What we’re reading (4/8)
“Stocks Slide Again As US Forges Ahead With 104% Tariffs On China” (Reuters). “The United States said on Tuesday that 104% duties on imports from China will take effect shortly after midnight, even as the administration of President Donald Trump moved to quickly start talks with other trading partners targeted by sweeping tariffs.”
“Trump’s Tariffs Put Fed Chair Powell In A ‘No-Win Situation’” (Wall Street Journal). “Federal Reserve Chair Jerome Powell is facing an increasingly dreadful task. Economists, business owners and investors are betting that the uncertainty created by the sudden rollout of President Trump’s large tariff hikes, many of which are set to take effect Wednesday, will push the economy closer to a recession by weakening hiring and spending. That would call for cutting rates to cushion any downturn. At the same time, the magnitude of tariff increases is likely to lead prices to rise substantially for many imported goods, including materials used by domestic manufacturers.”
“A Contagion Of Uncertainty” (Tyler Cowen, The Free Press). “It is not merely that the policies keep on changing. We are seeing that the policies didn’t have much of a rational basis to begin with. Exactly how were all those threatened tariff rates calculated to begin with? A debate is raging across the internet and social media, but it seems they did not have much of a logical basis. We even were ready to put a tariff rate of 10 percent on the Heard Island and McDonald Islands (where?), which are inhabited mostly by penguins. Not a single step of this process has inspired confidence.”
“Signs Of Wall Street Stress Pile Up Amid Trump Tariff Turmoil” (Yahoo! Finance). “One concerning development is that there were no new offerings in the investment-grade and high-yield bond markets for three days, according to Reuters, as credit spreads widened due to concerns about the rising odds of a recession.”
“De-Extinction Company Announces That The Dire Wolf Is Back” (ars technica). “On Monday, biotech company Colossal announced what it views as its first successful de-extinction: the dire wolf. These large predators were lost during the Late Pleistocene extinctions that eliminated many large land mammals from the Americas near the end of the most recent glaciation. Now, in a coordinated PR blitz, the company is claiming that clones of gray wolves with lightly edited genomes have essentially brought the dire wolf back. (Both Time and The New Yorker were given exclusive access to the animals ahead of the announcement.)”
What we’re reading (4/7)
“U.S. Stock Meltdown Gives Way To Global Rout” (Wall Street Journal). “U.S. stocks took a heavy beating for two days in a row last week. On Monday, it was the rest of the world’s turn. Historic turmoil in financial markets left investors with few places to hide as President Trump’s challenge to world trade intensified stock losses from Hong Kong to France. Hopes that the White House would ride to the rescue over the weekend, pausing the tariffs, were dashed.”
“The Tariffs That Led To The Biggest Stock-Market Drop Since COVID May Have Been The Result Of An Error” (MarketWatch). “‘The idea is that as tariffs rise, the change in the trade deficit will depend on the responsiveness of import demand to tariffs, which depends on how import demand responds to import prices and how import prices respond to tariffs,’ AEI senior fellows Kevin Corinth and Stan Veuger pointed out. The problem is the White House used 0.25 as the elasticity of import prices. Per the research paper the USTR cited in the tariff determination, the elasticity is actually closer to 1, or 0.945 to be precise. The AEI authors say the White House may have used the elasticity of retail prices instead of import prices. The AEI team went and recalculated tariffs based on using correct numbers — and found no tariff rate would exceed 14%, and most would be at the 10% floor the Trump administration set. It stands to reason that if the revised calculations were used, the stock-market reaction would have been much different.”
“Donald Trump Tells Americans Bracing For Economic Collapse: ‘You Have to Take Medicine’” (Vanity Fair). “The self-proclaimed ‘Tariff Man’ spent the weekend golfing and says he plans to stay the course despite Wall Street turning on him and stocks making wild swings in response to his new policy.”
