Heardle it through the grapevine

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In this edition:🏦 Interest rates *sigh*🎧 Heard of Heardle?

— Vindhya Kolluru, Editor

ECONOMY

Inflation, interest rates...the whole shebang

Last week, the Bank of Canada (BoC) raised its key interest rate by 100 basis points (finance-speak for 1%) to 2.5%. The hike is the BoC’s largest one-time increase since Brandy and Monica released the hit summer soundtrack in 1998.

Quick refresher: After the BoC slashed interest rates to near-zero levels at the onset of the pandemic in March 2020 (remember the bread-making craze?), spending has increased and inflation is running hot.

• To put a lid on inflation, the BoC and other central banks around the world are raising interest rates — which makes things like mortgages and car loans more expensive — in the hopes that people will spend less.

Last week's rate hike is the fourth increase since March. Inflation sits at a four-decade high of 7.7% and is set to rise over 8% in the coming weeks — the highest level since Billie Jean topped the charts in 1983. BoC governor Tiff Macklem stated that the policy interest rate increase was to prevent high inflation from becoming entrenched. (That’s an economist’s “no pain, no gain” approach to managing the spiralling costs of *looks around* everything...okay, except for Costco hot dogs.)

Not too fast, not too slow, but just right: Hike interest rates too fast, too high, and the BoC risks plunging us into a recession. But leaving inflation unchecked is just as bad. The goal is to engineer the perfect, Goldilocks-esque 'soft landing.'

With the BoC expected to continue hiking rates in the coming months, economists predict a tough road ahead for workers. According to recent Statistics Canada data, average hourly wages rose by 5.2% to $31.24 year-over-year compared with a 3.9% annual increase in May. Still, rising wages aren't keeping up with the pace of inflation. While wage growth can also contribute to inflation in the form of higher prices, some believe the real driver is corporate profits.

• The Canadian Centre for Policy Alternatives (CCPA) compared the corporate profit-to-GDP ratio of previous post-recession periods and found that corporations have the upper hand compared to workers. Critics have said that retailers like Loblaw, which saw its net earnings rise more than 17% in the first quarter, are an example of companies profiting from inflation. In the first few months of 2022, corporate profits had risen to 15.2% of GDP; on the flipside, worker compensation had lost 0.8 points of GDP since 2020.

The bottom line: The BoC thinks that we won’t get back to the 2% inflation target until 2024. If you're feeling the pinch, know that you're not alone. A recent poll found that around half of all Canadians are reining in non-essential spending — travel, dining out, entertainment — and a quarter are cutting back on essentials due to rising costs. With economists predicting the situation might not improve for some time, we recommend checking out this guide to surviving rising prices.

— Paisley Sim

On our radar

• Payments Canada appointed Hanna Zaidi to its member advisory council, through which she will advise the organization’s board on the future of payments in the country. Zaidi is the chief compliance officer of Wealthsimple’s payments division and has held previous roles at RBC, TD and VIQI.

• Aritzia’s Melina pants are sleek, but we get it if you want to return them — who wants to wear leather pants in warm weather? Retailers burdened with processing online returns and rising shipping costs are turning to companies like ReturnBear. The Toronto-based company helps retailers manage the time-consuming logistical parts of returns. In this Globe and Mail feature, ReturnBear CEO Sylvia Ng discusses RetailBear and its future growth plans.

• Twitter has tapped Rebecca Hahn as its new vice president of global communications. With Elon Musk’s Twitter fingers and his more than 101 million followers, we have no doubt that the new gig will keep Hahn on her toes.

• Fatima Zaidi penned a piece in BetaKit on the importance of Canadian founders baking social purpose into their company mission. Zaidi is the CEO and founder of Quill, a podcasting hosting platform and production agency.

• Amid ongoing concerns about data privacy on TikTok, Roland Cloutier, the social media platform’s global chief security officer who oversees cybersecurity, is stepping down. Kim Albarella, a senior member at TikTok and former ADP executive, will serve as interim head of global security.

M&A

I Heardle it through the grapevine

Do you dream in yellow and green squares? Did Wordle become a staple in your daily routine for months, just like millions of others around the world? Spotify is jumping on the game train, too, with its recent acquisition of Heardle, the music version of Wordle.

What's happening: The acquisition is part of a plan by Spotify to diversify its service and make it more interactive for users. Heardle gives you six tries to guess a song from its intro, starting with a one-second snippet and extending it from there. Spotify hopes that Heardle will introduce users to new music, help them rediscover old music and determine the song's name if a tune has been stuck in their head.

Games bring a sense of community to people and commit them to a brand — if it is tied to one. For instance, Wordle, which started as a gift for the creator's girlfriend (who loves word games turned into an online phenomenon. The New York Times also caught onto the hype, buying it in January for an undisclosed amount in the “low-seven figures" in a bid to attract and retain subscribers.

• Games are good for business. In its first-quarter earnings report, the NYT reported that the addition of Wordle brought it "tens of millions of new users." Now, the media company is banking on making more money from the popular word game by teaming up with Hasbro to turn Wordle into a board game.

The details: Heardle through Spotify will remain free to all, even if you are not a Spotify user. However, users can listen to the songs in the quiz after they complete it, and in the future, they can challenge friends to a game. Spotify also plans to allow users to play Heardle in their native language, not just English.

Zoom out: One of the biggest pulls to play games like Heardle or Wordle, and for large companies to acquire or create games, is the psychology behind it. The anticipation of a new challenge every day and the sense of belonging that comes from being able to share your results on social media keep users coming back.

— Hannah Rosen

Overheard

“The national magnitude of the outage really calls into question whether it’s wise to rely on one large national provider in many cases to provide a wide swath of network services, internet services, and that, in the absence of real competition, is a real problem.” — Yuka Sai.

Sai is a lawyer with the Public Interest Advocacy Centre, an organization that has filed a letter with the Canadian Radio-television and Telecommunications Commission to look into the Rogers outage.

Other things we read and we liked

🪐 ICYMI: NASA revealed the dazzling first photos taken from the $10 billion James Webb Space Telescope last week. This tweet sums up our reaction to looking at these photos.

🏢 Lego is releasing a 1,164-piece Office set so that you re-create your own Dunder Mifflin branch.

📺 After a few months of falling subscriber numbers and tumbling stock prices, Netflix is beginning to turn its back to feedback from its workers.

😀 New emojis are dropping in September 2022 — here’s a peek at them. Let us know if you have a favourite!

🐧 Facing soaring inflation, a Japanese zoo is feeding its penguins and otters cheaper fish — and they are not impressed.

💬 Here's how to edit or unsend a text in iOS 16 to avoid having to follow up with "I didn't mean to send that!"

🤝 Now hiring

Want to get a jump on finding your next role? Here are this week's featured job openings:

• Tech Lead Java at CIBC (Toronto)

• Senior Content Writer at Brafton (Vancouver)

• Communications Advisor at City of Edmonton (Edmonton)

• Consultant at Klick (Toronto)

• Technology Strategy and Transformation Consultant at PwC Canada (Winnipeg)