This week's interesting finds

This week’s in charts

VW is catching up with Tesla

On one hand it's easy to argue that Tesla is miles ahead, shipping more than double the number of all-electric vehicles that VW Group managed in 2021. On the other hand, you could argue that VW Group's 453k deliveries in 2021 is close to Tesla's 500k effort from 2020, suggesting that the German giant is only 12-15 months behind Tesla's pace, despite starting late.

Source: Chartr

Russia and Ukraine : key suppliers of various metals

Goldman Sachs: “A survey of our equity analysts reveals that imports of car parts from Russia and Ukraine have dropped, with some European automakers already cutting production. Our equity analysts estimate that ongoing disruptions could depress monthly auto production in the affected plants by nearly 60k vehicles (around 25% of their monthly production) in March. In addition, car producers with assembly plants in Russia, such as Hyundai and Renault, have already stopped local production reducing the global supply of autos.

According to our commodity analysts, a stop in palladium exports alone may lead to a 10% hit to global auto production for 2 years based on potential production losses in the region and global inventories."

Inflation is shrinking your products

Do consumers notice when their everyday products get smaller? Often, they don’t and companies are taking advantage by reducing the amount of product they sell while keeping prices the same. Shrinking product sizes to pad profits is not a new tactic but it grows in popularity during periods of shortages and inflation. Some consumers are noticing and documenting their shrinking groceries on the shrinkflation subreddit.

Even with today’s release of US inflation figures from the Bureau of Labor Statistics showing prices increased 7.9% in the last 12 months, consumers may not realize they’re paying more for some of their regular purchases because companies are reducing sizes while keeping prices the same

Saudi Arabia Considers Accepting Yuan Instead of Dollars for Chinese Oil Sales

Saudi Arabia is in active talks with Beijing to price some of its oil sales to China in yuan, people familiar with the matter said, a move that would dent the U.S. dollar’s dominance of the global petroleum market and mark another shift by the world’s top crude exporter toward Asia.

The talks with China over yuan-priced oil contracts have been off and on for six years but have accelerated this year as the Saudis have grown increasingly unhappy with decades-old U.S. security commitments to defend the kingdom, the people said.

China buys more than 25% of the oil that Saudi Arabia exports. If priced in yuan, those sales would boost the standing of China’s currency. The Saudis are also considering including yuan-denominated futures contracts, known as the petroyuan, in the pricing model of Saudi Arabian Oil Co., known as Aramco.

It would be a profound shift for Saudi Arabia to price even some of its roughly 6.2 million barrels of day of crude exports in anything other than dollars. The majority of global oil sales—around 80%—are done in dollars, and the Saudis have traded oil exclusively in dollars since 1974, in a deal with the Nixon administration that included security guarantees for the kingdom.

China introduced yuan-priced oil contracts in 2018 as part of its efforts to make its currency tradable across the world, but they haven’t made a dent in the dollar’s dominance of the oil market. For China, using dollars has become a hazard highlighted by U.S. sanctions on Iran over its nuclear program and on Russia in response to the Ukraine invasion.

China has stepped up its courtship of the Saudi kingdom. In recent years, China has helped Saudi Arabia build its own ballistic missiles, consulted on a nuclear program and begun investing in Crown Prince Mohammed bin Salman’s pet projects, such as Neom, a futuristic new city. Saudi Arabia has invited Chinese President Xi Jinping to visit later this year.

The Secretive Company That Might End Privacy as We Know It

Until recently, Hoan Ton-That’s greatest hits included an obscure iPhone game and an app that let people put Donald Trump’s distinctive yellow hair on their own photos.

Then Mr. Ton-That — an Australian techie and onetime model — did something momentous: He invented a tool that could end your ability to walk down the street anonymously, and provided it to hundreds of law enforcement agencies, ranging from local cops in Florida to the F.B.I. and the Department of Homeland Security.

His tiny company, Clearview AI, devised a groundbreaking facial recognition app. You take a picture of a person, upload it and get to see public photos of that person, along with links to where those photos appeared. The system — whose backbone is a database of more than three billion images that Clearview claims to have scraped from Facebook, YouTube, Venmo and millions of other websites — goes far beyond anything ever constructed by the United States government or Silicon Valley giants.