“China Says It Will Never Accept US ‘blackmail’ In Escalated Tariff Threats” (DailyMail). “China said it will never accept the "blackmail nature" of the United States after the latter escalated tariff threats against it, the Chinese commerce ministry said on Tuesday. The U.S. threats were ‘a mistake on top of a mistake,’ a ministry spokesperson said in a statement, urging the U.S. to properly resolve differences with China through dialog with mutual respect and on an equal footing.”
“Trump’s Tariffs Will Wound Free Trade, But The Blow May Not Be Fatal” (New York Times). “The shock of Mr. Trump’s move is reverberating even more widely, given the larger size of the American economy and its place at the fulcrum of global commerce. Yet as with Brexit, its ultimate impact is unsettled: Mr. Trump could yet reverse himself, chastened by plummeting markets or mollified by one-off deals. More important, economists say, the rise of free trade may be irreversible, its benefits so powerful that the rest of the world finds a way to keep the system going, even without its central player. For all of the setbacks to trade liberalization, and the grievances expressed in Mr. Trump’s actions, the barriers have kept falling.”
March performance review
Prime: -3.58 percent
Select: -0.70 percent
SPY ETF: -5.89 percent
Bogleheads Portfolio (80 percent VTI + 20 percent BND): -4.87%
What we’re reading (4/4)
“Hedge Funds Hit With Steepest Margin Calls Since 2020 Covid Crisis” (Financial Times). “Hedge funds have been hit with the biggest margin calls since Covid shut down huge parts of the global economy in 2020, after Donald Trump’s tariffs triggered a powerful rout in global financial markets. Wall Street banks have asked their hedge fund clients to stump up more money as security for their loans because the value of their holdings had tumbled, according to three people familiar with the matter. Several big banks have issued the largest margin calls to their clients since the beginning of the pandemic in early 2020.”
“Wall Street Blew It” (The Atlantic). “After Thursday’s stock-market sell-off provoked by Donald Trump’s announcement that the United States would be imposing new tariffs on almost every country in the world, the one thing we can say for sure is that Wall Street blew it. In the three trading days leading up to Trump’s much-anticipated ‘Liberation Day’ speech, the market rose steadily as investors apparently convinced themselves that Trump would not do anything too crazy. Surely moderation would prevail. It did not[.]”
“The Big Losers In Trump’s Tariff Chaos—And A Couple Of Survivors” (Wall Street Journal). “Few areas were spared in the stock market’s huge selloff this week, with all 11 of its sectors ending in the red after President Trump unveiled his dramatic tariff plans. Banks and private-equity firms were among the biggest losers. Investors fear Wall Street firms would be hit hard by a recession, with companies and individuals pulling back on borrowing and dealmaking drying up. The consumer staples sector, meanwhile, was relatively unscathed, finishing with the smallest weekly decline. Those companies are seen as havens in a downturn since people still need essentials like groceries.”
“Your Life Will Never Be The Same After These Tariffs” (Justin Wolfers, New York Times). “These tariffs are going to hurt. A lot. By my calculations, this round of tariffs may be 50 times as painful as the ones Donald Trump instituted in his first term. That means they are going to reshape your life in much more fundamental ways.”
“The White House Cited These Economists To Justify Its Tariffs. They Aren’t Thrilled.” (Yahoo! Finance). “In a blog post complete with a bibliography and footnotes, the US Trade Representative said it had calculated ‘reciprocal’ tariffs at rates that would eliminate the US trade deficit with each country, using a formula that was in fact more sophisticated than met the eye and took into account factors like how much imports would fall as duties rose and how much prices would increase for consumers. It just so happened that some of the key variables canceled each other out, leaving behind the simple long-division exercise that had been widely mocked.”
What we’re reading (4/3)
“Tariffs Send Wall Street Tumbling To Worst Day Since Pandemic” (New York Times). “The S&P 500 fell almost 5 percent on Thursday, its worst drop since June 2020, as allies and adversaries alike criticized President Trump’s action and weighed their responses.”
“A Market-Rattling Attempt to Make the American Economy Trump Always Wanted” (Wall Street Journal). “Perhaps the most striking aspect of Trump’s dramatic move to reposition the American economy is the timing. The economy he inherited was the envy of the world with growth of 2.8% last year, faster than almost every other major developed economy, an unemployment rate of just 4.1% and inflation of 2.8%. Stocks were at record highs.”
