Since time immemorial, humankind has been bumbling around waiting for a technological inflection point to deliver us from our physical and intellectual shortcomings. That moment is here!
The combination of Ozempic and ChatGPT is beginning to transform us from a race of portly simpletons into the svelte savants we were destined to be. More on that below.
In the news
- Canada’s railways are working to resume full service after a labour board imposed binding arbitration and ordered thousands of rail employees back to work, ending a conflict that crippled the country’s supply chains.
- The Ontario government is considering whether new regulations are needed to limit exclusivity deals between insurers and pharmacies, launching a consultation process Friday that seeks comment from businesses and consumers on the issue.
- Prime Minister Justin Trudeau is expected to unveil changes to the temporary foreign worker program this morning as his government wrestles with immigration streams that exploded in numbers during the pandemic, which critics say have put pressure on housing and health care.
- The federal government has announced that military bases and a Montreal building once the headquarters of the National Film Board are among five properties that will soon welcome proposals from developers to convert them into affordable housing.
IN FOCUS
GLP + GPT
Illustration by Hayden Maynard
Okay, we’re not on the cusp of an age of superhumans. But there are profound economic changes afoot from the advent of a pair of legitimately transformative innovations: artificial intelligence, such as ChatGPT, and the class of GLP-1 weight-loss drugs that include Ozempic, according to The Globe’s Jason Kirby.
I asked Jason how these two forces are converging.
At first blush, ChatGPT and Ozempic don’t seem to have much in common. How are the two linked?
Part of it is timing. Both of these innovations hit the public imagination around the same time in 2022, even though they weren’t really new. So you had these two mega-stories unfolding throughout 2023 and into this year, but in very different ways. Even though both are technologies with the potential to disrupt the economy, we’ve tended to only view AI that way. Ozempic, which at this point is really a catch-all name for similar types of weight-loss drugs, is still seen as a medical story. But that’s arguably far too narrow a framework.
I think most people get the disruptive potential of AI. Why does the same go for weight-loss drugs?
Let’s be clear, AI will be massive, no question. We can’t even conceive of how it will change our lives. Or when. Just that it will. With Ozempic and similar drugs, it’s different. When people start using it, the impact is immediate, with average weight loss of 15 to 20 per cent. Only a small percentage of the potential market is using it now, largely because the high cost leaves it out of reach, though that will change over time.
There are nearly one billion people with obesity in the world and billions more who are overweight. Obesity is a huge drag on growth – people with obesity are more likely to be unemployed, take more sick days and earn less. Goldman Sachs estimates that 60 million Americans with obesity using this category of drugs and finding success could boost GDP by 1 per cent.
For the last year, investors have been pricing in the impact of weight-loss drugs on a variety of industries, like medical-device manufacturers, packaged-food companies, restaurant chains and even casinos. Is that just the stock market doing that thing where it gets way ahead of itself?
The market is definitely trying to price in the impact of weight-loss drugs on both the winners and losers in the economy. Snack-food companies will likely take a hit, restaurants could see diners cut back, as might conventional weight-loss programs, and healthier people should require fewer other medical interventions. There will also be winners. Gyms could actually benefit, since people find the need to counter muscle loss that comes with Ozempic. Many who have lost weight on these drugs after failing with conventional diets for years report their energy and mobility is up, and they travel more, so tourism could get a boost. And, of course, the drug companies are huge winners – Novo Nordisk, which makes Ozempic and Wegovy, and Eli Lilly, which makes Zepbound and Mounjaro, have seen staggering share price gains. But exactly how big these impacts will be is hard to measure. It’s a given that in some cases investors will overestimate the upside and downside for some companies, and completely miss the impact on others.
In reporting this story, how much clearer are you on the magnitude of the economic impact of both AI and these new weight-loss drugs?
The changes coming to AI are both fascinating and unnerving. The technology is advancing so quickly toward the emergence of autonomous digital agents capable of fully taking over tasks that only humans can do today. And yet AI’s impact remains amorphous – I included a chart in the story on the range of estimates out there for AI’s contribution to GDP and it runs the gamut from 1 per cent to 20 per cent. I’m clearer when it comes to Ozempic, in part because as a diabetic I have first-hand experience. I’ve so far shed 15 per cent of my weight and drastically reduced my blood sugar level. What I hadn’t twigged to was what happens when that effect gets multiplied on a massive scale.
CHARTED
How much can you expect to receive from the Canada Pension Plan 15 years down the road? That depends on when you retire. Let’s say you march into your boss’s office this morning and quit on the spot. If you also happen to be 65, happy retirement! From this point on, your maximum annual CPP payment will rise only by the rate of inflation each year. That should work out to about $23,300 annually by 2040.
Now, someone who keeps working through those 15 short years will see their payments rise by the rate of wage inflation, which historically has outpaced price inflation by about 1 per cent a year. That should push their CPP payment starting in 2040 up to about $32,900 a year. Then you take that extra $9,500 per year in retirement you earned and buy something sweet to make the person who retired in 2024 super jealous.
THE OUTLOOK
On our radar and reading list
Monday: It’s a relatively heavy week of corporate earnings and economic data, starting with U.S. durable goods. Are Americans buying lots of big-ticket items? You better hope so.
Tuesday: Canadian bank earnings season hits its stride with the release of third-quarter financials for Bank of Montreal and Bank of Nova Scotia. Royal Bank and National Bank are up the following day, capped off by CIBC on Thursday. As The Globe’s James Bradshaw wrote, the spotlight is squarely on the health of the large Canadian banks’ loan books.
Wednesday: It’s earnings day for Nvidia Corp., which has the potential to jolt global markets one way or another. Also, remember CrowdStrike? The company that broke the internet last month? It’s reporting, too.
Thursday: U.S. initial jobless claims are due, amid intense scrutiny of American economic readings and their potential to inform potential rate cuts.
Friday: Canadian GDP for June is expected to build on three consecutive months of growth. That would cap off a fairly stable quarter for the Canadian economy, which has given the Bank of Canada the luxury of keeping its focus on inflation.
Morning markets
Global markets were mixed amid cautious trading ahead of inflation data that could pave the way for rate cuts in the United States and Europe. Wall Street and TSX futures pointed higher.
Overseas, the pan-European STOXX 600 was flat in morning trading. Germany’s DAX fell 0.21 per cent and France’s CAC 40 advanced 0.16 per cent. British markets were closed for a holiday.
In Asia, Japan’s Nikkei closed 0.66 per cent lower, while Hong Kong’s Hang Seng rose 1.06 per cent.
The Canadian dollar traded at 74.04 U.S. cents.