Federal and state law enforcement officers said that while they had only limited knowledge of how Clearview works and who is behind it, they had used its app to help solve shoplifting, identity theft, credit card fraud, murder, and child sexual exploitation cases.

But without public scrutiny, more than 600 law enforcement agencies have started using Clearview in the past year, according to the company, which declined to provide a list. The computer code underlying its app, analyzed by The New York Times, includes programming language to pair it with augmented-reality glasses; users would potentially be able to identify every person they saw. The tool could identify activists at a protest or an attractive stranger on the subway, revealing not just their names but where they lived, what they did and whom they knew.

And it’s not just law enforcement: Clearview has also licensed the app to at least a handful of companies for security purposes.

The Moral Hazard Lessons from Nickel Market Disaster

The tide went out this week in London’s nickel market, and we discovered — in Warren Buffett’s immortal words—who had been swimming naked: a giant Chinese producer that couldn’t meet its margin calls, additional security brokers require when leveraged trades lose money.

Instead of letting the market cleanse itself of this indebted trader, the exchange decided to wade in and save the firm from the consequences of its bets by canceling the trades.

This isn’t just a one-off in an obscure commodity. This is the natural conclusion of a trend that is undermining free markets and creating all the wrong incentives: A growing reluctance by the authorities to let financial groups go bust, even when they aren’t too big to fail.

The problems started on Tuesday morning, when traders on the London Metal Exchange smelled blood and nickel prices almost doubled. China’s Tsingshan Holding faced a $1 billion-or-so margin call that exchange officials feared it couldn’t meet. Rather than let it fail, which would probably have taken down several of the smaller LME brokers that had serviced Tsingshan, LME decided to cancel all that day’s trading, more than 9,000 trades worth about $4 billion

It. Canceled. The. Trades. Not because of a fat-finger error, which exchanges often cancel. Not even because of a rogue algorithm (as regulators claimed in the 2010 flash crash in U.S. stocks). But because someone with too much leverage was going to blow up, with knock-on effects on some members of the exchange.

This week’s fun finds:

Less serious, not investing related, but just as fun. Sometimes we want to share some of our less serious (but still interesting) finds. On any given week, we might show some things unrelated to investing - absorbing articles, notable numbers, or even recommendations from our internal partners.

Your organs may be ageing at different rates

An analysis of hundreds of biological features strengthens the evidence that some organs and body systems can age faster than others. Tracking the biological age of different parts of the body could help doctors predict the onset of disease more accurately.

We already knew that the condition of cells in the body can be interpreted to give someone a biological age that is older or younger than their age measured in years. In other words, cell condition – which varies depending on genetic and lifestyle factors – determines the pace of the ageing process.

Now, work by Brian Kennedy at the National University of Singapore and his colleagues supports the idea that the various organs and systems in the body – such as the cardiovascular or immune system – can age at different rates within the same individual.

“It confirms previous studies that there are diverse ageing rates among organs and systems, and people’s ageing patterns are different,” says Wenyu Zhou at Tempus Labs, a biotechnology company in California. “This further calls

The Joyful, Illiterate Kindergartners of Finland

“The changes to kindergarten make me sick,” a veteran teacher in Arkansas recently admitted to me. “Think about what you did in first grade—that’s what my 5-year-old babies are expected to do.”

A working paper, “Is Kindergarten the New First Grade?,” confirms what many experts have suspected for years: The American kindergarten experience has become much more academic—and at the expense of play. The late psychologist, Bruno Bettelheim, even raised the concern in an article for The Atlantic in 1987.

Researchers at the University of Virginia, led by the education-policy researcher Daphna Bassok, analyzed survey responses from American kindergarten teachers between 1998 and 2010. In the study, the percentage of kindergarten teachers who reported that they agreed (or strongly agreed) that children should learn to read in kindergarten greatly increased from 30 percent in 1998 to 80 percent in 2010.

Bassok and her colleagues found that while time spent on literacy in American kindergarten classrooms went up, time spent on arts, music, and child-selected activities (like station time) significantly dropped.

