The Economy, Pandemic Purchases, Vaccines, and Cars

Wednesday morning news drop

• Was That the Bottom? The Russell 2000 Index of small-cap stocks and the Nasdaq 100 were both down nearly 32% and 33%, respectively, from their highs. That’s a pretty decent bear market. Since that day, the S&P 500 is up 13%. The Russell 2000 has shot up 14% while the Nasdaq 100 has bounced 16%. (A Wealth of Common Sense)

• If the Economy Is Shaky, Why Are Company Profits Still Strong? Corporate optimism may seem at odds with the Fed’s grim determination to hold back the economy to get inflation down, but earnings tell a story that other data doesn’t. (New York Times)

• The pandemic impulse purchases we grew to hate From Pelotons to pets, the Covid buys people wish they’d left on the shelves. (Vox)

• The 100 Wealthiest Americans Lost $622 Billion Since November But they’re still a lot richer than they were before the pandemic. (Businessweek)

• Corporate Landlords ‘Aggressively’ Evicted Tenants During Pandemic, House Report Says: A new report from a House subcommittee alleges that four companies, including Invitation Homes and Pretium Partners, used harsh tactics to push out thousands of renters. (Bloomberg)

• The Water Wars Come to the Suburbs A community near Scottsdale, Arizona, is running out of water. Amid the finger-pointing, the real question is: how many developments will be next? (New Yorker)

• The audacious PR plot that seeded doubt about climate change: Thirty years ago, a bold plan was cooked up to spread doubt and persuade the public that climate change was not a problem. The little-known meeting – between some of America’s biggest industrial players and a PR genius – forged a devastatingly successful strategy that endured for years, and the consequences of which are all around us. (BBC)

• Why Americans Hate the Media: Why has the media establishment become so unpopular? Perhaps the public has good reason to think that the media’s self-aggrandizement gets in the way of solving the country’s real problems (The Atlantic)

• These Vaccines Will Take Aim at Covid—and Its Entire SARS Lineage Scientists are developing vaccines to target the virus family that spawned Covid-19. Their efforts could thwart future variants, or even new related viruses. (Wired)

• How colours affect the way you think Our world is awash with a rainbow of colours, but certain shades can have a surprising impact on our ability to concentrate, our mood and even the flavours we experience. (BBC)

• How a near-death experience could change the way you live Near-death experiences can occur when someone faces a life-threatening situation such as cardiac arrest or is under deep anesthesia. Some people have reported the feeling of leaving their body and observing their surroundings. For Schiefer, his journey started with what looked like an airplane fuselage. (NPR)

• Elon Musk’s Antics Turn Owners and Would-Be Buyers Against Tesla The lightning-rod CEO’s public persona — once a big asset — is increasingly a liability in the EV race. (Bloomberg)

• Why So Many Supercars Have Montana License Plates A legal loophole lets owners of expensive cars avoid taxes and emissions standards in other states. Tightening rules could send the practice into overdrive. (Bloomberg)

• Why are cars so expensive now? A look at the reasons behind the skyrocketing prices and ballooning auto loans. Grid found a net increase of nearly $13,000 in the cost of a new vehicle. Where does that extra cost come from? (Grid)

Russian Economy, Interest Rates, AM Radio, and the Doctrine of Discovery

Tuesday morning news drop

• Actually, the Russian Economy Is Imploding: Nine myths about the effects of sanctions and business retreats, debunked. (Foreign Policy)

• Why doesn’t the Fed just hike 200bp all at once? The cases for and against bold, abrupt moves (Noahpinion)

• After the Great Resignation, where did all the Canadian workers go? Stories from across the country tell of people turning to new careers, education and priorities (CBC)

• Want to lay off workers more smoothly? There’s a startup for that: There’s one startup that is thriving in the market turmoil. And it’s sort of the perfect metaphor for the current state of tech. The company is called Continuum, and it’s cashing in at layoffpalooza. (NPR)

• Lumber bubble 2.0 just burst Since the beginning of the pandemic, lumber prices have been more volatile than at almost any other time in history, leading to some major headaches for homebuilders and buyers (Fortune)

• What if the suburbs were just a first draft? Remote work, the arrival of home-owning millennials, and other forces can be an opportunity to remake them for the better. (Vox)

• An Indigenous scholar on why the Pope needs to address the Doctrine of Discovery Steven Newcomb, Shawnee/Lenape scholar, calls it the 'Doctrine of Domination' (CBC)

