This week's interesting finds

First quarter commentaries are now live! 

This quarter, George Droulias talks about the importance of having “non-obvious” insights, while Frank Mullen discusses how he believes EdgePoint's fixed income approach answers a lot of the questions investors have about the current market environment. 

Alexandra, partner since 2018 (Toronto, Ontario)   

This week in charts 

Investment options   

Mortgages 

Canadian savings 

Toronto housing   

Immigration is back in the US

In the US, immigration accounted for about half of the growth in the working age population between 1995 and 2014 according to Pew Research. Unfortunately, between Donald Trump’s “build a wall” jingoism and the Covid pandemic, there was then a sharp drop in immigrant workers. Over the course of four years, according to a February paper from the San Francisco Federal Reserve, the Trump administration took 472 executive actions aimed at reducing immigration, from increasing immigration enforcement to freezing refugee admissions to moving away from family immigration. Between 2016 and 2019, the number of new permanent residents dropped 13 per cent and the number of student F1 visas declined 23 per cent. 

Covid didn’t help. Many laid-off workers lost visas or simply preferred to ride out the pandemic in their own countries. The two trends together fuelled a strong tightening in the labour markets, according to the San Francisco paper. The authors found that the drop in immigration from 2017 onwards resulted in a 5.5 percentage point increase in the vacancy to unemployment ratio in the US. 

But happily, the recent uptick has resulted in a 6 percentage point reduction to that ratio. More than 900,000 immigrants became US citizens during 2022 — the third highest level on record and the most in any fiscal year since 2008, according to Pew. The largest numbers came from Mexico, India, the Philippines and Cuba, and the highest growth in flows were from Cuba, Jamaica, the Philippines, India and Vietnam. 

That’s great news not just for inflation, but for growth, labour force mobility and entrepreneurship. Immigrants are more likely to be self-employed and start new businesses than native born Americans. They are the heart of the ever-evolving American dream. In my own home town in Indiana, there are Spanish groceries, restaurants, nightclubs and dual language service providers to cater to a community of former migrant farm workers. A couple of generations on, they are increasingly middle-class and represent much of the entrepreneurial zeal in the area. 

Indeed, the Dallas Fed’s research points to the fact that the future of American growth exceptionalism (relative to Europe and other rich countries) may be largely down to the future of immigration. Dallas Fed economists did a long-run projection that included the growth contributions of immigrants and their children. They found that if immigration to the US were to continue at 2016 trend levels until 2060, the labour force would grow 0.45 per cent, eventually creating a 193mn person workforce — given that growth is basically people plus productivity, a larger workforce is key. Conversely, a 30 per cent decline in immigration would mean 180mn workers, and a 50 per cent cut would mean 173mn workers. 

That means millions fewer people to pay taxes, fund entitlements and start new businesses. While immigrants represent 13.6 per cent of the US population, they start a quarter of new businesses. Indeed, a study by the American Immigration Council last year found that 43.8 per cent of the Fortune 500 companies were started by immigrants or their children. Anti-immigration, business-friendly conservatives in particular should think carefully about that figure.   

Frozen food beating fresh as shoppers seek savings 

Frozen food is outperforming fresh in supermarkets at the moment, data from research firm Kantar suggests. 

Frozen chicken, ready meals, pizzas and chips are the most popular items. 

"Frozen food tends to be much cheaper, and there's less waste, so you can see why it's selling well in the cost of living crisis," said retail analyst Ged Futter. 

Overall, frozen food volumes have held steady, even though overall shoppers are buying less. In the 12 weeks to mid-March, total grocery volumes fell by 4% while the volume of frozen goods bought was unchanged, the data shows. 

Mum-of-two Kate Hall from Bromley set up a website, The Full Freezer, to advise people how to save money and reduce waste by using their freezer properly. 

She said she's had much more engagement in the last six months, as living costs soared. 

"People are getting over their fear of frozen food, and that's a good thing," she said. 

"There's much less food waste if you use your freezer effectively, and that's something people are really conscious of right now."   

This week’s fun finds 

Rare Canadian “Supercar” For Sale: The Enterra Vipre 

Exactly how a group of waiters came up with the idea of starting their own car company may be lost to history, but we do know that in the early-to-mid 1980s the waitstaff at the Keg Restaurant on Vancouver’s Granville Island hatched a plan to launch their own custom car brand and call it Cymbria.

Rather than building a car from scratch as Bricklin has done a decade earlier before collapsing into bankruptcy the team at Cymbria decided too instead base their car on a preexisting production sports car to save time and money. 

The car they chose was arguably the hottest American sports car of the time, the Pontiac Fiero, an affordable mid-engined car with a lightweight fiberglass body. Cymbria developed their own custom bolt-on fiberglass body for the car, then they developed a more luxurious interior, they doubled the sticker price, and put their car on the market. 

The first prototype was built in 1984 as the Cymbria Vipre, however the poor fitment of the fiberglass body panels and overall build quality left a lot to be desired. The moulds had to be completely redone, by the time they were ready it was 1986. The car was relaunched, now as the Enterra Vipre, with a price of over $30,000 USD – the equivalent to $71,277 USD in 2023 and roughly double the cost of a standard V6 Fiero. 

Despite the fact that the car was being sold through selected Pontiac dealerships in the USA it was a complete flop. The lack of brandname awareness for Enterra coupled with the high price and the fact that the car had slightly worse performance than the stock V6 Fiero (due to to the larger/heavier body) resulted in dismal sales. 

Fewer than 40 were sold, though it’s believed that 6-8 cars remained in the factory in partially-built condition when bankruptcy proceedings began. It’s not known what happened to them or how many of the production versions of the car have survived to the modern day. 

The car you see here is an original surviving 1986 Enterra Vipre, it’s based on the high-specification Pontiac Fiero SE and it’s powered by the 2.8 liter V6 sending power to the rear wheels via a 5-speed manual transmission. 

