This week's interesting finds

EdgePoint’s inaugural responsible investing report

Since the inception of EdgePoint, ESG considerations and compounding wealth for our investors have been intertwined.  Building on our history, we took steps to formalize our approach of ESG integration.

We hope you enjoy the read!

Talk is cheap…but making the wrong decision can be expensive

You can't choose your family, but you can choose to work with someone who has your best interests in mind. Strong relationships, no matter who they're with, are built during difficult times. The right financial advisor is the one who can help you select the investments that are the best fit for your long-term goals AND keep you committed to them during periods when your emotions can be your biggest enemy. Don't turn DIY investing into "D-I-Why?!?"

Although we’ve not spent a dollar on traditional marketing since inception, that doesn’t mean we can’t have some fun and wonder what an EdgePoint commercial would look like.

This week in charts

Greed & fear: history of asset bubbles in one chart

U.S. wheat planting advancing at the lowest rate in 20 years and only at 49% complete relative to 83% average 

Howard Marks Memo: Bull market rhymes

The Lessons As always for students of investing, what matters most isn’t what events transpired in a given period of time, but what we can learn from these events.  And there’s a lot to be learned from the trends in 2020-21 that rhymed with those in previous cycles. 

In bull markets:

• Optimism builds around the things that are doing spectacularly well.
• The impact is strongest when the upswing arises from a particularly depressed base in terms of psychology and prices.
• Bull market psychology is accompanied by a lack of worry and a high level of risk tolerance, and thus highly aggressive behavior.  Risk-bearing is rewarded, and the need for thorough diligence is ignored.
• High returns reinforce belief in the new, the unlikely, and the optimistic.  When the crowd becomes convinced of those things’ merit, they tend to conclude “there’s no price too high.”
• These influences cool eventually, after they (and prices) have reached unsustainable levels.
• Elevated markets are vulnerable to exogenous events, like Russia’s invasion of Ukraine.
• The assets that rose the most –   and the investors who over-weighted them – often experience painful reversals.

These are themes I’ve seen play out numerous times during my career.  None of them relates exclusively to fundamental developments.  Rather, their causes are largely psychological, and the way psychology works is unlikely to change.  That’s why I’m sure that as long as humans are involved in the investment process, we’ll see them recur time and time again.And, as a reminder, since the major ups   and downs of the markets are primarily driven by psychology, it’s clear that market movements can only be predicted, if ever, when prices are at absurd highs or lows.

Amazon Aims to Sublet, End Warehouse Leases as Online Sales Cool

Amazon.com Inc., stuck with too much warehouse capacity now that the surge in pandemic-era shopping has faded, is looking to sublet at least 10 million square feet of space and could vacate even more by ending leases with landlords, according to people familiar with the situation. 

The excess capacity includes warehouses in New York, New Jersey, Southern California and Atlanta, said the people, who requested anonymity because they’re not authorized to speak about the deals. The surfeit of space could far exceed 10 million square feet, two of the people said, with one saying it could be triple that. Another person close to the deliberations said a final estimate on the square footage to be vacated hasn’t been reached and that the figure remains in flux.

Amazon could try to negotiate lease terminations with existing landlords, including Prologis Inc., an industrial real estate developer that counts the e-commerce giant as its biggest tenant, two of the people said.

Western Canada apartment rents to continue to rise

Economic and population growth will push apartment rents higher in all three major Western Canada markets, Vancouver, Edmonton and Calgary, during the coming year.

However, the three cities start at different baselines and face different challenges, according to speakers at this week’s Western Canada Apartment Investment Conference in Edmonton.

 Shenoor Jadavji, founder and president of Vancouver-based Lotus Capital Corp., suggested apartment supply will be a major factor for the city as 40,000 students and up to 52,000 new people come into the market.

Vancouver developers say slow approvals and bureaucracy at the municipal level are a major challenge in getting projects off the ground. “We have three projects on the way that are all at the city or municipality level. They’ve been there for four or five years,” said Jadavji. Meanwhile construction costs and the cost of borrowing have increased.

Calgary and Edmonton aren’t struggling with delays in municipal approvals and land costs. However, inflation, supply chain issues, rising borrowing rates and a shortage of skilled construction labour all apply to the Alberta cities as they do across the country.

“In Vancouver, an average person pays 75 per cent of their income on accommodation,” said Jadavji. “In Alberta, it’s 20 to 30 per cent.”

Calgary experienced a drop in vacancy rates between 2021 and Q1 2022, said Ferreira. The rates are running at 2.9 per cent for stabilized properties and 5.7 per cent when new projects are factored in. Zonda Urban figures show average rent per unit for concrete properties at $2,076 or $2.41 per square foot and $1,725, or $2.36 per square foot for wood-frame buildings. Ferreira says Calgary has had plenty of new product coming into the market but it has been steadily absorbed. “As a result, we don’t see the market as oversupplied and we can’t foresee it as oversupplied.”

This week’s fun find

“Most big, deeply satisfying accomplishments in life take at least five years to achieve. This can include building a business, cultivating a loving relationship, writing a book, getting in the best shape of your life, raising a family, and more.

Five years is a long time. It is much slower than most of us would like. If you accept the reality of slow progress, you have every reason to take action today. If you resist the reality of slow progress, five years from now you'll simply be five years older and still looking for a shortcut.” – James Clear, weekly newsletter.

The medical power of hypnosis

When David Spiegel was told his next patient was waiting for him, he didn't need to ask the room number. He could hear her wheezing from halfway down the hall.

Entering the patient's room, he saw a 16-year-old girl with red hair sitting bolt upright in bed, knuckles white, in the midst of an asthma attack. By her side, her mother was crying. It was the third time the girl had been hospitalised for asthma in as many months.

Spiegel was a medical student on a paediatric rotation at Boston Children's Hospital in Massachusetts, US, in 1970. As part of his training, he was also taking a class in clinical hypnosis.

The young asthma patient's medical team had already tried to dilate her airways with injections of adrenaline. After two shots, the girl's attack was not subsiding. Spiegel didn't know what else to do. "Do you want to learn a breathing exercise?" he asked her.

She nodded, and so Spiegel hypnotised his first patient. Once the girl had entered the trance-like state characteristic of hypnosis, Spiegel was ready to make a suggestion – the "active ingredient" of hypnotic treatment, typically a carefully worded statement that will produce an involuntary response. But as the girl sat in bed, calm and focused, Spiegel wondered what suggestion he should make. They hadn't got to asthma in his hypnosis class yet.

"So I came up with something," Spiegel tells me, as he recalls the case. "I said, 'Each breath you take will be a little deeper and a little easier.'"