• The Doctrine of Discovery explained and what would happen if the Pope revoked it The idea that Europeans could claim land not belonging to them, which is inherent in the Doctrine of Discovery, paved the way for the Indian Act and residential schools (National Post)

• Why are cars so expensive now? A look at the reasons behind the skyrocketing prices and ballooning auto loans. Grid found a net increase of nearly $13,000 in the cost of a new vehicle. Where does that extra cost come from? (Grid)

• How electric vehicles could spell death for the oldest form of radio broadcasting My neighbourhood is lousy with electric vehicles: all flavours of Teslas, scattered Volts and Bolts, a selection of Hyundais and KIAs, a couple of Nissan Leafs (Leaves?) along with some Taycans, at two Polestars that I’ve seen, and at least one Lucid. They’re all loaded with so much fabulous spaceship tech that the mind boggles at what our driving experiences will be in the next 10 years. (Global)

Videos of the Week, Recession, Inflationary Perceptions, and Chip Shortages

Friday morning news drop

• Housing Affordability Crisis Increases Odds of Recession A prolonged sales slump in the $4 trillion industry would ripple through the economy. (Businessweek)

• The great slowdown: Why inflation, housing and the labor market might be showing a recession — or something else Massive job growth, employer demand for labor and a booming housing market are all starting to come off the post-covid boom. (Grid)

• How Bacon and Costco Fish Shape America’s View of Inflation Economic policymakers are razor focused on inflation expectations after more than a year of rapid price increases. Consumers explain how they’re thinking about rising costs. (New York Times)

• Why This Crash is Worse Than 2020 (and Why It Might Be Over Soon) It’s been a little over six weeks since the S&P 500 officially entered a bear market and U.S. stocks are still 17% below their all-time highs. Naturally, you might be wondering whether our current crash is worse than the one we experienced in March 2020. (Of Dollars and Data)

• Why do we still bother with active funds? ‘Manager vs Machine’ report finds that passive funds have fared better in choppy markets. (Financial Times)

• A $9.4 Trillion Results Day Looms in a Test for Stock Market: For analysts, the last Thursday of July is always one of the busiest dates in the calendar. This year, it’s likely to be even more of a stretch. (Bloomberg)

• The Chip Shortage Is Easing—but Only for Some: Certain chips have caught up with demand, thanks to stockpiling and reduced consumer spending, but the semiconductor supply chain is still snarled up (Wired)

• The Mets and Yankees Have Traded Places for the Subway Series The Mets are big spenders. The Yankees have folk heroes. New York’s two baseball teams are among the best in the sport—and have swapped identities. (Wall Street Journal)

Videos of the Week

Cost of Housing, Transitory Inflation, Frank Gehry, and Mad Men

Thursday morning news drop

• U.S. Federal Reserve raises benchmark interest rate another 75 points Move comes after Canada's central bank raised its rate earlier this month (CBC)

• Victoria eyes changes to new-build bylaw to meet climate goals On Thursday, council heard that the city needs to further decrease building emissions to get on target (Capital Daily)

• Supply chain issues continue to be a ‘pressure cooker’ in B.C. Chris Atchison, president of the B.C. Construction Association (BCCA) said supply chain disruption and escalating costs of goods are worse than he’s ever seen and there doesn’t appear to be any relief on the horizon. (Journal of Commerce)

• Why Your House Was So Expensive: Material-cost inflation, anti-building rules, NIMBY attitudes, and barriers to innovation have created a housing-affordability crisis (The Atlantic)

• I Beg to Differ Howard Marks’s latest memo argues that investors seeking superior performance must have the courage to depart from the pack, even though doing so means accepting the risk of being wrong. Thinking differently and better than others is key to outperformance because in investing, it’s not enough to be right. You have to be more right than most. This means being able to tell when the investment crowd is focused on all the wrong things. (Oaktree Capital)

• What If Inflation Really Is Transitory? The Case For A Return Of Disinflation/Deflation (The Capital Spectator)

• Myth of ‘Free’ Checking Costs Consumers Over $8 Billion a Year: US consumers who frequently overdraft drive more than half of the profitability of mass-market checking accounts. (Bloomberg)

• Spreadsheets Are Hot—and Cranking Out Complex Code: The venerable (and yes, super dull) piece of officeware is getting reinvented as a tool for non-coders to automate and simplify their lives. (Wired)

• Elder Millennials Have Less Time for Fun: A new report on how Americans spend their days shows 35- to 44-year-olds have fewer leisure hours than anybody else, and less than two decades ago. (Bloomberg)

