This week's interesting finds

 

A chart worth discussing

“Auto loan delinquencies are at an all-time high. Credit card delinquencies over 90 days are matching 2010 levels.”

- Tracey Chen

“Did not have tech being more capital intensive than mining in my playbook during our lifetime.”

- Greg Sinclair

Other charts worth pointing out

iPhone Index vs. Big Mac index

S&P 500 Index – 2025 performance review by sector

Fund categories – % of top performers that maintained their ranking

Canadian equity funds – underperformance rate & benchmark performance

Diesel processing costs vs. North Sea crude oil

Discretionary spending by generation

Online betting

SEC Preps Plan to Widen Investor Access to Private Markets

The US Securities and Exchange Commission is eyeing a plan to expand access for retail investors to private markets and allow investment advisers to charge performance fees to a wider set of clients.

The regulator’s planned proposal was received by the White House Office of Management and Budget on Monday. It’s the latest sign of the agency attempting to open up an area of the market that’s off limits to most mom-and-pop investors.

“Exposure to the full dynamism of our markets – both public and private – should not be reserved for wealthy insiders,” the SEC said in a statement.

The proposed rule would amend the Investment Advisers Act of 1940 and the Investment Company Act of 1940 by “modernizing” the performance fee framework and allowing retail exposure to private markets through registered funds, the SEC’s rulemaking notice states. Further details weren’t included in the notice.

Investment advisers are currently limited to charging performance fees to so-called qualified clients, said Thoreau Bartmann, partner at K&L Gates and former attorney in the SEC’s investment management division.

“Through limiting performance fees, you’re limiting access to that asset class,” Bartmann said. “Whether that’s a good or bad thing, that’s debatable.”

Investing in private markets has historically been the domain of institutional investors or wealthy individuals who, in theory, have the knowledge to assess whether an investment is a good idea. 

SEC Chairman Paul Atkins has repeatedly bristled against such restrictions, saying fast-growing companies that are able to attract capital in private markets remain unavailable to most investors. Broadening access to private markets is about “freedom and fairness,” he said at an SEC event in March.

At the same time, investments offered privately provide fewer disclosures than those in the public markets, which can make them harder to value. That exposes investors to more risks, groups like Better Markets have warned.

Once the White House completes its review of the SEC measure, the current three-member commission is expected to release a proposal for the public to the public for comment. The agency will then incorporate that input into a final version of the rule, which must be voted on by the commission again.

This week’s fun finds

On a recent visit to the Toronto office, Catherine brought several cat-themed hot sauces from Québec for her fellow EdgePointers to try. They were bright, full of flavour and had a nice kick to them.

Shipwreck Divers Discovered a 162-Year-Old Bottle of Guinness Brewed During the Reign of Queen Victoria—and They Want to Take a Swig

If you dive to the Mindoro more than once, you’ll find that the shipwreck is always changing. The vessel has been resting in the cold, dark waters of the English Channel since the 19th century—but as currents shift, some parts of the site emerge from the sand, while others disappear into it.

Last year, when diver Stefan Panis explored the wreck with a friend, he stumbled upon a sealed bottle, which he decided to bring up to the surface. When he rinsed it off, he could read the words emblazoned on the seal: “Guinness Extra Stout, London.”

The Mindoro was a British sailing barque that sank on November 27, 1864, making this particular bottle of Guinness roughly 162 years old. Panis hadn’t known that the brand’s history stretched back that far. Unsure of what to do with the bottle, he shared his discovery with Pawel Truszynski, a fellow diver and researcher, who started making plans to investigate the beer.

“We immediately recognized that we weren’t just holding an old artifact,” Truszynski tells Smithsonian magazine. “We were holding a flawlessly sealed time capsule of liquid history.”

What would this bottle of Guinness have tasted like in the 19th century, during the reign of Queen Victoria? The two men wanted to find out, and they had a few possible paths forward: They could analyze traces of the yeast and try to recreate it. They could also just pop open the bottle and take a swig.