The improvisation worked. Within five minutes, the patient's wheezing had stopped and she was lying back in her bed, breathing comfortably. Her mother was no longer crying.

It was a formative encounter for doctor and patient. The girl grew up to train as a respiratory therapist, while Spiegel embarked on a career in clinical hypnosis. Over the next 50 years, he would go on to found the Center for Integrative Medicine at Stanford University and, by his reckoning, hypnotise more than 7,000 patients.

The Weirdest Coaching Staff in Baseball Has Made the Giants a Powerhouse

Fernando Perez studied creative writing at Columbia University and is the author of essays that have been published in prominent literary magazines. Mark Hallberg spent years working as a teacher and administrator at schools in Saudi Arabia and the United Arab Emirates. Dustin Lind has a doctorate in physical therapy.  

These are a few of the people on the unconventional coaching staff who have helped transform the San Francisco Giants into a powerhouse and disrupted a sport that traditionally hasn’t taken well to outsiders. The Giants were the surprise of the National League last season, winning 107 games and ending the Los Angeles Dodgers’ streak of eight consecutive division titles. It’s been more of the same early in 2022, with San Francisco again looking like a serious World Series contender. 

The Giants accomplished all of this while being guided by a group of coaches unlike any other in the history of baseball—and their unexpected success is forcing the industry to rethink just who is qualified to wear a major-league uniform.

“We hire a staff with the mind-set that a more diverse coaching staff gives us a better chance to win,” Giants manager Gabe Kapler said. “If you want to have a wide variety of human beings for players to connect with, you can’t have them all cut from the same cloth.”

That way of thinking would’ve been considered radical for much of the last 150 years. Conventional wisdom has long dictated that in order for a coach to gain the respect of players, he needed to have professional playing experience. “The longer you were around,” veteran pitcher Alex Wood said, “the more credibility you had.”

To Kapler, that attitude never made much sense, especially in the era of analytics. The data revolution that has changed the game has largely been driven by outsiders in the front office, so bringing people with unorthodox backgrounds into the clubhouse seemed like a natural progression. 

This week's interesting finds

14th annual Cymbria Investor Day

It's only been two days since we hosted our 14th annual Cymbria Investor Day, but we wanted to share a video of the insights from CEO Patrick Farmer and the Investment team for those who couldn't attend. Discussion focused on finding businesses they believe can double in value over the next five to seven years. There are examples of buying companies using proprietary insights that haven't yet been recognized by the market. As well as some of the unique investments that could happen only due to the flexibility afforded by Cymbria's unique structure.

Cymbria's 2022 spring collection

If you're reading this, then you understand the importance of diversity. This is why we've brought you a tastefully eclectic set of merchandise that allows you to show your appreciation for our investment approach without hurting fees by asking us for freebies. There's an updated book, a t-shirt, mugs (both for those staying in one place and on the go) and even...honey? We hope you'll "bee" as excited as we are about them.

This week in charts

Wheat exporters

India bans most wheat exports, adding to concerns of global food insecurity

India, the world’s second-largest wheat producer, has banned exports of the grain with some exceptions, a move that could compound a worldwide shortfall worsened by the war in Ukraine and exacerbate an already dire forecast for hunger across the globe.

The war has interrupted wheat production in Ukraine and Russia, which are major suppliers. Fighting and blockades in the Black Sea have disrupted transport of the grain. And poor harvests in China, along with a heat wave in India and drought in other countries, have further snarled global supply.

India has about 10 percent of the world’s grain reserves, according to data from the United States Department of Agriculture, a large surplus resulting from its heavy subsidizing of its farmers. It has been seen for months as a country that could help make up for global supply shortages.

But agricultural experts said that an ongoing heat wave and rising temperatures could affect the harvest this year, which could be a factor in why the government changed course and imposed a ban on the exports.

The Commerce Ministry notice on Friday said that wheat exports were immediately banned, with some exceptions, because a sudden spike in the crop’s price had threatened India’s food security. Limited exports will be allowed at the request of individual governments whose own food supply is vulnerable, the notice said.

OPEC+ Misses Production Target By Whopping 2.7 Million Bpd

OPEC continues to undershoot its oil production target in the OPEC+ deal, failing in April to boost output as much as required by the agreement.

All 13 members of OPEC – including Iran, Libya, and Venezuela exempted from the OPEC+ deal – saw their production rise by just 153,000 barrels per day (bpd) collectively, to 28.648 million bpd in April, the organization’s Monthly Oil Market Report (MOMR) showed on Thursday.

The top three OPEC producers, Saudi Arabia, Iraq and the UAE, saw the highest increases in their respective oil production last month, while output in Libya plunged by 161,000 bpd to below 1 million bpd, at 913,000 bpd, according to OPEC’s secondary sources.

Libyan oilfields and terminals have again been under blockade in recent weeks amid protests, clashes, and disputes over the distribution of oil revenues in the country with two rival governments, with incumbent Prime Minister Abdul Hamid Dbeibah refusing to step down for newly sworn-in eastern Prime Minister Fathi Bashaga.

Excluding Libya and the other two producers exempted from the OPEC+ deal, the ten OPEC members bound by the agreement saw their collective production at 24.464 million bpd in April, OPEC’s figures showed. This compares with a collective quota for OPEC-10 of 25.315 million bpd for last month.

The gap is more than 800,000 bpd, mostly due to severe underperformance from African members Angola and Nigeria, which have been pumping 300,000 bpd-400,000 bpd below quotas each, for months, due to a lack of investment and capacity.

Podcast “Masters in Business: Boaz Weinstein on Credit Investments” (Duration: approximately 84 min)

Bloomberg Radio host Barry Ritholtz speaks with Boaz Weinstein, who is founder and chief investment officer of Saba Captal Management. Prior to launching Saba as an independent firm in 2009, Weinstein was co-head of global credit trading at Deutsche Bank, where he founded Saba Principal Strategies as a proprietary trading group in 1998. Weinstein first came to public notice as the fund manager on the other side of the derivatives trade from the London Whale, which ultimately cost JPMorgan Chase & Co. losses of at least $6.2 billion in 2012.

This week’s fun find

Imitate, then Innovate

It’s counterintuitive, but the more we imitate others, the faster we can discover our unique style. In the entertainment world, there’s a long lineage of comedians who tried to copy each other, failed, and became great themselves: Johnny Carson tried to copy Jack Benny, but failed and won six Emmy awards. Then, David Letterman tried to copy Johnny Carson, but failed and became one of America’s great television hosts.