• The Claremont Institute triumphed in the Trump years. Then came Jan. 6. After Trump helped revolutionize Claremont from a minor academic outfit to a key Washington player, the think tank is facing blowback for standing by lawyer John Eastman after he counseled Trump on overturning the 2020 election. (Washington Post)

• Rockstar Games Cleaned Up Its Frat-Boy Culture - and Grand Theft Auto, Too In the summer of 2020, after a police officer killed George Floyd, Rockstar Games quietly shelved a mode of play it had planned to release for its Grand Theft Auto Online game called Cops ‘n’ Crooks. (Bloomberg)

• Frank Talk At age 93, Frank Gehry, the original starchitect, is as busy as ever, with 17 Projects in the works in 15 cities, including his hometown. He also has a few things to get off his chest (Toronto Life)

• Mad Men’s Smoke and Mirrors Have Aged Like a Fine Whiskey Fifteen years after the show’s premiere, Peggy, Don, and the Sterling Cooper gang feel more relevant than ever. (Vanity Fair)

Stock Forecasts, Remote Work, Pickleball, and Psychedelic Drugs

Wednesday morning news drop

• Why You Should Be Wary of Wall Street’s Upbeat Stock Forecasts Amid rising inflation and the threat of recession, corporate earnings are coming under pressure. (New York Times)

• A Giant Distraction to the Business of Investing: The average drawdown of the top 10 stocks from last fall is a decline of 30.1%. This compares rather unfavorably with the drawdown in the S&P 500 of -17.4%. Only two stocks have a drawdown that beats the S&P 500 — Apple and Visa. Eight out of the top 10 are down more than the market itself. Many of these stocks are down in a big way. (A Wealth of Common Sense)

• Loans Could Burn Start-Up Workers in Downturn Tech workers took out loans based on the value of their start-up stock in recent years. That may come back to haunt them. (New York Times)

• The future of remote work, according to 6 experts Make the case for working remotely — but not so much that your job gets outsourced. (Vox)

• Incognito Mode Isn’t As Incognito As You Might Think: Private browsing (aka incognito mode) is a great way to prevent your web browser from saving what you do. But to call it privacy-focused is a stretch, and while your browser or device doesn’t log your movements in its history and cookies, that doesn’t mean the sites you visit don’t clock your behavior. Despite its name, you’re not really incognito, and you may want to dial back your confidence in what these modes really do. (Wirecutter)

• New COVID Vaccines Will Be Ready This Fall. America Won’t Be. Respiratory-virus season starts soon, and our autumn vaccine strategy is shaky at best. (The Atlantic)

• The Three Pillars of Happiness Being happy isn’t just about getting the details right. Here are some truths that transcend circumstance and time. (The Atlantic)

• Can Pickleball Save America? The sport, beloved for its democratic spirit, could unite the country—if it doesn’t divide itself first. (New Yorker)

• The High-Stakes Race to Engineer New Psychedelic Drugs As psychedelic therapies for mental health go mainstream, companies are recruiting chemists to create patentable versions of hallucinogens. Critics say it’s all a bad trip. (Wired)

Recessions, Value Investing, Pension Fund Landlords, and F1

Tuesday morning news drop

• Inverted Yield Curve: A Recession Alarm Is Ringing on Wall Street: An inversion of the bond market’s yield curve has preceded every U.S. recession for the past half century. It is happening again. (New York Times)

• Good News: Economy Sucks, You’re Screwed, and It’s All Your Fault, Economists Say Make sure you’re doing your part to help fight inflation: accept those wage cuts and worsening working conditions! (Vice)

• Recession: medicine that’s worse than the disease Some experts say we need a recession to bring high inflation down. That’s incorrect. Their model of the economy and views on what’s causing inflation risk making a bad situation much worse. (Sahm)

• There Was Never Anything Wrong With Value: How the influence of popular value benchmarks challenges investor faith in the style and even the business of some value managers. (Institutional Investor)

• Europe is burning like it’s 2052 The extraordinary heat wave in Europe is showing what’s possible already, and what lies ahead under climate change. (Vox)

• It’s so hot in Europe that roads are literally buckling The world wasn’t built for this heat (Vox)

• A public pension fund is Canada’s newest mega-landlord The Public Service Pension Investment Board is teaming up with real estate firms and betting on displacement of low-income renters (Breach Media)

