Soft Spot
Monday, August 4th, 2025
World News - Canada’s Wildfire Creates Worsening Air Quality Across North America
Bloomberg
Thick smoke from over 730 out-of-control Canadian wildfires has blanketed vast areas of Canada and the northern US, significantly worsening air quality across the Midwest and Northeast. Major cities like New York, Chicago, Toronto, and Montreal have seen air quality drop to unhealthy levels, particularly for sensitive groups. Warnings and alerts have been issued in 10 US states from Minnesota to Maine and throughout much of Canada, with conditions expected to persist as prevailing wind patterns continue bringing smoke southward. The fires, which have already consumed 6.6 million hectares, show little sign of abating, meaning more smoke and ash are likely to drift into the US in the coming days, keeping air quality compromised for millions.
Tech - BMW’s EV Bet
Bloomberg
BMW is launching the iX3, the first in a wave of 40 new or updated electric vehicles that will be introduced by 2027 and mark a massive technological and design shift for the brand. Designed to take on industry leaders like Tesla’s Model Y, the iX3 will debut with a range of up to 800km and ultra-fast charging capabilities, setting new performance benchmarks. Despite global industry upheaval, including US tariffs and aggressive Chinese competition, BMW is moving forward with heavy investment in its Neue Klasse electric architecture, aiming to eventually have half its global sales be electric vehicles by 2030. Production of these new models will phase out combustion engines at BMW’s flagship Munich plant by 2027, with the company betting that new innovations in software and battery technology—plus ongoing strength in legacy markets—will secure its place against both Western and Chinese rivals, even as US regulatory changes threaten to shake up the competitive landscape.
Business - How McKinsey Lost Its Edge
Economists
McKinsey, once the undisputed leader among strategy consultancies and famed for its “superior people,” is facing stagnation after a decade of rapid expansion and scandals that dented its reputation. Though its revenue more than doubled between 2012 and 2023 to $16b, growth sharply slowed to 2% in 2024—far outpaced by rivals like BCG, which grew five times as fast—and the firm responded by cutting 5,000 jobs. McKinsey’s aggressive push into digital consulting and project implementation put it in direct competition with lower-cost firms like Accenture and the “Big Four,” requiring changes to its billing and hiring models. Meanwhile, new threats are emerging: BCG is closing the revenue gap, and AI-focused firms like Palantir, Databricks, and even OpenAI are offering consulting services that directly challenge McKinsey’s core strengths. As business leaders increasingly look for hands-on help with AI, much of the labor-intensive consulting work McKinsey sells may soon be automated, putting pressure on the firm to further distinguish itself as it enters its second century.
Culture - Is Luxury Going Out of Fashion?
FT
Luxury brands are facing a significant downturn as tourist spending in Europe and Japan drops sharply, compounded by currency swings that have reduced the spending power of American and Chinese travelers. Sector leaders like LVMH, Prada, and Moncler all reported declines in sales attributed to fewer purchases by US tourists in Europe and by Chinese tourists in Japan, reversing last year’s brief boom that was fueled by favorable currency exchange rates. The US dollar’s decline against the euro in the first half of 2025 and the recovery of the yen have both played a role, eroding incentives for tourist shopping sprees. At the same time, weak demand in the crucial US and Chinese domestic markets—exacerbated by concerns over tariffs, inflation, and sagging consumer confidence—has left the luxury industry with little buffer, prompting forecasters to predict a 2% fall in global luxury revenues for 2025, instead of the growth it once expected.
The Daily Spark
The number of births per woman has declined significantly in China, from 1.8 in 2017 to 1 today, see chart below. Also, the Chinese population has been shrinking since 2022.
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Quote of the Day
"It is impossible to live without failing at something, unless you live so cautiously that you might as well not have lived at all - in which case, you fail by default."
- J.K. Rowling