Reflecting on his own influences, Conan O’Brien said: “It is our failure to become our perceived ideal that ultimately defines us and makes us unique.” 

Modern creators do the opposite though. They refuse to imitate others and stubbornly insist on originality, which they hold as their highest virtue — even when it comes at the expense of quality. They might deny their ambition toward originality when you talk to them, but they reveal it in their actions. In general, creators spend much less time imitating their heroes than they do trying to make something new. I call it the Originality Disease — a pervasive plague that makes creators feel scared to imitate other people’s styles.  

The problem may be worst among writers, who speak about their craft with levels of mystery that are usually reserved for the numinous. Writers would be smart to learn from other fields, though. 

Where does this Originality Disease come from? 

I have three explanations. 

The first is pretty clear: misunderstanding inspiration. Some of the juiciest inspiration comes from admiring (and maybe even reverse-engineering) other people’s work. But many people think inspiration needs to strike out of thin air, like a bolt of lightning. They fear that the Muses of novelty won’t visit them if their mind is contaminated with what’s been done before. In blind pursuit of originality, they avoid studying anything that’s come before them out of a fear of tainting their minds with the stain of influence. Rather than standing on the shoulders of people who’ve come before them, they look within themselves for a breakthrough idea.

The second is more subtle: fetishizing originality. I think this part of the disease comes from academia, where people do study those who’ve come before them—but only so they can do something different. Since scholarly journals insist on original contributions, academics are incentivized to study things nobody else is studying. The challenge, though, is that originality and usefulness are not the same thing. I worry that academics are so focused on checking the “nobody’s ever written about this before” box that they sometimes forget to make useful contributions to human knowledge. 

The third is pure conjecture: self-obsession. Perhaps our Originality Disease has its roots in Freud’s work, which still underpins our model of human psychology. To the extent that ideas like the ego and the subconscious seem trivial, it’s only because they’ve been so influential. Freud’s ideas basically went viral, and as they did, made their way to Salvador Dalí who led Europe’s surrealist painting movement. Instead of trying to capture reality like the Realists or interpret it like the Impressionists, the Surrealists went inwards and painted the landscape of their own consciousness. They rejected logic and reason in favor of dream-inspired visions. 

This week's interesting finds

This week in charts

Price of used cars

Big Investors Reconsider Oil and Gas Upside as Supplies Remain Tight

Big investors are starting to warm to energy.

For more than five years, endowments, pension funds and other so-called institutional investors shunned the oil-and-gas industry because of big losses and concerns about climate change.

Now some investors are coming back as energy emerges as the stock market’s best performer—the S&P 500 Energy Sector Index is up 40% so far in 2022—and projections that the world might face shortages in the years ahead suggest continued near-term upside for those willing to bet on fossil-fuel producers

The lack of new investment is one reason oil and gas supplies haven’t kept up with surging demand and the loss of output caused by the Russian invasion of Ukraine.

The short-term factors and a growing realization that new supplies will be crucial, even as the world transitions to cleaner energy sources, have some investors reconsidering their aversion to energy. 

New money could boost production, though there are other factors limiting supply. And any increase in investments will likely be modest, as some groups such as college endowments or public pension funds continue to stay away.

Last year, when the Houston private-equity firm Quantum Energy Partners met with big investors ahead of a potential new fund launch, it heard concerns that the transition to cleaner energy sources meant there would be little need for new oil and gas development, says Wil VanLoh, Quantum’s founder.

After the Ukraine war began and European nations started feeling pressure to locate new energy supplies, Quantum began fielding calls from many of those same investors—they were expressing interest in oil and gas once again. The firm recently began fundraising for a new fund with a target size of $5.6 billion. Quantum also plans to start an energy-credit fund in the midst of growing interest from investors.

“The difference in tone and receptivity since the Russian invasion has been amazing—it has been a 180-degree change in three months,” says Mr. VanLoh. “Last year, we had to convince people the oil and gas business would be around in five to seven years.”

U.S. East Coast Diesel Supply Is Running on Fumes

The horizon south of the Statue of Liberty is interrupted by the silhouettes of several oil-tank farms. New York harbor is the home of Wall Street and financial wizardry, but it’s also the place where old-school oil traders still buy and sell refined petroleum products the old way, by the gallon, setting benchmark prices. In the 1990s, Morgan Stanley’s Olav Refvik controlled so many of those tank farms that he was known as “the king of New York harbor.” If Refvik was still trading today, he would find his tanks nearly dry: Diesel, the harbor’s most basic fuel, is very scarce.

Last week, East coast inventories of diesel plunged to the lowest seasonal level since government records started more than 30 years ago. The shortage caused a crisis in the diesel market, sending wholesale and retail diesel prices to an all-time high. Diesel is today more expensive in America that it was in 2008, when the price of crude oil surged to nearly $150 a barrel compared with little more than $100 currently. 

Diesel is the workhorse of the global economy. It’s used everywhere to keep trucks, tractors, freight trains and factories moving. And its ubiquity means the increase in its price will exacerbate global inflationary pressures.

From central bank interest rates to supermarket prices, a lot hinges on diesel. On Tuesday, average U.S. retail diesel prices posted the fifth-consecutive fresh daily record, surging above $5.3 per gallon, up nearly 75% from a year ago. The price spike is worse on the Eastern seaboard, where diesel retails now for more than $6 per gallon, nearly double 2021’s price.

Netflix Tells Employees Ads May Come by the End of 2022

Netflix could introduce its lower-priced ad-supported tier by the end of the year, a more accelerated timeline than originally indicated, the company told employees in a recent note.

In the note, Netflix executives said they were aiming to introduce the ad tier in the final three months of the year, said two people who shared details of the communication on the condition of anonymity to describe internal company discussions. The note also said Netflix planned to begin cracking down on password sharing among its subscriber base around the same time, the people said.

Last month, Netflix stunned the media industry and Madison Avenue when it revealed that it would begin offering a lower-priced subscription featuring ads, after years of publicly stating that commercials would never be seen on the streaming platform.

But Netflix is facing significant business challenges. In announcing first-quarter earnings last month, Netflix said it lost 200,000 subscribers in the first three months of the year — the first time that has happened in a decade — and expected to lose two million more in the months to come. Since the subscriber announcement, Netflix’s share price has dropped sharply, wiping away roughly $70 billion in the company’s market capitalization.

This week’s fun finds

Reading Better

One of the benefits of reading is that it allows you to master the best of what other people have already figured out. This is only true if you can remember and apply the lessons and insights from what you read.

Levels of Reading

Reading the words on the page (or screen) is the easy part. We learned how to do this in elementary school. The problem is this is the only way we learned to read.

