What we’re reading (8/11)
“The Death of Diversification: Why Buffett Was Right All Along” (RealClear Markets). “Warren Buffett famously said that “diversification is protection against ignorance. It makes little sense if you know what you are doing.” For decades, this statement has been brushed aside as the musings of a genius with an unusually high risk tolerance. In truth, it was a quiet indictment of the entire financial industry. Diversification was once a prudent guardrail. It is now a crutch. In a world increasingly allergic to judgment, we have replaced depth with breadth and conviction with convenience. Why learn to understand a business deeply when you can simply own all of them at once?”
“Trump Fired The Labor Statistics Chief And The Markets Shrugged. That’s Concerning.” (MSNBC). “What financial markets, and even the Supreme Court, seem to have overlooked in focusing on the important goal of an independent Federal Reserve is that independence without accurate information is of limited value. The Fed, like all of us trying to understand the macroeconomy in real time, relies on an immense flow of accurate, unbiased data produced by thousands of workers in both the digital and physical worlds.”
“The Era Of Big Raises For Low-Paid Workers Is Over” (Wall Street Journal). “Something remarkable happened in the years immediately preceding and, especially, following the pandemic: Wages for poor workers began rising much faster than they did for the rich. That era may have now come to at least a temporary halt. And with worries about the health of the job market heightened following the disappointing July jobs report, it may have ended altogether. Wage growth for low-income workers looks to have significantly deteriorated in recent months, while wage growth for their higher-income counterparts has held up much better. It is a shift that could matter not just for low-paid workers, but the overall economy. “
“The Rising Returns To R&D: Ideas Are Not Getting Harder To Find” (Ando, Bessen, and Wang). “R&D investment has grown robustly, yet aggregate productivity growth has stagnated. Is this because “ideas are getting harder to find”? This paper uses micro-data from the US Census Bureau to explore the relationship between R&D and productivity in the manufacturing sector from 1976 to 2018. We find that both the elasticity of output (TFP) with respect to R&D and the marginal returns to R&D have risen sharply. Exploring factors affecting returns, we conclude that R&D obsolescence rates must have risen. Using a novel estimation approach, we find consistent evidence of sharply rising technological rivalry and obsolescence. These findings suggest that R&D has become more effective at finding productivity-enhancing ideas, but these ideas may also render rivals’ technologies obsolete, making innovations more transient. Because of obsolescence, rising R&D does not necessarily mean rising aggregate productivity growth.”
“July CPI Report Expected To Show Inflation Accelerated Amid Tariff Pressures” (Yahoo! Finance). “According to Bloomberg data, headline CPI is expected to have increased 2.8% year over year in July, up from a 2.7% rise in June. On a monthly basis, prices are forecast to increase 0.2%, a slight slowdown from June’s 0.3% gain, driven by lower gasoline prices and expectations of moderately softer food inflation.”
July performance review
Prime: -3.03%
Select: -1.55%
SPY ETF: 2.55%
Bogleheads (80% VTI + 20% BND): 2.02%
What we’re reading (8/10)
“Laffer Curve In The United Kingdom?” (Scott Sumner). “More broadly, I believe that the current malaise in the European economy partly reflects the long run effects of various tax and spending policies, which have slowly eroded the tax base. European countries that did not opt for a big government model, such as Switzerland, are doing better than their more highly taxed neighbors.”
“Retreats, Coaching, And Therapy: Inside The $1 Billion Cottage Industry Cashing In On The Retail-Trading Phenomenon” (Business Insider). “In recent years, a cottage industry has taken root amid the hype for stock trading. Social media is rife with businesses offering courses, getaways, one-on-one coaching, and other services that claim to improve traders' performance and get them in the right mindset to turn a profit.”
“American Companies Are Buying Their Own Stocks At A Record Pace” (Wall Street Journal). “U.S. companies have announced $983.6 billion worth of stock buybacks so far this year, the best start to a year on record, according to Birinyi Associates data going back to 1982. They are projected to purchase more than $1.1 trillion worth overall in 2025, which would mark an all-time high.”
“Dollar Steady Before Inflation Report, US-China Tariff Deadline” (Reuters). “The U.S. dollar stabilised on Monday after last week's losses, as markets await Tuesday's key U.S. CPI report for July and focus on developments in trade talks between Washington and Beijing ahead of a deadline to avoid the imposition of higher tariffs. The dollar index was flat at 98.25 after a 0.4% decline last week. Against the yen, the dollar was unchanged at 147.685 yen, with Japanese markets closed for the Mountain Day holiday. Trade talks were in focus as Trump's August 12 deadline for a deal between the U.S. and China loomed, particularly around chip policy.”
“Gold Prices Are On A Rollercoaster After A Curious Tariff Ruling That The White House Called ‘Misinformation’” (CNN Business). “
The global gold market has been thrown into fresh turmoil after a US government agency indicated that bullion would not be exempt from tariffs. Imports of one kilo and 100-ounce gold bars are subject to reciprocal tariffs, according to a July 31 Customs and Border Protection letter reviewed by CNN. The revelation perplexed Wall Street traders, who had expected bullion to be exempt from duties.”