But Finland—a Nordic nation of 5.5 million people, where I’ve lived and taught fifth and sixth graders over the last two years—appears to be on the other end of the kindergarten spectrum. Finland’s kindergartners spend a sizable chunk of each day playing, not filling out worksheets. Finnish schools have received substantial media attention for years now—largely because of the consistently strong performance of its 15-year-olds on international tests like the PISA.

“[Children] learn so well through play,” Anni-Kaisa Osei Ntiamoah, one of the preschool’s “kindergarten” teachers, who’s in her seventh year in the classroom, told me. “They don’t even realize that they are learning because they’re so interested [in what they’re doing].”

This week's interesting finds

EdgePoint Wealth website facelift

After seven years (an eternity in internet years!), our website has received a facelift. Check us out! 

This Week in Charts

Long-term Commodity Cycle

Oil correlations and CAPEX in Canada

Scrapped: How nearly $150 billion worth of energy projects have been shelved in Canada

Canadian and international investors have had a hard time getting shovels in the ground on their projects, even after securing regulatory approval. The reasons have been many: pure economics, political divisions, Indigenous disapproval and environmental concerns.

All of the above factors have left a slew of projects stranded as Canadians are unable to agree on our need to develop resources and at the same time fight climate change. Together, they make up around $150 billion of lost investment opportunity that would have generated taxes, jobs and businesses for the domestic economy.

Here are some of the major energy projects over the past few years that never saw the light of day:

Project: Frontier Oilsands Mine

Cost: $20.6 billion

Company: Teck Resources Ltd.

Project: Pacific Northwest LNG

Cost: $36 billion

Lead company: Petronas Bhd.

Project: Aurora LNG

Cost: $28 billion

Lead company: Nexen Energy

‘Tech wreck’ looks more like another dotcom bubble bursting

At what point does the slump in US technology stocks stop being dismissed as a mere “tech wreck” primarily centered on the most speculative companies and become considered a fully-fledged dotcom crash 2.0?

The combination of increasingly hawkish central banks and Russia’s invasion of Ukraine has been toxic for equity markets this year. The MSCI All-Country World index is now down 12 per cent in 2022. However, as is often the case, headline indices miss a more fascinating story underneath. The pain has been primarily focused in US technology stocks. Despite a tepid bounce over the past week, the Nasdaq Composite index has already fallen nearly 20 per cent in 2022. In dollar terms, the tech-heavy market has now lost well over $5tn in value since its November peak

Almost two-thirds of the Nasdaq’s 3,000 plus members have fallen by at least 25 per cent from their 52-week highs, according to numbers from Société Générale’s Andrew Lapthorne. Almost 43 per cent have lost more than half their value, and nearly a fifth have tumbled over 75 per cent — the worst such ratio since the financial crisis. The $5.15tn that has evaporated from the Nasdaq in recent weeks is like the entire UK stock market going “poof”. 

Russia’s War Prompts a Pitch for ‘Socially Responsible’ Military Stocks

Russia’s invasion of Ukraine has upset the world order. It could conceivably alter the way some people think about investing, too.

At least that’s the view of two analysts with Citi, who argue that the height of social responsibility at this moment requires putting your investment money into the stocks of companies that make weapons.

“Defending the values of liberal democracies and creating a deterrent, which preserves peace and global stability,” is so important that weapons makers should be included in funds that carry an E.S.G., or “environmental, social and governance,” label, the two analysts, Charles J. Armitage and Samuel Burgess, wrote.

Leslie Samuelrich, president of the Green Century Funds, which was founded by nonprofit groups, including the California Public Interest Research Group and the Citizen Lobby of New Jersey, was appalled by the notion.

“This is absurd,” she said. “It feels very opportunistic and shallow.” She added that Ukraine needed to be defended. “I’m part Ukrainian,” she said. “Of course, they need weapons.”

But she said that had nothing to do with investing in funds devoted to socially responsible investing. “Those who argue that weapons belong in a sustainable portfolio are capitalizing on the horrific attack,” she said. “Excluding military and civilian firearms has been a long-held screen by authentic responsible investors.”