Tailoring how you read to what you read makes more sense. Not everything needs to be read with the same intensity. Some books only deserve a skim, while others deserve your complete attention. How much effort you put in relates to what you’re reading and why you’re reading it.

The Levels of Reading offer four different approaches to reading (from easiest to hardest). Most of our time will be spent between levels 2 and 3.

1. Reading to Entertain — The level of reading taught in our elementary schools.
2. Reading to Inform — A superficial read. You skim, dive in and out, and get a feel for the book and get the gist of things.
3. Reading to Understand — The real workhorse of reading. This is a thorough reading where you chew on things and digest them.
4. Reading to Master — If you just read one book on a topic odds are you have a lot of blind spots in your knowledge. Synoptical reading is reading a variety of books and articles on the same topic, finding and evaluating the contradictions, and forming an opinion.

The Blank Sheet

The single biggest change you can make to getting more out of the books you read is using the blank sheet method. Over the years I’ve tested multiple approaches and this one works best for simplicity and effectiveness — it will 10x your comprehension overnight.

Here’s how it works:

1. Before you start reading a new book, take out a blank sheet of paper. Write down what you know about the book / subject you’re about to read — a mind map if you will.
2. After you finish a reading session, spend a few minutes adding to the map with a different color.
3. Before you start your next reading session, review the page.
4. When you’re done reading, put these ‘blank sheets’ into a binder that you periodically review.

The blank sheet primes your brain for what you’re about to read and shows you what you’re learning. When you first start with a blank sheet, you’re forced to search your memory and put on paper what you know (or what you think you know) about a subject. As you read, you literally see that knowledge grow as you add new knowledge to the foundation. Often, you’ll even remove things you thought you knew.

Reviewing what you knew about a subject, as well as what you learned before a reading session not only improves memory and recall but helps connects ideas. Most of the early connections come from putting the authors’ raw material onto your foundation.

When in Rome: The Ancient History of Traditional Shaving

Despite our common view of our Stone Age ancestors having big, full, poorly maintained beards, they actually are the ones who started out our shaving journey. It is believed that Stone Age men started shaving 100,000 years ago by using clam shells like tweezers and pulling out their beard hair. About 60,000 years ago, man discovered shaving, and started using sharpened obsidian and clam shells to shave their beards.

Ancient Rome

Roman men took a liking to shaving with a passion, and Julius Caesar is reported to have had his beard hair plucked out with tweezers (which still sounds like a step forward from rubbing a pumice stone all over your face).

Young Roman men would celebrate their first shave with a party as a way to welcome in adulthood. The novacila was used for shaving, the pumice stone made an appearance again to help rub off stubble, and afterwards, massage oils and perfumes would be used to soften the skin.

Ancient Egypt

Egypt is hot. Very hot. And living in that kind of heat with long hair can be particularly uncomfortable (as anyone with long hair in high summer already knows). According to Herodotus, all Egyptians, men and women, lower and upper classes, would shave their entire bodies from top to toe.

If this is the case, why don’t we see depictions of completely bald Egyptians in their art? Going completely bare-headed was considered to be a social faux pas, and of course, is not very comfortable with the desert sun beating down on your uncovered head. Having hair was still fashionable, just not very practical. So the Egyptians would craft fake wigs, and even beards, to wear.

Ancient Greece

Take a look at Ancient Greek busts, and you’ll see that beards abound. Greeks were extremely proud of their beards and put a lot of importance on them. They would only cut their beards during mourning periods, and if you lost your beard, it was considered shameful.

That all changed when Alexander the Great came along, though. He encouraged his soldiers to cut their beards so that they couldn’t be grabbed by the enemy if it came to hand-to-hand combat. Alexander’s influence quickly made shaving more fashionable, and razor technology took a leap forward. Shaving razors were soon made out of copper or iron and looked much closer to the straight razors we know today.

This week's interesting finds

This week in charts

Cloud software index now back to just below pre-covid averages

China meets banks to discuss protecting assets from US sanctions

Chinese regulators have held an emergency meeting with domestic and foreign banks to discuss how they could protect the country’s overseas assets from US-led sanctions similar to those imposed on Russia for its invasion of Ukraine, according to people familiar with the discussion.

The internal conference, held on April 22, included officials from China’s central bank and finance ministry, as well as executives from dozens of local and international lenders such as HSBC, the people said. The ministry of finance said at the meeting that all large foreign and domestic banks operating in China were represented. 

They added that the meeting began with remarks from a senior finance ministry official who said Xi’s administration had been put on alert by the ability of the US and its allies to freeze the Russian central bank’s dollar assets. 

The officials and attendees did not mention specific scenarios but one possible trigger for such sanctions is thought to be a Chinese invasion of Taiwan, which China claims as its territory and has threatened to invade if Taipei refuses to submit to its control indefinitely.

China Pledges Stronger Policy Support for Economy, Markets

China’s cabinet vowed to stabilize the economy and moved to reassure financial markets, as the nation of 1.4 billion people battles a Covid surge that’s sent the business hub of Shanghai into a staggered lockdown.

A State Council meeting led by Premier Li Keqiang on Wednesday called on the nation to prioritize stable growth and avoid measures that harm market expectations. Contingency plans should be drafted to deal with possible greater uncertainties, it added, according to state broadcaster CCTV.

The cabinet acknowledged that downward pressure on the domestic economy was increasing but said China should stick to its annual economic growth target of about 5.5%.

China’s economy came under further pressure in March, as cities and provinces-imposed lockdowns and tightened Covid controls to contain infections. A deepening slump in the property market also continues to weigh on growth. 

Top financial leaders committed earlier this month to easing regulatory crackdowns, support property and stimulating the economy through monetary policy. However, few concrete steps have been taken. Economists have pushed back their forecast of another cut in banks’ required reserves to the second quarter. A reduction in the interest rate on one-year policy loans is also expected in that quarter, a Bloomberg survey shows.

Amazon Fuels North America’s Most Severe Warehouse Shortage

Finding warehouse space around Toronto has never been harder, and the e-commerce fueled shortage is disrupting businesses and threatening the broader economy.

With the pandemic driving a belated embrace of online shopping in Canada, Amazon.com Inc. has been gobbling up warehouses. That’s pushed the vacancy rate in the Toronto area down to just 0.5%, making it the tightest market in North America, if not the world.

Logistics consultant Richard Kunst is seeing the fallout first hand, as companies try to fill orders and move merchandise. One client, a food manufacturer, has been forced to pack roughly a third of its orders in a parking lot. Others are so desperate for warehouse space Kunst has advised they ask local farmers if they can keep goods in their fields.

