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Hello and welcome to the TLDR podcast, a show about the culture, gossip, and business of money. And this week, a cure for congestion. My name is Devin Friedman. I am here with my co-host, Matt Keres, as you may know, is the director of product for WellSimple, our sponsor. Matthew, update us. I had some healthy pasta last night. That was great. Is there such a thing?
Yeah. I've actually just taken to calling everything that I want to be healthy, healthy in front of it. So like, I have a healthy cookie for breakfast sometimes. You don't have a cookie for breakfast. Oh, yeah. If something bad happens in the morning, I will go get a chocolate chip cookie. This is why Cookie Monster is one of my favorite characters of all time.
Sarah Rieger is the business and markets correspondent for the Webby Award-winning TLDR newsletter. Sarah, how are you? I'm sad because of David Lynch, and I'm hoping we're just making this a David Lynch podcast today, right? We can talk about our favorites. Can we do like just a little capsule obituary and say in one sentence...
Why does David Lynch matter? I think he was like my intro to weirdness in cinema and all his movies have a very big heart. Ooh, interesting. He had this quote he said when he was playing a character in the new Twin Peaks where I think it was something like just grow your heart or die. And I think that's really lovely.
And today we are going to welcome a new friend of the pod. Arshi Mann is the co-founder of The Hatchet, which is a podcast and newsletter looking at power and money in Canada. And we talk about power and money here. Arshi, welcome. We are very excited to have you here. I'm very, very excited to be here. Thank you guys so much for having me. By the way, you guys, Arshi, when we talked to him about coming on the show, he's like, yeah, I sort of know. I know you're stick. You're going to talk to Matthew about quarter zips and charts and
And you're going to ask Sarah about the snow and like, God, we need some new material. People like it when you lean into the old stuff, you know? Yeah, Billy Joel doesn't sell out Madison Square Garden by coming and playing the new stuff, you know? If you don't give the people Piano Man, then what are you doing? We are here to give the people Piano Man. Okay, I think we have like a pretty informative but yet fun show coming up. We're going to talk about...
This thing going on in New York City that's taking on traffic, how's it working, and can we import it? We are going to talk about how bad the media is at picking industry leaders to put on magazine covers. And we're going to talk about how politics are shaping up in Canada because, as we know...
It is a period of massive uncertainty. And Sarah, we're going to start with you. Who is making or losing money right now that's interesting? So, you know the saying, time is money? I do. New Yorkers seem to be saving some time right now that they're no longer stuck in Manhattan traffic. And the city is making money too, thanks to its new congestion pricing measure. And I want to talk about it because Canadian cities obviously have our own traffic issues. And by Canadian cities, I mean Toronto.
There's a lot of stuff that people say about big cities that's kind of bullsh*t. However, when you go to Toronto,
The traffic is truly terrible. It's just so bad. The average Torontonian spent a total of three days sitting in traffic last year. And it costs money, too, right? All that congestion cost Ontario more than $50 billion last year in lost economic productivity, social impacts. If you're sitting in your car, you're polluting. You're not at your desk working, spending money. Any use of your time would be better than that.
Sarah, they are listening to the TLJR podcast. True. So hopefully if you are stuck in your car in Toronto right now, we're bringing you like a tiny iota of joy. Let's talk about what's happening in New York City. If you followed it, it was going to happen, then it wasn't going to happen, and then suddenly it did happen.
Tell us about the policy and, like, how is it working out? Yeah, so, like, politicians in pro- and anti-car lobbies have been fighting over this one for a while. It was delayed for years due to legal challenges. So what congestion pricing actually looks like in practice is drivers have to pay a toll either for traveling into certain busy areas or at busier times of day, like rush hour.
rush hour. So in New York, drivers who enter Manhattan's main business district during peak business hours have to pay between $9 US and $21, depending on whether they're driving their personal car or something like a big tour bus. That drops to $2 in off-peak hours.
There's also discounts for low-income drivers. Emergency vehicles are exempt, as are drivers with disabilities. And most of that money is going to go toward funding public transit. The MTA, the Metropolitan Transit Authority, says that it's going to bring in $500 million a year to start. That'll increase to more than a billion down the road. And that will go to stuff like modernizing the subway system and improving bus frequency, too.
The thing that's interesting to me about this, besides the fact that I like walking and I like walkable neighborhoods, the fewer cars, the better for me. But from a show about money perspective, this is very much like economics at work in the real world, like economic theory. How can we alter behavior by putting in a cost to something? How do the people who designed this plan hope it's going to work?
I think it's like any behavioral tax, right? Like, say, even a tax on cigarettes or soft drinks. If you have to pay more for something, you might not do it. So there's a chance that maybe, hey, instead of driving into this busy area, maybe I'll take the train or the bus or maybe I'll go later when it's less crowded. And it does seem to be working so far. So.