It’s now being offered for sale out of Totem Lake, Washington on Bring a Trailer, and you can visit the listing here to read more or register to bid. 

Cube-shaped creature with 24 eyes discovered hiding in pond in Hong Kong, study says 

The researchers found the creature hiding in the “brackish water” of shrimp ponds at Mai Po Nature Reserve, according to a study published March 20 in the journal Zoological Studies. They returned three summers in a row and kept finding more of these creatures. 

The scientists analyzed the animals and discovered a new species of box jellyfish, the study said. 

Box jellyfish are named for their “cube-shaped” bodies, researchers said. This group of jellyfish contains “some of the most venomous marine animals in the world.” 

The new species, Tripedalia maipoensis, has a see-through body with a slight whitish tinge, photos show. The jellyfish, measuring less than an inch long, has three tentacles extending from each corner of its body, the study said. 

The jellyfish has 24 eyes arranged in sets of six, researchers said. On each side, the creature has two larger eyes — the upper and lower lens eyes — surrounded by four smaller eyes known as the pit and slit eyes. 

Two of these eyes are used for seeing images while the other four are used to detect light, according to an April 18 news release from Hong Kong Baptist University. 

Tripedalia maipoensis is the first box jellyfish species to be discovered in Chinese waters, the release said.

This week's interesting finds

Joel, partner since 2014 (Toronto, Ontario)   

This week in charts 

Consumer debt 

Electric vehicles

 

Salaries 

Construction 

US-Saudi Oil Pact Breaking Down as Russia Grabs Upper Hand 

The Saudi-Russia oil alliance has the potential to cause all kinds of trouble for the US economy — and even for President Joe Biden’s re-election campaign. This month’s OPEC+ decision to cut crude output, for the second time since Biden flew to Saudi Arabia last summer seeking an increase, may be just the start. 

In a world of shifting geopolitical alliances, Saudi Arabia is breaking away from Washington’s orbit. The Saudis set oil production levels in coordination with Russia. When they wanted to ease tensions with regional rival Iran, they turned to China to broker a deal — with the US left out of the loop. Western influence over the oil cartel, in other words, is at its lowest point in decades. 

Meanwhile, the threat of competition from US shale fields, a deterrent to price hikes in the past, has receded. And while there’s a global effort to reduce fossil-fuel use — and higher prices will accelerate that effort — the dash to drill in the last year shows that the zero-carbon economy remains more long-term aspiration than short-term driver. 

Add all of this up, and while some analysts say demand hurdles mean the recent bump in prices could prove fleeting, most anticipate prices above $80 a barrel over the coming years — well above the $58-a-barrel average price between 2015 and 2021. 

For the global economy writ large, lower oil supply and higher prices is bad news. The major exporters are the big winners, of course. For importers, like most European countries, more expensive energy is a double blow — dragging on growth even as inflation rises. 

The US falls somewhere in between. As a major producer, it benefits when prices rise. But those gains — unlike the pain of higher pump prices — aren’t widely shared. 

Bloomberg Economics’ SHOK model predicts that for every $5 increase in oil prices, US inflation will rise by 0.2 percentage point — not a dramatic change, but at a time when the Federal Reserve is struggling to bring prices under control, not a welcome one either. 

Bloomberg’s economic scenario modeling tool — SHOK — suggests that supply cuts pushing oil to about $120 per barrel in 2024 would keep US inflation at nearly 4% by the end of 2024 compared with a baseline forecast of 2.7%. And conventional wisdom says that high pump prices hurt incumbent politicians at the ballot box. 

B.C. To Legalize All Secondary Suites, Introduce Flipping Tax, Hike Density On Single-Family Lots

B.C. will overhaul municipal zoning rules to allow so-called “missing middle” housing, such as townhomes and multiplex homes on single family lots, as well as introduce a flipping tax and legalize all secondary suites as part of Premier David Eby’s refreshed housing plan announced on Monday.

However, the plan lacked details on how the province plans to overrule B.C. municipalities to allow higher density on single family lots. Those details will come this fall when the NDP introduces legislation that will allow three to four units on a traditional single-family detached lot and even higher density permitted in areas close to transit hubs. 

The debate over missing-middle housing has been divisive in many communities, with proponents calling for creative solutions that will make owning a home more attainable. Opponents, meanwhile, cite parking concerns or fears that higher density will strip the character from neighbourhoods.

The government will also legalize all secondary suites in B.C., taking the choice away from municipalities. In some B.C. communities, secondary suites are still illegal, a policy which Eby says chokes the supply of affordable rentals. 

British Columbians who buy a home just to flip it for a profit will be hit with a flipping tax that will be introduced later this year. The plan did not include details about the tax but Eby’s housing platform, released before he became premier, called for a tax against those who hold a residential property for two years or less, with the tax rate edging higher the shorter the owner holds the property. 

The government will also work with municipalities to strengthen enforcement of short-term rentals to ensure people aren’t operating them under the radar and without paying the required taxes. 

Eby promised to build 6,000 more affordable homes through the Community Housing Fund. Some B.C. mayors have complained that shovel-ready affordable housing projects are languishing because of a lack of funding from B.C. Housing. 

I drove from Toronto to Montreal in an EV and faced a mutiny halfway

“It’s pretty slow to travel this distance in this car, because you won’t charge above 80 per cent. I just don’t get it,” my wife said. 

Before I could defend myself – getting a full charge is not good for battery health, slows things down even more at public fast-chargers, and demonstrates poor etiquette if anyone is waiting – my daughter piped in with a couple of pointed questions from the back seat. 

“Can we go?” she said. “What are we waiting for?” 

“We’re charging,” my wife told her. 