“It’s cheaper to go to a farmer and say, ‘tell me how much you’re going to make off a crop on a five acre lot, and I will pay you that, plus 10%, in order to drop containers here,’” Kunst said.

While the warehouse shortage is most acute in Toronto, other major cities in Canada aren’t far behind, with Victoria, Vancouver and Montreal rounding out North America’s top four tightest warehouse markets, according to real estate brokerage Colliers International Group Inc.

The single biggest driver of this squeeze has been Amazon.com. The pandemic has seen the e-commerce giant increase its logistics footprint by nearly 12 million square feet across nine major Canadian markets since the end of 2019, according to Colliers.

That includes taking a quarter of all the space that came up for lease in Toronto last year, while boosting its footprint 10 times in Montreal and quadrupling in Ottawa.

With new warehouse supply lagging the soaring demand, the brokerage CBRE has predicted Canada could run out of space entirely by the end of the year. That’s starting to raise alarms that Canada’s overall economy could be dragged down, just as it starts to recover from the pandemic.

This week’s fun finds

20 Years Married: How ‘My Big Fat Greek Wedding’ Became a Smash Hit

On the long list of movies that don’t get made anymore, the romantic comedy is typically at the top. In technical terms, this isn’t strictly true; as the mid-budget film has been driven out of the multiplex to free space for blockbusters and IP, it’s found a foothold on streaming services eager for couch-friendly content. The Netflix rom-com is practically a category unto itself, delivering standbys like Set It Up, To All the Boys I’ve Loved Before, and Always Be My Maybe. This past Valentine’s Day, viewers had their pick between I Want You Back, on Amazon Prime Video, and Marry Me, the Jennifer Lopez vehicle that paired its theatrical run with a day-and-date release on Peacock.

But even as the romantic comedy survives, it’s dwindled from its peak. That heyday is typically associated with established celebrities like Julia Roberts or Sandra Bullock and the star vehicles built on their proven appeal. (Today, Bullock’s The Lost City is a charming throwback; in 1998, it’d be just another week at the box office.) Yet the most financially successful rom-com of all time—the film that draws the greatest contrast between the genre’s past as a cultural juggernaut and its present as a sweet diversion—didn’t have a single star in its cast. It wasn’t produced by a major studio. It never even hit no. 1 at the box office, despite spending five months playing in wide release. At the time, the stupendous success of My Big Fat Greek Wedding was extraordinary. Today, it’s practically unthinkable.

“The story was to be told through Ian and Toula’s eyes, but it was about the family—the smothering, ever-suffocating, loving family,” Vardalos tells The Ringer. Because the conflict was largely internal, she felt free to cut down on more conventional, external sources of strife. “I wanted very, very much to not follow the standard romantic comedy formula of ‘he cheats on the girl and wins her back,’” she explains. “I didn’t want them to break up, because the only villain in the screenplay was the world against Ian and Toula.”

Structural quirks aside, My Big Fat Greek Wedding nonetheless became the high-water mark for the romantic comedy as a commercial force, eventually grossing more than $350 million worldwide on a $5 million budget. The film’s triumph wasn’t entirely commercial; Vardalos received an Academy Award nomination for the screenplay alongside such luminaries as Todd Haynes, Alfonso Cuarón, and eventual winner Pedro Almodóvar. Greek Wedding would ultimately yield a short-lived sitcom on CBS, which fizzled after just seven episodes, and a sequel in 2016, to modest success. (The premiere was sponsored by Windex.) The extended afterlife wasn’t what anyone anticipated when My Big Fat Greek Wedding first hit theaters, 20 years ago today.

Can Virtual Reality Help Ease Chronic Pain?

After an hour-and-a-half bus ride last November, Julia Monterroso arrived at a white Art Deco building in West Hollywood, just opposite a Chanel store and the Ivy, a restaurant famous for its celebrity sightings. Monterroso was there to see Brennan Spiegel, a gastroenterologist and researcher at Cedars-Sinai who runs one of the largest academic medical initiatives studying virtual reality as a health therapy. He started the program in 2015 after the hospital received a million-dollar donation from an investment banker on its board. Spiegel saw Monterroso in his clinic the week before and thought he might be able to help alleviate her symptoms.

Monterroso is 55 and petite, with youthful bangs and hair clipped back by tiny jeweled barrettes. Eighteen months earlier, pain seized her lower abdomen and never went away. After undergoing back surgery in September to treat a herniated disc — and after the constant ache in her abdomen worsened — she had to stop working as a housecleaner. Eventually, following a series of tests that failed to reveal any clear cause, she landed in Spiegel’s office. She rated her pain an 8 on a 10-point scale, with 10 being the most severe.

Chronic pain is generally defined as pain that has lasted three months or longer. It is one of the leading causes of long-term disability in the world. By some measures, 50 million Americans live with chronic pain, in part because the power of medicine to relieve pain remains woefully inadequate. As Daniel Clauw, who runs the Chronic Pain and Fatigue Research Center at the University of Michigan, put it in a 2019 lecture, there isn’t “any drug in any chronic-pain state that works in better than one out of three people.” He went on to say that nonpharmacological therapy should instead be “front and center in managing chronic pain — rather than opioids, or for that matter, any of our drugs.”

Virtual reality is emerging as an unlikely tool for solving this intractable problem. The V.R. segment in health care alone, which according to some estimates is already valued at billions of dollars, is expected to grow by multiples of that in the next few years, with researchers seeing potential for it to help with everything from anxiety and depression to rehabilitation after strokes to surgeons strategizing where they will cut and stitch. In November, the Food and Drug Administration gave authorization for the first V.R. product to be marketed for the treatment of chronic pain.

This week's interesting finds

 This week in charts

Year-to-date Fixed-Income returns

Commodity trading ranges 

U.S. household net worth

Average 30-year fixed rate mortgage in the U.S.

A New Texas Oil Boom Is Coming, Finally

In the two months since Russia invaded Ukraine and oil prices shot up to more than $100 a barrel, the perplexing question for the Texas energy industry has been: Why isn’t anyone drilling? The answer initially was that the oil business has become beholden to a new group of investors who have no interest in strapping in for a roller-coaster ride. They ponied up their money for a nice calm turn on the kiddie train. This dynamic still holds, but evidence is emerging that the recent fossil fuel boom may stick around for a while. That could melt the frosty resistance to deploying more rigs—if only the exploration companies can find enough workers and parts to make that happen.

