A Canadian Tesla?

Watch out Elon Musk, the Canadian Automotive Parts Manufacturers' Association (APMA) is coming for you... Yesterday, the CAPM, which represents Canadian auto parts manufacturers, launched Project Arrow, an initiative to prove that a fully electric vehicle can be designed and assembled in Canada.

What are they building? The APMA is hoping to build an original, full-build zero-emissions concept car designed by students at Carlton University. They launched the project in response to Prime Minister Trudeau's call for a zero-emissions future by 2050.

Why is this important? Canada is home to hundreds of small scale parts manufacturers who produce components used in nearly every vehicle. The goal of Project Arrow is to demonstrate that Canada has the expertise and capacity to produce electric vehicles at scale. APMA's hope is that a multinational manufacturer sees Canada's capabilities and decides to invest in our automotive sector.

Bottom line: Advanced manufacturing jobs will be key to our country's economic future. Demonstrating that Canada is capable of producing high-quality electric vehicles will go a long way in securing future investment.

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One Airline to Rule Them All

Over the weekend, Air Canada announced they still plan to acquire Air Transat but on revised terms. The proposed deal would see Air Canada purchase Air Transat at $5 per share, down from the original $18 per share.

Is it a done deal? While both parties have agreed to the revised terms, the deal is far from final.

  • Regulators in Canada, Quebec and the European Union will have to evaluate the deal against anti-trust concerns and give it the green light before it can proceed. Deadline for the deal to receive regulatory approval was moved back from December to February 15th.
  • Shareholders of Air Transat welcome the deal but are waiting to see if any other bidders emerge before giving it the rubber stamp of approval.
What does this mean for you? Prior to the pandemic, the proposed takeover of Air Transat by Air Canada was highly contentious. If approved, the acquisition would give Air Canada a 60% marketshare over Transatlantic flights and dominance in Montreal air travel.

  • Conventional wisdom is that less competition leads to higher prices and a worse experience for consumers. Air Canada and Air Transat have done little to reassure passengers that this won't happen.
Zoom out: The more than 60% discount in share price shows you how hammered the airline industry is being hit. Air Canada is proceeding with the deal because they think they're getting a airline for a steal. Now it's up to the regulators to decide if it's in our country's best interest...

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Trade Titans

Forget about China, America's got a new foe on the trade front: the menacing Europeans! Yesterday, the WTO gave the European Union permission to tax up to $4 billion of American products annually.

Why? In a classic sea-saw, last year the World Trade Organization gave the US the permission to tariff European products in retaliation for generous EU subsidies to French-based plane manufacturer Airbus.

The European Union proceeded to counter-sue the US, arguing that the US Government also heavily subsidizes their domestic airplane manufacturer Boeing. So now the EU can charge their own tariffs on US goods in response to the US's original tariff – that's what we call a tariff tongue-twister.

What's next? The WTO's main motivation for the decision was to force both parties to come to the table to negotiate a settlement. But that could take years...

Zoom out: In the short term, key industries – already struggling due to COVID-19 – will be particularly hard hit by Europe's tariffs. Last year, the EU released a list of items it could tax, including aircraft, chemicals, citrus fruit, frozen fish and ketchup (not ketchup?!?).

This is really bad for news for Boeing. Between the grounding of their 737 MAX's fleet, the drop in air traffic due to COVID-19 and now European tariffs, Boeing can't catch any breaks.
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One More Thing

💵Get your wallets ready. Yesterday, Apple held their 'Hi, Speed.' event where they unveiled four new phones: the iPhone 12, as well as their Pro, Mini, and Max versions.

But the really big news was Apple's announcement that the iPhone 12 will be their first 5G enabled device.

What's 5G again? 5G is the latest in cellular technology. According to experts, 5G will 10x internet browsing speeds, enable 4K video on your phone, and power the next generation of connected devices, such as autonomous vehicles.

Is 5G available in Canada? Yes! Rogers, Bell and Telus are all in the process of rolling out their 5G networks and almost all Canadian cities have some coverage. The problem? Very few devices actually support 5G.

That's until now... the iPhone 12 is the first high profile phone to support the new spectrum and marks a turning point for the technology.

What else did Apple announce?

  • More speed: In addition to 5G, all iPhone 12 models will use the A14 Bionic chipset, which Apple claims is the fastest chip in any smartphone.
  • Magnets: If you use wireless charging, you know how frustrating it is to find out that your phone didn't charge because you didn't place it on the pad properly. Apple's added a magnet to each phone to prevent this from happening. The magnet can also be used for accessories, such as a phone card holder.
  • Camera: Apple loves their cameras and the iPhone 12 and 12 Max don't disappoint. The iPhone 12 Pro has the best camera(s) of any iPhone and the standard iPhone 12's camera has been optimized for night mode.
Apple also unveiled a new Homepod Mini and a new wireless charger but both took a supporting role to the iPhone 12.

The strangest news of the event was Apple's announcement that they're going to remove a wall charger and wired headphones from the iPhone 12 box. End of an era for the white earbuds...
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Shot Across Google's Bow

The U.S. Justice Department is expected to fire its opening salvo at Google this week, charging the company with anti-trust violations related to its search practices.

