July picks available soon
I’ll be publishing the Prime and Select picks for the month of July before Tuesday, July 1 (the first trading day of the month). As always, SPC’s performance measurement for the month of June, as well as SPC’s cumulative performance, will assume the sale of the June picks at the closing price (at the mid-point of the closing bid and ask prices) on the last trading day of the month (Monday, June 30). Performance tracking for the month of July will assume the July picks are bought at the open price (at the mid-point of the opening bid and ask prices) on the first trading day of the month (Tuesday, July 1).
What we’re reading (6/25)
“Housing Market Set For The 'Worst Year In Decades,’ Says Meredith Whitney” (Business Insider). “The CEO of investment research firm Meredith Whitney Advisory Group and senior advisor at Boston Consulting Group told Yahoo Finance that 2023 and 2024 were both bad years, but it's now looking even worse with about 4 million sales of existing homes expected. Whitney thinks the actual number may be significantly below that figure.”
“OpenAI, Microsoft Rift Hinges On How Smart AI Can Get” (Wall Street Journal). “The future of the OpenAI-Microsoft—one of the most storied in tech history—hinges in part on the meaning of an amorphous AI buzzword that divides many in the industry. The contract between the tech partners, who have been locked in acrimonious negotiations, stipulates that when OpenAI’s systems reach ‘artificial general intelligence,’ or AGI, the startup will be able to limit Microsoft’s access to its future technology. Microsoft is fighting hard to prevent that.”
“Coinbase Stock Touches 52-Week High As Analyst Calls Company ‘One-Stop Amazon’ Of Crypto Services” (Yahoo! Finance). “‘Coinbase is the most misunderstood company in our Crypto coverage universe,’ Bernstein analyst Gautam Chhugani and his team wrote on Wednesday morning, raising their price target on the stock to $510 from $310 with an Outperform rating. Coinbase dominates US crypto trading, operates the largest stablecoin business among exchanges, and serves as custodian for the underlying assets of the majority of US spot bitcoin ETFs, Bernstein analysts said.”
“Why Today’s Graduates Are Screwed” (The Economist). “This is especially true for those jobs that require the rudimentary use of technology. Until relatively recently, many people could get to grips with a computer only by attending a university. Now everyone has a smartphone, meaning non-graduates are adept with tech, too. The consequences are clear. In almost every sector of the economy, educational requirements are becoming less strenuous, according to Indeed, a jobs website. America’s professional-and-business services industry employs more people without a university education than it did 15 years ago, even though there are fewer such people around.”
“The End Of Publishing As We Know It” (The Atlantic). “Not all publishers are at equal risk: Those that primarily rely on general-interest readers who come in from search engines and social media may be in worse shape than specialized publishers with dedicated subscribers. Yet no one is totally safe. Released in May 2024, AI Overviews joins ChatGPT, Claude, Grok, Perplexity, and other AI-powered products that, combined, have replaced search for more than 25 percent of Americans, according to one study.”
What we’re reading (6/24)
“Powell Reaffirms Wait-And-See Posture On Rate Cuts” (Wall Street Journal). “Federal Reserve Chair Jerome Powell told lawmakers on Tuesday that recent economic data would have likely justified continuing to lower interest rates if not for concerns that higher tariffs might derail the central bank’s yearslong fight to defeat inflation.”
“Wall Street Bull Calls For Another 10% Rally In S&P 500 By End Of 2025” (Yahoo! Finance). “[BMO Capital Markets chief investment strategist Brian] Belski's call for a roughly 10% rally for the S&P 500 from current levels joins a growing list of such predictions from rejuvenated bulls as the market marches back toward record highs. No fewer than 11 Wall Street firms lowered their S&P 500 targets amid the market sell-off in April. At least eight of those have since raised their bets on where the index will end 2025.”
“The Treasure Trove Of Platinum On The Moon” (The Week). “The moon is likely to become the next mining hot spot, as there may be extensive platinum and other metal deposits in its craters. Guidelines about resource mining on the moon are still not solidified, so this could lead to problems with more countries and private companies trying to stake their claim. But the potential for platinum could also entice private companies to invest more in space exploration.”
“A Key Gauge Signals Waning Demand For US Dollar In $7.5 Trillion Market” (Bloomberg). “A measure of demand in the $7.5-trillion-a-day foreign-exchange market is catching the attention of Wall Street, pointing to diminished appetite for the US dollar even during market turbulence that would otherwise send investors flocking to the greenback.”
“Milken Protege Peizer Gets 3-1/2 Years Prison For Insider Trading, Plans Appeal” (Reuters). “A protege of former junk bond king Michael Milken was sentenced on Monday to 3-1/2 years in prison for insider trading at a healthcare company he once led, over his use of a trading plan designed to protect executives against that crime. Terren Peizer, 65, the founder and former chief executive of Ontrak, was sentenced by U.S. District Judge Dale Fischer in Los Angeles. She also imposed a $5.25 million fine and forfeiture of more than $12.7 million of ill-gotten gains.”
What we’re reading (6/23)
“Oil Prices Sink After Trump Announces Israel And Iran Have Agreed To Ceasefire” (Yahoo! Finance). “Oil futures fell late Monday after President Trump announced a ceasefire timeline for the Israel-Iran conflict. West Texas Intermediate fell about 4% to trade near $66 per barrel, while Brent crude, the international benchmark, also tumbled to hover near $68 per barrel.”