The most recent sign of the new interest in upping spending on production has come from Olivier Le Peuch. Le Peuch is the CEO of Schlumberger, the world’s largest oil-field service company. When anyone from Chevron to a one-rig family company wants to work on a well, they call Schlumberger, giving the Houston company a wide-angle view of energy trends.

Last week, Le Peuch, while announcing a surge in business and profits, said the Russian invasion had spurred interest by companies and countries in having a more secure and diverse supply of oil and gas. That means a lot of energy investment can be expected to open new producing areas and boost the output of existing areas. Overall, he said the industry is entering an “exceptional” period marked by “a cycle of higher magnitude and duration than previously anticipated.” In other words, there will be a boom—and it will be stronger and longer than expected. This message will likely be reinforced later this week when Exxon reports its first-quarter earnings, which it has hinted could feature record-breaking profits.

The Permian Basin Oil Field Is Running Out of Workers, Materials—and Cash

MIDLAND, Texas—America’s most prolific oil field is running out of the workers, cash and equipment needed to produce more oil.

In the Permian Basin, the sprawling oil-rich region in West Texas and southeastern New Mexico, drillers are facing long delays and steep competition for everything from roughnecks to steel to fracking pumps.

The region is the only place where U.S. crude production is expected to grow significantly this year, and the Biden administration is hoping production there can help alleviate high prices at the pump. But mounting supply-chain crunches are putting a ceiling on how much more frackers can produce there, said energy executives and analysts, despite the highest oil prices in roughly seven years.

Unlike the last time oil fetched about $100 a barrel, the vast service industry of steel suppliers, drilling-rig operators and fracking companies that develop shale producers’ wells is coming into the current price cycle malnourished. Service companies mothballed large fleets of equipment during the pandemic and investors remain wary of the industry, leaving companies short of capital and reluctant to invest in new fracking fleets and drilling rigs.

U.S. drillers are expected to raise domestic oil output by about 8% from last year to about 12.6 million barrels a day by December, according to the Energy Information Administration, and analysts say most of that growth will come from the Permian. By contrast, in 2014, the last time oil prices topped $100 a barrel, U.S. production grew by 1.6 million barrels a day, nearly 20% over the year, according to the EIA.

This week’s fun finds

4 ways to hack your memory (video ~ 4 min) 

• Self-testing is one good way to better remember information. Think of memory as a two-way street. If we only put information in, it is like traveling in only one direction. Recalling information requires us to go the other way.
• Spacing out studying is better than cramming. If you need seven hours to prepare for an exam that is one week from today, study one hour per day rather than all seven hours the night before.
• Context matters for memory recall. If you study while eating Sour Patch candy, do the same thing while taking the test.

Romanian Philosopher Emil Cioran on the Courage to Disillusion Yourself

“People who shut their eyes to reality simply invite their own destruction, and anyone who insists on remaining in a state of innocence long after that innocence is dead turns himself into a monster,” James Baldwin wrote in a staggeringly prescient piece from 1953. And yet shutting our eyes is how we humans have coped, again and again, with our own discomfort and helplessness in the face of inconvenient realities — indeed, it could be said that our existential eyelids evolved precisely for this survivalist function, maladaptive and supremely adaptive at the same time. Virginia Woolf articulated the intoxicating chill of this truth: “Illusions are to the soul what atmosphere is to the earth. Roll up that tender air and the plant dies, the colour fades.”

Our illusions are self-cast enchantments that sever our contact with truth by paralyzing what Bertrand Russell called “the will to doubt” — the vital moral faculty that protects us from manipulation and from the credulity Russell considered our “intellectual original sin.” It is a vicious cycle of delusion — one which W.H. Auden described in his incisive meditation on enchantment: “We must believe before we can doubt, and doubt before we can deny… The state of enchantment is one of certainty. When enchanted, we neither believe nor doubt nor deny: we know, even if, as in the case of a false enchantment, our knowledge is self-deception.”

To break the spell of self-deception, then, is one of the greatest moral triumphs a human being — or a society, or a civilization — can claim.

This week's interesting finds

An EdgePoint ESG update

In honour of Earth Day, we are excited to announce EdgePoint has fully offset the emissions of our operations through the purchase of two carbon offsetting projects, after quantifying our carbon footprint. With the assistance of external emission consultants, we identified all direct and indirect emission sources within our firm (Scope 1, 2 and select Scope 3). 

Our main motivation was to improve our understanding of our emissions and strategize ways to reduce our footprint.

As we look ahead, we will continue to offset EdgePoint’s emissions on an annual basis through a mix of energy efficiency and carbon offsets.

Stay tuned for more information on our upcoming Sustainability Report. 

*****

We are excited to announce we officially became a member of the International Association for Emissions Trading (IETA). The IETA is a non-profit organisation created in 1999 to establish a functional international framework for trading in greenhouse gas emission reductions. IETA’s over 200 members globally seeks to develop an emissions trading system that results in real and verifiable greenhouse gas emission reductions, while balancing economic efficiency with environmental integrity. Claire is EdgePoint’s active member with IETA and will be spearheading our involvement with IETA various members and working groups. 

“IETA has been a leading voice in Canada and globally on carbon pricing and climate finance for nearly two decades. As members, we are excited to have the opportunity to participate in IETA’s various working groups that develop proposals to increase efficiency, transparency, stability, and effectiveness of carbon markets” – Claire Thornhill

EdgePoint commentaries

Why we can stay calm in the face of uncertainty – 1st quarter, 2022
This quarter, Investment team member George Droulias discusses why our investment approach helps us stay calm during uncertain times.

Earning our wings - 1st quarter, 2022
This quarter, portfolio manager Frank Mullen talks about the importance of knowing what you own – not just when to sell, but when to add.

This week in charts

US TV Streaming time

Tech Wage Inflation Puts Pressure on Companies

Wage inflation in the technology sector is accelerating, pressuring companies to boost compensation for key roles by 20% or more as they compete for a limited pool of workers skilled in areas such as cloud computing and data science.

There is no single source of data on all tech jobs, but it is clear from a range of market analysts and executives that demand for labor in the tech sector is on the rise. During the first quarter, U.S. employers posted 1.1 million tech jobs, an increase of 43% from a year earlier, according to information technology trade group CompTIA.

Demand for workers to fill those jobs has been surging since the pandemic began, prompting companies to turn to remote work and other digital initiatives. Inflation at a 40-year-high and the war in Ukraine disrupting tech and outsourcing hubs in Europe also are pushing compensation for tech workers higher.

The tech roles in greatest demand include cloud computing architects, data scientists and modelers, and machine learning experts. Staffing firm Mondo, an Addison Group company, said at the high end of the compensation range, cloud architects saw average salary increases of 25% between 2020 and this year, while average salaries for software engineers rose 11% over the same period.