Those few lines defined our 550-kilometre drive to Montreal, which took – I’m embarrassed to admit this – nearly eight hours. Yes, one way. 

I’ve often driven distances of about 300 km in our Hyundai Ioniq 5, an all-electric vehicle I purchased a little over a year ago. But most of those trips were in the warm summer months, when batteries are more efficient and I can drive for a relatively long time before needing a quick recharge. 

In the cold, and driving on winter tires at speeds of about 100 kilometres an hour, the range of our car was noticeably lower. Though our car can travel nearly 400 km on a single charge under ideal conditions, I faced a reduced range below 300 km.

Despite its disappointments, I hope Montreal was not our last road trip because it had a number of good points. 

We saved at least $150 in gas charges during the round trip because charging was mostly free during a brief revamp by the Ivy Charging Network. We also prevented about 120 litres of fuel from billowing into the atmosphere. 

Plenty of roadside charging stations in Montreal meant that we could charge – and park – for just $1 an hour while we visited neighbourhoods in the city.   

This week’s fun finds 

Now live on the Cymbria site, the 2022 annual report! 
You can find insights on how Cymbria navigated the last year and updates on our largest holding, EdgePoint Wealth Management.

How Much Should You Tip In Each Country?

All mixed up – How the shuffle button came to define modern-day media consumption.

“Our art tells a story and our stories should be listened to as we intended,” Adele tweeted shortly after the release of her album 30, a release so massive that almost no one could escape its story even if they would like to. In 2020, Spotify began to automatically shuffle albums for all listeners instead of playing them in assigned order. But Adele’s wish proved to be Spotify’s command, and the company removed its auto-shuffle function, but for premium users only. What had once been a feature was now a bug, one you had to pay to override. 

Shuffle or random playback, to use the more precise term that predates the contemporary “shuffle button,” has its roots in a core element of computing: automating randomness, a feat that is technically impossible. The only true randomness, where there’s “an equal chance of X or Y happening at the quantum level” as Andrew Lison, an assistant professor of media studies at the University at Buffalo, puts it, is found in things like atomic decay — natural phenomena that cannot (at this point, at least) be fully replicated by a computer. You would need to incorporate quantum physics for the shuffle button to be truly random. 

The introduction of the idea that media consumption could be both personal and passive had massive ripple effects. In the wake of the Napster era and its promises of a massive, totally unique music library, Pandora effectively invented the idea of individualized radio, promising the ultimate “shuffle” experience with technology that has since been used to great effect by streaming services intent on keeping people listening. Spotify, Apple Music, and their ilk offer both the promise of that Napster-scale range with Pandora’s ease. You could find anything, they suggest, but why not click this button and we’ll find it for you? 

As a result, increasingly precise and invasive algorithms have crept in under the comparatively innocuous umbrella of “randomness,” feeding us not just songs without context but information of every possible variety that is both novel and tells us what we’d like to hear — usually in service of getting us to buy something. Our social media timelines and YouTube feeds and video streaming services all employ the conceit, if not the science, of shuffle and randomness to keep us looking and listening, consuming without going through the work of figuring out what to consume. 

“It’s fundamentally premised on the idea that there’s no end,” says Lison. “Even though obviously there is, there’s not an end that any of us will ever reach.” With all this choice, agency and, more importantly, having the time to choose in the first place is a luxury. 

When it first integrated the play and shuffle button, Spotify was moving in concert with what its metrics undoubtedly showed — that 35 years or so after the introduction of the shuffle button, people had grown to prefer listening that way. For their purposes, playing an album on shuffle made the shift from the album itself to the algorithmically determined songs that Spotify plays immediately after it more seamless (and harder to notice). The true(ish) randomness and the algorithmically driven faux-randomness became one, further eliding the boundaries between the randomness you choose and the “randomness” you don’t.   

Why the Ozone Hole Is on Track to Be Healed by Mid-Century 

Ozone is a molecule made up of three oxygen atoms. (The oxygen we breathe is made up of just two.) There’s not much ozone floating around in the layer of atmosphere that we breathe — a good thing, since it’s actually a lung irritant and linked with respiratory disease. 

But there’s a lot of it in the stratosphere (comparatively speaking, at least; it’s still only a tiny fraction of the overall air). It’s that layer of ozone that absorbs ultraviolet (UV) radiation, especially the specific wavelengths called UV-B. 

UV-B radiation is what causes sunburns, and in high concentrations it causes more problems than that. It can lead to many kinds of cancer by damaging our DNA; most plants and animals also suffer when growing in a high-UV-radiation environment. 

In the 1970s, researchers noticed that the ozone layer had started thinning, especially around the poles. (With the ozone layer constituting only about three in a million atoms in the stratosphere in the first place, “hole” is technically a misnomer — the “ozone hole” was really just an area where ozone levels had dropped by more than 30 percent in a decade.) 

By the time the thinning of the ozone layer was measured, researchers Mario Molina and Sherry Rowland had already established the probable cause: CFCs. 

The problem was that CFCs break down in the upper atmosphere. And the chlorine in CFCs was actually reactive, binding with ozone to make oxygen and chlorine monoxide. 

The Montreal Protocol on Substances that Deplete the Ozone Layer was agreed upon and opened for signature in 1987. It went into force in 1989. Countries gradually began phasing out CFCs. Andersen’s team, Nicholson says, “systematically identified hundreds of solutions for phasing out CFCs from hundreds of industry sectors,” making it possible to shift manufacturing processes worldwide to chemicals that weren’t ozone-depleting. 

And keeping the ozone intact buys us time in the fight against climate change. Yes, HFCs are a potent greenhouse gas. But CFCs contributed to global warming as well: They were powerful greenhouse gases in their own right, and by destroying the ozone layer, they contributed to warming by allowing more energy to reach the planet’s surface. One study found that ozone-depleting chemicals drove half of Arctic warming in the 20th century. 

