Bearish blogging

Good morning. Heads up for anyone with plans to visit the U.K. Effective today, travellers without a British passport must acquire an electronic travel authorization (ETA) or else they will be barred from entering the land of Big Ben, red phone booths, and beans on toast.  

While technically this requirement began last January, the U.K. hasn’t strictly enforced it until now. So, make sure you shell out 16 quid (about $30) for one and have it ready at the gate. 

Today’s reading time is 6 minutes.

Markets: Canada’s main stock index hit a record high yesterday thanks to a robust materials sector and an 11.4% surge for Thomson Reuters shares. Meanwhile, Scotiabank kicked off Canadian bank earnings season with a report that beat profit expectations, though shares still ended down on the day. Up next: BMO and National Bank.

Investor fears about AI have reached the point where blog posts have become billion-dollar market movers. 

Driving the news: A viral Substack post predicting a future of economic pain caused by AI disruption seemingly sparked a mass market selloff on Monday, sinking the stocks of software firms and other companies mentioned in the essay. 

Catch-up: In Citrini’s near-future scenario, the recent SaaS selloff is just the first tremor of a broader crash. As AI lets companies replicate more software in-house — and slash their contracts with software firms as a result — mass layoffs ensue.

Yes, but: The theory has its critics, with one commentator dismissing it as nothing more than a “scary bedtime story”. Others pointed out that in this scenario, productivity increases drastically while consumption collapses (which economic theory suggests is unlikely). 

Why it matters: Whether it’s realistic or not, the fact that a Substack post full of theoretical scenarios can erase billions of dollars in market value highlights just how emotional, uncertain, and trigger-happy the trading around AI has become.—LA

Canadian airlines resume flights to Mexico. Air Canada, WestJet, and Porter all started flying to Puerto Vallarta again yesterday, following days of violent unrest across western Mexico that forced them to suspend all flights. Despite the violence, Foreign Affairs Minister Anita Anand didn’t explicitly recommend Canadians cancel their trips to Mexico. (The Canadian Press) 

Trump’s new global tariff comes in at 10%. After announcing that the new levy would be upped to 15%, the Trump administration ended up rolling out a temporary 10% import tariff yesterday. The lower-than-expected rate added to the uncertainty surrounding the U.S.’s new trade policy, which was upended by the Supreme Court’s decision to strike down the legal basis for most of Trump’s tariffs. (Reuters)

Ottawa and India could kick off trade deal talks this week. Prime Minister Mark Carney is flying to India tomorrow to meet with Prime Minister Narendra Modi, a trip that will focus on boosting the economic relationship between the two countries. India’s trade minister said he hopes negotiations will begin on a free-trade deal during Carney’s visit. (Reuters)

📡 What else is on our radar: 

🤝 Meet Nick Frosst. He's the co-founder of Cohere, the Toronto-based AI company valued at US$7 billion that's positioning itself as Canada's champion in the global large language model race. Before starting Cohere, Frosst was Geoffrey Hinton's first hire at Google Brain's Toronto lab. And for good measure, he's also the lead vocalist of Good Kid, an indie rock band that has played Lollapalooza. We chatted with Nick about why he stayed in Canada to build an AI company, whether sovereign AI is realistic for smaller countries, and why he thinks AI will eventually be boring — in the best way.

What was the moment for you when you realized that AI was going to be a big deal? And then after that, why did you decide to start Cohere rather than going to the U.S. and working for a huge paycheque at one of the frontier labs?

I think one of the big moments was early on when Geoff Hinton released his ImageNet research. At the time (around 2012), it was so mind-blowing that I thought I was late to the AI boom. Of course, we now know that AI is capable of many, many orders of magnitude more than that. We started Cohere in 2019, after my co-founder Aidan Gomez worked on the seminal Transformer paper, because we knew enterprises had a lot to gain from this technology, and we wanted to bring that capability and power to them.

Does Cohere do the same sort of R&D as the big American AI labs when it comes to training more sophisticated general-purpose models, or do you take a different approach when it comes to product development?

I'd consider our approach more practical and focused on real-world problems. Things like strong performance in many languages, fluency in industry-specific terms and problems, and customization are important for the global teams at the large enterprises and public-sector organizations we work with. We prioritize making our tech do what companies need, and making it efficient to serve and highly secure so they can use it for complex, sensitive work.

We read a lot of stories about AI businesses bleeding unfathomably large amounts of cash, but Cohere doesn't seem to be in that situation. Why is that?

Because we were clear about our market from day one. We knew enterprises could benefit from this technology, so we've been able to build really great models and products that are effective and efficient. Others are burning cash in pursuit of AGI, but we're building technology that works today.

Most people I talk to about AI are worried about it, sitting somewhere on the spectrum between "it's going to replace me at work" to "it's going to lead to the end of the species." Any thoughts for them, reassuring or otherwise?

If the industry gets it right, AI will be boring. In the best way. It should fade into the background, power the technology and tools we'll use every day, and make work more enjoyable — like what we've seen with technologies that have become invisible enablers, like cloud technology or GPS. This will be transformative, but nowhere near the same way doomsday headlines claim.

Read the full Q&A with Nick Frosst on our website.

The MLB is coming to TikTok — make sure to wipe the grease from the peanuts and Cracker Jacks before you scroll. 

What happened: TikTok and MLB have entered an expanded content partnership that will create a hub within the app showing highlights, game updates, and “creator perspectives.” Interestingly, select creators will be given access to MLB’s archives to produce content. 

Zoom out: Baseball is having a moment, generating new levels of interest that haven't been seen in years. While last year’s World Series may have ended in pain for us Jays fans, it was a worldwide smash hit. Game 7 was the most-watched MLB game globally since 1991.

Why it matters: Younger viewers still enjoy sports but don’t necessarily want to watch in the traditional format (being glued to the TV screen for three straight hours). Instead, they’re seeking a “second screen” experience either to supplement viewing or get quick catch-ups. 

Our take: Baseball could be the perfect sport to thrive on TikTok because, unlike most other major sports, it doesn’t move horizontally. While large swaths of the action are cut off in football, hockey, or basketball highlights when formatted for 16:9 vertical video, a standard MLB at-bat doesn’t really lose much when trimmed from a widescreen TV broadcast.—QH

💰 US$133 billion. How much the U.S. Treasury has collected from import taxes since Trump’s global tariffs were imposed last year. Now that those levies have been struck down by the Supreme Court, thousands of companies, including FedEx, are suing the federal government for refunds on the fees they had to pay.

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