The rising cost of hiring and retaining top tech talent is creating challenges for chief information officers and other tech leaders and has even caught the attention of chief executive officers. “It’s stunning,” said Michael Burns, co-founder and executive chairman of iDEAL Semiconductor Devices and managing director of the Murray Hill Group venture capital and private-equity firm. Mr. Burns said wage increases in the tech sector can top 20%, and in hot markets such as Austin, Texas, they can hit 30%.

Mosaic Forest halts logging on some of its timberlands as it opts to sell carbon credits

One of Canada’s largest timber companies is setting aside 40,000 hectares of British Columbia coastal forests – woodlands three times larger than the city of Vancouver – after concluding it can make more money from letting trees grow and selling carbon credits than from logging.

On Wednesday, Mosaic Forest Management announced it will defer the harvesting of “old forests” on Vancouver Island and Haida Gwaii for at least 25 years, opting instead to sell nature-based carbon credits to companies that want to offset a portion of their greenhouse gas emissions. The Vancouver-based company is halting logging on 7 per cent of its timberlands, calling it the largest project of its kind in Canada.

Mosaic estimates the program, which it calls the BigCoast Forest Climate Initiative, will generate between $100-million and $300-million, based on current prices for carbon credits. In an interview, Mosaic chief forester Domenico Iannidinardo said: “We expect to make at least as much from the BigCoast initiative as we would earn from harvesting these forests.”

Mosaic oversees forest holdings for two B.C. companies – TimberWest Forest Corp. and Island Timberlands L.P. – which are owned by two pension plans: the British Columbia Investment Management Corp. and the Public Sector Pension Investment Board.

“The BigCoast Forest Climate Initiative brings high-quality, large-scale, nature-based carbon credits to a growing international market,” Mosaic chief executive officer Jeff Zweig said in a news release. “The initiative generates economic value, contributes to the global effort to reduce carbon emissions, and benefits our local partners.”

This week’s fun finds

Envy the optimist, not the genius

The modern world is said to over-reward academic intelligence, and so it does. Of the most successful people I know, though, none are the very smartest in their organisations, much less their generational cohorts. Beyond a certain cognitive level, another trait seems to become more decisive. “Optimism” is the crispest word for it, but it gives a banal ring to what is a complex and eerie mental gift: the sifting for good news among the bad, the willingness to magnify and even invent some, the reinterpretation of adverse events as what one had wanted all along. It can border on self-deception. But it also gets people through the night. And the most underrated component of success is continuing to show up.

Whether optimism is genetic or learned, it is, I am sure — in a way I wasn’t when I hadn’t met any high-fliers — worth more than extreme intelligence. Few executives or entrepreneurs I have ever known have said anything brilliant or novel. If an enviable attribute comes across, it is an almost constitutional inability to mope. This, as the Gordon Gekko picture of business misses, is the commercial psyche: not the seeking of advantage in everything, but the seeing of it.

Optimism is, in part, what Oliver Wendell Holmes had in mind when he called Franklin Roosevelt a “second class intellect” with a “first class temperament”. It should be obvious that he meant it as praise. But it is almost as clear that, forced to choose, most 21st-century tiger parents would wish the inverse traits on their children. It is hard to fault their logic. Intellect is more measurable and certainly more coachable than temperamental buoyancy. The worldwide struggle for places at top universities is Darwinian, if not Hobbesian. Still, as I see friends enter the hot-housing phase of white-collar parenthood, I sense they overrate the marginal returns to brain power beyond a certain (admittedly high) point.

Benefits of Starting Your Day with a Cold Shower

Hydrotherapy is simply the use of water as a natural medicine or treatment. Leveraging water in its various forms, such as ice or steam, and at various temperatures, from ice cold to practically scalding, has been used to treat various maladies since the beginning of time. 

Research published in the North American Journal of Sciences (NAJS) revealed some interesting findings regarding the consistent use of cold showers as a form of therapy. For one, cold showers result in a significant increase in dopamine concentrations. (Dopamine is a neurotransmitter that regulates learning, attention, emotional responses, and physical movement.)

In addition, recent research has found a link between low dopamine levels and the brain’s ability to form new memories, prompting additional research into dopamine’s impact on Alzheimer’s disease. The correlation between cold showers and increased dopamine has the potential to positively impact natural approaches taken toward preventing cognitive decline.

Another benefit of cold showers reported by NAJS is the reduction of cortisol production, also known as the dreaded stress hormone. When our cortisol levels are at their best, this hormone plays a role in regulating our metabolism, reducing inflammation in the body, balancing the salt and water equation within our bodies, maintaining healthy blood pressure, and helping with memory formation.

 But when cortisol levels are excessive, it often leads to belly fat, high blood pressure, and mood swings which show as anxiety, depression and/or irritability. Additional clinical research studies affirmed that cold showers not only decreased inflammation in study participants but also showcased two additional benefits. Study participants reported significant analgesic effects as well as substantial benefits associated with improved sleep patterns.

But the scientifically-reported benefits of cold showers don't end there. The skin, which is the body's largest organ, is laden with cold receptors. When the skin is shocked by the sensation of cold water, it sends an astounding number of electrical impulses from the peripheral nerve endings to the brain, a process that has been shown to decrease depressive symptoms. 

 Most notably is a study conducted in the Netherlands with more than 3,000 participants which revealed that consistently ending a shower with 30+ seconds of cold water resulted in a 29% reduction of self-reported sick leave from work.

This week's interesting finds

This week in charts

Cost of raising a child

Home prices (indexed at 100) 

Chinese government bonds 

Measure Twice: Sizing Europe’s Natural Gas Crisis

In this analysis, we’ll align the natural gas flows presented to a consistent measurement of billion cubic feet per day (bcf/d). Apologies to our non-US Doomers, but US supply will likely play a key role in weaning Europe off Russian supply, so we’re aligning to the unit you’ll likely see referenced regularly in the coming months.

Thanks to the shale revolution, the US now produces approximately 96 bcf/d of natural gas. Of that amount, nearly 12 bcf/d is exported via newly constructed LNG terminals. Said another way, Europe’s Russian natural gas imports represent the equivalent of 125% of the entire current US LNG export capacity. This is a significant number.