With that said, HFCs are still a big climate problem. In recent years, governments have been working to extend the hugely successful Montreal Protocol to phase them out too. It’s fair to say that, in some ways, the global fight against the ozone crisis was a complicated story, one that continues to be written.

This week's interesting finds

Liz, partner since 2017 (Saskatoon, Saskatchewan)

This week in charts

Financials

Household debt

Oil 

Canada top choice for oil-importing countries in part due to quality, aligned values 

A new Ipsos poll shows that not only is Canada the number one choice for countries that import oil, the top ranking is in part due to alignment of shared values. 

“People do prefer to get their oil from countries such as Canada, Norway, the United States, that have strong records of democracy and environmental safety. 

“When we’re seeing a lot of conflict in areas that have traditionally produced oil, such as Russia, and concerns around countries such as China, the poll demonstrates that globally the world is looking to Canada and other countries like us to produce the and supply the oil that they need.” 

Canada ranked number one, with Norway and the U.S. in second and third, respectively. 

The fact that Canada ranks highest amongst all these countries, when it only sells to the U.S., and makes up just four per cent of global oil production, says a lot about Canada’s reputation, said Richard Masson, executive fellow at the University of Calgary and chair of the World Petroleum Council in Canada. 

He added that Canada’s high regulatory standards and comprehensive law lets “people understand that there’s no shortcuts taken here that would result in environmental harm.” 

And despite the federal government’s plan for zero emissions by 2050, Masson said it is possible for Canada to stay on top of the energy production leaderboard, despite the decrease in need for oil and gas. One thing that needs to be answered, he said, is whether Canada wants to be one of the world’s preferred suppliers or will let others fill that role.   

This week’s fun finds 

Inside the Very Real (and Very Complicated) World of Luxury Water Collectors

The water sommelier movement—yes, that’s the term—has been growing in the US and around the world for years now. In fact, some argue that the seltzer boom has opened a door for a mineral water renaissance. These water sommeliers taste bottled waters as if they’re fine wines, expounding upon the waters terroir and “virginality,” or a water’s level of protection from its surroundings. They help to design bespoke water menus for restaurants; they judge contests in which bottled waters compete on taste, texture, and mouthfeel; and they collect bottles of tasteless water from icebergs that cost as much as $300 (more on that later). Some of them have even led Zac Efron and Anna Kendrick through a lengthy water-tasting class. Swishing, swirling, and slurping are par for the course in the fine water universe. It all sounded, quite frankly, ridiculous to me. Which meant, of course, that I had to learn every single thing about it. 

Fine water, as I quickly learned it’s called, is an industry that spans the globe. Sparkling, seltzer, and mineral water sales reached $3.5 billion in sales between 2019 and 2020 in the US alone. Water sommeliers are trained in programs around the world—from the Associazione Degustatori Acque Minerali in Italy to the Doemens Academy in Germany to Japan’s Aqua Sommelier Association. In the US the Fine Water Academy has seen a steady increase in attendance of approximately 10% to 12% per year since its founding in 2018, with a notable spike in 2020. Currently, the self-directed course that lasts about two months has 50 students in attendance. Program websites describe rigorous training, the curricula detailing hours of water tastings, final exams, and, in the case of the Doemens, many, many “hydration breaks”—short recesses to sip on your favorite water. 

It may start as a hobby, but becoming a water sommelier is serious work. Both Epperson and Barrak-Barber described the intensity of the training programs they attended at the Fine Water Academy and Doemens Academy, respectively. For Epperson, a 16-week, self-directed course priced at $2,200. For Barrak-Barber, a two-week intensive, which cost $2,500 not including lodging and travel costs to Germany. The class required 10 to 12 hours of study a day, she said. “Rigorous training, and a lot of tears preparing for the final exams,” Barrak-Barber said. “It was way more intense than I thought it was going to be.” 

These courses give students foundational lessons in water tasting: Does the water feel oily or clean on your tongue? What flavors do the blend of minerals in the water, or total dissolved solids (TDS), leave on your palate? Students also learn and are tested on how to pair waters with food—a very mineral-forward water can bring out the saltiness of a steak, for instance, but its strong flavor would overpower most fish dishes. They learn the proper procedure for presenting and pouring water out of bottles tableside—make sure the label is facing out, hold a glass by its stem so that the heat from your hands won't warm the water, and never, ever use ice cubes because their impurities would pollute the taste of the water. “It’s a lot like wine,” Barrak-Barber said.   

Can a billionaire die without anyone noticing? 

The US Treasury’s daily reports of government financial transactions turned up a surprising data point on Feb. 28, 2023: The deposit of $7 billion in the category of “estate and gift” taxes. It was the highest collection of that kind of tax since at least 2005. It’s possible that more than one enormous tax bill happened to be processed on that day, but that would still be remarkable. 

A Treasury spokesperson says this was not a reporting error, and a spokesperson for the Internal Revenue Service says it is unlikely this would be caused by processing a backlog of returns in one day. Privacy rules prevent government officials from discussing the specifics of any tax return. 

Based on the tax rate, that $7 billion payment implies an estate or gift of some $17.5 billion. However, the Tax Policy Center, a think tank in Washington, D.C, has estimated that estates typically pay a 17% effective tax rate after exemptions and other forms of avoidance. Even if only 50% of the estate was taxable, that’s a potential value of $35 billion. Even the lowest estimate would make the estate’s owner one of the 100 richest people in the world, according to Bloomberg News. 

Gabriel Zucman, an economist at the University of Berkeley whose work has focused on tax policy and the ultra-wealthy, says there are a few plausible hypotheses: “A very rich person who was missed by Forbes, a large gift, a delayed payment by some billionaire who died several years [ago] (perhaps a result of enforcement efforts).” The gift tax can also be triggered by divorces involving spouses without American citizenship, but payments within a year of a divorce are generally excluded. 