“JPMorgan Analysts Say Recession Risk Increased To 60% Since Trump Announced Tariffs: ‘There Will Be Blood’” (Business Insider). “In a research note to clients published on Thursday, JPMorgan's Bruce Kasman, along with several other company economists, warned that the risk of the global economy falling into a recession has increased from 40% to 60% in response to Wednesday's ‘Liberation Day’ tariff announcement.”
“America Is Headed For A Grim Fiscal Reckoning” (Michael Bloomberg). “Amid all the blaring headlines coming out of Washington, here’s a piece of news that is getting far too little attention: The US is on course for fiscal breakdown. That’s the unambiguous message from the Congressional Budget Office’s newly updated long-term projections. Unless Congress changes course, there’ll be a reckoning, and it will be grim.”
“Fed’s Cook Says Time For Patience On Policy Amid Inflation Risks” (Reuters). “Federal Reserve Governor Lisa Cook said on Thursday that the central bank can take its time to assess a highly unsettled environment before moving interest rates again, amid risks inflation could worsen due to tariffs. ‘Amid growing uncertainty and risks to both sides of our dual mandate, I believe it will be appropriate to maintain the policy rate at its current level while continuing to vigilantly monitor developments that could change the outlook,’ Cook said in a speech at the University of Pittsburgh.”
What we’re reading (4/2)
“Trump Announces Tariffs, The Highest Import Taxes Since The 1800s” (Axios). “President Trump announced a baseline 10% tariff on U.S. imports, with steeper reciprocal levies on goods from Europe, Japan, China and more than 50 other nations.”
“Oil Imports Exempted From Trump’s Sweeping Tariffs” (Reuters). “Imports of oil, gas and refined products were exempted from U.S. President Donald Trump’s sweeping new tariffs, the White House said on Wednesday. The exemption will come as a relief to the U.S. oil industry, which had expressed concerns that new levies could disrupt flows and raise costs on everything from Canadian crude oil serving Midwest refineries to European cargoes of gasoline and diesel to the eastern seaboard.”
“Amazon Said To Make A Bid To Buy TikTok In The U.S.” (New York Times). “Amazon has put in a last-minute bid to acquire all of TikTok, the popular video app, as it approaches an April deadline to be separated from its Chinese owner or face a ban in the United States, according to three people familiar with the bid. Various parties who have been involved in the talks do not appear to be taking Amazon’s bid seriously, the people said. The bid came via an offer letter addressed to Vice President JD Vance and Howard Lutnick, the commerce secretary, according to a person briefed on the matter.”
“Will Mortgage Rates Ever Be 3% Again?” (Yahoo! Finance). “In 2021, the average 30-year mortgage rate fell below 3% — now it’s well over 6%. If you’re in the market for a mortgage loan, you may be wondering if you should wait until interest rates fall significantly before buying a house. When will mortgage rates finally drop back down near the 3% mark?”
“Trump Attorney Studied Options For Third Presidential Term” (Wall Street Journal). “Epshteyn, who is now the president’s outside counsel, didn’t provide a comment for this article. Steven Cheung, the White House communications director, said that ‘it’s far too early to think about’ a third term.”
What we’re reading (3/31)
“U.S. Stocks Post Worst Quarter Since 2022 On Threat Of Trade War” (Wall Street Journal). “Worries about tariffs and the economy sent the S&P 500 and Nasdaq Composite to their worst quarters since 2022, a setback that is pushing some investors overseas…’For the first time in a while, you can have a conversation about: Might European equities be the best place to be for the next two or three years?’ said John Porter, chief investment officer at Newton Investment Management, which has been buying European stocks in many of its strategies in recent months.”