So far. I mean, how long has it been going on anyway? Not long. Like, I think it'll be about two weeks by the time the podcast comes out. But in week one, traffic dropped by 7.5% in Manhattan, which is 44,000 fewer cars on the streets every day.
So for the average commuter driving the Holland Tunnel between New Jersey and Manhattan, their weekday morning drive dropped from 13 minutes to 4.5 minutes. And if that was like your daily commute, like you're going into work five days a week, that would save you 57 hours a year. And it seems pretty popular, too. Like there have been some drivers complaining, but for the 90% of commuters who are already taking transit as they travel into Manhattan, it seems pretty popular. How exportable is it to a city like Toronto, Canada?
Is it something that Toronto is considering, should be considering? It's something Toronto has been considering for a long time. Like this isn't a new concept. I looked at the solution that was proposed eight years ago, which was like a much smaller congestion price than the one in New York. Like it literally was just on two highways.
City council voted in favor of it, but it got shut down on the provincial level. And there is a ton of pushback to something like this. When transit doesn't seem like a viable option for a lot of people, it's maybe not fast enough or accessible enough or like a wide enough network. I think it's kind of hard to sell people on the switch to it when it's like, oh, this will fund it better to expand down the road. But that isn't working yet. Can I just talk about like what...
My quick fix here would be, and the thing that nobody seems to be talking about, at least in the case of Toronto, just get rid of street parking on these major roads. We're taking up two lanes on both sides for like five people to be able to go into a flower shop or a restaurant. It really makes no sense. Yeah, but increasing the number of lanes because you think it's going to alleviate traffic never actually alleviates traffic. Like that was the big lesson of like Robert Moses saying,
In fact, you know, what New York has done is, you know, it's just made walking areas. You go down Broadway and it's like one lane now. So people just don't go down Broadway. I love when these issues come up because like most of the time people just spend all their energy fighting over these big social issues that don't really impact that many people and like don't impact their lives at all. And these are things that actually impact your life, like how much traffic you sit in, whether they pick up the trash. Matt, I bet as a politician, I think you would just be a technocrat.
You're apolitical. You're like, what works? What doesn't? Like, what's the tradeoff? It drives people in my family crazy. Like, I really don't like national politics. My number one issue is local. Are they picking up the trash? You really are obsessed with trash. I don't really understand that, but it's a different thing. Come on, then. My log does not judge.
Matt Keres, you are next. Who is making or losing money that is interesting to you right now? Sam Altman, the co-founder and CEO of OpenAI, is on the next cover of Bloomberg Businessweek. And it really got me thinking, like, is he, you know, about to lose money like basically all the rest of the figureheads that are on these magazines? Like, it really seems to sow people's downfall. Okay. Have you seen the cover?
Yeah, it was a stylized image of Altman. His face is like fused with like metal and pipes made it look like human and computer fused together. No, no, no, no. That's a terrible cover. It's such a cliche. So why do you think it's bad news to be on the cover of a business magazine? What what does it mean? What data is there to support it?
So there's this like longstanding idea that if something is consensus enough to make it on the cover of a magazine, that it's already peaked and likely to reverse. So if a company's CEO is on the cover, short the company. If the cover talks about how great everything is in the economy, run into hiding and short the market. And I actually, I first heard about this idea about 10 years ago when I was brand new out of college as an investor, you
You know, my boss loved this idea. I think it was mostly just like a colorful way to try to teach me to be non-consensus. You know, if ever my like views like aligned with what he would see on any magazine covers, he would like point out that that was destined to be wrong.
Okay, so outline the curse for us. What data is there to support it? Well, one of my favorite financial commentators, Brent Donnelly, actually runs a live version of this strategy and periodically shares his results on Twitter. It's something he jokingly refers to as, quote, magazine cover capital. Basically, the idea that he has this hedge fund that tries to implement this strategy. I mean, so basically, he scans the covers. Specifically, he does time in The Economist, which he thinks are...
the most inversely related to what will happen in the future. If he sees a CEO on the magazine in something that seems sort of bullish, he'll go short the stock. And if it's something that implies doom and gloom, he'll go long. And overall, the strategy has done unbelievably well, remarkably so, at least as far as systematic trading indicators go. It's been up on about 65% of its trades and about 7% on each one of them over the last...
So you could be running a great hedge fund. Yeah, and since he started doing this strategy, he would have 3x'd his money over the last three years. Can you take us through some covers that have appeared since Brent Donnelly started looking at this? So...