What we’re reading (8/7)
“Dow Slides, Nasdaq Jumps To Record As Tariffs Kick In, Trump Nominates Miran To Fed board” (Yahoo! Finance). “US stocks trimmed losses on Thursday, finishing mixed after President Trump's sweeping tariffs hit dozens of US trade partners. Meanwhile, Trump also previewed coming chip tariffs, suggesting a carveout that could benefit Big Tech companies. The tech-heavy Nasdaq Composite rose nearly 0.4% to close at a fresh record, while the S&P 500 ended little changed. The Dow Jones Industrial Average slipped 0.5%.”
“Auto Industry Takes $12 Billion Hit From Trade War” (Wall Street Journal). “President Trump’s tariff war has inflicted almost $12 billion of losses on global automakers, the biggest hit they have faced since the pandemic. The scary reality: This may be just the beginning. Beyond the continuing cost of tariffs, automakers in the U.S., Japan, South Korea and Europe face years of retooling and supply-chain tweaks to adjust to the new realities. This comes after they spent heavily to reshape factories for electric vehicles.”
“Stock Buybacks Are Surging. Here’s Why It Matters To Your Portfolio.” (MarketWatch). “A surge in share repurchases represents tentativeness about the future. That might seem counterintuitive, but researchers have found that when corporate executives feel confident about what’s coming down the pike, they tend to use excess cash to increase dividends. When, like today, they are less confident, they instead tend to repurchase shares.”
“How AI Conquered the US Economy: A Visual FAQ” (Derek Thompson). “Nobody can say for sure whether the AI boom is evidence of the next Industrial Revolution or the next big bubble. All we know is that it’s happening. We can all stop talking about ‘what will happen if AI dominates the economy at such-and-such future date?’ No, the AI economy is here and now. We’re living in it, for better or worse.”
“Tesla’s Biggest Rivals Warn the EV Party Might Be Over” (Gizmodo). “After a brief sugar rush of sales, Tesla’s top rivals are bracing for a brutal hangover, hit by a double punch of hostile policies from the second Trump administration: crippling tariffs and the fast-approaching end of the federal EV tax credits that have propped up the industry for years.”
What we’re reading (8/6)
“How Palantir Won Over Washington—And Pushed Its Stock Up 600%” (Wall Street Journal). “The blind run into AI is one of a series of decisions by Palantir that have positioned the company today as a power player in the Trump administration, an integral tool for national security and the most expensive stock in the S&P 500. On Monday, it reported its best-ever earnings with more than $1 billion in revenue in the second quarter, 53% growth in earnings from U.S. government contracts and total booked contracts valued at $2.3 billion.”
“The Militarization Of Silicon Valley” (New York Times). “[W]eapons and defense start-ups are taking off. Andreessen Horowitz, a venture capital firm, said in 2023 that it would invest $500 million in defense technology and other companies that would help America ‘move forward.’ Y Combinator, the start-up incubator known for hatching companies like Airbnb and DoorDash, funded its first defense start-up in August 2024. Venture capital investment in defense-related companies surged 33 percent last year to $31 billion, according to McKinsey.”
“Healthcare Stocks Have Been Beaten Up. The Case For Buying Now.” (Barron’s). “[D]arn, don’t their valuations look attractive. The broader healthcare ETF is trading at just over 16 times expected aggregate earrings for the coming 12 months, 27% lower than the S&P 500’s just over 22 times. That’s a particularly steep discount, about double the average over the past decade.”
“Tokenised Trading Creates Structural Risks” (Financial Times). “A new generation of blockchain-based platforms is offering synthetic access to financial assets under the banner of decentralisation and financial inclusion, including fractional equities, indices, and yield-bearing tokens. Their promise is seductive: instant settlement, global access, and freedom from intermediaries. But behind the sleek interfaces and technical rhetoric lies a structural reality that regulators, institutions, and the public can no longer afford to ignore. These systems do not decentralise power in any meaningful governance sense. They decentralise accountability, dispersing legal obligations across a network of offshore entities, unaudited smart contracts, and user-facing wrappers that obscure the true nature of the risk.”
“Fed's Daly: Fed Will Likely Need To Lower Rates In Coming Months As Job Market Has Slowed” (Yahoo! Finance). “San Francisco Federal Reserve president Mary Daly said Wednesday that the Federal Reserve will likely need to lower rates in the coming months, noting that while tariffs will boost inflation in the near term, the job market has slowed. ‘The labor market has softened. And I would see additional slowing as unwelcome, especially since we know that once the labor market stumbles, it tends to fall quickly and hard,’ Daly said in a speech in Alaska. ‘All this means that we will likely need to adjust policy in the coming months.’”
What we’re reading (8/5)
“Bets On Fed Rate Cuts Are Sweeping Through The US Bond Market” (Bloomberg). “Positioning in options tied to the Secured Overnight Financing Rate, which closely tracks the expected trajectory of US monetary policy, shows investors readying for the possibility of cuts in each of the three remaining meetings this year, bringing down rates by a total of 75 basis points in 2025. Other plays on SOFR have included bets on a 50 basis-point cut at the central bank’s next meeting, in September.”
“Why America’s New Crypto Regime Makes Other Countries Nervous” (Kenneth Rogoff). “[B]y proffering an official stamp of approval, the U.S. is potentially providing a powerful vehicle for facilitating tax evasion and all manner of illegal activity worldwide. It doesn’t have to be this way.”