This particular bottle was found lying on the ocean floor, but Panis noticed others nearby that were still secured in wooden crates. Now, he and Truszynski need to determine how well the beer has been preserved at the wreck site, located roughly three miles off the coast of Dover. 

“They were packed upside down, which under deep-sea pressure created a perfect natural hydraulic block, keeping the seawater out,” Truszynski says. If experts can determine that no seawater penetrated the bottle, bringing harmful bacteria with it, then the beer might be safe to drink.

The men sent samples from the bottle to KU Leuven, a university in Belgium, where microbiologist Kevin Verstrepen plans to analyze them in his lab. If the Guinness gets the green light, Truszynski will be one of the first in line to try it. “To taste a flavor profile that has been trapped in a vacuum since the Victorian era would be an unforgettable, once-in-a-lifetime experience,” he says.

Panis, meanwhile, tells BBC News’ Adam Mandeville that he’s normally “not that big” of a Guinness fan. But if the testing determines that the beer is safe to drink, he will “of course” have to sample it for himself.

This week's interesting finds

A chart worth discussing

“Europe has one of the lowest rates of air conditioning penetration globally.”

- Claire Thornhill

Other charts worth pointing out

Quarterly U.S. Apple App Store spending – year-on-year change

Food manufacturing company stock exposure to GLP-1 usage

U.S. GLP-1 users

Restaurant spending by generation

Food spending by retailer type

U.S. Treasuries – Outstanding vs. percentage of non-U.S. ownership

Global federal reserve gold weights – total vs. percentage of total reserves

Long-term interest rate movement relative to Federal Open Market Committee meetings

Canadian exports targeted by U.S. tariffs – destination breakdown

45-day correlation between high beta and low volatility stocks

Defaults by credit rating

China’s IPO Rush Is Showing Strain With Pace Nearing 2023 Frenzy

China’s high-powered market for initial public offerings is showing signs that its breakneck pace could be difficult to sustain.

Fueled by enthusiasm for all things artificial intelligence, companies are raising money at the fastest rate since 2023, with volumes at levels just before cooling measures back then ushered in a multiyear lull. Recent high-profile deals have struggled to hold on to initial gains, while a robust IPO pipeline has reanimated liquidity concerns. And some highly anticipated deals may be taking longer to come to market than previously thought.

Since the beginning of July, proceeds have exceeded 119 billion yuan ($17.7 billion), more than the 114 billion yuan in the third quarter of 2023. Three years ago, that milestone marked a turning point in China’s IPO market. As Beijing pledged to boost capital markets, regulators also moved to curb the IPO frenzy to address concerns about liquidity drain. The measures effectively applied brakes to earlier reforms that had made it easier for companies to list.

Investor enthusiasm has so far been buoyant enough to absorb the barrage of offerings. But as momentum in tech begins to fade, the market’s ability to take on fresh supply is being tested. 

“Since the AI trade rolled over in June, liquidity has been draining from the market,” said Yang Tingwu, fund manager at Fujian Tongheng Investment. “Mutual funds, quants and retail investors alike have little capacity nor appetite to add, and state-backed funds have largely been net sellers. In a market without incremental inflows, this level of IPO issuance is hard to digest.”

China’s stock market, along with Hong Kong, has emerged as the engine of fundraising for the AI buildout, with companies racing to sell shares as they look to expand capacity and compete with mostly US competitors. With deals such as CXMT Corp.’s near-record share sale, IPO proceeds this year have surpassed $30 billion for the first time since 2023, according to data compiled by Bloomberg.

So far, there’s been no official communication to indicate that authorities are preparing a clamp down on IPOs. And in contrast with the wave of 2023 deals, many of the largest offerings are tied to strategic sectors such as semiconductors and AI, which have heavy capital needs. Authorities have also made it clear that they will continue to support high-quality tech firms including homegrown large language models to list.