Mr. Armitage and Mr. Burgess, the Citi analysts, make a vigorous counterargument. Essentially, it boils down to this: Without strong militaries capable of “defending the values of liberal democracies and creating a deterrent” against geopolitical adversaries like Russia and China, there can’t be much progress on other pressing global issues.

Harper’s Index – interesting stats

• Portion of moviegoers who say they are unlikely to return to theaters after the pandemic: 1/10

• Factor by which the number of cryptocurrency investors is expected to increase this year: 3.4

• Percentage decrease between 2019 and 2020 in the value of the wellness industry: 11

• Percentage of Bitcoin held by the top 0.01 percent of Bitcoin holders: 27

• Amount spent last November on a private island in the metaverse: $398,685

• Percentage of people alive today who have never used the internet: 37

• Portion of daily newspapers in the United States that are controlled by investment groups: ½

• Portion of U.S. adults who say their physical health is “excellent”: 1/4.

• Average amount of soda, in gallons, that an American drinks each year: 36

• Portion of therapists who say their clientele has increased since the start of the pandemic : 9/10

• Minimum portion of Americans aged 18 to 25 who are extremely lonely nearly all of the time: 3/5

This week's interesting finds

This Week’s in charts

Mismatch of unemployment and consumer sentiment

Sharp inflation is part of the problem

Canadian Oil 

Magazine Covers Revisited

In April 2019, BusinessWeek published a cover story asking “Is Inflation Dead” with a picture of a dead dinosaur – the implication being that inflation was not only dead but extinct.

We observed that it can take up to three years before a published cover story is proven wrong—often abruptly. In the case of the 1979 “Death of Equities” cover story, it was published almost exactly three years before equity markets literally “blew-off” the bottom in August 1982 --which we know was the start to one of the greatest bull markets in history. Therefore, we argued that three years after the April 2019 published cover story, that inflation should stage a major acceleration and become a huge problem.

What follows is an essay on contrarian thinking and consensus expectations.

The Politics of Passive Investing

There are a handful of folks in the finance world whom I try to read everything they put out. Matt Levine at Bloomberg is one of them. Let’s face it, he is smarter than most of us, and writes better than, well, all of us?

“The right model of BlackRock is probably that it is mostly an aggregator of preferences, but it is also, at the margin, a shaper of preferences. It passively reflects what investors want generally, but it has some ability to push those investors to want different things.”

The Harvard professor (John Coates) was very correct about the entangling of goals of “the state” with the goals of a business. Because today, in some ways, “the state” is Larry Fink, the founder, chairman, and CEO of BlackRock, manager of $10 trillion of assets. It is Larry Fink intimating that the companies that happen to be included in major US benchmark indices like the S&P 500 are now beholden to his personal views; views which seem to be particularly motivated by his penchant for environmental issues. 

Russia May Default. Passive Funds Still Have to Own Its Bonds.

Russia could default on its debt as soon as this month, and investors still own billions of dollars of the securities through emerging-market bond funds. 

Russian financial markets have been called “uninvestable” after the country’s invasion of Ukraine was met with sanctions from the U.S., Europe, and other Western nations. The sanctions, meant to isolate Russia from the global financial system, include cutting off many Russian banks from key financial infrastructure and freezing its central bank’s assets. 

As a result, S&P Global Ratings downgraded Russia’s credit rating to CCC-minus, one step above default. That is either five or six notches below its prior rating, depending on the currency of its debt.

Russia’s next foreign-currency debt payment is due March 16, according to Bloomberg data. Pricing on that debt reflects substantial risk, as it was quoted around 30 cents on the dollar late Thursday on Bloomberg. If Russia does default on that debt, it would be unprecedented; during its late-1990s financial crisis it continued to pay most of its foreign-currency debt. 

Yet emerging-market bond benchmark providers still include Russian ruble-denominated bonds in their indexes. That means passively managed emerging-market debt funds couldn’t sell the bonds even if there was a liquid market for them.