• How ‘Baby Al Capone’ Pulled Off a $24 Million Crypto Heist Ellis Pinsky was a regular suburban teenager until he found his way into the underworld of internet hackers. In his first interview, he details the crime that nearly ruined his life. (Rolling Stone)

• America Was in an Early-Death Crisis Long Before COVID: Even before the pandemic began, more people here were dying at younger ages than in comparably wealthy nations (The Atlantic)

• Your phone’s notification settings and the meaning of life Switching to a new phone is easy enough these days. The wheezing older model formed a huddle with the shiny oversized new thing, and within a few minutes had effected a near-complete digital handover. One exception was the notification settings. As they reset to the default, my new phone began to beep and buzz incessantly, like the strange offspring of R2-D2 and a cheap vibrator. (Tim Harford)

• Why Formula One’s Fastest Team Isn’t Leading The Championship: Ferrari’s Speed Is World-Class. Its Reliability And Strategy? Not So Much. (FiveThirtyEight)

Boomers Leaving the Workforce, Bull Markets, and China's Debt Bomb

Monday morning news drop

• Where have all the workers gone? Don't blame COVID, economists say Boomers are exiting the workforce in droves, leaving more job vacancies than there are people to fill them (CBC)

• A New Bull Market Can’t Start Until Investors Give Up For a new cycle to begin, people who bet on the market need to capitulate. Problem is, they’ve forgotten what that feels like. (Wall Street Journal)

• ‘A bigger paycheck? I’d rather watch the sunset!’: is this the end of ambition? From high-flyers quitting their jobs to Beyoncé singing about work-life balance, people are recalibrating their lives and relationships to their jobs. What’s changed? (The Guardian)

• What is happening with the housing market? Why big interest rate hikes are scrambling an already strange real estate landscape. The housing market is the most confusing it’s ever been. (Grid)

• Copious Corporate Cash May Not Be So Great, After All Touted as a bulwark against recession, it could draw down quickly—and it is concentrated at a few big companies. (Chief Investment Officer)

• China’s debt bomb looks ready to explode Many warning signs suggesting that a debt reckoning is imminent (Nikkei)

• Pioneering Economist Says Our Obsession With Growth Must End: But what about the counterintuitive possibility that our current pursuit of growth, rabid as it is and causing such great ecological harm, might be incurring more costs than gains? (New York Times)

• Traffic Jam at 400 Feet: How to Keep the Drone Age From Becoming an Epic Traffic Jam in the Sky. NASA and the FAA are preparing to revolutionize air traffic control for the drone era. (Businessweek)

• The Jewish Deli: An American Tale Told in Pickles and Pastrami “I’ll Have What She’s Having,” a traveling exhibit on the Jewish delicatessen, looks back at a vibrant institution fueled by immigration and irresistible food. (New York Times)

Videos of the Week, Heat Wave and Climate Change

Friday morning news drop

• How an Unstable US Threatens Canada’s National Security American political violence could lead to unpredictable spillover events in Canada (Walrus)

• While Canadians look at European heat wave in awe, we face our own climate challenges We may not have been unusually hot so far this summer, but things may be changing (CBC)

• Do these heat waves mean climate change is happening faster than expected? General warming predictions are still on track, but recent heat waves are a stress test for the modeling of extreme events. (MIT Review)

• Americans recognize the climate is changing. But they disagree on why — and what to do about it Polarization remains when it comes to U.S. policies to address effects of climate change (CBC)

• Great Resignation shows no signs of slowing down: 40% of U.S. workers are considering quitting their jobs — here’s where they’re going Fewer are reverting to traditional office jobs, with a growing number seeking nontraditional roles, or even the opportunity to start a new business.(Fortune)

• Interest-Rate Pain From Higher Inflation Has Barely Begun: Stocks, houses, corporate borrowers and the federal Treasury may not be ready for a world of much higher real interest rates (Wall Street Journal)

• In Times of Stress, Female Fund Managers Take Less Risk Than Men — For the Same Performance Fund investors don’t receive compensation for the higher risk that male managers take on, according to new research. (Institutional Investor)

• Rich Chinese Worth $48 Billion Want to Leave — But Will Xi Let Them? Some 10,000 wealthy Chinese are looking to leave in the wake of punishing lockdowns and an economic slowdown. The question is whether they’ll be able to. (Bloomberg)

• As professionals flee antiabortion policies, red states face a brain drain Early indications, however, are that they may raise new obstacles to recruiting workers whose skills and qualifications allow them to choose from multiple job opportunities. (Los Angeles Times)