“Why Factories Are Having Trouble Filling Nearly 400,000 Open Jobs” (New York Times). “The pool of blue-collar workers who are able and willing to perform tasks on a factory floor in the United States is shrinking. As baby boomers retire, few young people are lining up to take their place. About 400,000 manufacturing jobs are currently unfilled, according to the Bureau of Labor Statistics — a shortfall that will surely grow if companies are forced to rely less on manufacturing overseas and build more factories in the United States, experts say.”
“A New Meatpacking Plant’s Novel Pitch to Attract American Workers” (Wall Street Journal). “Steep challenges loom. Sustainable Beef is taking on the Big Four meatpackers—JBS, Tyson Foods, Cargill and National Beef—that control 85% of the beef industry. Cattle herd sizes have hit a 75-year low. And President Trump’s immigration crackdown is targeting the backbone of an industry known for some of America’s most-grueling jobs.”
“Happy Birthday, Money” (Jason Furman). “For most of history, money had been tangible: gold, silver, wampum, salt blocks, jewelry beads. Paper in the form of private bills of exchange or promissory notes was rare (China and Japan are the notable exceptions here), used mainly by merchants and bankers, and generally able to be converted into some underlying commodity. That changed in 1690 when Massachusetts had a problem paying its bills from a failed expedition against French Quebec. London would not reimburse the costs. The raid itself captured no plunder. So the colony’s resourceful government did something that was effectively unheard-of in the Western world: It created 7,000 pounds in its own ‘bills of credit,’ basically paper currency, with only a vague promise that they would be paid back (but a guarantee that they would be legal tender for tax payments). It created what was effectively fiat money.”
“Interest On Reserves” (John Cochrane). “The proposal, starting with comments from Senator Ted Cruz, that the Congress force the Fed to stop paying interest on reserves is having more legs than I thought it would. It also seems to be suffused with confusion — at least the AI and top three pages of hits generated by a google search certainly are. Hence this post. One reason given is that it would save the government money, so including the proposal in the Big Budget Bill would help to hit deficit targets. In addition, interest on reserves is paid to a lot of foreign banks, and sending foreigners money so they can buy American goods is somehow out of fashion. One answer: If you think that is a good and reasonable idea, here is a better one: stop paying interest on all Treasury debt. Reserves are just another form of government debt, so why stop there? That will generate $1 trillion per year, not in 10 years or so. And lots of foreigners hold Treasury debt too.”
What we’re reading (6/22)
“Trump’s Airstrikes On Iran Leave Oil Market Poised For Surge” (Bloomberg). “The oil market has been wrestling for days with Donald Trump’s next act in an escalating Middle East conflict. Now American jets have struck Iran’s three main nuclear sites, a move that leaves traders preparing for a price surge — but still guessing where the crisis goes from here.”
“More On Repealing The Laws Of Economics” (Howard Marks, Oaktree). “Our elected officials may believe the status quo can be maintained forever, or more likely they count on being out of office by the time the wheels come off. But certainly, they’re not facing up to reality. The behavior in Washington with regard to both the fiscal deficit and the precariousness of Social Security remind me of the tale of the guy who jumped off the 20-story building. As he passed the 10th floor, he said, ‘So far, so good.’”
“Private Equity’s Fundraising Demands Far Outstrip Supply” (Institutional Investor). “Some 18,000 private capital funds are currently “on the road” seeking to raise a total of $3.3 trillion, according to Bain & Co. The problem is that for every $3 general partners seek, there’s only $1 dollar of potential allocations, the consultant estimated. Bain called it a ‘supply and demand’ problem. Private equity firms’ fundraising crisis, which has also been stoked by the lack of cash distributions for existing funds, is even prompting some investors to accept a haircut on their investments. ‘LPs are increasingly dissatisfied with partial or minority exits; instead, they are pushing for full, traditional realizations despite the headwinds faced by such transactions,’ according to Bain. It noted that some 63 percent of investors participating in a webinar poll conducted by the Institutional Limited Partners Association preferred a conventional exit “even accepting a valuation below recent marks if necessary.'“
“Want A Winning Stock-Market Play? Bet Against Meme Stocks.” (MarketWatch). “A lottery stock’s short-term potential traces in many cases to interest in the stock going viral on social media — becoming a meme stock, in other words. You can make a lot of money if you’re early to the party before a stock goes meme, but far more dollars are lost with meme stocks than gained. This was confirmed by a study of clients of Robinhood Markets Inc., a group of investors who disproportionately are drawn to meme stocks. Entitled ‘Attention Induced Trading and Returns: Evidence from Robinhood Users,’ the study was conducted by Brad Barber of the University of California at Davis, Xing Huang of Washington University, Terrance Odean of the University of California at Berkeley and Chris Schwarz of the University of California at Irvine. They found that ‘betting against Robinhood users is a profitable business; the top stocks bought by Robinhood users fall by 5% over the next month.’”
“Why Countries Are Suddenly Broadcasting Their Spies’ Exploits” (Wall Street Journal). “Instead, fighting in Ukraine and the Middle East is bringing a new doctrine to spycraft stemming from changes in both what their organizers seek to achieve and how information spreads. Operations that would have once been designed to remain under wraps are now meant to be seen, to produce spectacular optics. They play out not just on the battlefield, but also on social media, boosting morale at home while demoralizing the enemy watching from the other side of the screen.”