This week's interesting finds

EdgePoint Investment team book club

How does our Investment team come up with their insights? For starters, they like to read…a lot. In the past we’ve shared their favourite reads, and now we’re taking it to the next level. Introducing the Investment team book club, a roundtable discussion of books that each member must read. We hope they will lead to spirited conversations about themes important to any investment professional. This first curated list of books conjures lessons from the past and peeks into the future.

This week in charts

Last time CPI was at this level, the Fed Fund’s Rate was 15% (Feb. 1982)

Cost of energy and economic growth

A Pandemic Baby Bump Shines a Spotlight on the Nordic Welfare Model

Finland’s government has been working arduously to stem the country’s rapid population decline. Since the 2019 elections, a cabinet run by a millennial woman has produced eight offspring, with two more on the way. Regular Finns have joined in the baby making: The number of live births jumped 6.7% last year, the most in nearly five decades.

Other nations on Europe’s northern rim have experienced their own pandemic baby bumps, making the region of 28 million people an outlier among advanced economies, several of which have seen fertility rates drop to historic lows.

“The pandemic definitely had an impact on our decision to try for a second child”, says Heini Korpela, 38, who oversees influencer marketing at Otavamedia Oy in Helsinki and gave birth to a baby girl in June. “We’d spent so much time at home that it did not feel like a big deal to stay home with another baby. 

For Tryggvi Sigurdsson, a 36-year-old engineer from Reykjavik who became a father for the third time last June, one upside of the COVID-19 crisis is that there was more familial support for new parents. “Everyone spending a lot of time at home, including grandparents for instance, so people might be more available to babysit,” he says.

Trouble lies ahead for the Canadian housing market

The Canadian residential real estate market may have ended 2021 with its 12th consecutive annual increase in prices, with a year-over-year gain of 17.9 per cent, but there is a good chance that trend may be broken in 2022.

Indeed, as the Bank of Canada grapples with inflation at a 30-year high of 4.8 per cent year-over-year, interest rates are set to rise over the coming quarters; the market is currently priced for nearly seven rate hikes through the end of the year. This will likely serve to quell the investor-led housing frenzy that has gripped the nation throughout the pandemic.

So, with a record share of mortgage debt hitched to variable rates, the housing market (and the broader economy) could be in for trouble should this extended honeymoon period come to an end.

After the Fact

Exercising does two things: It makes you hungry and makes you proud. So let’s say after every workout you eat a huge dinner with extra dessert. You know that’s not ideal, but you just accomplished something hard, so it feels justified.

After a year of this you haven’t lost any weight, which was your goal. You can’t figure it out. You’re exercising every day. You’re so frustrated.

You can’t measure the benefit of exercise just by tracking how much you work out. It’s the gap between your workout and avoiding offsetting its benefits after the fact that makes all the difference.

And isn’t building wealth the same?

The typical American family is earning more than ever before. But for many it probably doesn’t feel like that – at least as much as it should – because all of the income gains and then some have been offset with higher spending.

I get why it happens. Spending more when your income rises is as tempting as eating more after you exercise. It feels earned and justified. People’s lifestyle expectations are driven by their peers, so when everyone spends more you feel entitled to do the same.

But all wealth relies on the ability to receive an extra dollar and say, “I could spend this, and spending feels great, but I’m not going to.” It’s the same as turning down a big meal after working out, and it’s just as hard. All great things are hard.

This week's interesting finds

Charlie Munger Expects Index Funds to Change the World—and Not in a Good Way 

Mr. Munger, the billionaire vice chairman of Berkshire Hathaway Inc Warren Buffett’s business partner, said the rise of index funds like those run by Mr. Fink’s BlackRock Inc. has resulted in an “enormous transfer” of the power to sway corporate decision making. That shift will “change the world,” he said, and not for the better.

“We have a new bunch of emperors, and they’re the people who vote the shares in the index funds,” Mr. Munger, 98 years old, said at the annual meeting of Daily Journal Corp. , a publishing company he has chaired since the 1970s. “I think the world of Larry Fink, but I’m not sure I want him to be my emperor.”

The surging popularity of index funds has made their managers the biggest investors in most large stocks. The firms, including BlackRock, have sought to wield that power in ways that have at times made corporate executives uncomfortable. Investment managers have had more sway over important company decisions, including takeovers, the fates of executives and plans for long-term sustainability.