• Mergers destroy value. Without reform, nothing will change: The M&A playbook of warped incentives, rent extraction and creative accounting is overdue a rewrite. (Financial Times)

Videos of the Week

Inflation, US Dollar, Bear Markets, and Electric Cars

Thursday morning news drop

• Inflation rises again, to new 39-year high of 8.1% Cost of living increasing at its fastest pace in decades (CBC)

• The Dollar Is Extremely Strong, Pushing Down the World: The value of the U.S. dollar is the strongest it has been in a generation, devaluing currencies around the world and unsettling the outlook for the global economy as it upends everything from the cost of a vacation abroad to the profitability of multinational companies. (New York Times)

• How long bear markets typically last—and how you should think about investing during this one: Going back to the end of World War II, the U.S. stock market has experienced 13 bear markets (including the current one). In the previous 12 bear markets, the average loss was –32.7%. It took the stock market an average of around 12 months to go from the peak of the market to the bottom. It then took roughly 21 months on average to go from the bottom back to the previous peak.(Wealth of Common Sense)

• Active Managers Are Proving Their Worth Right Now. Will It Last? Active managers’ performance during downturns is “usually not as good as they say, not as persistent as they say, and not as important to their long-term success as they would lead you to believe,” says Morningstar’s Jeff Ptak. (Institutional Investor)

• The Haves and the Have-Yachts: Luxury ships attract outrage and political scrutiny. The ultra-rich are buying them in record numbers (New Yorker)

• The Lucid Air Grand Touring Makes the Tesla Model S Feel Kinda Pointless: With better build quality, nicer materials and vastly superior battery range, the Air makes the Model S seem old, cheap and outdated. (Jalopnik)

• GM Will Finally Have a Rival to Tesla’s Model Y With Blazer EV Chevy SUV built on new battery platform to debut in a year Battery capacity gives GM edge in getting models out: analyst. (Bloomberg)

• As heat waves hit U.S. and Europe, leaders split on climate change While Europeans talk of tackling climate change, near-record summer heat in Oklahoma, Texas and South Dakota has not shifted the politics (Washington Post)

• The New Numbers on Music Consumption Are Very Ugly: And it’s not just the dominance of old songs—the whole creative culture is losing its ability to innovate. But why? (The Honest Broker)

Soaring Rent, Market Chaos, China's Economic Engine, and Elon Musk

Wednesday morning news drop

• Soaring rents price out some Canadians Interest rates are rising and the house-buying market is cooling off, putting more strain on rentals (CBC)

• US Crosses the Electric-Car Tipping Point for Mass Adoption Once 5% of new-car sales go fully electric, everything changes — according to a Bloomberg analysis of the 19 countries that have made the EV pivot. (Bloomberg)

• Chaos Is Becoming the Rational Base Case in Market Ruled by Fear: Wall Street’s highest S&P 500 target tops lowest by a rare 50%; The post-pandemic world is hard to predict for Fed, businesses (Bloomberg)

• Thirteen ‘Perfect Storms’ That Are Sweeping the World Right Now. How many times can the ‘perfect storm’ happen? Many industries have been hit by a bevy of challenges, leading to shortages, price spikes and other disruptions. On the podcast, the ‘perfect storm’ phrase has been invoked to describe everything from oil, grains, wooden pallets to coffee beans and even the shortage of bathtubs. (Bloomberg)

• China’s Economic Engine Is About to Start Shrinking: The nation’s working-age population could decline by two-thirds or more by century’s end, according to new UN projections. (Bloomberg)

• The Last Time Inflation Was This High: There was an energy crisis back then just like there is today. The Fed was tightening monetary policy to fight inflation in the early-1980s as well. And people were increasingly unhappy about the economic state of affairs. But there are many differences between now and the early-1980s/late-1970s. (Wealth of Common Sense)

• The Case Against Elon: The depths of Musk’s legal troubles are clearly laid out in the complaint that Twitter’s attorneys filed in Delaware this week. The legal war is just starting. (Puck)

• Twitter’s Suit Against Elon Musk: What Twitter’s 62-page lawsuit does is blow open a lot of the secrecy around the deal, which has already been subject to leaks (primarily from Musk himself) and endless speculation. Here are some of the biggest revelations from the suit. (New York Magazine)

• How Hockey Canada used registration fees to build a fund to cover sexual-assault claims Special multimillion-dollar fund financed by registration fees of players across the country used to settle abuse claims with minimal outside scrutiny (Globe and Mail)