“Trump Says He Will Decide On Fed Governor Before End Of The Week” (Bloomberg). “President Donald Trump said he would make his decision on a replacement for outgoing Federal Reserve Governor Adriana Kugler this week as he looks to make his imprint on the central bank’s monetary policy. The Fed announced on Friday that Kugler would resign from her seat on the board of governors before her term is up in January, giving Trump an earlier than expected opportunity to tap a candidate more closely aligned with his calls for the central bank to lower interest rates.”
“Electricity Costs Rise Amid Data Center Boom” (Axios). “Electricity costs are rising nationwide — and could get even higher for some amid the explosion in data centers powering AI and more. Surging power bills could further stress many Americans' budgets as pretty much everything else gets more expensive, too.”
“Andreessen Horowitz Fled Delaware And Moved To Nevada. It’s More About Vibes Than Substance.” (Business Insider). “Andreessen Horowitz, often called a16z, cited several reasons for moving to Nevada: stronger legal protection for corporate directors, tighter limits on shareholder lawsuits, and a business-friendly court system. It said this sets Nevada apart from Delaware, where an outsize share of America's business lawsuits are filed. Some critics say a16z's beef with Delaware's corporate laws don't make much sense because it's not a corporation; all the entities that it moved to Nevada are LLCs, or limited liability companies. ‘They're either being accidentally imprecise or intentionally disingenuous,’ said Samantha Prince, a law professor at Penn State University. ‘Andreessen is criticizing Delaware and its statutory corporate framework, but that doesn't apply to LLCs.’”
What we’re reading (8/4)
“A Wild Year For Markets Hits Trend-Following Hedge Funds” (Wall Street Journal). “Many hedge funds have weathered this year’s trade-war turmoil well. The one big exception: fast-moving quantitative funds that are meant to flourish in tough markets. These funds, known as trend followers, use complicated computer algorithms to spot patterns in asset prices, then ride them up or down. The investment approach has a reputation for protecting portfolios in crashes and delivering uncorrelated returns during calmer periods.”
“Greenlight’s Gains Vanish As Bearish Bets Backfire” (Institutional Investor). “Greenlight Capital has shed all of this year’s gains after suffering another large monthly loss. The long-short hedge fund headed by David Einhorn dropped 4.1 percent in July and is now down 0.1 percent for the year, according to someone who has seen the results. The firm declined to comment.”
“Palantir Tops $1 Billion In Revenue For The First Time, Boosts Guidance” (CNBC). “The artificial intelligence software provider’s revenues grew 48% during the period. Analysts hadn’t expected the $1 billion revenue benchmark from the Denver-based company until the fourth quarter of this year. ‘We’re planning to grow our revenue … while decreasing our number of people,’ CEO Alex Karp told CNBC’s Morgan Brennan in an interview. ‘This is a crazy, efficient revolution. The goal is to get 10x revenue and have 3,600 people. We have now 4,100.’”
“Airport Lounges Sound Luxurious. I Keep Getting Duped.” (New York Times). “There have never been more airport lounges. Yet there also have never seemed to be more lounges that are not worth the hassle. Many are forlorn. Many others are overcrowded; sometimes the lines for the lounges are the longest in the airport. Yet we all still fight to get in. Many of us will choose to fork over too much in credit card fees or commit to flying on one airline to gain entry to these spaces, because we still believe they offer a taste of luxury amid the stress of travel.”
“Eric And Trump Jr-Backed Manufacturing SPAC Files For $300 Million US IPO” (Reuters). “The special purpose acquisition company, a vehicle previously used by the family to launch firearms retailers and media firms, aims to merge with businesses headquartered or primarily operating in the U.S., it said in a filing. The SPAC will ‘play a meaningful role in revitalizing domestic manufacturing, expanding innovation ecosystems, and strengthening critical supply chains’, the filing added.”
What we’re reading (8/3)
“American Consumers Are Getting Thrifty Again” (Wall Street Journal). “Americans are back on the hunt for a good deal. Consumer spending stagnated in the first half of this year, according to federal data issued last week, and the CEOs of Chipotle Mexican Grill, Kroger and Procter & Gamble, among others, are telling investors that their customers are more strapped—or appear to feel that way. ‘There’s a lot of consumer anxiety,’ said Dirk Van de Put, chief executive of Mondelez International, which makes Oreo cookies, Ritz crackers and Cadbury chocolate. Global sales of snacks rose last quarter, but U.S. sales fell a lot.”
“Forecasts Predict A Dismal Decade For Stocks. Here’s What To Do.” (USA Today). “In recent forecasts, Vanguard projects the stock market will rise by only 3.3% to 5.3% a year over the next decade. Morningstar sees U.S. stocks gaining 5.2% a year. Goldman Sachs forecasts the broad S&P 500 index will gain only 3% a year.”