What we’re reading (6/20)
“Thousands Of Laid-Off Government Workers Are Flooding A Shrinking Job Market” (Bloomberg). “housands of private government consultants laid off during the Trump administration’s cost-cutting crusade are increasingly flooding a shrinking labor market. Job postings among seven of the 10 consulting companies singled out by the General Services Administration for contract cuts are down about 27% since 2023, and about 11% from a year ago, according to data scraped from job boards by labor market analytics firm Lightcast.”
“In A Rocky Job Market, Power Has Shifted Back To Employers. Hiring Is Down, Promotions Are Scarce, And RTO Is In.” (Business Insider). “It's getting harder to negotiate a new job and move up the career ladder at your current gig. Exclusive data from Gusto, a payroll and benefits platform for small and medium-sized businesses, showed that the rate of workers receiving a promotion, meaning a title bump and a raise of at least 5%, peaked at 14.5% around mid-2022 and has now fallen to just over 10%.”
“High Costs Have Ended America’s Love Affair With Cars” (Wall Street Journal). “Lately…Americans have been losing that car-loving feeling. Actually, they’re at the dish-throwing stage. Light-vehicle sales have fallen by about 1.7 million a year since 2016, reflecting the number of younger consumers declining the pleasures of ownership. Millions more remained trapped in toxic relationships with abusive elders. The average age of passenger cars on the road is currently 14.5 years, according to S&P Global’s data.”
“Mira Murati’s Thinking Machines Lab Closes On $2B At $10B Valuation” (TechCrunch). “Thinking Machines Lab, the secretive AI startup founded by OpenAI’s former chief technology officer Mira Murati, has closed a $2 billion seed round, according to The Financial Times. The deal values the 6-month-old startup at $10 billion. The company’s work remains unclear. The startup has leveraged Murati’s reputation and other high-profile AI researchers who have joined the team to attract investors in what could be the largest seed round in history. According to sources familiar with the deal cited by the FT, Andreessen Horowitz led the round, with participation from Sarah Guo’s Conviction Partners.”
“Pope Leo Calls For An Ethical AI Framework In A Message To Tech Execs Gathering At The Vatican” (CNN Business). “Pope Leo XIV says tech companies developing artificial intelligence should abide by an ‘ethical criterion’ that respects human dignity. AI must take ‘into account the well-being of the human person not only materially, but also intellectually and spiritually,’ the pope said in a message sent Friday to a gathering on AI attended by Vatican officials and Silicon Valley executives. ‘No generation has ever had such quick access to the amount of information now available through AI,’ he said. But ‘access to data — however extensive — must not be confused with intelligence.’”
What we’re reading (6/19)
“The Fed Waits Out The Tariff Economy” (Wall Street Journal). “Federal Reserve Chair Jerome Powell projected confidence when he insisted the central bank was in a good position to handle whatever the economy does next—all while repeatedly acknowledging the Fed has little idea what’s actually coming…’We haven’t been through a situation like this, and I think we have to be humble about our ability to forecast it,’ Powell said. Inflation has eased recently, but tariff effects loom. The job market shows hints of softness, though unemployment remains low at 4.2%.”
“Profits Of Doom: Why Investors Seem To Shrug Off War” (DealBook). “Stocks tumble when geopolitical crises erupt — and then rebound as investors’ appetite for risk returns. This happened in April 2024, when Israel and Iran last traded strikes and set off fears of wider regional conflict. At the time, the S&P 500 fell by as much as 3.1 percent over five trading sessions, according to data from LPL Research, a market analytics firm. Fourteen trading sessions later, the benchmark index fully recovered. The S&P 500 later set record after record. That was no anomaly. LPL Financial analyzed 25 major geopolitical episodes, dating back to Japan’s 1941 attack on Pearl Harbor. ‘Total drawdowns around these events have been fairly limited,’ Jeff Buchbinder, LPL’s chief equity strategist, wrote in a research note on Monday.”
“Fidelity Fund Bets On Midcaps Saying Worst Of Tariffs Is Over” (Bloomberg). “Financial markets have seen the worst of Donald Trump’s tariff threats, helping make midcap stocks an attractive buy as the outlook improves, according to a Fidelity International money manager”
“Profit Pressure: Why COOs And CFOs Are Bracing For A Tough 2025” (Institutional Investor). “Polling…revealed the majority (68%) of CFOs and COOs [of asset managers] believe industry profits will decrease by as much as 20% at the end of 2025 in relation to the year prior. Another 8% believe the decrease will exceed 20%, reflecting possible growing concern among financial and operational leaders about near-term profitability across industries.”
“Is Washington Open To Railroad Mergers? This Regulator Isn’t Saying No.” (Semafor). “For weeks, railroad executives have played footsie in public, touting the benefits of mergers that would turn regional players into coast-to-coast juggernauts. Investors, too, have caught the bug, bidding up shares of smaller carriers most likely to be acquired. But their enthusiasm hinges on one question: Will the industry’s regulator be on board? Try him. Patrick Fuchs, the 37-year-old chairman of obscure and quaintly named Surface Transportation Board, has signalled what colleagues and industry players are interpreting as an openness to consolidation, or at least a clean break from the reflexive antipathy of his predecessor to deals.”
What we’re reading (6/15)
“‘Why Am I Doing This?’ These Investors Are Locking In Stock Gains While They Can.” (Wall Street Journal). “Overall, individual investors are still buying stocks more than they are selling. But a rally-chasing shopping spree cooled significantly in May, and analysts say they have observed signs of investors selling shares to pocket gains. Retail traders bought $23 billion worth of equities in May, according to a JPMorgan Chase report, down roughly $17 billion from the month prior. Last week, individual investors sold a net $400 million worth of individual stocks, the bank’s analysts found.”