Until recently, the US had six major LNG export facilities running at or above nameplate capacity. On March 1, 2022, Venture Global LNG's Calcasieu Pass facility in Louisiana shipped its first product, establishing a seventh hub. That project will continue to build out more trains, while Golden Pass, a 70:30 joint venture between QatarEnergy and ExxonMobil, is slated to come online in 2024. In all, these projects should add approximately 3.2 bcf/d of additional export capacity by 2025. There are several other projects at various stages of development, and assuming price differentials between the US and the rest of the world remain elevated, it is safe to assume these will eventually get built. Critically (and finally!), the industry is experiencing a newly warmed reception from the Biden administration.

According to data from S&P Global, total LNG exports amounted to approximately 377 million metric tonnes in 2021. To convert this into our bcf/d framework, there are 48.7 billion cubic feet in a million metric tonnes and still 365 days in a year, making the global LNG export market approximately 50 bcf/d across all sources [(377 x 48.7)/365 = 50 bcf/d].

At a rate of 15 bcf/d, Europe relies on Russia for the equivalent of 30% of the entire global LNG export market. Given the price elasticity of demand for natural gas, and the fact that countries like Japan, South Korea, China, and India depend heavily on LNG imports to meet their energy needs, the nature of the challenge facing Europe becomes clearer.

Investors Own Nearly a Third of Homes in Major Canadian Markets

People who own more than one home account for about a third of the housing stock in some of Canada’s biggest markets, new government data show, highlighting how the nation’s real estate boom may also be heightening inequality.

Multiple-property owners accounted for 31% of all homes in Ontario as of early 2020 and almost the same share in British Columbia, a report from Statistics Canada said Tuesday. In the smaller east coast provinces of Nova Scotia and New Brunswick, the share was about 40%, the data show. 

A 50% rise in home prices over the last two years has made the cost of housing a political issue in Canada, prompting Prime Minister Justin Trudeau to make home affordability a centerpiece of his government’s 2022 budget. 

But with the supply of houses for sale still near record lows, prices at record highs, and interest rates set to rise, the barriers for new buyers appear to be getting more entrenched. In British Columbia, the top 10% of owners control 29% of the total value of residential properties in the province. 

While Trudeau’s budget focused on curbing the role of professional investors and foreign owners in the housing market, the new government data suggest the majority of multiple-property owners are just individuals or families already living in Canada. Most own just two properties -- usually single-family detached houses -- and are usually located in the same area, suggesting most are buying the second property for rental income not recreation.

Because the figures are from the period prior to the Covid-19 pandemic, they may underestimate multiple homeowners’ current role in the market. More recent data from the Bank of Canada showed multiple-property owners have increased their share of home purchases in that time, while first-time buyers represented a smaller share of the market. 

This week’s fun finds

A Psychology Experiment: Drowning Rats

In a series of experiments that are fairly cruel and unpalatable, yet interesting in their findings, Curt Richter demonstrated that hope is a powerful factor in perseverance. Curt’s experiments focused on how long it takes rats to die from drowning. He conducted his experiments by placing rats into buckets filled with water and seeing how long they survived.

12 domesticated rats were used in Curt’s first set of experiments. The three of these rats initially swam around the surface, then dove to the bottom of the bucket and explored what was there for a while. It lasted a total of two minutes before it drowned. The other nine domesticated rats though did something completely different. After an initial exploration, the predominantly spent their time and the surface. And the just kept swimming. They survived for literally days before eventually succumbing to exhaustion and drowning.

The second set of experiments Curt undertook involved 34 wild rats. Wild rats are excellent swimmers, and these savage and aggressive ones had only recently been caught. Obviously, Curt expected them to fight hard for their survival. Surprisingly though, this wasn’t the case at all. Despite their ferocity, fitness and swimming ability, not one of the 34 wild rats survived more than a few minutes.

Curt reflected on what caused some of the rats to give up and decided that hope a key factor in the willingness to struggle on. The last set of experiments that we’ll focus on were concerned with the impact that introducing hope would have on the perseverance of the rats in buckets. To test his hypothesis Curt selected a new cohort of rats who were all similar to each other. Again, he introduced them into buckets and observed them as they progressed towards drowning. This time though, he noted the moment at which they gave up then, just before they died, he rescued them. He saved them, held them for a while and helped them recover. He then placed them back into the buckets and started the experiments all over again. And he discovered that his hypothesis was right. When the rats were placed back into the water they swam and swam, for much longer than they had the first time they were placed in the buckets. The only thing that had changed was that they had been saved before, so had hope this time.

What This Means in the World of Work

From a work perspective, these findings can be taken to mean that people will remain resilient and will continue to persevere in the face of difficult situations, provided they have hope. What this means for leaders is that people in your team will be strong and resilient, provided that you give them hope of a better future. If that hope is extinguished, your people will stop fighting for you.

The Productivity Secrets of the Air Force’s Disaster Gurus

Hurricane Florence was a day away from drowning the East Coast, but the airmen were at ease. The members of the Air Force’s 621st Contingency Response Wing—a unit designed to respond to natural disasters—could only guess at what was coming. A year earlier, when the United States had been battered by the one-two-three punch of hurricanes Harvey, Irma, and Maria, nearly four hundred men and women from the 621st had deployed to help with the relief effort. If the storm now churning in the Atlantic made landfall with the ferocity of any of those disasters, a lot of the people I saw walking through McGuire Air Force Base would be launching into action within hours. And yet, no one looked rushed or harried. The gloomy weather made everything on the base seem like it was happening in slow motion—the giant arms of the storm had pressed clouds down on all of southern New Jersey, and the air was eerily still.

There was a reason that everyone was so calm: they were prepared. They were so prepared that they could spend hours that autumn day in 2018 showing me around the base without affecting in the slightest their hurricane relief efforts that might soon begin. I had spent a year embedding in different organizations facing high-pressure deadlines, and these airmen were the coolest customers I had encountered yet. What did they know that the rest of us didn’t?

As the unit’s name suggests, the Contingency Response Wing responds to “contingencies,” which can range from earthquakes and hurricanes to the last-second crises that can crop up in a war zone. The 621st can open an airfield capable of landing giant aircraft just about anywhere in the world. And in a disaster, a working airfield can mean the difference between life and death for people needing shelter, food, and water.

On the eve of a storm that would keep the Carolinas underwater for weeks, the unit’s leaders, Chief master Sergeant David Abell and Colonel Ryan Marshall, walked me through their operation. I told them it didn’t look like anyone was about to go hop on a cargo plane and coordinate a wide-reaching relief effort, but they assured me they were poised to do just that. “We’re ready,” Marshall said. “We are designed to go in quick, light, lethal, agile.”

Each mission was essentially unknowable until it arrived, but the commanders were certain they could handle it. There was a lesson here for anyone facing more mundane deadlines, but it took me a while to learn it.