Still, signs of fatigue are emerging. Nearly a third of this quarter’s listings have lost more than half their value from post-debut peaks. Unitree is down 45% from its intraday high recorded during its blistering first day of trading.

Regulators may already be signaling discomfort with the pace of activity. Local media reported that exchanges recently met with brokerages to discuss the quality of IPO filings. Authorities have so far haven’t reacted to the reports.

This week’s fun finds

Relationship manager Lauren (centre) organized a Middle Eastern meal for her EdgePoint colleagues this week. Lunch included fresh falafel, heavenly hummus and savoury salads. Thanks for bringing us all together!

Why some people mow a lawn better than others

You’ve probably done something like mow a lawn or vacuum a rug hundreds of times without thinking much about it. Some part of your brain works out a route that’s usually good enough to get the job done. People are actually pretty good at this, and better than you’d guess for a problem that is hard for computers. We wanted to see it for ourselves, so we built a lawn and asked people to mow it.

This week's interesting finds

 

A chart worth discussing

“$445 billion in AI related debt issued year-to-date. 1.5% of US GDP. 8% of the size of the entire US investment grade corporate bond market. 25% of the annual US deficit.”

- Derek Skomorowski

Other charts worth pointing out

Private construction spending: offices and data centers

China’s exports and imports since 1990

Chinese domestic demand vs. imports

Hedge fund ownership positioning in mega-cap tech stocks 

Mutual fund ownership positions in the Mag 7 

Average hedge fund portfolio turnover since 2010

U.S. equity fund flows by category 

Mutual fund positioning in consumer staples

Number of stocks with negative beta to the S&P 500 Index

Auto loan repayments across income groups

Small business travel spending by category

Top 5% household spending vs. S&P 500 Index performance 

US Treasury to boost long-term bond purchases in bid to steady market

The US Treasury said it would “at least double” purchases of long-term government debt as policymakers seek to contain a sell-off that has sent borrowing costs soaring in the world’s most important bond market.

The more aggressive buyback operation affects Treasury securities maturing in 10 to 20 years and 20 to 30 years, increasing from $2bn to “at least” $4bn, the Treasury said on Wednesday.

The surprise move comes at a time of growing strains in the $32tn US Treasury market as investors fret over the burst of inflation triggered by Donald Trump’s Iran war and Washington’s mounting public-debt burden.

The Treasury said on Wednesday that the increased buybacks, which will begin on September 9, reflected its “desire to provide greater liquidity support” to long-dated US debt. It marks a significant expansion of a programme that is designed to facilitate market function for older and less actively traded Treasuries, known as “off-the-run” securities.

US government bonds rallied sharply after the announcement, with the yield on the 30-year bond down 0.08 percentage points to 5.21 per cent. The yield on 10-year debt, a benchmark for trillions of dollars in assets worldwide, slid 0.04 percentage points to 4.67 per cent.

The 30-year yield reached almost 5.34 per cent on Tuesday, the highest level since 2007, in a jump that has also ricocheted around the world. An auction of 30-year debt last week also saw investors buy government bonds at the highest yield since 2001.

The dollar also declined following the buyback announcement, with an index of the currency against six peers sliding 0.7 per cent on Wednesday.

Barclays analysts added that the Treasury’s decision to expand its buybacks just weeks after the quarterly “refunding” announcement, when it details its debt management plans, highlighted how “the recent rise in yields did catch [officials’] attention”.

In an early sign of the limits of the buyback strategy, the Treasury’s $16bn auction of 20-year bonds on Wednesday afternoon drew only modest appetite. The debt was sold at a yield of 5.204 per cent, a small premium to the 5.199 per cent on the secondary market, Bloomberg data shows.

The so-called bid-to-cover ratio, a measure of demand relative to the amount of debt sold, was 2.53, compared with this year’s average prior to the sale of 2.66.

