ottawa says all cell carriers must provide service on Toronto subways by 10/3. Now there’s no excuse to be off TikTok. Source ✉️ Call me Email: New service sends short daily dispatches of classic books right to your inbox. Source CRASH & BURN TO THE MOON 🍥 J.M. Smucker Co. is acquiring Hostess Brands for US$5.6B. Jos Louis, Little Debbie having major FOMO. Source 👶 Elon Musk and Grimes name their newborn son Tau Techno Mechanicus, because Dubstep Roboticus would’ve been stupid. Source 🧘 Everybody stay down! And exhale…British police descend on “mass murder” that turned out to be a yoga class. Source 📖 There’s a new biography on Elon Musk out, which will answer any remaining questions you have about Tau Techno’s dad. Source WHO CARES WHAT’S UP THIS WEEK Fresh Canadian inflation data (Tuesday). We found out last week that U.S. core inflation (mercifully) eased a bit last month. Fingers crossed Canada follows a similar trend. FedEx announces earnings (Wednesday). Shares in the shipping giant are up nearly 45% this year, far ahead of the transportation sector generally (+16% YTD). Global shipping demand is slowing, though, so we’ll see if FedEx, an industry bellwether, can keep the rally going. DON'T BE A TLDR HOG 🐷 Like TLDR? The first five million people to click this link can share it with a friend for free. (You can share it with enemies too but only if you’re ready for them to love you.) THE BIG IMPORTANT STORY BUSINESS Does Canada Have a Dud Economy? Can Celine Dion (Sort of) Help? Earlier this month, the Financial Times took a big ol’ swing at Canada. “While the country may exceed expectations in the pop and rap arena,” the FT wrote, referring to Drake and Celine Dion, among others, “it underwhelms on the international economic stage.” The article highlighted some alarming non-development trends — like how the economy grew more slowly in the last decade than it has since the 1930s. FT pointed to “poor productivity” as a major cause, noting that “in an hour a Canadian worker produces just over 70 per cent of what an American can.” (Dang!) If current trends continue, the FT says, living standards will decline. Is the FT right? Is Canada falling off? And are we really lazier than the country that invented fast food and television? First, the good news: Canada enjoys a very high standard of living relative to almost every other country. As TLDR detailed last year, we’re well educated, have a low poverty rate, and happen to be sitting on vast mineral deposits that bode well for our economic future. Now, the bad news: Productivity is indeed a problem, says Trevor Tombe, an economics professor at the University of Calgary. The issue isn’t that Canadians aren’t working hard; it’s that the goods and services we provide aren’t as sought-after as those offered by other countries. (Productivity, in economic terms, refers to the value the average worker creates per hour, not how busy or industrious they are.) With all due respect to Shopify et al., we don’t really have an innovative, global, growth-driving company like the U.S. does with Apple, or Germany with Volkswagen, or Taiwan with TSMC. And a big reason we lack such a company is… …Canada isn’t the best place to have a brilliant idea. That’s because all sorts of things discourage you from turning your idea into a fast-growing company, says Tombe. For starters, our population is relatively small, so you have a limited number of potential customers. Beyond that, our provinces are notorious for having stifling, internal-trade-hurting regulations. So, if you invent a world-changing solar panel, say, it would be hard to blame you for moving your company south of the border, where there are 10 times as many potential customers and fewer regulatory headaches. (That Silicon Valley recruits many of our tech workers out of college doesn’t help the brain-drain problem.) Then there are Canada’s coddled monopolies. They’re one of the greatest drags on productivity because, as we’ve previously covered, they’re not incentivized to innovate. Get this: Canada ranks last in the G7 in research-and-development spending by businesses. Is there any way to fix this stuff? Here’s the thing: When people talk about Canada’s “low productivity,” the subtext is often the tech sector, because tech is where productivity numbers get juiced; it’s where you can create lots of value with few workers. Which is why Canadian boosters have called for the country to take a more active role in funding tech and innovation. More fundamentally, Tombe says, Canadians should reevaluate their risk appetite and think bigger. “Our problem is we’re really neglecting the [productivity] issue,” he says. Like Celine Dion in the late ’80s, the country needs to realize that, while local success is nice, you need a truly global hit to be a star. —Ben Matthis-Lilley OTHER VERY GOOD READS 🏠 Ontario says home energy efficiency has to wait The government wants to build cheap and fast | The Narwhal ⚖️ The real stakes of the Google antitrust trial* The case could reshape the internet as we know it | The New Yorker 🪞 What Naomi Klein learned about herself from Naomi Wolf An examination of ego through a political doppelgänger | The Walrus *Article is paywalled, which, yeah, is kind of annoying. But we think good journalism is worth paying for. THE WISDOM OF TWITTER X Pretty sure Apple’s dongle business is worth more than most tech companies at this point. 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), Nikki Holmes (copy editor), Sara Black McCulloch (fact checker), Mohini Tailor (senior lifelycle marketing specialist), Jared Sullivan (senior editor), Peter Martin (senior editor), Kat Angus (managing editor), and Devin Friedman (editor-in-chief). Correction: A chart of alt-investment returns in the Sept. 4th edition of TLDR stated that it showed an initial $5,000 investment with $300 monthly contributions, while the chart, in truth, showed an initial $5,000 investment with $300 quarterly contributions. Another correction: In last week’s edition, we conflated Moissanite and lab-grown diamonds. Our story should have excluded any mention of Moissanite. We regret the errors. 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