“Wall Street Is Making Some Seriously Weird Trades” (CNN Business). “Wall Street traders hunting for profits might find that the most lucrative investments are in the peculiar market for precious metals. Gold, silver and platinum prices have surged this year as investors have piled into precious metals in search of places to hide from trade war uncertainty. President Donald Trump’s chaotic tariff plan has rocked markets, and investors have tried to minimize risk by putting some money in safe haven assets. While gold is historically considered a haven, demand for havens has spilled over into its wonky cousins like silver and platinum.”
“What If Stocks Don’t Go Up In The Long Run?” (A Wealth of Common Sense). “My baseline assumption is that human beings will strive to earn more money and better their station in life. Corporations will innovate and look for ways to increase profits. The economy will grow. Bad things will happen but the long run will see progress.”
“GenAI As An International Lawyer: A Case Study With The Jessup International Law Moot Court” (Damien Charlotin and Niccolò Ridi). “his paper investigates the capacity of Generative Artificial Intelligence, specifically Large Language Models, to craft compelling international legal arguments. We tested the performance of two popular models, Gemini 2.0 and GPT4o, in the Jessup International Law Moot Court Competition, generating ten complete written memorials with minimal human intervention. With the organisers' blessing, these AI-generated memorials were anonymously added to the pool of submissions and evaluated by judges, who remained unaware of their origins, providing a unique benchmark against humanproduced work. Our results demonstrate that LLM-generated memorials consistently achieve average to superior scores, with some submissions receiving exceptional praise and near-perfect ratings. However, a detailed analysis of judges' qualitative feedback reveals persistent shortcomings of LLMs, notably factual inaccuracies, hallucinated citations, and superficial legal analysis.”
“‘It Makes Sense To Be On Hold’: Why Wall Street Strategists Think Fed Rate Cuts Aren’t Coming Anytime Soon” (Finance! Yahoo). “‘The Fed is on hold until we get a little more clarity about not only the magnitude of the tariffs and the breadth of the tariffs, but what effect they all have on inflation and what effect the tariffs and other policies, including the budget bill, will have on growth and employment,’ Mester said.”
What we’re reading (6/13)
“The Frenzied Pursuit Of Wall Street’s Low-Profile All-Stars” (Wall Street Journal). “Billionaire Steve Cohen doesn’t like losing out on superstars. In December, the New York Mets owner made headlines for paying $765 million to sign phenom outfielder Juan Soto, beating out the New York Yankees and the Boston Red Sox. Around the same time, Cohen and his investment firm Point72 were facing off against rival hedge-fund giants to poach a young stock picker who had become one of Wall Street’s hottest free agents.”
“Is Meta Really Spending $15 Billion To Hire A 28-Year-Old?” (Business Insider). “You probably don't know who Alexandr Wang is. But that's going to change: The 28-year-old is about to become known as the guy Mark Zuckerberg spent $15 billion on.”
“Reserving Judgment On The Gold Rally” (Financial Times). “Sure, it’s easy to dismiss the change in rank as a function of so-called ‘maths’. Both gold and the euro started the year with reserve shares not a million miles from one another, and after a 30 per cent rally the shiny metal came out top. However, part of the explanation for gold’s price surge lies at the feet of the central banks themselves. For the third year in a row, they’ve accounted for more than a fifth of total gold demand.”
“The Case For Rate Cuts Is Growing” (Wall Street Journal). “The Fed doesn’t have to act when it meets next week. There is less urgency than last September when rates were a full percentage point higher and rising unemployment carried a whiff of recession. Tariff effects might become more pronounced in coming months. But in their outlook and rhetoric, Fed officials need to acknowledge risks are shifting. And they can also pat themselves on the back, because the economy is actually unfolding much as they expected when they began easing nine months ago.”
“‘Unintended Consequences’ Of Section 899 Could Spark Foreign Investment Retreat” (Institutional Investor). “Speaking just a month ago at the SEC’s International Institute for Securities Market Growth and Development in Washington, Commissioner Hester Peirce addressed both how best to maintain this dominance and why the number of public companies listed on U.S. exchanges continues to fall…But recent government actions are spooking investors and asset managers — posing a potential threat to the robustness of the capital markets. Even as tariffs remain a threat to the economy, Section 899 of the One Big Beautiful Bill Act — passed by the House but not yet the Senate — is adding a whole new headache. Referred to as a ‘revenge tax’ or ‘retaliation tax,’ the proposal is designed to punish certain countries whose tax policies the U.S. government considers unfair.”
What we’re reading (6/11)
“Bonds Rally, Stocks Slip After Inflation Data” (Wall Street Journal). “Bond investors liked the latest read on inflation. Government bonds staged a big rally after the latest monthly report on consumer prices, dragging the yield on 10-year Treasury notes down to 4.413% in recent trading, from 4.472% the prior session.”
“Chime Prices IPO At $27 Per Share, Valuing Fintech Company At $11.6 billion Ahead Of Nasdaq Debut” (CNBC). “The offering comes after a years-long freeze in the fintech IPO pipeline, as rising interest rates and valuation resets kept many late-stage companies on the sidelines. The market has started to loosen. Trading platform eToro jumped 29% in its Nasdaq debut last month, and crypto company Circle popped after hitting the market last week.”
“Oil Prices Tick Up On Worries Of Escalating US-Iran Tension” (Reuters). “Oil prices edged higher on Thursday to their highest in more than two months, after U.S. President Donald Trump said U.S. personnel were being moved out of the Middle East, which raised fear that escalating tensions with Iran could disrupt supply.”