Wall Street expects the agency to offset the buybacks by issuing more short-term debt, part of an effort to shift US borrowing towards Treasury bills that mature in one month to one year.

Yields on three- and six-month bills rose slightly on Wednesday, reflecting expectations for more issuance on the shorter end of the curve.

The yield on the 10-year note is closely watched as it tends to have a greater impact on the cost of borrowing for businesses and households, heavily influencing the price of products such as residential mortgages.

However, economists warn that longer-term borrowing costs will probably remain high amid concerns about inflation and vast US deficits.

This week’s fun finds

Scientists invent 'world's greenest party balloon'

Scientists in London have invented what they claim is the world's first fully biodegradable party balloon.

Researchers at Imperial College London say standard balloons can take years to break down and can release harmful chemicals.

But their new balloon biodegrades within nine months.

The research was part-funded by a party planner, who wanted to reduce the impact of balloon litter on marine wildlife.

The new balloon, called Bioloon, is no more expensive than a standard balloon and is easier to blow up, according to the scientists.

This week's interesting finds

 

A few charts worth discussing

“AI-linked issuance is becoming an increasingly significant source of capital across nearly every funding channel."

- Frank Mullen

Other charts worth pointing out

Historical 10-year yield change during U.S. Federal Reserve cutting cycles

Credit spreads by rating

Investment grade and hyperscaler bond issuance

Tech and AI drive nearly 40% of longer-duration issues

Travel spending by generation

Equal-weighted vs. cap-weighted S&P 500 performance

Megacap Technology/Media/Telecoms – fund ownership

Equity allocation mix

S&P 500 Index Earnings growth estimates

Ratings Firm Accused of Grade Inflation Vouched for $40 Billion of Insurer Debt

Egan-Jones Ratings, based in King of Prussia, Pa., is being sued by two former employees who allege that it pressured staff to inflate ratings to gain business. The Securities and Exchange Commission has questioned the company’s reliability, and a regulator in Bermuda, where insurers park a huge amount of capital, has stopped accepting the firm’s ratings.

Ratings firms play a crucial role in making sure life and annuity insurers don’t take too much risk when investing policyholders’ premiums. That is because the credit rating on each investment generally determines the dollar amount an insurer must set aside to protect against the risk of loss. A better rating means insurers don’t have to set aside as much capital.

Life insurers chasing higher returns have splurged on private credit deals in the past decade, leading to a sharp increase in confidential, or “private letter” ratings assigned by firms like Egan Jones that often accompany the investments.

A wave of defaults on often illiquid private-credit assets has brought attention to the potential pitfalls that come with lending to smaller or less-creditworthy businesses, and stoked concern about the ratings assigned to these investments even though they apply to a fraction of the total debt owned by insurers. 

Many insurers have debt rated by Egan-Jones on their books, according to the Journal’s analysis, which drew on ratings data disclosed by the firm and investment holdings data from the National Association of Insurance Commissioners.

Among the biggest holders are insurance companies controlled by Mark Walter, the financial titan who owns the Los Angeles Dodgers. Egan-Jones rated about $2.6 billion of loans held by Walter’s insurers, the analysis showed, including debt issued by American Media Productions, a firm controlled by a Walter affiliate that owns the Dodgers’ local TV broadcaster.

Loans tied to Walter’s business empire are at the center of a federal investigation into possible fraud. Egan-Jones said its understanding is that the Walter investigation is focused on disclosures, not ratings. A spokesperson for Walter’s insurers declined to comment.

Insurance companies and the state commissioners who regulate them have long relied on public ratings from Moody’s Ratings or S&P Global to assess risk and determine how much of a financial cushion insurers should hold for each bond they invest in. Those letter-grade credit assessments have historically been limited to public debt. But that changed in the past decade as private credit in life insurer portfolios swelled to an estimated $980 billion, or about a quarter of total holdings, as of 2025, according to an estimate by insurance-company ratings firm AM Best.