“Poorest US Workers Hit Hardest By Slowing Wage Growth” (Financial Times). “America’s lowest-paid workers are suffering a sharper slowdown in wage growth than their richer peers, adding to the pressure on Donald Trump over inequality as he threatens to undermine the reliability of US economic data. Data from the Federal Reserve Bank of Atlanta shows wage growth for the lowest-paid quartile of workers — people earning roughly less than $806 a week — slowed to an annual rate of 3.7 per cent in June, down from a peak of 7.5 per cent in late 2022, when post-pandemic labour shortages in industries such as hospitality were most acute. Wage growth has also slowed for higher earners but to a lesser extent.”
“Why Trump’s Firing Of The B.L.S. Commissioner Is So Damaging” (Financial Times). “Trump’s ire was directed at the large revisions to the May and June jobs numbers, which went from a previously reported respectable average of 145,500 new jobs per month to a more concerning 16,500. The revisions were unusually large — the largest since 1979, not counting the pandemic, according to economist Ernie Tedeschi. But revisions are a normal part of the statistical process and, in fact, one of its strengths in balancing timeliness and accuracy of data.”
“‘The Revisions Are Hard Evidence’: White House Struggles To Justify Firing Of BLS Chief Over Weak Jobs Numbers” (CNBC). “National Economic Council Director Kevin Hassett on Sunday defended President Donald Trump’s sudden decision to fire the Bureau of Labor Statistics commissioner, without citing specific evidence. Hassett repeatedly pointed to the revisions in Friday’s employment data to justify Trump’s firing of BLS Commissioner Erika McEntarfer, but did not provide data showing the latest jobs report was ‘rigged,’ as Trump claimed. ‘I mean, the revisions are hard evidence,” he said on NBC News, adding that there ‘have been a bunch of patterns that could make people wonder.’”
August picks available now
The new Prime and Select picks for August are available starting now, based on a model run put through today (July 30). As a note, I will be measuring the performance on these picks from the first trading day of the month, Friday, August 1, 2025 (at the mid-spread open price) through the last trading day of the month, Friday, August 29, 2025 (at the mid-spread closing price).
What we’re reading (7/27)
“This Could Be The Most Consequential Week For The Economy In Years” (CNN Business). “A slew of crucial economic data is set for release this week, including the jobs report, inflation, consumer confidence and corporate earnings. We’ll get the first glimpse at America’s second-quarter gross domestic product, the broadest measure of the economy. And, most crucially, the Federal Reserve will decide whether to cut rates or hold steady one more time.”
“Investors Are Flocking To The Stock Market’s Discount Rack” (Wall Street Journal). “As recently as April, Chase Goodman plowed his extra savings into funds linked to stock-market indexes dominated by the world’s biggest technology companies. Lately though, the Detroit-based 29-year-old analyst at an auto company is reading corporate filings and tracking where the shares of companies trade relative to their book value.”
“A Price Just For You, Specifically” (DealBook). “Imagine that an airline notices you’ve booked a five-star hotel, so it charges you more for your ticket than it would have if you had booked a four- or three-star hotel. That’s the vision of personalized pricing, a concept that has for years intrigued companies and enraged consumer advocates. While consumer backlash may still give companies pause, some roadblocks to widespread use of the strategy may be clearing.”
“Oil Edges Higher As EU Agrees To US Trade Deal Ahead Of Deadline” (Bloomberg). “Oil rose after the US and European Union agreed on a trade deal ahead of President Donald Trump’s tariff deadline of Aug. 1.”
“Euro Rises After US, EU Agree To Tariff Deal” (Reuters). “The euro gained on Monday following the announcement of a framework trade agreement between the United States and the European Union, the latest in a flurry of deals to avert a global trade war. Meeting in Scotland on Sunday, U.S. President Donald Trump and European Commission President Ursula von der Leyen announced the deal, which will result in a 15% tariff on EU goods, half what Trump had threatened to impose from August 1.”
August picks available soon
I’ll be publishing the Prime and Select picks for the month of August before Friday, August 1 (the first trading day of the month). As always, SPC’s performance measurement for the month of July, as well as SPC’s cumulative performance, will assume the sale of the July picks at the closing price (at the mid-point of the closing bid and ask prices) on the last trading day of the month (Thursday, July 31). Performance tracking for the month of August will assume the August 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 (Friday, August 1).
What we’re reading (7/25)
“The Hottest Business Strategy This Summer Is Buying Crypto” (Wall Street Journal). “Companies are raising tens of billions of dollars, not to invest in their businesses or hire employees, but to purchase bitcoin and more obscure cryptocurrencies. A Japanese hotel operator, a French semiconductor manufacturer, a Florida toy maker, a nail-salon chain, an electric-bike maker—they’re all plowing cash into tokens, helping to send all kinds of digital currencies to record levels. News that a new company plans to buy crypto is enough to send its shares flying—spurring others to consider joining the frenzy. Since June 1, 98 companies have announced plans to raise over $43 billion to buy bitcoin and other cryptocurrencies, according to Architect Partners[.]”
“The Stock Market’s Most Unserious Season Is Back And Dorkier Than Before” (New York Times). “The fever in financial markets over ‘meme stocks’ is back and stranger than ever. Just how strange? So strange that on Monday, for no singular reason, shares in a medley of beaten-down companies suddenly soared as small-time investors bought up stocks that mainstream Wall Street analysts and investors had long given up on. It got odder on Tuesday, as that tsunami of trading intensified and the shares of four companies briefly doubled in value. Krispy Kreme (DNUT), Opendoor (OPEN), Rocket Mortgage (RKT) and Kohl’s (KSS) had become the meme stocks of the moment, along with a new moniker from traders — ‘DORK,’ a reference to the first letters of their tickers.”