Facing Texas pushback, BlackRock says it backs fossil fuels 

At the risk of being dropped from Texas pension funds, BlackRock Inc has ramped up its message that the world's largest asset manager is a friend of the oil and gas industries. As a large and long-term investor in fossil fuel companies, "we want to see these companies succeed and prosper," BlackRock executives wrote in a letter that a spokesman confirmed was sent at the start of the year to officials, trade groups and others in energy-rich Texas.

Although the message is consistent with its other statements, the emphasis is new after years in which BlackRock has stressed its efforts to take climate change and other environmental, social and governance (ESG) issues into account in its investment and proxy voting decisions. 

In Texas, new legislation requires the state's comptroller, Glenn Hegar, to draw up a list of financial companies that boycott fossil fuels. Those firms could then be barred from state pension funds like the $197 billion Teacher Retirement System of Texas, which has about $2.5 billion with BlackRock.   

Immigration 

Canada, a country that relies heavily on immigration to grow its labor force, has set an ambitious plan to bring in more than 1.3 million newcomers over the next three years to support its post-pandemic growth. 

Trudeau’s government aims to add more than 431,000 permanent residents this year, 447,000 in 2023 and 451,000 in 2024, according to the 2022-24 Immigration Levels Plan released on Monday. Figures for this year and 2023 have been revised higher from earlier targets of 411,000 and 421,000, respectively. 

Immigration had been one of the main drivers of Canada’s economy, and accounts for almost all of the nation’s employment growth. Last year, Canada welcomed more than 405,000 newcomers, the largest single-year increase in its history.  

The $22 Billion Wager: DraftKings and Others Are Reaching for a Piece of the Sports-Gambling Prize.

Bookmakers have always been busy on Super Bowl Sunday, but this year will be a bonanza like never before. Bettors are on track to wager $7.6 billion on the game, up 78% from last year, and it’s not because the office pool is getting bigger. 

Legal sports gambling has now spread to 30 states and Washington, D.C.—home to more than 130 million. In the four years that it has been legal, both the amount of money bet on sports and the amount counted as revenue by gambling companies have risen nearly 1,000%, to $57 billion and $4.3 billion, respectively, according to the American Gaming Association, or AGA. 

Gambling companies spent $725 million on television ads in 2021, three times as much as on cereal ads, according to Nielsen. Such levels of spending, in addition to giveaways to bettors, mean that these companies could report losses for years, until consolidation winnows the field and a few winners emerge. DraftKings has said that online sports betting could be a $22 billion to $36 billion market when it matures, up from around $4 billion today.

An Interesting Take

As fiduciaries, we are charged with attempting to protect and grow your capital. Inside Edge is a small collection of things the Investment team comes across on a weekly basis that could have investment implications. The links below deal with politics, however are not meant as political statements. They are included because the actions and policies they address could have material investment implications. These implications could range from the flow of deposits out of the banking system to the demand for precious metals to the weakness of a currency relative to immigration patterns into a country - all things that could impact the investment environment. As fiduciaries we are paying attention to these government actions and trying to think through what they can mean for the future.

- "Just Watch Me"

- Justin Trudeau's Ceausescu Moment

This week's interesting finds

This week in charts 

Top contributors to U.S. Consumer Price Index (CPI) YoY%   

Half of the attached subscribers due to release of “Hamilton” and “Wonder Woman 1984”are gone just six months later 

Streaming-video services get a surge of subscribers when they launch a hotly anticipated show or movie. But many of these new customers unsubscribe within a few months, according to new data, a challenge even for the industry’s deep-pocketed giants. 

The data, which subscriber-measurement company Antenna provided to The Wall Street Journal, illustrate the extent to which the streaming wars require all players to consistently churn out popular and often expensive programming to keep fickle subscribers satisfied. 

“You constantly need new content,” said Michael Nathanson, an analyst for Moffett Nathanson. Streaming services not only have to build vast libraries of old shows and movies, he said, they also “need a couple big, nice theatrical movies every quarter to make it feel like it’s really valuable.” 