Rather than go to insurance regulators for an individual assessment of how much capital to hold for each private investment, insurers and debt issuers began paying for confidential, or private-letter, ratings. Insurers held about $480 billion worth of privately rated debt instruments in 2025, more than 10 times their $47 billion value in 2018, when companies first began disclosing their use, the Journal’s analysis shows. Most were for private debt, but insurers can also seek private-letter ratings on public securities.

Egan-Jones is among the main players in the private-letter ratings business but has lately attracted considerable scrutiny. The lawsuit filed in 2024 by the firm’s two former executives alleged they were fired after telling securities regulators they were concerned about conflicts of interest.

In its statement, Egan-Jones denied the allegations by the former employees and said they were establishing a competing ratings business.

In a September 2023 letter to Egan-Jones, the SEC wrote that the firm’s incentives for analysts could lead to compromised ratings. And in March, the Securities and Exchange Commission questioned Egan-Jones’s capacity to “consistently produce credit ratings with integrity” on asset-backed securities, a type of debt instrument it was seeking permission to rate. An SEC spokesperson declined to comment.

Egan-Jones said the incentives referenced by the agency were part of a work-tracking system commonly used by businesses.

In January, regulators in Bermuda removed Egan-Jones from its list of recognized ratings providers. A study by the National Association of Insurance Commissioners said private-letter ratings from small firms, a group that includes Egan-Jones, were often inflated. The group has pulled the report from its website, saying it needed to clarify its findings.

The general lack of disclosures around private credit have been a concern for investors and lawmakers worried about hidden risks in the industry. Evaluating private-letter ratings is difficult because so few are disclosed, and unlike with big publicly traded bond issues, the investments are frequently rated by only one firm.

In its analysis of a data set of 5,000 private-letter deals rated by Egan-Jones, the Journal also assessed how the firm’s ratings compare with those of peers, drawing on limited publicly available data. The Journal found 52 investments that carried ratings from Egan-Jones and another firm covering the same period. Among those, Egan-Jones’s ratings were on average one notch higher than those of the other raters. In two dozen cases, they were at least three notches higher, the Journal’s analysis shows. Egan-Jones had a lower grade in 18 instances.

Methodology

The Journal assembled and analyzed a data set of nearly 18,200 private-letter rated instruments, drawing on filings made by insurance companies. Egan-Jones issued ratings for more than a quarter of those instruments, based on the Journal’s analysis of disclosures made by six ratings firms. The Journal identified 52 instruments across 79 rating actions where Egan-Jones and at least one other firm maintained an active credit rating.

To measure changes in ratings, the Journal converted letter ratings into numerical designations used by insurance regulators. The Journal only looked at ratings that were in effect during overlapping periods and used discrete, nine-character identifiers—known as Cusip numbers—to identify debt instruments that were rated by both Egan-Jones and a competitor.

Many of the ratings compared by the Journal applied to publicly traded bonds. Egan-Jones said that in many of those cases, it provided unsolicited ratings for its subscribers, using only publicly available information. Egan-Jones said it uses the same methodology whether ratings are private or public, solicited or unsolicited.

This week’s fun finds

From myth to reality. Kris from the Operations Team hosted one of the most anticipated moai’s of the year. He arranged to have infamous focaccia sandwiches delivered from his hometown of Bolton to our Toronto office. They were fresh, flavourful and offered a ton of variety for everyone to enjoy.

Scientists Reveal Why Mosquitoes Bite Some People More Than Others

Ever felt like mosquitoes bite you while ignoring everyone else?

Scientists are now making progress in deciphering the complex chemical cocktail that makes particular people more enticing to these disease-spreading bloodsuckers.

A range of sensory cues can cause mosquitoes to pick one human over another – mainly the smell and heat our bodies give off, and the carbon dioxide we exhale.

Female mosquitoes – which are the only ones that bite – detect these signals with finely-tuned receptors, then choose their target accordingly.