“Wall Street ‘Euphoria’ Sparks Bubble Warnings” (Financial Times). “Wall Street’s relentless rally this summer has driven stock valuations close to record levels, prompting warnings that “euphoric” markets are entering bubble territory. The S&P 500 index has hit a string of all-time peaks this month, while US corporate borrowing costs are nearing their lowest level in decades, in a dramatic turnaround from the April slump sparked by Donald Trump’s trade war.”
“What Happens After The Dollar’s Hegemony Ends?” (ProMarket). “If the United States does run into problems making the fiscal adjustments needed to fund its debt, it will create a major and recurrent problem for the world that could unfold in higher interest rates, greater inflation, financial instability, or more intense financial repression — or more likely than not, all four. It would not be good for the dollar’s brand[.]”
“Partisan Bias In Professional Macroeconomic Forecasts” (Benjamin Kay, et al.). “Using a novel dataset linking professional forecasters in the Wall Street Journal Economic Forecasting Survey to their political affiliations, we document a partisan bias in GDP growth forecasts. Republican-affiliated forecasters project 0.3-0.4 percentage points higher growth when Republicans hold the presidency, relative to Democratic-affiliated forecasters. Forecast accuracy shows a similar partisan pattern: Republican-affiliated forecasters are less accurate under Republican presidents, indicating that partisan optimism impairs predictive performance. This bias appears uniquely in GDP forecasts and does not extend to inflation, unemployment, or interest rates.”
What we’re reading (7/24)
“Fed Chair Powell Pushes Back On Trump Criticism During Extraordinary Visit At Central Bank” (NBC News). “President Donald Trump used a rare visit to the Federal Reserve on Thursday to renew his pressure on Fed Chair Jerome Powell, telling reporters that costs to renovate the Fed’s buildings were exorbitant. Powell shook his head at times during the president’s remarks. Wearing a hard hat while surrounded by the ongoing renovations that have become the subject of Republicans’ scrutiny, the president said the construction cost had ballooned to ‘about $3.1 billion.’ Powell shook his head, saying, ‘I haven’t heard that.’”
“Intel To Lay Off 15% Of Workers, Cancel Billions In Projects In Bid For Rebound” (Wall Street Journal). “The chip-making giant said Thursday it would refocus its strategy on the highly competitive market for AI chips, regaining market share in personal-computer processors and developing its advanced 14A technology to sell to large customers.”
“If Active Investing Is The Loser’s Game, What’s The Winner’s Game?” (Morningstar). “A sound investment strategy should be grounded in peer-reviewed academic research, not opinions or anecdotes. The overwhelming evidence is that markets are highly, though not perfectly, efficient. This means that most information is already reflected in prices, making it extremely difficult for active managers to consistently outperform after costs. As a result, the most effective approach is to avoid strategies that rely on security selection or market-timing and instead focus on systematic, transparent, and replicable strategies, such as using index funds or quantitative factor-based approaches.”
“Elon Musk Warns Of Potentially ‘Rough’ Times Ahead” (New York Times). “Shares in Tesla are sinking in premarket trading on Thursday after the electric vehicle maker reported its worst quarterly revenue drop in over a decade, and after Elon Musk warned on a call with analysts of the potential for ‘a few rough quarters’ ahead.”
“Why Ground Beef Prices Are Hitting Record-Highs In The U.S.” (Time). “For many Americans, the cost of ground beef is starting to weigh down their weekly shopping baskets. Ground beef prices rose by 10.3% in June, when compared to the same time last year, surpassing $6 per pound. The price of steak rose by 12.4% within this period.”
What we’re reading (7/23)
“Google Revenue Soars On AI Boom, And Investors Eye Spending Surge” (Wall Street Journal). “Google’s parent company reported a 14% jump in year-over-year revenue, driven by growth in its cloud and search divisions that was tempered by heavy spending on artificial intelligence. The parent company, Alphabet, had record sales of $96.4 billion in the second quarter but also said capital expenditure expectations for the year would increase by 13% to about $85 billion. That compares with $52.5 billion in 2024.”
“Bank Earnings Are Sending A Message: The Economy Isn’t That Bad” (Barron’s). “Quarterly report cards from the largest, most systemically important U.S. banks brought investors and consumers welcome news this past week. The message: The economy is faring better than it feels. Consumers, for one thing, are generally staying on top of their debt. JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo all said their relatively low rates of consumer delinquencies, as well as debt they have written off as unrecoverable, were either about the same or looking better than a year ago.”
“New Analysis Suggests PE Funds Are More Volatile Than We Think” (Institutional Investor). “[Dan] Rasmussen, with the assistance of Harvard College student Julia Grinstead, looked at 10 of the largest and most liquid private funds traded in London, a list that includes ‘marquee brand-name firms and even includes funds-of-funds that own diversified holdings.’ They concluded that the market volatility is roughly 1.5 times the market average and that these funds are trading at a significant discount to their internally reported NAVs.”