Coffee Reserves Plunge to Lowest in More Than Two Decades 

The era of expensive coffee is not going to end any time soon, judging from dwindling amounts held in reserves. 

Stockpiles of high-end arabica beans, a favorite of artisan coffee shops and chains like Starbucks Corp., totaled 1.078 million bags or about 143 million pounds, according to data released Monday by ICE Futures U.S. exchange. That’s the lowest level for inventories monitored by the New York exchange since February 2000. 

Coffee reserves certified by ICE have been falling since September due to soaring shipping costs and unfavorable weather that clipped production in Brazil, the world’s largest grower and exporter. 

Shrinking inventories are a concern because countries tap them when they aren’t getting enough product from overseas. It’s a sign that demand is outstripping supplies, and a condition for rising prices. Coffee prices have already been touching multiyear highs at a time when food inflation is gripping the globe.   

Canadian energy could become a hot commodity

Canadian pure gasoline will quickly be labelled with its nation of origin, very similar to that “Grown in California” sticker on an orange from the native grocery retailer, says Mark Fitzgerald, outgoing chief govt officer of Petronas Energy Canada Ltd. 

His feedback underscore a shift within the Canadian energy panorama, wherein extra corporations at the moment are eager to deal with the environmental, social and governance (ESG) measures that more and more affect world buyers and customers. Suncor Energy Inc. CEO Mark Little, for instance, stated not too long ago that ESG discussions have modified the dialog round oil to some extent, as a result of buyers and customers are not targeted solely on the worth of a barrel of crude. 

In the case of pure gasoline, Mr. Fitzgerald stated the commodity will probably be differentiated sooner or later based mostly not solely on the greenhouse gasoline emissions that come from its manufacturing, however the nation of origin’s environmental protections, respect for Indigenous rights, social insurance policies and poverty discount measures. 

And on that scorecard, he stated, Canada can nudge forward of opponents.   

Money advice

This week's interesting finds

This week in charts 

Luxury watch prices   

Canadians choose variable mortgage rates 

Food shortages 

According to this farming insider, dramatically increased costs for fertilizer will make it impossible for many farmers to profitably plant corn this year. 

Things like fertilizer and liquid nitrogen have tripled and quadrupled in price. Yes, commodity prices are up, but that certainly wont cover the new increased input costs. Corn for example, typically takes about 600 pounds of fertilizer per acre, plus 50 gallons of liquid nitrogen. Times that by many acres and that’s a lot of money. Soybeans take much less. Problem is, there is apparently a soybean seed shortage because others have this plan as well. 

Corn is one of the foundational pillars of our food supply. If you go to the grocery store and start reading through the ingredients of various products, you will quickly discover that corn is in just about everything in one form or another. 

Of course, fertilizer prices are not just going through the roof in the United States. In South America, high fertilizer prices are going to dramatically affect coffee production. Christina Ribeiro do Valle, who comes from a long line of coffee growers in Brazil, is this year paying three times what she paid last year for the fertilizer she needs. Coupled with a recent drought that hit her crop hard, it means Ms. do Valle, 75, will produce a fraction of her Ribeiro do Valle brand of coffee, some of which is exported.   

Consumers Are Pivoting Spending to Services Like Dining and Travel  

Americans responded to the pandemic with a dramatic shift in spending to goods from services. That now appears to be reversing and should gather steam as the Omicron wave of Covid-19 ebbs, economists say. 

Consumers shopped more online in the pandemic, and changed what they bought. Unable to eat out or travel, and with both school and work going remote, they splurged more on things for the home such as furniture and computers. Several rounds of federal stimulus amplified that spending spree. 

Goods—including nondurable goods such as food and clothing, and durable goods such as cars and appliances—averaged 31% of total personal consumption in the two years before the pandemic. That soared to 36% in March and April 2021, shortly before Covid-19 vaccines became widely available. The share has been dropping since, to 34% in December. Consumer spending on goods fell that month for the second month in a row, according to the Commerce Department, while spending on services increased slightly. 

James Knightley, chief international economist at ING, said consumers are starting this year with “a combination of general fatigue of buying physical things and Omicron reducing the ability to spend on services.”