Permanent renters

Good afternoon. We’re still playing around with formats for this newsletter. The last few weeks I have been writing one longer piece of analysis, with shorter bullets covering interesting money stories. Today I’m trying out something different. Let me know what you think and what you prefer.

In today’s letter:

A new Desjardins report says Toronto and Vancouver are starting to look less like Canadian cities and more like global hubs such as London, New York and Sydney, where long-term renting is the norm rather than a stepping stone to ownership. Price-to-income ratios have pushed deep into "impossibly unaffordable" territory at nearly 11 in Toronto and nearly 13 in Vancouver, compared to the national average of 7.5. Homeownership rates have already dropped to 52% in Toronto and 46% in Vancouver, well below the 67% national average. Getting back to the old normal would require incomes to jump 60% to 80%, prices to fall another 25% to 40%, or mortgage rates to drop to zero or even go negative. The report's takeaway: Ottawa should stop trying to restore broad-based ownership and start building a system where long-term renting actually works, including more family-sized rental units and a tax code that doesn't tilt so heavily toward owners. The principal residence capital gains exemption alone topped $7.6 billion in 2023.

The fragile US-Iran ceasefire is showing cracks. Iran struck a key port in the UAE hours after targeting an ADNOC oil tanker near the Strait of Hormuz. Brent crude jumped to nearly $115 a barrel and major stock indexes fell. Donald Trump announced Sunday the US military would begin escorting stranded ships through the strategic chokepoint starting today, deploying guided-missile destroyers, aircraft and drones. Two US-flagged ships have made the trip so far, while Iran fired warning shots at US Navy vessels and threatened to attack any American forces that enter Hormuz.

A new Wall Street Journal analysis of Polymarket and Kalshi shows prediction markets are heavily tilted toward the pros. Just 0.1% of Polymarket accounts (roughly 2,000 of the 1.6 million analyzed) took home 67% of all profits since November 2022, netting nearly $500 million. The winners are algorithm-driven traders — often teams of professionals — paying big bucks for premium data feeds and firing off tens of thousands of trades a day using software. One former pro poker player told the Journal he places 60 trades a minute on Kalshi. His take on casual bettors? They "have no chance. Systematically." Nevertheless, people are still piling into this platform: trading volume across both Polymarket and Kalshi hit $24.2 billion in April, up from $1.8 billion a year earlier.

A new Wall Street Journal analysis of Polymarket and Kalshi shows prediction markets are heavily tilted toward the pros. Just 0.1% of Polymarket accounts (roughly 2,000 of the 1.6 million analyzed) took home 67% of all profits since November 2022, netting nearly $500 million. The winners are algorithm-driven traders — often teams of professionals — paying big bucks for premium data feeds and firing off tens of thousands of trades a day using software. One former pro poker player told the Journal he places 60 trades a minute on Kalshi. His take on casual bettors? They "have no chance. Systematically." Nevertheless, people are still piling into this platform: trading volume across both Polymarket and Kalshi hit $24.2 billion in April, up from $1.8 billion a year earlier.

A new TD survey shows Canadians are getting more practical with their tax refunds this year. Nearly half (47%) plan to save the money, up from 29% last year, while 25% will invest it. Gen Z is leading the charge, with 63% planning to save, more than double last year's 30%, and 33% planning to invest, up from 14%. More than a third of respondents say they'll put their refund toward debt, compared to 23% last year, and a quarter will use it to cover everyday expenses, up from 18%.