“Chipotle Stock Plunges After Company Reports Second Straight Sales Decline, Cuts Guidance” (Yahoo! Finance). “Chipotle (CMG) on Wednesday reported another quarter of negative sales growth, sending shares sharply lower in extended trading as the company navigates an uncertain consumer environment and its new leadership deals with the most challenging backdrop for the chain in years.”
“The Sea Slug Defying Biological Orthodoxy” (The Atlantic). “This particular slug starts life a brownish color with a few red dots. Then it begins to eat from the hairlike strands of the green algae Vaucheria litorea: It uses specialized teeth to puncture the alga’s wall, and then it slurps out its cells like one might slurp bubble tea, each bright-green cellular boba moving up the algal straw. The next part remains partially unexplained by science. The slug digests the rest of the cell but keeps the chloroplasts—the plant organelles responsible for photosynthesis—and distributes these green orbs through its branched gut. Somehow, the slug is able to run the chloroplasts itself and, after sucking up enough of them, turns a brilliant green. It appears to get all the food it needs for the rest of its life by way of photosynthesis, transforming light, water, and air into sugar, like a leaf…[t]he algae and the slug may have managed some kind of gene transfer, and over time, produced a new way of living, thanks not to slow, stepwise evolution—the random mutation within a body—but by the wholesale transfer of a piece of code. A biological skill leaked out of one creature into another.”
What we’re reading (7/22)
“The Fed Must Be Independent” (Ben Bernanke, Janet Yellen). “But an overwhelming amount of evidence, drawn from the experiences of both the United States and other countries, has shown that keeping politics out of monetary policy decisions leads to better economic outcomes. A particularly clear lesson of history is that when central banks are forced to finance government deficits — by keeping interest rates excessively low, to cite one possibility — the result is inevitably higher inflation and economic damage.”
“Kohl’s And Opendoor Headline A New Class Of Meme Stocks” (Wall Street Journal). “Individual investors are once again loading up on a group of unloved stocks and taking to social media to defend them from the haters and the short sellers. Meet the cast of the meme-stock craze, season two.”
“Bullish Retail Traders Are The Biggest Force Behind The Stock Market’s Latest Rally To All-Time Highs” (Business Insider). “Retail traders have been on a dip-buying frenzy since President Donald Trump announced his tariffs in April. Analysts at Barclays estimated that retail traders ploughed around $50 billion into global stocks in the last month. Stock-buying among institutional investors has paled by comparison, with hedge fund re-risking remaining "modest" and their long positions in US stocks remaining below the long-term median, the bank said on Tuesday.”
“Make Your Own Luck: Mid-Year Outlook For 2025” (KKR). “As we look ahead at KKR, we remain positive. To be sure, we expect more market drawdowns than in the past, but our ‘Glass Still Half Full’ thinking is that attractive financial conditions, a global easing cycle, ongoing productivity gains, and lack of net issuance—coupled with some incredibly powerful investment themes—will continue to drive this cycle both further and longer than many think.”
“Texas Instruments Plunges After Forecast Fuels Tariff Fears” (Bloomberg). “Though the company issued a third-quarter forecast that beat most estimates, the outlook was more guarded than some investors had anticipated. The stock fell further during a conference call, when executives struggled to win over analysts who said the company’s tone had become increasingly negative. The main concern is whether tariffs and trade disputes will hurt a sales resurgence that’s still in the early stages.”
What we’re reading (7/21)
“Mortgage Rates Move Higher Again” (Yahoo! Finance). “Mortgage rates increased for the second straight week. The average rate on a 30-year fixed mortgage was 6.75% through Wednesday, up from 6.68% the week prior, according to Freddie Mac data. The average 15-year fixed mortgage rate was 5.92%, up from 5.86% last week.”
“Block’s Stock Pops On Addition To S&P 500” (CNBC). “The stock rose following the announcement late Friday as investors sought to get in ahead of index fund managers, who will need to buy shares to mimic the changes. Square’s $48 billion market cap at Monday’s close places it well above the median S&P 500 constituent, though shares are still down 8% this year. Passive funds are expected to purchase roughly 101 million shares of Block due to its inclusion, equivalent to about 11 days of average trading volume, according to a note from Stephens.”
“The $130 Billion Train That Couldn’t” (Spectator). “In neither the short-term nor the mid-term is there a way of providing the promised San Francisco to Los Angeles service in 2 hours and 40 minutes. Instead, the plan is now for the train to work in a “blended” fashion, mixing with conventional and freight trains in parts of the San Francisco and Los Angeles metropolitan areas. To say the least, a line running from the Central Valley hubs of Bakersfield, Fresno and Merced hardly seems a romantic return to the rails of the past.”
“Stop Pretending You Know What AI Does To The Economy” (Noahpinion). “In other words, Americans are very primed with AI pessimism. Even the smartest among them tend to jump at any shred of evidence that AI is killing jobs, or turning society into a feudal hellscape, or any number of other negative effects. But each time this happened so far, when we look closely at the evidence — or just waited for the results to come in — the panic turned out to be a false alarm. AI has not yet had a detectably negative effect on the job market, which remains just about as strong as it has ever been in the country’s history[.]”
