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The "Dumb Money" Is Winning

The conventional wisdom is that you can't beat the market unless you're a professional. Someone tell that to the amateur traders on RobinHood, because they're up on the year while the average S&P500 stock is down.

The most popular stocks on RobinHood are up 1% in 2020, compared to a decline of 7% for the typical S&P constituent.

Why they're winning: Experts aren't really sure. One theory is that amateur traders are creating a self-fulfilling prophecy. Using online forums like Reddit's WallStreetBets, they drive up interest in a stock among enough people to influence its share price. Or maybe their risk tolerance has served them well in this period when many are risk averse. Or maybe they're just getting lucky.

Who are they: Individual investors now account for a fifth of stock market activity, more than double the usual level.

Why it matters: This is of course great business for companies like RobinHood and other discount brokerages. But it's also creating large amounts of risk for people who can't necessarily afford to pay the price if their luck turns. How will these investors fare in the next market crash?

The Canadian angle: RobinHood-style easy zero-fee options trading doesn't yet exist in Canada, but with the explosion of interest in the U.S. market you can be sure someone is eyeing the opportunity to be the first to market.
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Ford Finds $4B for Cities

Premier Doug Ford announced that his provincial government will allocated another $4B in funding to Ontario municipalities to help them deal with the Covid crunch on services. The funding, which will come equally from provincial and federal coffers, is to be used support shelters, food banks, public health and about half of the funding will be allocated to public transit systems, which have seen a 90% decrease in fares since the start of the pandemic. 

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Air Canada's Turbulent Takeover

Air Canada's attempted takeover of Transat A.T., the parent company of Air Transat. has once again been delayed. The agreement, valued at $720M, gives each party three delays of the date the deal must close or fall apart. This is the second delay by Transat. Factors in the slow close include awaiting Canadian and European regulators to approve the deal, and the near collapse of the airline industry through the pandemic.

Market Impact:

  • Transat's share price fell another 2% on the news to $5.30, a significant discount to the $18 price tag Air Canada agreed to pay
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Baseball's Bad Start

Positive tests and baseball seem go hand in hand, but unlike PEDs positive tests for Covid-19 could cancel games and perhaps the whole season. MLB's opening day was just last week, at the time of this writing they've already had to cancel two games, a result of 14 Miami Marlins players and staff testing positive for Covid. Sunday night's matchup between the Marlins and Phillies went ahead after 4 Miami players had already tested positive, a decision reportedly made on a text chain.

The Big Picture
The MLB's shortened season was doomed from the start, unlike the NBA and NHL who have adopted a hub city bubble approach to saving their seasons, the Big Leagues have teams travelling from stadium to stadium with limited restrictions on players activities off the field.

I'm not betting on another week before the whole thing is shut down again.
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Canada's Pandemic Warning System Failed

Canada's pandemic warning system, the Global Public Health Intelligence Network (GPHIN), was considered world class. It attracted interest from Google, who tried to buy it from the feds in 2008, and just two years ago the WHO praised the system. A investigation in The Globe reveals how restructuing and bureaucracy left Canadians with our pants around our ankles as Covid-19 took over.

How it (Should) Works:
  • GPHIN was created as an early warning system for disease outbreaks around the world. Decision makers would be armed to make decisions about prepping hospitals, closing borders or cancelling flights.
  • GPHIN is armed with an algorithm that reviews over 7000 data points for unusual patterns. What sticks out is analyzed by humans who issue warnings if needed.
  • The system successfully identified an outbreak of SARS in China in 1998 and Bird Flu in Iran in 2005, both well before either outbreak was officially acknowledged to the world.

Why it Failed:
  • The system, which regular issued a dozen alerts a month sent its last alert in May 2019.
  • The organization was re-organized to prioritize domestic issues over international ones.
  • Layers of bureaucracy were added to prevent warnings from being issued without the approval of high ranking bureaucrats, which would take several days if approved at all.
  • GPHIN did not issue any alerts in the run up or during the Covid-19 outbreak in Canada or abroad, despite their own procedures saying they should.

What Could Have Been:

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Peak Picks

Justice Served? Remember "Chair Girl"? She just got sentenced with a fine and 2 years probation for her little stunt. But Mayor John Tory thinks she should've been locked up.

COVID Costumes: Would you wear a giant bubble to a restaurant to stay safe from COVID? How about a 6 foot wide hoop skirt? Some people apparently would, as they look for creative costumes to keep the virus at bay.

I'll have what he's having: You've heard of boxed wine. Perhaps you've even sampled it. How about boxed negronis? A Brooklyn company is now selling 1.75L boxes so you can have negronis on tap in your house. Unfortunately not yet available in Canada.
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International Students: Looks like international students are out of luck this year: Canada has told most of the 650,000 international students that they will not be able to enter the country in September.

Crypto: Execs from the Toronto cryptocurrency exchange Coinsquare just got slapped with $2 million in fines by the Ontario Securities Commission for artificially inflating trading volumes on its platform.

China/US Conflict: The U.S. has asked to China to close its consulate in Houston. Tensions between the two powers just keep rising.
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Ballin' In The Bubble

Am I dreaming, or is the NBA really back?

Well, sort of. A series of scrimmage games started yesterday, and I have to tell you, seeing live sports again — even in a scrimmage format — is prett-ay, prett-ay nice.

And if basketball isn't your thing, baseball returns tonight with the Yankees taking on the Nationals at 7PM EST.

Plus: hockey is just a week away.

Go inside the bubble: the breakout start of the NBA restart has to be Matisse Thybulle, whose YouTube videos documenting life inside the bubble have earned him almost 300,000 subscribers.
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Busting Tech Trusts

The 90s are back, baby: Microsoft is once again facing antitrust scrutiny from regulators, largely due to a complaint made by Slack with the European Commission.

Slack alleges that Microsoft is illegally bundling its chat product (and Slack competitor) with the rest of its Office programs. Slack argues Microsoft should have to sell its chat product as a standalone and for a "fair price".

If the Commission agrees that Microsoft is using its market power to crush competitors in a way that hurts consumers, that could cause problems for Microsoft.

Why it matters: Tech giants are facing increasing pressure from regulators on a variety of issues, antitrust being one of the biggest.

  • Amazon is being investigated over its treatment of third-party sellers on its platform.
  • Alphabet has been slapped with $9.4B in fines over the past few years by the EU.
  • Now the EU's top antitrust enforcer wants greater powers than fines, including the ability to breakup companies and force them to offer consumers alternatives to their products.
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Europe's Big Deal

EU leaders finally have a deal on COVID economic relief after a marathon negotiating session. Here are the key details:

  • The deal is worth 750 Euros, which is over $1.1 trillion CAD.
  • More than half of that sum will be directed to states with weaker economies (generally those in southern Europe).
  • This marks the biggest effort in Europe to date to deal with COVID reconstruction.

Dissent in the ranks

Not everyone was on board for the relief package, though. Angela Merkel (Germany) and Emmanuel Macron (France) were the chief proponents of the deal, while a group of northern nations — the so-called "frugal five" — including Finland, Austria, Denmark, the Netherlands, and Sweden, opposed letting the EU borrow to fund the relief programs.

While the package shows the possibility for European cooperation still exists to some extent, the negotiations required to achieve it suggest deep divisions on the continent.

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