“Google Buyouts Could Point To More Tech Layoffs, As Sector Faces Heavy Job Losses” (Investopedia). “Google extended buyout offers to more employees this week, marking the latest move by Big Tech firms to lower headcounts. It may not be the last, as companies face pressure to reduce spending amid an uncertain economic environment, while also investing in AI infrastructure. Tech has seen an exodus in 2025. The sector has announced nearly 75,000 job cuts in 2025 as of the end of May, according to a report last week from Challenger, Gray & Christmas, up from about 55,000 cuts in the same period in 2024.”
“A Big Shake-Up At Amazon Finally Brings Whole Foods Into The Fold” (Business Insider). “The plan includes a new leadership team and a change that will bring Whole Foods corporate staff under Amazon's employee programs, including performance reviews and pay structure. The changes will happen over the next 12 months, but won't affect Whole Foods frontline warehouse and in-store workers, according to the memo, a copy of which was obtained by Business Insider.”
What we’re reading (6/10)
“World Bank Sees U.S. Growth Rate Halving As Tariffs Slow Global Economy” (Wall Street Journal). “Economic growth in the U.S. might halve this year as a result of President Trump’s tariff policies, while the global economy is set to suffer a more modest, but still significant, slowdown, the World Bank said Tuesday. The Washington, D.C.-based development bank said it expects the world’s largest economy to grow by just 1.4% in 2025, a sharp deceleration from the 2.8% expansion recorded in 2024. In its January report on the outlook for the global economy, the World Bank forecast a 2.3% increase in U.S. gross domestic product.”
“o3 pro” (Marginal Revolution). “It is very, very good. Hallucinates far less than other models. Can solve economics problems that o3 cannot. It can be slow, but that is what we have Twitter scrolling for, right? While we are waiting for o3 pro to answer a query we can read about…o3 pro.”
“Moody’s Flags Risks From Retail Investors’ Push Into Private Credit” (Reuters). “The rapid growth in retail investors, who put their money into private markets, could create liquidity and asset quality risks, Moody's Ratings warned on Tuesday, highlighting potential vulnerabilities within the private credit sector. The rush to court ‘Main Street’ investors is transforming the traditionally institutional world of private credit, with asset managers launching new funds tailored to retail demand.”
“Traders Boost Bets On Just One 2025 Fed Cut Ahead Of CPI Data” (Yahoo! Finance). “Traders are increasingly betting that the Federal Reserve will cut interest rates only once this year amid signs of resilient growth and sticky inflation. Wednesday brings US consumer-price data for May, which is forecast to show a pickup that may reinforce the Fed’s wait-and-see stance toward further easing as it assesses the impact of tariffs. The central bank is widely projected to hold rates steady next week, and futures and options tracking expectations for its policy path show traders are moving to unwind the rate-cut premium built into the months ahead.”
“How Far Should Apple Go To Catch Up On A.I.?” (DealBook). “Should Apple open up its wallet? Apple’s annual developers conference has usually been a must-watch event for what it revealed about the iPhone giant’s plans. But this year’s event has been more notable for what it didn’t focus on: advancements in artificial intelligence tools. For skeptics, it only underscores Apple’s weakness in the fast-growing technology, and raises the question of whether the company needs to follow rivals like Meta and make a splashy purchase to keep up.”
What we’re reading (6/9)
“A Bond Market Meltdown Might Be Inevitable” (The Hill). “Over the past five years, both the budget and trade deficits have deteriorated sharply. Budget deficits have exceeded 5 percent of GDP since 2020 and projections indicate deficits will remain elevated, raising concerns about fiscal sustainability. Critically, government borrowing costs have risen sharply since 2022. Historian Niall Ferguson has suggested that America’s superpower status may be threatened as the U.S. government now spends more on interest payments than on defense. “
“The Canned-Food Aisle Is Getting Squeezed By Rising Steel Tariffs” (Wall Street Journal). “The Trump administration’s new 50% duty on imported steel could increase store prices for items in steel cans by 9% to 15%, according to the Consumer Brands Association, a trade group whose members include Campbell’s, Hormel Foods and Del Monte Foods. At that rate, the price of a can of vegetables costing $2 could increase by 18 cents to 30 cents. ‘The American consumer is going to pay more for their cans,’ said Dan Dietrich, vice president for strategy at Trivium Packaging.”
“We’re Secretly Winning The War On Cancer” (Vox). “The age-adjusted death rate in the US for cancer has declined by about a third since 1991, meaning people of a given age have about a third lower risk of dying from cancer than people ofthe same age more than three decades ago. That adds up to over 4 million fewer cancer deaths over thattime period. Thanks to breakthroughs in treatments like autologous stem-cell harvesting and CAR-T therapy…cancer isn’t the death sentence it once was.”
“The Illusion Of Thinking: Understanding The Strengths And Limitations Of Reasoning Models Via The Lens Of Problem Complexity” (Apple Machine Learning Research). “By comparing LRMs with their standard LLM counterparts under equivalent inference compute, we identify three performance regimes: (1) low- complexity tasks where standard models surprisingly outperform LRMs, (2) medium-complexity tasks where additional thinking in LRMs demonstrates advantage, and (3) high-complexity tasks where both models experience complete collapse. We found that LRMs have limitations in exact computation: they fail to use explicit algorithms and reason inconsistently across puzzles. We also investigate the reasoning traces in more depth, studying the patterns of explored solutions and analyzing the models’ computational behavior, shedding light on their strengths, limitations, and ultimately raising crucial questions about their true reasoning capabilities.”