He started this at the end of 2021 when Time said Elon was the man of the year. And Tesla actually did fall pretty meaningfully after that. That was like right at the peak of some of the tech craziness. So the contrarian, you know, magazine cover capital fund made a fair amount of money. Then the magazine covers in 2022 were all about how like tech and, you know, Bitcoin were over like crypto winter stuff. And so he in November 2022 went long after AX
crypto's downfall cover and more than doubled his money on that. Some of the most famous examples that Brent loves to talk about are the Economist covers over the years, particularly the Economist covers calling like the end to oil, 1999, 2003, and 2016. And like every single time they called the end of oil, oil shot up over the next year.
So academics have also looked into this theory and, you know, they've mostly found that it's held up. Although like historically they've found that like this works better if a magazine cover is saying that the company is going to do horribly and then you're going to buy it versus if the magazine cover says something is going to do really well and then you go short. And my thought there is like, oh, maybe the thing that's going on here is that like stocks tend to go up over time. And, um,
It's good to be contrarian, but particularly if you're just like riding that tailwind. Isn't there a chance that there's also kind of a cause and effect issue here? So if you are negatively portraying a big company on a publication, it's probably going to lower the stock price, which makes it cheaper. So that's a good time to buy, right? Yeah.
I think that there's a backwards looking, forwards looking thing going on here. Like often what you see in magazines, even if they like try to be forward looking, is that they're actually responding to what has happened in the past, which might like already be reflected in the stock price. And so mean that like the bar is actually lower than
You know, the other thing that I think is also really important to point out here is that, like, the effect of this dynamic is not that strong. Like, if you take Brent Donnelly's magazine cover capital, you know, yes, it's done really well over the last three years. But, like, some of those trades were disastrous. Like, on the Tesla trade, like, it was down 40%.
And it only was right on 62% of its bets. And so I think the other dynamic that might be going on here is that maybe this is a reasonable signal over time. It's just not good enough for anyone to actually
systematically try to take advantage of. Well, what I was curious about was how this applied to Canadian magazine covers. So I looked at a bunch of covers from the Globe and Mail's R.O.B. magazine report on business, and it didn't work at all. But I think that's due to something different about Canadian business leaders, which is that we're really boring.
So the kind of cover stores we're seeing were like the head of Suncor, the head of BMO, the head of Bombardier. These are all companies that have just been giants for a really long time. And I think we don't have quite the same disruptive startup economy as the U.S.,
Can we talk about like some similar phenomenon here? So obviously the first one that comes to my mind is like the inverse Kramer index. You know, I think everyone knows Jim Kramer, the very extravagant host of of Mad Money. And a lot of people online have taken great pleasure in basically doing the exact opposite of everything that he recommends.
and generally have done okay. I mean, you're still, I think the latest returns are not so great. You're still underperforming like the S&P. But the most interesting one has got to be like the Forbes 30 under 30 curse. I mean, that one, you're not losing money. You're going to jail, right? I hope there isn't any Alberta 30 under 30 curse, Sarah. It's 40 under 40, so I'm safe. That one's fine, right? I think so. Thank you.
Long-term possibilities for these companies, frankly, they're incredible. All right, Arshi Mann, the first time that you've ever been asked this very important question, who is making or losing money? That's interesting at the moment. Well, look, with Trudeau's resignation, the liberal leadership, a federal election just on the horizon, we're going to have to talk about Canadian politics a lot this year. It's inescapable. And of course, whoever forms the next government is going to determine who's going to win.
Who's making money? Who's losing money for years? Because this is your first time on the show. Yeah. And I assume there may be a person or two who has not listened to your podcast. I'd say so. How part of this conversation are you on a day-to-day basis? I'm jumping into the conversation. You know, I'm in Toronto, not in the Ottawa bubble.
But I talk to a lot of people who are insiders in the different parties and now more so than ever. So what's the chatter? Like among the people who do this for a living,
What are they chattering about? I think right now it's very much the liberal leadership race. I mean, a prime minister announcing his resignation is a pretty dramatic event. And now we have a sense of like who's likely to be the next prime minister, although it might be short lived. That's at the top of the agenda. But the second thing is just anything going on with the conservatives.
Pierre Palliev is very much the frontrunner, has been for quite a long time. So any indications of what he might do in office, any indications of his electoral strategy, all of that elicits a lot of interest and a lot of response from people and a lot of gossip.
So obviously this is interesting to everyone because it's the future of the country. And a big reason Trudeau was in trouble is because everyone is seemingly very angry at him about the way the economy is going.
So what's the essential like economic struggle between Carney and Freeland right now? And then we'll get into the conservatives. It's impossible to say with Carney and Freeland. They don't have platforms out yet. I think the biggest question is going to be how much is each of them going to distance themselves from the Trudeau legacy? We're hearing from inside Christopher Freeland's camp that she's going to oppose the carbon tax, right?