Forbes’ 2021 list does note the death of Sheldon Adelson in Jan. 2021; the casino tycoon’s fortune was estimated at $35 billion. That’s about the right magnitude, but unless ProPublica is sitting on the answer in its collection of leaked IRS data, we may never know. 

How to save America’s public transit systems from a doom spiral

This week's interesting finds

Akhil, partner since 2021 (Toronto, ON)   

This week in charts 

Market risks 

Canadian mortgages   

Japan

Americans Are Losing Faith in College Education, WSJ-NORC Poll Finds

“These findings are indeed sobering for all of us in higher education, and in some ways, a wake-up call,” said Ted Mitchell, the president of the American Council on Education, which counts more than 1,700 institutions of higher education as members. “We need to do a better job at storytelling, but we need to improve our practice, that seems to me to be the only recipe I know of regaining public confidence.” 

Dr. Mitchell cited student debt, which has reached $1.7 trillion, and the 60% graduation rate at four-year colleges as two of the biggest problems undermining confidence in the sector. 

Public skepticism toward higher education began to rise after the 2008 recession and compounded during the pandemic. Enrollment in U.S. colleges declined by about 15% over the last decade while the growth in alternative credentials, including apprenticeships, increased sharply. 

Women and older Americans are driving the decline in confidence. People over the age of 65 with faith in college declined to 44% from 56% in 2017. Confidence among women fell to 44% from 54%, according to the poll.   

Retailers Reaping Big Savings on Ocean Transport Costs

The average price for Asia-to-U.S. container trade has “fallen as dramatically as we’ve ever seen it fall,” said Jon Cargill, senior vice president and chief financial officer of Hobby Lobby Stores Inc. 

Importers and container lines typically conclude agreements for the fall shipping season, when retailers stock up on consumer goods, by mid-April for contracts that take effect May 1. Companies say they are negotiating in a far different environment from last year, when retailers looking to replenish depleted inventories rushed to sign deals and paid record amounts to secure scarce space on container ships.

Ocean carriers are struggling to fill space on ships after a steep drop-off in cargo that began in the fall and that has continued into 2023. Retailers ended up overstocked in the second half of last year as consumer spending shifted, and many are still coping with excess inventories. 

Spot market rates have crashed more than 90% from pandemic-era highs as shipping demand has declined. The average spot rate to ship a container from Asia to the U.S. West Coast as of Thursday was $1,289, according to Norway-based transportation data specialist Xeneta, about $668 lower than the contract price.   

Netflix Restructures Film Group as It Scales Back Movie Output 

Film chief Scott Stuber is attempting to scale back the company’s output so that he can ensure more of the titles are of high quality. The streaming service has released more original movies than any other company in Hollywood recently, producing upwards of 50 projects a year. 

A handful of those earn Oscars, like All Quiet on the Western Front, which won best international film this year, or are viewed by tens of millions of people, like Glass Onion: A Knives Out Mystery. But many of them come and go with little fanfare. 

Netflix increased its output in part because it knew other studios would stop licensing it as many titles as they focused on their own streaming services. The company added staff to boost production, creating multiple divisions responsible for movies at different price points. The independent film group makes movies with a smaller budget (typically $30 million or less), while another group makes ones in the mid-budget range (between around $30 million to $80 million). Yet another unit makes bigger-budget films. 

The job cuts are much smaller in scale than the ones Netflix instituted a year ago. The company, which closed 2022 with about 12,800 employees, eliminated hundreds of positions last year in an effort to reduce costs after its subscriber growth slowed.   

This week’s fun finds 

The power of Excel

MIT Researchers Twisted Apart Hundreds of Oreos to Find the Perfect Method 

In 2022, researchers at the Massachusetts Institute of Technology (MIT) unveiled their cookie-centric findings in a study titled, "On Oreology, the fracture and flow of 'milk's favorite cookie.'" The research, which has recently resurfaced on social media, focused on if and how people could evenly split the crème inside an Oreo when twisting it open. 

To find out if, and how, the crème could be evenly split, the team created the "Oreometer," a 3D-printed apparatus, which employs both rubber bands and weighted coins to represent the force of twisting apart the cookies. The team even open-sourced the design, so anyone with a 3D printer can make their own at home. 

Of course, this entire study is much deeper than just finding the perfect cookie twist. It's also a look at rheology, which Nature describes as "the science of measurement of deformation. Virtually all materials deform in response to an imposed stress ('everything breaks if you hit it hard enough') and the materials present in the eye range from liquid-like to soft-solid behavior." 

So, what did the team conclude? That despite their best efforts and original hypothesis, it's actually almost impossible to have evenly distributed crème on both sides of an Oreo after twisting. 

You Don't Need to Do a Cleanse Diet 

Otherwise known as detoxification diets, the extremely restrictive temporary regimens, often hawked by nutrition influencers, claim to carry meaningful health benefits: weight loss, clearer skin, mental acuity. A sense of pureness. 

These diets come in many different forms. Drinking only liquid or specialty mixed smoothies is probably what comes to mind when someone hears the word “cleanse,” but eating certain foods, taking certain herbs, and popping certain supplements all fall under the detoxification rubric. 

The fact is that our bodies do the heavy lifting for us. And if that’s the case, why the emphasis on detox diets? “It kind of implies a shorter-term solution, and quick results,” said Brigitte Zeitlin, a registered dietitian. 

There is a good reason why detox diets help people lose weight, for example, in the short-term. Consider the fact that on a detox diet you’re eating less sugar, fewer processed foods, and more whole foods (if you’re eating at all). You’re eating fewer calories overall, which is exactly what the limited number of papers on detox diets spells out. For some people, that can be great for a short-term boost; for others, it saps them of energy. In either case, you might be missing out on key nutrients you get from foods on the plate.