“Why Apple’s Stock Suddenly Dropped A Few Minutes Into Its WWDC Keynote” (Business Insider). “About six minutes into the presentation, Apple's stock abruptly fell more than 2.5%, from roughly $206 to below $201. That's the equivalent of about $75 billion in market value. Just seconds earlier, Apple software chief Craig Federighi was on stage recapping the Apple Intelligence features the company had already rolled out in recent months, such as Genmoji, smart replies, photo cleanup tools. Then he pivoted to Siri. That's when things got awkward.”
What we’re reading (6/8)
“A Fresh Inflation Reading Greets A Stock Market Back Near All-Time Highs: What To Know This Week” (Yahoo! Finance). “Updates on consumer and wholesale inflation for the month of May will headline the week ahead. The first reading of the University of Michigan's consumer sentiment survey for the month is also due for release at the end of the week.”
“The Missing Engineers” (Bloomberg). “Swedish battery startup Northvolt AB’s bankruptcy filing was preceded by a number of debilitating events: failing to fulfill its contracts with customers; pleas to investors for more cash; ghosting its creditors. But its downfall began with a problem many companies are facing today. There was a severe, years-long struggle to find enough workers with the right skills…A shortage of skilled workers, especially engineers, is a growing problem in developed countries.”
“The Future Of AI Will Be Governed By Protocols No One Has Agreed On Yet” (Business Insider). “With the boom in personal computing came USB, a standard for transferring data between devices. With the rise of the internet came IP addresses, numerical labels that identify every device online. With the advent of email came SMTP, a framework for routing email across the internet. These are protocols — the invisible scaffolding of the digital realm — and with every technological shift, new ones emerge to govern how things communicate, interact, and operate. As the world enters an era shaped by AI, it will need to draw up new ones. But AI goes beyond the usual parameters of screens and code. It forces developers to rethink fundamental questions about how technological systems interact across the virtual and physical worlds.”
“How To Invest When Everything Yields The Same” (Wall Street Journal). “Here’s an investment puzzle: Treasurys, stocks, cash and corporate bonds all yield about the same. Either risky assets are less rewarding than usual or safe assets are less safe than usual. Or, perhaps, both.”
“Junk Bond Sales Surge As Companies Try To Beat Fresh Tariff Uncertainty” (Financial Times). “US companies with risky credit ratings are rushing to sell junk bonds ahead of an expected resurgence of trade tensions in July that could depress demand for corporate debt. Companies with weaker credit ratings tapped the high-yield bond market for $32bn in May, the most since October, according to data from JPMorgan. Junk bond sales in the first week of June already have surpassed April’s $8.6bn total. Bankers and investors say they expect a steady flow of new debt sales during the rest of the month and into July while demand remains high and market uncertainty stays relatively low.”
What we’re reading (6/7)
“The U.S. Economy Is Headed Toward An Uncomfortable Summer” (Wall Street Journal). “The U.S. economy, which weathered false recession alarms in 2023 and 2024, is entering another uncomfortable summer. Job growth held steady in May, with the economy adding 139,000 jobs. The unemployment rate has stayed in a tight range, between 4% and 4.2%, over the past year. But there are cracks beneath the surface. Businesses are warning that constantly shifting trade policies are interfering with their ability to plan for the future, leading to hiring and investment freezes.”
“What Today’s New College Graduates Are Up Against” (Vox). “Numbers from the first quarter of 2025 from the New York Federal Reserve show that the unemployment rate for recent college graduates reached 5.8 percent, up from 4.8 percent in January. Companies have also pulled back on hiring. Last fall, employers expected to increase college-graduate hiring by 7.3 percent, according to a survey led by the National Association of Colleges and Employers. Now they’re projecting just a 0.6 percent increase, with about 11 percent of companies planning to hire fewer new grads than before.”
“Trump Presses Fed Chief Powell To Cut Interest Rate By Full Point Despite Strong Jobs Report” (CNBC). “President Donald Trump urged Federal Reserve Chairman Jerome Powell to slash interest rates by a full percentage point despite a better-than-expected jobs report Friday. Trump, who regularly badgers Powell to lower rates, argued for the steep cut even as he maintained that the U.S. economy is ‘doing great.’ ‘Go for a full point, Rocket Fuel!’ Trump wrote in a Truth Social post.”
“The Rich Compensation For Being The C.E.O.” (New York Times). “‘Compensation actually paid’ is one of two major ways of accounting for chief executive pay required under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. It emphasizes the annual changes in the value of an executive’s current and potential stock holdings and reveals the staggering gains of executives, often company founders, who have been granted substantial stakes in their enterprises.”
“Britain Prepares To Go All-In On Nuclear Power — After Years Of Dither” (Politico). “The government is expected to unveil, after months of delay, the winner of a multi-billion pound contract to build next-generation small modular reactors (SMRs), known as ‘mini nukes.’ A long-awaited financial decision on the mega nuclear plant Sizewell C in Suffolk is on its way. Meanwhile, U.K. officials are discussing buying up nuclear sites from private ownership to bring the industry under greater state control.”