“First-Quarter GDP Growth Will Be Just 0.3% As Tariffs Stoke Stagflation Conditions, Says CNBC Survey” (CNBC). “Policy uncertainty and new sweeping tariffs from the Trump administration are combining to create a stagflationary outlook for the U.S. economy in the latest CNBC Rapid Update. The Rapid Update, averaging forecasts from 14 economists for GDP and inflation, sees first quarter growth registering an anemic 0.3% compared with the 2.3% reported in the fourth quarter of 2024. It would be the weakest growth since 2022 as the economy emerged from the pandemic.”
“Fed’s Williams Says Rates To Remain Steady For ‘Some Time’ Amid Trump Tariff Uncertainty” (Yahoo! Finance). “New York Federal Reserve president John Williams told Yahoo Finance he expects the central bank to keep rates unchanged for ‘some time’ as policymakers watch how new tariffs from President Trump affect the economy. The tariffs, he added in an interview Monday, could produce ‘more prolonged effects’ on inflation and he warned that it could take a few years to figure that all out.”
“The PE Glut: A ‘Towering’ $3.6TR Of Value Is Locked In 29,000 Unsold Companies” (Institutional Investor). “Private equity funds just have too much money: They are struggling to find potentially profitable investments, can’t sell companies they already own, and are being pressured by exasperated limited partners.”
“23andMe’s DNA Data Is Going Up For Sale. Here’s Why Companies Might Want It” (CNN Business). “23andMe, a standard-bearer for the at-home health movement, announced on March 23 that it has filed for Chapter 11 bankruptcy to facilitate a sale, prompting many of its 15 million customers to wonder: What happens to my genetic data now? Privacy advocates and two state attorneys general have urged Americans to delete their data on the service, even as 23andMe said the bankruptcy won’t change how it handles user data.”
What we’re reading (3/30)
“President Says He’s ‘Not Joking’ About A Possible Third Term” (New York Times). “President Trump said in an interview on Sunday that he was “not joking” about possibly seeking a third term, which would run afoul of the 22nd Amendment. The remarks, to the NBC News host Kristen Welker, were the most serious treatment he has given an idea he has mused about previously. The amendment says, ‘No person shall be elected to the office of the president more than twice’ but Mr. Trump said there were ‘methods’ to doing so.”
“Trump Team Weighs Broader, Higher Tariffs” (Wall Street Journal). “The Trump administration is scrambling to determine the specifics of its new tariff agenda ahead of its self-imposed deadline of Wednesday, weighing options as the president has promised to remake the American economy with a swath of new levies. One key point of debate is whether to impose individualized tariff rates for U.S. trading partners, as President Trump has previewed in recent weeks, or revert to his campaign pledge for an across-the-board tariff that would affect virtually every country doing business with the U.S., say people familiar with the conversations.”
“White House Officials Are Quietly Freaking Out About Trump Upcoming ‘Liberation Day’ Tariff Announcement” (Daily Mail). “The mood inside the White House is verging on panic with just days to go before Donald Trump’s ‘Liberation Day’ on April 2. Trump is expected to unveil sweeping new tariffs on America's global trading partners, but those tasked with implementing his agenda admit they're uncertain. Behind closed doors, top administration officials are deeply concerned, with many quietly admitting they're unsure what the president is actually going to do.”
“Consistency On Taxes And Tariffs” (Marginal Revolution). “Peter Navarro is arguing that the pending tariffs will raise $600 billion a year, which might make them the biggest tax increase in U.S: history…If you too are against the tariffs, and arguing they will raise prices by a noticeable amount, that also means you think most of the tariff will not primarily fall on foreign producers. In light of that, you might wish to reevaluate your stance on the domestic corporate income tax. Perhaps quite a bit of that tax also does not fall on producers, due to competitive forces.”
“Explaining Stagnation In The College Wage Premium” (Federal Reserve Bank of San Francisco). “After growing substantially during the 1980s through the early 2000s, the college wage premium more recently has been largely unchanged, or stagnant. We extend the canonical production-function model of skill premiums to assess supply and demand contributions to the slowdown in college wage premium, using annual CPS ASEC data from the early 1960s through 2023. To account for the rising importance of women in the college educated workforce, we estimate a hybrid model that incorporates components that are disaggregated by age and gender. We also allow for non-linearities and changes over time in the parameters of the aggregate production function. Our results suggest that the recent stagnation of the college wage premium primarily reflects demand factors, specifically a slowdown in the pace of skill biased technological change.”