Mark Carney's also come out against the carbon tax, but in sort of typical Canadian politician fashion, he only did so in French. But when pressed further about like what would be the changes, he didn't really clarify and said that he would announce that later on. What are we looking at in terms of like a financial sea change if the Conservatives come into power?
I think there's the concrete stuff we know about. And then there's the kind of directional things that we expect a conservative government under somebody like Pierre Polyev will probably do. So maybe we should talk about the concrete things, you know, first off, like getting rid of the carbon taxes is right off the top. I mean, axe the tax has basically been Polyev's slogan since he ascended to the leadership. He's also...
talked about implementing a major tax code overhaul. He says he's going to do that by bringing in a panel of entrepreneurs and farmers and everyday people and economists, that kind of thing, in order to close loopholes and overall reduce the tax burden.
It's the kind of thing a lot of Canadian parties like to say, because then you don't have to actually put out what your tax plan is going to be before the election. But I think we do have a general sense that we're going to expect less taxes under possible Prime Minister Polyev than we would under Trudeau.
Any time that there's like a power change like this, after such an extremely long period of rule by one party, there's this sort of pent-up policy wonkery. You know, conservatives have presumably been chomping at the bit to be in power and have sort of coalesced around a set of ideas they've been opposed to in the Trudeau administration. Is that the case?
Yeah, I think so. I mean, the Trudeau government's kind of been experimenting with like so-called industrial policy. And that's everything from like, we're going to create, you know, an AI supercluster in Montreal. We're going to invest all this money into building up green energy industries. And I think you really see the conservatives pretty opposed to that way of like economic management.
They talk a lot about the rise of so-called corporate welfare as they characterize it under the liberal government. Pierre Polyev isn't going off and speaking to a lot of chambers of commerce in Canada. He's actually made quite a point of that. He's at more union halls, right?
than he is at a meeting of a major chamber of commerce. And the question is, like, how much of what Polyev is putting out there is political posturing versus what he really believes and wants to implement. He's definitely running in a different way than previous conservative leaders have, who have been much more straightforward, kind of free market economics, balanced budgets, pro-business.
Sarah, what do you think the next regime will look like if you're just looking at it in terms of incentives and externalities? What sort of behavior are you looking for the new government to influence in an economic way?
I think the biggest concern like a lot of Canadians will be watching for right now is housing and how the incoming government will handle the housing crisis. This is one of the major issues that really propelled Polyev upwards. And what we do know about his approach is he says that he'll get rid of federal sales tax on new housing builds, which would be a pretty significant policy change.
He's been threatening to basically withhold federal money, grants for transit, infrastructure money, if cities aren't actually incentivizing housing construction enough. If they're not hitting their targets, Polyev says that he's going to make sure that they feel some pain.
I do think the question is how much the government does actually want to try to lower housing prices, right? Because you have these kind of two opposed groups. You have renters and people who haven't been able to enter the housing market yet, and a lot of older Canadians especially, who their house doing up in value is their retirement plan. That's what most of their wealth is tied up in. So it's really hard to see a path forward where you help one of those groups without also hurting the other, right? If Pierre Palliev...
were on the ROB cover and you wanted to short, you know, some companies in the future that would appear to be doing well because of his rise to power, what would they be? Small cap energy stocks, I'd say. Like smaller oil and gas companies in and around Alberta. That might be the way to go just because conservatives tend to be very pro oil and gas.
There's a lot of stuff going on. Like Trump coughing could also, you know, whip those stocks around. Right. Everything could go out the window by the time our next episode comes out after Trump gets inaugurated, because who knows what's going to happen. It's going to be an interesting time. Maybe the American army will be occupying Toronto by then. But will they enact congestion pricing?
Okay, Sarah, that is it for this week. Tell the people what they learned. We learned that everyone hates bad traffic, but maybe not enough to pay to fix it. We learned that we're all going to be so successful because none of us are Time Magazine cover stars. And we learned that Canadian politicians agree everything needs to change. They just can't agree on what everything is.
Thank you all for listening. This show is sponsored by Wealthsimple. It is made by me, Devin Friedman, Matt Keres, Sarah Rieger, Matilde Erfolino, Leah Fetter, Kat Angus, Jared Sullivan, with help from Juanita Leon and Allison Hopkins, fact-checking by Brennan Doherty, theme music by Andy Huckvale, and engineering by Emma Munger. Special thanks this week, of course, to Archie Mann.
The TLDR podcast is offered by Wealthsimple Media Incorporated and is for informational purposes only. The content in the TLDR podcast is not investment advice, a recommendation to buy or sell assets or securities, and does not represent the views of Wealthsimple Financial Corporation or any of its other subsidiaries or affiliates. Wealthsimple Media Incorporated does not endorse any third-party views referencing this content. More information at wealthsimple.com slash TLDR.