What we’re reading (6/5)
“Economists Raise Questions About Quality Of U.S. Inflation Data” (Wall Street Journal). “Some economists are beginning to question the accuracy of recent U.S. inflation data after the federal government said staffing shortages hampered its ability to conduct a massive monthly survey. The Bureau of Labor Statistics, the office that publishes the inflation rate, told outside economists this week that a hiring freeze at the agency was forcing the survey to cut back on the number of businesses where it checks prices. In last month’s inflation report, which examined prices in April, government statisticians had to use a less precise method for guessing price changes more extensively than they did in the past.”
“Citadel Securities’ Esposito Says US Deficit Is A ‘Ticking Time Bomb’” (Reuters). “The U.S. government's growing debt pile is a ‘ticking time bomb’ and how the Trump administration reacts to this crisis is going to be "super important", Citadel Securities President Jim Esposito said on Thursday. Several other leaders of the financial services industry have issued similar warnings about the current U.S. deficit in recent weeks. Earlier in June, JPMorgan Chase CEO Jamie Dimon said the U.S. national debt is a ‘big deal’ that could create a "tough time" for the bond market that causes spreads to widen.”
“Lululemon Shares Tumble 23% As It Cuts Full-Year Earnings Guidance, Citing ‘Dynamic Macroenvironment’” (CNBC). “Lululemon’s report comes after a string of retailers reduced or withdrew their guidance and said they would hike prices because of uncertainty surrounding President Donald Trump’s tariff regime. Retailers including Abercrombie & Fitch and Macy’s slashed their profit outlooks, while others, including American Eagle Outfitters pulled their full-year guidance altogether.”
“Circle Stock Soars Over 160% After IPO As Stablecoin Giant Makes Market Debut” (Yahoo! Finance). “Circle stock (CRCL) exploded higher in its first day of trading on Thursday, rising as much as 200% at session highs after the stablecoin issuer made its long-anticipated public market debut. At market close, shares settled at $83.23, up 168% from their IPO price of $31.”
“Can AI Master Econometrics? Evidence From Econometrics AI Agent On Expert-Level Tasks” (Qiang Chen, et al.). “Can AI effectively perform complex econometric analysis traditionally requiring human expertise? This paper evaluates an agentic AI's capability to master econometrics, focusing on empirical analysis performance. We develop an ``Econometrics AI Agent'' built on the open-source MetaGPT framework. This agent exhibits outstanding performance in: (1) planning econometric tasks strategically, (2) generating and executing code, (3) employing error-based reflection for improved robustness, and (4) allowing iterative refinement through multi-round conversations. We construct two datasets from academic coursework materials and published research papers to evaluate performance against real-world challenges. Comparative testing shows our domain-specialized agent significantly outperforms both benchmark large language models (LLMs) and general-purpose AI agents.”
What we’re reading (6/3)
“Dollar’s Correlation With Treasury Yields Breaks Down” (Financial Times). “The close relationship between US government bond yields and the dollar has broken down as investors cool on American assets in response to President Donald Trump’s volatile policymaking. Government borrowing costs and the value of the currency have tended to move in step with each other in recent years, with higher yields typically signalling a strong economy and attracting inflows of foreign capital. But since Trump’s ‘liberation day’ tariffs were announced in early April, the 10-year yield has risen from 4.16 per cent to 4.42 per cent, while the dollar has dropped 4.7 per cent against a basket of currencies. This month, the correlation between the two has fallen to its lowest level in nearly three years.”
“Wall Street Is Sounding The Alarm On U.S. Debt. This Time, It’s Worth Listening.” (Wall Street Journal). “Sounding the alarm about a debt crisis has been great for companies shilling gold coins and fishy financial products but has made smart, sincere people look silly when nothing happened—financial markets’ equivalent of Y2K. So why are several suddenly worried? Because the math is getting daunting with interest on the debt blowing past $1 trillion annually and Washington acting recklessly. Even people who have issued past warnings deserve a second (or third, or fourth) hearing.”
“A.I. Killed The Math Brain” (New York Times). “Computer science has consistently been one of the top majors in the United States for the last decade. But with the ability to task A.I. to code, startups and tech giants alike are hiring fewer and fewer entry-level computer scientists. Reports suggest that at major A.I. companies, the hiring rate for software engineering jobs has fallen over the course of 2024 from a high of about 3,000 per month to near zero. If enrollments in computer science degrees dry up as jobs disappear, the whole pipeline from education to employment could crash. It’s not so surprising that chatbots might threaten technical jobs before writing ones. They are very good at predicting the answers to a lot of standard questions on exams and problem sets. And a lot of quantitative work is done using that very simple kind of code.”
“More Laws, More Growth? Evidence From US States” (Ash, et al., Journal of Political Economy). “This paper analyzes the conditions under which more legislation contributes to economic growth. In the context of US states, we apply natural language processing tools to measure legislative flows for the years 1965–2012. We implement a novel shift-share design for text data, where the instrument for legislation is leave-one-out legal topic flows interacted with pretreatment legal topic shares. We find that at the margin, higher legislative output causes more economic growth. Consistent with more complete laws reducing ex post holdup, we find that the effect is driven by the use of contingent clauses, is largest in sectors with high relationship-specific investments, and is increasing with local economic uncertainty.”
“Fed Loosens The Shackles On Wells Fargo Nearly A Decade After Fake Accounts Scandal” (Yahoo! Finance). “The Federal Reserve is loosening a major restriction on Wells Fargo (WFC) that was put in place following a fake accounts scandal nearly a decade ago, and the fourth-largest US bank will no longer have to operate under a $1.95 trillion asset cap.”