The charges: It's not yet clear what the case will focus on, but we have some hints... 
  • Congressional Democrats released a report last week claiming Google has a monopoly in search and uses its market dominance to crush competitors.
  • Republicans have accused Google of political bias in its search results. 
Pitfalls: But anti-trust regulators face some pitfalls in this case...
  • Anti-trust cases typically must now show that consumers are harmed by the targets practices, which can be difficult with tech companies that offer a free service.
  • Reports last month quoted lawyers expressing concern that the Attorney General was rushing the case.
  • The outcome of the election could impact the trajectory of the case, and a new Biden-led Justice Department could change course. 
Zoom out: After years of inaction, U.S. lawmakers are rushing to regulate tech companies, which no longer enjoy public acclaim. But in spite of much furor, regulators have yet to score any major wins.
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The Bankers Meet

Finance ministers and central bankers are gathering (virtually) this week for annual meetings of the IMF and World Bank.

7 months into the pandemic and with the economic recovery losing momentum, to say these meetings matter would be an understatement.

Key questions:
  • Will a consensus be reached on continuing (or ramping up) stimulus spending?
  • Will wealthy countries that can borrow at low interest rates organize sufficient transfers to low-income countries to fund COVID relief?
  • Will major countries — particularly the U.S. and some EU states — pull back on stimulus too soon, threatening global recovery?
Power shift: Central banks are already running the money printers at full tilt, which means that there's only so much more monetary policy can do. Now the big decisions will be fiscal policy choices made by finance ministers and governments.

The big picture: A major politial battle is emerging over whether fiscal policy — taxing and spending by governments — will continue to be used as a mainly short-term fix for economic slumps or a long-term project to manage the economy and achieve political goals.
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Airbnb's Near-Death Experience

When COVID hit in March, Airbnb lost $1.5bn in bookings nearly overnight and saw the number of weekly bookings drop from nearly 600,00 in February to around 100,000 by mid-April.

By the summer, business had recovered and bookings returned — on some days — to pre-pandemic levels.

So what happened?

  • Airbnb switched focus from international destinations to local getaways, changing its algorithm to show people nearby cottages and beach houses.
  • After securing a $2bn loan, they cut costs dramatically, laying off a quarter of their workforce and slashing $1bn from marketing expenses.
  • The company refocused on its core functions, putting other projects like experiences and transportation on hold. 
The outcome: The company appears to have made it through the worst of the storm (at least so far), future bookings in the US have risen since last year, rental inventory is growing again, and some laid off workers have been re-hired. 

Zoom out: The fate of Airbnb is a useful barometer for travel and leisure businesses more broadly. The company's survival and recovery shows that people are once again spending on holiday stays, but in a very different way than they were pre-pandemic. However, with cases on the rise, this sector isn't out of the woods yet.

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What Are The Two Most Important Business Skills Today?

Answer: Spreadsheets and story-telling. Being able to analyze data and use it to tell a story. Mastering these two skills can really take your career to the next level.

Fortunately, Lighthouse Labs can help you master them in just six weeks with live online classes. Learn from pros and build your knowledge with expert mentors. Plus, scholarships of up to $750 are available.
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Let's Make a $100 Billion Deal

$100 billion — that's how much the OECD says could be lost on an annual basis if negotiations to develop global cross-border tax rules collapse. 

What's being negotiated:
  • 137 countries came together in January to agree on new rules for taxing multinational corporations that do business globally. 
  • In particular, governments are looking to find a way to tax tech giants like Amazon and Facebook. 
  • These tech corps often book profits in low-tax countries like Ireland, allowing them to avoid paying taxes in higher tax jurisdictions where their customers reside.
What's the problem:
  • Making a deal that satisfied so many different countries is tough. 
  • The Americans have pushed for a "safe harbour" rule that would allow companies to decide whether to subject themselves to either existing or future rules (an idea that nearly everyone else opposes).
  • Low-tax countries want to keep profits booked in their countries so they can impose taxes themselves (albeit small ones).
  • A deal has yet to be reached, despite the deadline already being extended.
What's at stake: 
  • If a global agreement can't be reached, countries will impose their own national taxes on digital services. 
  • The U.S. government has threatened to retaliate with tariffs against any country that imposes taxes on U.S. based tech companies.
  • The OECD projects trade disputes driven by this issue could reduce global GDP by as much as 1%. 
Zoom out: With the global economy already knocked back by COVID, an international tarrif war could make things even worse.
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Wait, your mortgage doesn’t disappear after you die?

If you’re a homeowner, you’ve felt the pain of saving up for a down payment for years just to buy a tiny box in the sky with about the same square feet as your parents’ laundry room. Nope? Just us?
After saving up to buy what will likely be the biggest asset you ever purchase (although we really do hope you buy a super yacht one day), don’t you want to protect it? I don’t mean hiring The Rock to stand outside and scare away burglars - I mean protecting it by having a will that ensures your largest assets passes on the way you would want. Not as sexy, but still important.

What if I asked you how your home is owned? Would you know the difference between owning it jointly with rights of survivorship vs. joint with tenants in common? Would you know what happens to your mortgage when you pass away? And would you know who your home would go to if you didn’t have a will?
Well, 1 in 10 Canadians think their mortgage disappears when they die (spoiler alert: it doesn’t), and there are a lot of myths and misconceptions and home ownership and estate planning. While we can’t make your mortgage disappear, we can break down the basics for you.

If you’re a homeowner, you’ve got to take a minute to read Willful’s Guide to Estate Planning for Homeowners about why you should get a will. You’ll learn how your ownership structure affects how a home is treated in your will, what happens to your dreaded mortgage after you pass away, why you may want to update your will when you move, and lots of other exciting things. We promise, it will be more exciting than watching paint dry.
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