“How China Curbed Its Oil Addiction—And Blunted A U.S. Pressure Point” (Wall Street Journal). “China’s thirst for oil drove global demand for decades. Now a government campaign to curb that addiction is nearing a milestone, with national consumption expected to peak by 2027, then begin to fall. Chinese officials have long worried that the U.S. and its allies could hamstring the nation’s economy by choking off its supply of foreign oil. So China has poured hundreds of billions of dollars into weaning itself off the imported stuff by reviving domestic production and swiftly building the world’s leading electric-vehicle industry.”
What we’re reading (7/20)
“Dow, S&P 500, Nasdaq Futures Tread Water Ahead Of Tech Earnings As Tariff Deadline Looms” (Yahoo! Finance). “US stock futures were flat in Sunday evening trading, as markets entered a critical week defined by megacap earnings and continued risk around President Trump's looming tariffs. S&P 500, Nasdaq 100, and Dow Jones Industrial Average futures all hovered around the baseline, reflecting a cautious tone after last week’s record-setting rally in growth names. The Nasdaq advanced 1.5% last week, while the S&P 500 added 0.6%. The Dow lagged, finishing slightly negative.”
“Debt Reckoning” (Harper’s Magazine). “The financial system is much safer now because all parties use the safest-possible collateral. But how safe can such a collective dependency be? If everyone has promised their Treasuries away, and Treasury prices fall, then everyone suddenly needs more. This could spark a spiral, the kind we maybe saw glimpses of after Liberation Day and that seems, at best, difficult and expensive to stop. ‘We’ve rebuilt our entire financial system’s regulatory environment after the financial crisis, and a fundamental linchpin in that whole system is that the Treasury market functions well,’ [NYU Stern Professor Jeffrey] Meli told me. ‘If it doesn’t function well, this system that we built is on a house of cards.’”
“Firing Powell Would Shatter The Economy’s Inflation Defenses” (Wall Street Journal). “The Fed would no longer be an independent check on the government, but just another part of that government with inflation subordinated to other priorities, such as the cost of the national debt. What would happen then? Markets wouldn’t like it, though predictions of a crash look overwrought. Stocks have hit records while discounting some possibility of Trump removing Powell. The lag between monetary policy and inflation is long and variable. The real consequences of a subservient Fed would show up gradually, once inflation pressures emerge and the Fed, fearful of crossing the president, fails to act.”
“Delta Air Lines Is Using AI To Set The Maximum Price You’re Willing To Pay” (The Verge). “While personalized pricing isn’t unique to Delta, the airline has been particularly candid about embracing it. During that November call, Hauenstein said the AI ticketing system is ‘a full reengineering of how we price and how we will be pricing in the future,’ and described the rollout as ‘a multiyear, multi-step process.’ Hauenstein acknowledged that Delta was excited about the initial revenue results it saw in testing, but noted the shift to AI-determined pricing could ‘be very dangerous, if it’s not controlled and it’s not done correctly.’”
“Industrial Colossus: China Vs 1950s America” (Cogitations). “Chinese industrial policy maximalist Lu Feng argues that China today resembles the United States on the eve of World War I. But the analogy is faulty. China’s industrial strength—and its broader economic trajectory—is much closer to the United States of the 1950s.”
What we’re reading (7/19)
“After Stock Market’s Torrid Run, Earnings Misses Face Punishment” (Bloomberg). “The second-quarter earnings season is off to a ripping start, with consumer strength powering resilient corporate profits. In the stock market, however, the reaction has been fairly quiet, an ominous sign that much of the good news is priced in — and investors are punishing disappointments.”
“The Stock Market Bargain That’s Right Under Your Nose” (Wall Street Journal). “Will small stocks stink forever? Little companies are supposed to earn higher returns over time than big ones, but that hasn’t been the case for more than a decade. Since the beginning of 2014, the S&P 500 has grown at an average of 13.2% annually; the Russell 2000 index of small stocks has gained just 7.2%. Many people seem to be throwing in the towel. So far this year, investors have pulled $12 billion out of exchange-traded funds investing in small U.S. stocks, according to FactSet. Meanwhile, investors added $149.6 billion to ETFs that track large U.S. companies. Money always chases performance, and big stocks have all the momentum—burnished by the artificial-intelligence boom. But what if AI turns out to be a bust, it fails to meet expectations or the biggest stocks end up stagnating? Then investors who didn’t give up on smaller stocks will be rewarded.”
“Is America Breaking The Global Economy?” (Foreign Affairs). “[F]orecasters have struggled to predict where the U.S. economy will ultimately end up. But two main visions bookend a dispersed and unstable set of individual projections. In the first, the United States is on a bumpy journey that will culminate in an economic restructuring resembling the ones that took place under U.S. President Ronald Reagan and British Prime Minister Margaret Thatcher, where it will emerge with less debt and a more efficient private sector and where it will trade in a fairer international system. In the second scenario, the country is slowly slipping into the stagflation and, as happened under U.S. President Jimmy Carter, could end up in a deep recession, perhaps with pronounced financial instability.”
“What Flint Teaches About the Chances Of Rust Belt Renewal In Trump 2.0” (Politico). “Policies designed to stimulate economic growth will fail to revitalize cities like Flint unless they are accompanied by efforts to repair the social and environmental damage that previous failed policies left behind.”