This week's interesting finds

 

Nataliya, partner since 2008 (Toronto, ON)   

This week in charts 

Canadian population   

Energy consumption   

Opinion: LNG is a hat trick for Canada 

Natural gas is the most energy dense by mass of the entire fossil fuel group and generates the lowest emissions when ignited, it’s at the top of the fossil fuel evolutionary ladder if you like. For the record, a molecule of methane has three times the embedded energy as a molecule of hydrogen. In general, from an energy sourcing prospective, we should be migrating towards denser, lower cost, lower emission energy sources. Natural gas most certainly releases carbon when burned, it’s not perfect, but that’s actually the case with all the current components of the world’s energy stack. Whether it’s renewables, nuclear or fossil fuels, each energy source has both positive and negative attributes, be it carbon emissions, cost challenges per unit of energy, or ultimate waste disposal. 

The foundation of our modern civilization has been built upon abundant and inexpensive energy. The world’s energy stack continues to ‘transform’ between sources in an effort to systematically improve efficiency, economics, and emission profile to provide energy for our planet’s growing population. Part of that transformation is a rapidly growing ‘transition’ to natural gas envisaged for the next several decades. No matter which forecast or outlook you use, natural gas consumption is growing materially, to as much as 35 to 40 per cent of the entire energy stack within 10 years. So the world is most certainly not transitioning off natural gas, it’s just the opposite. 

Canada is currently the fourth-largest producer of natural gas in the world, and we are blessed with amongst the largest gas reserves on the planet. We have a well-established gas industry with an extensive natural gas processing and country-wide transportation infrastructure already built and in place. Another advantage is that we have relatively low-cost reserves to develop, the main gas resource plays aren’t particularly deep, and they tend to drill and complete quickly and easily. Although the Western Canadian Sedimentary Basin has been producing for almost 100 years, our prime natural gas resource plays, the Alberta Deep Basin and the BC/AB Montney, are actually very early in producing life, and much earlier than their US counterparts to the south. The Montney, for example, has only produced 22 TCF of an estimated 645 TCF of ultimate recoverable gas reserve (current production from the Montney is approximately 5.7 TCF per year). We’re in the top of the first inning and pitching to the first batter, to use a baseball analogy to depict the remaining Montney reserve life. A 4 bcf/day LNG project, the potential size of LNG Canada, is estimated to create up to 20,000 jobs and $9-12 billion in annual export income to the Canadian economy. 

And this is a true net reduction for the world. The atmosphere has no borders so replacing coal with gas in China or India is a true 60 MT/year reduction for the world. The second key consideration is that our Canadian gas industry produces on average the world’s lowest-emission natural gas, and our leading clean-tech industry is allowing us to get cleaner, faster than anyone else. The gas is going to be supplied to the countries that demand it; China, India and now Europe, whether Canadian methane molecules show up or not. The global atmosphere is a net loser in that case as the gas will be sourced from producing jurisdictions with a higher emission profile. 

The final goal in our hat trick is scored by the opportunity to improve First Nation prosperity. The majority of First Nations in Western Canada are very supportive of oil and gas development as it’s seen as an opportunity for long-term, high-quality employment and a sustained higher standard of living. Be it Indigenous-owned service companies, a growing reclamation business sector, direct employment with producers, or equity investment in pipeline projects; the First Nations’ economic opportunities are myriad if we become a major global LNG player. We need to ensure this opportunity is not lost. 

Top Biden Adviser Says US Won’t Rush to Fill Petroleum Reserve

“We’ve seen a decline in oil prices, we’re seeing some crunch there,” [Special Presidential Coordinator for Global Infrastructure and Energy Security Amos] Hochstein said. “We should take a deep breath and wait and see how this crisis right now impacts the oil and gas industry, production and what the profile is. So far prices have come down. We’re watching it very closely, we’ll continue to watch it over the next several days.” 

The SPR, which was designed to shield the country from supply disruptions, is currently at 371.6 million barrels, the lowest since the 1980s, after the historic release of 180 million barrels last year to tame gasoline prices in the wake of the war in Ukraine. 

The administration previously laid out a plan to refill the reserve at prices close to $70 a barrel. WTI futures tumbled to almost $66 in New York on Wednesday. 

Russia’s Oil Trade Is Starting to Show Signs of Clogging Up

Even after the world’s main oil forecasting agency said output could fall by 30%, exports from the OPEC+ producer have so far been resilient as the sanctions, along with price caps on Russian oil, were intended to keep the flow going. However, cargoes are now starting take longer in finding homes. 

As well as having implications for Moscow — proceeds from taxes on oil industry accounted for over two thirds of energy tax revenue in February — the development may alarm US officials, who’ve long argued that the Russian oil needs to flow freely to avoid a surge in fuel prices. 

Ships filled with refined fuels are floating off the coasts of Europe, Africa and Latin America, potentially ratcheting up waiting fees. Some vessels hauling the OPEC+ producer’s crude oil are bouncing between ports without discharging, while others are unloading and being stashed at unusual locations. 

It all points to a network of logistics that is struggling to keep pace with servicing a country that exports over 7 million barrels a day of crude oil and products. A vast swath of that trade has shifted from Europe to new and less-familiar customers, often thousands of miles further away. 

“Although crude oil cargoes are finding new homes in China and India, products are facing increasing difficulties to be placed,” said Tamas Varga, an analyst at brokerage PVM. 

Crypto Is Mostly Over. Its Carbon Emissions Are Not.

Mining bitcoin does not involve actually digging anything out of the ground—unless you count the fossil fuel that often powers it. The process involves using heavy-duty computers to grind through trillions of calculations, solving equations to create virtual coins. The method is known as “proof of work.” Once upon a time, bitcoin mining was something that people did if they had a couple of spare computers they wanted to put to work. Over time, it’s taken more and more computing power to unlock a single coin; now most mining is done in large-scale operations using purpose-built mining rigs. 

