That’s the share of Americans who think legalized gambling is having a negative impact on sports.
- The EU’s next member could be … Canada
- A new AI app hit No. 1 in the App Store — and it’s not ChatGPT
- What investors should expect after the Fed’s rate hike
Canada’s Pivot: From America’s Closest Ally to Europe’s First Associate
The European Union just invited Canada to become its first associate member. The proposal came from the European Commission’s president, Ursula von der Leyen, during her State of the Union address. While it’s still unclear what associate membership would mean, President Trump said the move is a “hostile act” and threatened the EU with “serious tariffs” if Canada were to join the bloc.
Last month, Trump accused Canada of unfair trade practices and levied new 50% tariffs on goods ranging from cheese to cars and furniture. Canada responded with its own retaliatory tariffs on $20 billion of U.S. products.
This newest trade war is broadly unpopular in the U.S. According to a Reuters/Ipsos poll this month, only 20% of Americans supported higher tariffs on Canadian goods.
Canadians' view of the U.S. has soured: 41% of Canadians now consider the U.S. an enemy to the country.
Though Canada is 8x smaller than the U.S. in terms of population and 13x smaller in terms of economic output, its abundant natural resources and massive pool of institutional capital have internationally recognized importance.
Roughly a third of the uranium that fuels U.S. nuclear reactors comes from Canada, and uranium prices already hit an 18-year high this summer on rising demand from nuclear power plants. If trade with Canada were disrupted, uranium — and power — prices could surge even further.
Finally, Canada’s public pension funds are the third-largest pool of retirement savings in the world, and there’s already evidence that Canadian money managers are cooling on U.S. investments. When Trump first unveiled his Liberation Day tariffs last year, Canada’s biggest institutional managers said they were reconsidering U.S. private assets due to policy uncertainty. And this past July, Canadians sold $22 billion in U.S. stocks — the biggest monthly sell-off ever. They’ve also been net sellers of U.S. government bonds every month since January.
In his speech to the EU, Mark Carney framed the ongoing trade war in terms of conquest versus cooperation — or positive-sum versus zero-sum thinking. It’s the same argument Nobel Prize–winning economist Milton Friedman made about markets: The more nations trade with one another, the more prosperity can increase for everyone.
Even old-school economists would agree: Trump has this backward. This is not how you build national wealth. And the numbers back it up — Canada’s trade with other countries is up 17% this year, meaning real volume is rerouting away from the U.S.
That includes critical Canadian resources, including iron, steel, aluminum, and nickel, that America depends on for tech infrastructure and military equipment. Less access to Canadian supply means less diversification for the U.S. on some of the most important materials in the world.
Carney understands he has leverage, and he knows how to use it. He’s targeting tariffs on materials that specifically hit swing states like Wisconsin and Pennsylvania. Now, 75% of Americans say that tariffs will be important to their vote in the midterms.
The AI App That Beat ChatGPT
While the race between Anthropic and OpenAI is capturing most of the headlines in tech, another company just released a serious AI product with less (initial) fanfare and doomerism. It’s called Muse, and it’s Meta’s newest AI agent offering. The app is free, with subscription plans available for heavy users. It’s designed to handle everyday tasks, from making dinner reservations and doctor’s appointments, to buying plane tickets and pet food. According to Meta’s CEO, Mark Zuckerberg, the plan is to eventually take a small percentage cut from the transactions that take place using Muse.
Additionally, Muse will give Meta access to even more granular user data, which will likely increase the effectiveness (and therefore prices) of Meta’s ads.
The app is gaining traction. As of Friday, it ranked No. 1 in Apple’s App Store, ahead of ChatGPT at No. 2, Gemini at No. 8, and Claude at No. 13. Since its unveiling on September 8, Meta has added nearly $170 billion in market cap and is up 9% versus the S&P 500’s 2% decline.
Meta has certain advantages that the frontier labs don’t. For example, 9 out of every 10 internet users outside China interact with a Meta product at least monthly. This means that Meta has both unprecedented training data for its AI systems, and one of the biggest user bases before it even releases a new product.
Meta has taken a completely different approach to AI from its competitors. Zuckerberg hasn’t joined in on the “AI could kill us all” catastrophizing espoused by OpenAI’s CEO Sam Altman and Anthropic’s CEO Dario Amodei, and he has made Meta’s models cheaper and open source.
Price competition has already started to drive down business spending on AI for the top adopters, according to new Ramp data.
The most successful companies have one thing in common: They are time machines. What do I mean by that?
The best AI products do actual grunt work for you. I thought of a way to evaluate this, and I’m calling it the dinner test.
I gave the free version of four AI agents — Meta’s Muse, Anthropic’s Claude, OpenAI’s ChatGPT, and Google’s Gemini — the same prompt: Find and book a dinner reservation for 2 this Saturday, 6:30 to 8:30 p.m., in Williamsburg, sit-down, 4.3 stars minimum. Here’s how it went:
Claude asked me to connect to OpenTable, picked a restaurant, presented a couple options, and then informed me that it could not make the final reservation. FAIL.
ChatGPT also asked to connect to OpenTable. It picked a restaurant and offered some times, but then it said it couldn’t complete the reservation. FAIL.
Gemini presented me with four restaurants, then, after I picked one, asked if I wanted to make the reservation. I confirmed. Then it asked me again if I wanted the reservation. I said yes. Then it asked again, and again. Then it made the reservation. PASS — but with some extra steps.
Meta’s Muse found a restaurant, asked for my email and phone number, confirmed that the information was correct, and then immediately sent me a message that the reservation was booked. The whole thing was done in less than a minute. PASS and WIN.
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The Fed Raised Rates. Here’s What Investors Should Expect From the Market.
The Federal Reserve unanimously voted to raise interest rates last week for the first time since 2023. The quarter-point rate hike was largely expected. Still, stocks sold off after the press conference and Treasury yields rose.
Stocks typically decline at the beginning of rate hike cycles as investors price in uncertainty but then bounce back higher. According to Goldman Sachs, on average, the S&P 500 gains 9% in the 12 months following the first interest rate hike.
Financial stocks are particularly well positioned to benefit. When interest rates increase, banks can charge higher rates on loans, juicing their own revenues. Homebuilder stocks tend to suffer for a related reason. Higher interest rates mean more expensive mortgages and fewer houses being built. During the last rate hike cycle in 2022, homebuilder stocks DR Horton and Lennar fell 29% and 30%, respectively, over the course of three months.
Houses have already gotten much harder to afford. The average interest rate on a 30-year mortgage hit 7.24% last week, meaning that a $500,000 mortgage now costs at least $3,400 per month. On the year, that’s an additional ~$4,860 in interest payments.
The pain isn’t over yet: The Fed’s dot plot showed the median projection to be one more hike this year and then a hold through 2027.
The Fed dot plot is a chart that shows — anonymously — where each of the 19 Fed members think the federal funds rate will be at the end of the current year, the next three years, and in the longer run.
Here’s every leadership and ethics course at every top business school summarized for free:
Meta Muse will continue to gain popularity and will rival ChatGPT and Claude consumer adoption in the next six months.
On Friday, September 25, at 11 a.m. EDT, Ed will sit down for the first-ever Prof G Markets Founder Series livestream with Bending Spoons co-founder and CEO Luca Ferrari. This conversation is for Prof G+ paid subscribers only. Upgrade here.
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