“The Epic Battle for AI Talent—With Exploding Offers, Secret Deals And Tears” (Wall Street Journal). “Hundreds of employees at one of Silicon Valley’s hottest AI startups gathered in their offices last Friday expecting a celebratory announcement. For months, OpenAI had been talking to Windsurf about buying it for $3 billion, and now it seemed like the rank-and-file were finally getting confirmation that the deal was about to become official. Windsurf’s marketing team even began filming the all-hands meeting for promotional material. Instead, they learned that Windsurf’s chief executive, Varun Mohan, had left the company to join Google, taking with him a small group of artificial-intelligence researchers and engineers. After hearing the news, some of the staff began to cry.”
What we’re reading (7/17)
“Federal Reserve’s Waller Says Central Bank Should Cut Rates At Next Meeting” (Associated Press). “Christopher Waller, a member of the Fed's governing board, said in a speech in New York City that the economy is showing signs of weakening, with consumer spending slowing and job gains cooling. The Fed should reduce borrowing costs to shore up spending and growth before the job market weakens further, Waller said.”
“Powell Defends $2.5 Billion Fed Renovation In Letter To White House” (Yahoo! Finance). “Jerome Powell offered his first detailed defense of a $2.5 billion renovation of the Federal Reserve's headquarters, arguing in a Thursday letter to White House budget director Russell Vought that ‘we take seriously the responsibility to be good stewards of public resources.’ It was a point-by-point response to a July 10 letter Powell received from Vought that raised a number of concerns about cost overruns and certain design elements, while warning that ‘the president is extremely troubled by your management of the Federal Reserve system.’”
“OpenAI Unveils Agent That Can Make Spreadsheets And PowerPoints” (Wall Street Journal). “OpenAI rolled out its latest entry in the red-hot area of independently operating AI bots, an agent that lets users automate tasks like online shopping and create spreadsheets and PowerPoint presentations. ChatGPT agent, as the bot is called, runs on a new AI model created to power the capability, the San Francisco-based company said. It works just as OpenAI’s ‘Operator’ agent does, by accessing the internet through its own browser and can click, scroll and type just as a person would.”
“House Passes First Major Regulation For Crypto Industry” (Washington Post). “The Genius Act, which passed with bipartisan support, 308-122, following the Senate’s approval in June, is now ready to be signed into law by President Donald Trump, who endorsed the bill and has pledged to pursue a more lenient regulatory environment for crypto while also promoting his own crypto ventures.”
“Netflix Notches A Record Quarter And Signals More Growth Ahead” (Business Insider). “The streaming giant's revenue rose 15.9% year over year to $11.08 billion, and earnings grew 47% to $7.19 per share. Analysts surveyed by Bloomberg expected quarterly revenue of $11.06 billion and earnings of $7.09 per share. The company also raised its revenue forecast for 2025 to $44.8 billion to $45.2 billion, in part because of its momentum growing subscribers and its advertising business.”
What we’re reading (7/16)
“Trump Says ‘Not Planning’ Fire Fed Chair Powell After Reports Suggest Powell Ouster Coming ‘Soon’” (Yahoo! Finance). “President Trump on Wednesday tempered reports from earlier in the day that suggested he planned to fire Federal Reserve Chair Jerome Powell imminently, the latest twist in the ongoing saga regarding Trump's displeasure with the central bank head.”
“Wall Street CEOs Stress Fed Independence Amid Powell Attacks” (Bloomberg). “Bank of America Corp.’s Chief Executive Officer Brian Moynihan and Goldman Sachs Group Inc.’s David Solomon joined JPMorgan Chase & Co.’s CEO Jamie Dimon in stressing the importance of the Fed’s autonomy. Moynihan said in an interview with Bloomberg TV on Wednesday that the Fed was ‘set up to be independent.’”
“The Market’s Been Wrong On The Fed For Three Straight Years — This Deutsche Bank Strategist Says It’s Now Looking Like Four.” (MarketWatch). “Henry Allen, macro strategist at Deutsche Bank, warns ‘inflation risks are still being underestimated, with a remarkable complacency across key assets…[t]his is particularly so when you consider that the 2021-23 inflation spike wasn’t anticipated at all in advance. And it’s already the 4th year in a row (so far) that markets have overestimated how dovish the Fed are going to be,’ said Allen, in a note to clients on Wednesday.”
“Why Tariffs Won’t Kill Corporate Earnings” (Axios). “The second-quarter earnings season kicks off Tuesday with some of the major banks set to report. While tariffs are likely to come up through this cycle, it's not the main focus for investors…Wall Street has moved on from the trade war. The question is whether consumer spending effects that show up this earnings cycle will force investors to reckon with the real-world impact of the levies.”
“United Airlines Issues New 2025 Forecast As CEO Says ‘World Is Less Uncertain’” (CNBC). “United Airlines’ second-quarter earnings beat estimates, and its CEO said travel demand is picking up after a rocky start to 2025. Travel demand, particularly from more price-sensitive customers for domestic flights, had come in weaker than airline executives expected at the start of the year, sending airfares lower. ‘The world is less uncertain today than it was during the first six months of 2025 and that gives us confidence about a strong finish to the year,’ CEO Scott Kirby said.”