And it is America’s problem now. After China clamped down on crypto mining in 2021, such computing work increased in the United States. Miners set up shop in communities with low energy prices. And owners of unprofitable power-generation infrastructure, such as waste-coal-burning power plants, opened up crypto-mining operations to create another revenue stream. These companies have put a lot of money into their hardware and their physical space, and they will continue mining until they are actively losing money. “There are miners that have been quoted saying, ‘As long as the price is over $10,000 per coin, it still can generate money,’” Elizabeth Moran, a policy advocate at the green law firm Earthjustice, told me. And that is a big reason crypto keeps spewing out so many emissions even during the “crypto winter”: Bitcoin prices in particular have held up, in fact they just passed $28,000 a coin. That’s still far below their peak of almost $68,000 in late 2021, but represents a bit of a comeback from the sub-$16,000 prices of last fall. 

So it is still very possible to make money at this game. Some companies bypass the energy grid entirely; depending on the price of gas and the price of bitcoin, turning natural gas into crypto might be twice as profitable as selling it to the wholesale gas market. Gas companies bring in a trailer or three jam-packed with generators, plugging one end into the well and the other into “shipping containers full of bitcoin miners,” says Rob Altenburg, the senior director for energy and climate at PennFuture, an environmental nonprofit. “We’ve heard of three different companies doing it. But we’ve got thousands of fracked gas wells across the state and just simply have no way of knowing where this is happening.” Gas drilling is heavily regulated, but crypto mining itself is not. 

A recent federal investigation in Colorado found crypto mining powered by gas wells on public-lease lands, creaming energy off before it hit the grid and converting it to crypto without paying any royalties. The report noted that because the generators and rigs are usually on trailers, the entire operation can be moved quickly, so miners can stay ahead of government oil and gas inspectors. Other “behind-the-meter” operations are physically located at power plants. The natural-gas-fired Greenidge Generation Station, on the shores of Seneca Lake in upstate New York, opened a massive bitcoin-mining operation plugged right into the plant, which in 2021 consumed the bulk of the electricity it produced. Tapping into energy before it hits the grid is just one way bitcoin miners keep costs down; they’ll seek out and exploit any cheap source of energy. 

Lots of other digital activities do consume power and cause greenhouse-gas emissions—questing with pals, hoarding years of work emails on the cloud, making friends with a hallucinating AI. One analysis in 2019 suggested that our online lives were responsible for 3.7 percent of planet-wide emissions; the number may have gone up since. Schneps likened bitcoin’s global electricity consumption to “roughly the same as video games.” But even if that’s true, while two-thirds of Americans play video games, just 21 percent of Americans own crypto, and even less bitcoin in particular. The massive environmental impact of bitcoin is harder to swallow because it is part of an industry that is, in essence, “smoke and mirrors,” as the crypto blogger James Block put it in an interview with Charlie Warzel. “There’s nothing produced by these companies.”  

This week’s fun finds 

St. Patrick’s Day moai 

Although we couldn’t find an Irish place that would cater, Luke ordered some deli sandwiches and the obligatory Guinness for the big day. Lucky us!   

Data Never Sleeps 10

Why Are All Action Heroes Named Jack, James, or John? 

The first step was to define my data set. Since there exists no one official pantheon of action heroes, I started by turning to the first port of call for many researchers: Wikipedia. According to its list of action movies, 2,206 modern movies had been released in the genre, beginning in 1962 with Dr. No, the first movie to star James Bond. From these movies, I narrowed down the list to include only Hollywood productions and movies centered on a male everyman–type hero. The trope is well known: A lone man facing seemingly unbeatable odds conquers any foe put in his way—be it his government, a terrorist cell, or a natural disaster. Gone from the list were movies that featured ensemble casts or were about buddy cops or female heroes. (This last category didn’t take long to remove.) If it was not immediately clear whether the movie was built around a single man of action, I dug deeper, consulting trailers, plot summaries, and other marketing materials to make an informed decision. (This also led me to watch some great action movies I’d never heard of, like 2002’s Extreme Ops.) After going through all 2,206 action movies, I was left with 790 movies featuring an everyman-type lead. 

Out of those 790 movies, 542 featured single male antagonists. I added up all the names together, expecting to see a few popular villainous names emerge, but this was not what the data showed. The most frequent fiendish name in the data was Victor, seen in only 10 movies. Villains had names beginning with J only 7 percent of the time. 

Jennifer Moss, from BabyNames.com, told me over email, “When I sit down to watch a new show and hear that the protagonist is named Jack, I think ‘Isn’t that over, yet?’ ” Going back to the data, I wanted to see how the trend has changed over time and whether we are seeing an end to it. From the data dating back to 1962, J-named action stars overtake all other names a few times, in the early 1970s, for a moment in 1984, and last in 2002. It’s already been more than two decades since the J’s reigned supreme.

This week's interesting finds

 

Ruairi, partner since 2019 (Dublin, Ireland)  

This week in charts 

Canadian housing 

Lost decades 

Trans Mountain crosses $30-billion threshold

"Buying and building this pipeline will go down in the history books as one of, if not the, worst infrastructure decision a Canadian government has ever made,” said Greenpeace Canada senior energy strategist Keith Stewart. “It was always a disaster from a climate change perspective, but this is now an economic crime that has stolen $30 billion of public funds from real climate solutions." 