What we’re reading (6/2)
“Companies Rely On Delaware Courts. Lawyers Reap Huge Fees There.” (DealBook). “Delaware’s decades-long pitch to corporate America is simple: It offers predictable judges, light-touch politics and fast decisions. But a new study making the rounds in boardrooms — and loudly promoted by the prominent venture capitalist Bill Gurley — finds reasons for Corporate America to reconsider its reliance on courts in the First State…[t]he study, by the well-known Stanford law professor Joseph Grundfest tallied every shareholder case since 2000 in which lawyers won fee “multipliers” of 7 times (“septuples”) or 10 times (“decuples”) their normal hourly rate from big corporations. Here’s what it found: Delaware produced 21 septuples and 14 decuples, almost matching the entire federal system on septuples and nearly triple on decuples.”
“How Moderna Went From Pandemic Hero To Vaccine Victim” (Wall Street Journal). “In the latest setback for Moderna, the Food and Drug Administration on Friday approved its next-generation Covid shot for a narrower population of patients than the company intended. The approval grants use of the vaccine only in older adults and people aged 12 to 64 with health risks.”
“L.A. Sound Stages: The New Dead Mall?” (The Ankler). “One well-known director recently told me that the last time they worked on the 15-stage Fox lot, their production was the only one active that day. And FilmLA’s recent sound stage report was bleak: Average stage occupancy plunged to 63 percent in 2024, down six points even from a strike-ridden 2023. Compare that to 2016, when stages hummed along at 96 percent occupancy level, or the we-all-agree-it-was-a-bubble Peak TV year of 2022 when levels bounced back up to 90 percent during the post-pandemic recovery.”
“This Startup Is Offering Mortgages For 401(k)s” (Semafor). “Al-Asaad’s solution is that favorite of financial tools: leverage. His startup, Basic Capital, will lend customers $4 for every $1 they contribute to their retirement accounts. Instead of investing mostly in stocks, Basic’s retirement accounts mostly hold loans, whose interest payments can ideally cover customers’ own borrowing costs. It is, essentially, a mortgage on your 401(k).”
“For Some Recent Graduates, The A.I. Job Apocalypse May Already Be Here” (New York Times). “This month, millions of young people will graduate from college and look for work in industries that have little use for their skills, view them as expensive and expendable, and are rapidly phasing out their jobs in favor of artificial intelligence. That is the troubling conclusion of my conversations over the past several months with economists, corporate executives and young job-seekers, many of whom pointed to an emerging crisis for entry-level workers that appears to be fueled, at least in part, by rapid advances in A.I. capabilities.”
May performance review
Prime Portfolio: +0.46%
Select Portfolio: +5.67%
SPY ETF: +5.18%
Bogleheads: +4.09%
June picks available now
The new Prime and Select picks for June are available starting now, based on a model run put through today (May 31). As a note, I will be measuring the performance on these picks from the first trading day of the month, Monday, June 2, 2025 (at the mid-spread open price) through the last trading day of the month, Monday, June 30, 2025 (at the mid-spread closing price).
What we’re reading (5/30)
“Trump Says Steel, Aluminum Tariffs Will Double To 50%” (Wall Street Journal). “President Trump said he would double tariffs on imported steel, a move he said would bolster the domestic industry and protect U.S. jobs. Trump announced the higher duties at a rally near Pittsburgh promoting a $14 billion deal between Tokyo-based Nippon Steel and U.S. Steel, which the president said would ensure U.S. control over the storied steelmaker.”
“Why Is Medtronic Spinning Off Its Diabetes Business?” (Dealbreaker). “Medtronic’s decision to spin out its diabetes division into a separate entity marks a major shift — one that allows the medical device giant to shed a lower-margin, consumer-facing business, while also giving the diabetes business an opportunity to refine its focus in a competitive market. Last week, Medtronic announced the intent to separate its diabetes business into a new standalone company. The new company, which remains unnamed, is expected to launch within 18 months.”
“Ninety Years Ago” (Scott Sumner). “In late July 1933, President Roosevelt enacted one of the most destructive economic policies in all of American history. The President’s Re-employment Agreement mandated an immediate 20% rise in hourly nominal wages. The stock market crashed. This action aborted a promising economic recovery that had raised industrial production by 57% between March and July 1933. By May of 1935, industrial production was actually lower than on the day the wage policy was enacted. Almost exactly 90 years ago, on May 27, 1935, the Supreme Court saved FDR from his folly. The entire NIRA was ruled unconstitutional, including its wage-fixing provisions. Industrial production almost immediately began rising rapidly, and FDR won a historic landslide victory in the November 1936 election.”
“UnitedHealth’s Collapse Reveals The Flaw At The Heart Of Medicare Advantage” (CNBC). “The company faces three federal investigations, looking at allegations of civil and criminal fraud and antitrust violations. The Wall Street Journal reported in February, for instance, that the DOJ is investigating whether UnitedHealth made its clinician employees record questionable diagnoses that make Medicare Advantage patients appear sicker than they are. This practice, known as ‘upcoding,’ triggered extra federal payments. (UnitedHealth told the Journal it stands ‘by the integrity of our Medicare Advantage program.’)”
“Summer Rentals In The Hamptons Are Down 30%” (CNBC). “Summer rentals in the Hamptons are down 30% from the same period in previous years, according to Judi Desiderio of William Raveis Real Estate. Brokers who focus on ultra-high-end rentals are seeing an even bigger drop and say their rental business is down between 50% and 75%. Some renters may be holding out for better deals or waiting to book, but brokers privately say there are other factors at play.”