On Friday afternoon, the Crown corporation disclosed that TMX’s estimated total cost is 44 per cent higher than the previous estimate of $21.4 billion from February 2022. It chalked the skyrocketing costs up to global inflation, flooding in British Columbia, archeological discoveries and a handful of other factors, like “challenging terrain between Merritt and Hope,” B.C., and “earthquake standards in the Burnaby Mountain tunnel.”In a statement, Finance Minister Chrystia Freeland did not directly acknowledge the Crown corporation’s ballooning cost increase. Rather, she said Trans Mountain released an updated cost estimate and confirmed the project would be complete by the end of this year and operational by 2024. 

“The federal government acquired (Trans Mountain Corporation) and the Trans Mountain expansion project in 2018 because we knew it was a serious and necessary investment — one that is in the national interest and will make Canada and the Canadian economy more sovereign and more resilient,” Freeland said. 

The statement did not address where the additional $9.5 billion of financing would come from. Last year — after Freeland promised no more public funds would be committed to the project — the federal government greenlit a $10-billion loan guarantee to cover TMX’s cost increases. 

Regardless of cost, Canadians already own TMX, and experts say the public will also end up on the hook for the $10-billion loan provided by Canada’s six biggest banks last year. Guaranteed returns on a loan that size are a great deal for the banks because even if Trans Mountain fails to pay back the entire amount, the federal government’s promise means there is no risk the banks will lose money. Loan guarantees like this are also fossil fuel subsidies, according to the World Trade Organization’s widely accepted definition.   

This week’s fun finds 

EdgePoint’s hot sauce review crew vs. Sprig’s Bhut Jolokia sauce 

Made from the ghost pepper, allegedly the “world’s hottest”. 

About 10 of us tried it out, but the warning on the back (“Not for people with heart conditions”) was scarier than the spiciness. 

Group rating: 

• Spice: 7/10 (“The spice lingers, but not bad.”) 

• Flavour: 4/10 (“Not too much flavour…but it’s smoky, so it would be nice mixed with something.”) 

Thanks for bringing it in, Akhil! 

The Daring Ruse That Exposed China’s Campaign to Steal American Secrets

Then the security officers told [GE engineer] Hua that the F.B.I. wanted to talk to him. Two F.B.I. agents, who were already in the building, entered the room. One of them was Bradley Hull, a bright-eyed man with a shaved head and a goatee. He started with the same questions that G.E. security had asked about Hua’s China trip. 

Hua was shaking with nervousness, one of the agents told me in an interview. He repeated the answers he had given to his employer’s security officers. Hull proceeded to ask more questions about the trip, giving Hua several chances to amend his story and signaling that he didn’t think Hua was being truthful. Finally, he confronted Hua with evidence showing that Hua had met with people other than just friends and family. He had also paid a visit to the Nanjing University of Aeronautics and Astronautics. 

Hua finally disclosed that he had given a presentation at N.U.A.A. about designing airplane parts out of composite materials. He said he had been careful to not divulge any information that was proprietary to G.E., even though he had downloaded certain files that belonged to his employer to help prepare his slides. As Hua provided more detail about his visit, Hull became convinced that he had been hosted at Nanjing by Chinese intelligence officials looking to cultivate the engineer as an asset, someone who could steal trade secrets for them. 

Hua was put on leave without pay by G.E. Aviation right after the F.B.I. interviewed him in November 2017. As he struggled to find paid work in the weeks that followed, his efforts on behalf of the F.B.I. kept him engaged. Under the agency’s direction, he kept up his exchanges with [Chinese Ministry of State Security agent] Xu over WeChat and email, expressing eagerness to share information from G.E. “Just recently I’ve heard the speculation about laying off in my department. I, of course, don’t want to be affected, but the possibility is there,” he wrote in a message on Jan. 23. “That’s why I’m trying my best to collect as much information as possible.” Xu asked if Hua could send material relating to the specifications and design process for building an encasement for fan blades. Hua obliged with a document titled “G.E.9X Fan Containment Case Design Consensus Review.” It had the appearance of being useful but didn’t contain anything of real value — G.E. Aviation, which was cooperating with the F.B.I., had altered the document. This bait worked: Xu, emboldened, sent a list of “domestic requirements” that he wanted Hua to collect information for, such as the type of software used in designing composite structures. 

The battle to boost our deep sleep – and help stop dementia

Doctors have long recognised the restorative properties of sleep, but it wasn’t until 2012 that Prof Maiken Nedergaard at the University of Rochester Medical Centre, in the US, and her colleagues identified a previously unknown plumbing system in the brain that springs to life during sleep, and enables the organ to clean itself. 

They found a series of tiny channels surrounding the brain’s blood vessels that allow CSF to filter in, and get pushed through the brain tissue by the pulse of blood alongside – and dubbed it “the glymphatic system”, because it is similar to the body’s lymphatic network except managed by the brain’s glial (support) cells. Having such a system is important because your neurons are extremely active during the day, and produce waste that needs to go somewhere. 

[Assistant professor of biomedical engineering Laura] Lewis has expanded on Nedergaard’s studies by persuading human volunteers to have their brains imaged while they sleep. “We saw these large waves of fluid flow that started to wash over the brain about every 20 seconds or so, and could travel quite long distances inside the brain,” she says. “As soon as people woke up, this flow pattern would disappear.” 

This system seems to be most active during slow-wave sleep – the deepest phase of non-rapid eye movement sleep, predominating during the early hours of the morning. 

For reasons that aren’t yet fully understood, people experience less of this kind of sleep as they get older. The glymphatic system also shows a dramatic decrease in efficacy as we enter our later years. “Your dishwasher only works at 20% capacity,” Nedergaard says. 

The key thing to focus on is sleep quality, which means avoiding coffee, alcohol, exercise and electronic devices in the run-up to bed, and maintaining a dark bedroom overnight. “If light is coming in through the window, or from pilot lights on electronic devices, even if it doesn’t wake you up, it may kick you into a lighter sleep stage and you won’t feel as well rested,” say Prof Lewis.