April picks available now
The new Prime and Select picks for April are available starting now, based on a model run put through Today (March 30). As a note, I will be measuring the performance on these picks from the first trading day of the month, Tuesday, April 1, 2025 (at the mid-spread open price) through the last trading day of the month, Wednesday, April 30, 2025 (at the mid-spread closing price).
April picks available soon
I’ll be publishing the Prime and Select picks for the month of March before Tuesday, April 1 (the first trading day of the month). As always, SPC’s performance measurement for the month of March, as well as SPC’s cumulative performance, will assume the sale of the March 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, March 31). Performance tracking for the month of April will assume the April 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, April 1).
What we’re reading (3/25)
“Front-Running Target-Date Funds For Fun And Profit” (Barron’s). “No institutional trader would think of telegraphing to the rest of Wall Street that it was about to execute a sizable trade. Yet that, in effect, is what the multi-trillion-dollar target-date fund industry regularly does when executing rebalancing transactions, enabling shrewd traders to front-run those transactions and profit at the funds’ expense.”
“Does Balyasny Have Good — Or Bad — Timing With Its New Venture Fund?” (Institutional Investor). “Venture investing has hit hard times since the 2022 collapse of technology and growth companies in the stock market. As a result, more than 1,200 venture-backed unicorns — companies valued at more than $1 billion — have yet to go public or get acquired, according to CB Insights, which tracks the VC industry.”
“Want To Invest In A Private Company? All It Takes Is $5,000” (Wall Street Journal). “It is getting easier to invest in high-risk, high-reward private companies. Now, all it takes is $5,000 to buy a stake in a firm like artificial intelligence platform Glean or crypto exchange Kraken. EquityZen and Forge Global, which are marketplaces for trading shares of private companies, are lowering the minimum investment from tens of thousands of dollars, the companies said.”
“Let’s Stop The Trade Deficit Blame Game” (Maurice Obstfeld). “Many economists suggest that low US saving, partly due to a federal budget deficit that reached a whopping 6.4 percent of GDP in 2024, could plausibly play a role in causing America’s large and persistent trade deficit. Proponents of tariffs or other trade-limiting measures push back furiously. The United States is a blameless victim, they say. US trade deficits arise from other countries’ mercantilist policies, foisted on a US economy that previous leaders have fecklessly and recklessly left open to external actors. To restore balanced trade, they argue, it is time to take back control. Anyone who points out that the United States borrows abroad because its saving falls short of its investment faces the retort that foreign saving exceeds investment by the same amount (another consequence of arithmetic). But neither observation suffices to determine the origin of the pattern of global imbalances, because saving and investment rates have deeper fundamental drivers. It is only those that can justifiably be labeled as ‘causes’ of the US deficit.”
“The Economics Of Healthcare Fraud” (Jetson Leder-Luis & Anup Malani). “Healthcare fraud imposes a sizable cost on U.S. public healthcare budgets and distorts health care provision. We examine the economics of health care fraud and enforcement using theory and data and connect to a growing literature on the topic. We first offer a new economic definition of health care fraud that captures and connects the wide range of activities prosecuted as fraud. We define fraud as any divergence between the care an insurer says a patient qualifies for, the care a provider provides, and the care a provider bills for. Our definition clarifies the economic consequences of different categories of fraud and provides a framework for understanding the slate of existing studies. Next, we examine the incentives for committing and for prosecuting fraud. We show how fraud is driven by a combination of inadequate (expected) penalties for fraud and imperfect reimbursement rates. Public anti-fraud litigation is driven by the relative monetary, political or career returns to prosecuting fraud and by prosecutorial budgets. Finally, we examine the prevalence of health care fraud prosecutions across types of fraud and types of care, and across the US, by machine learning on text data from Department of Justice press releases.”
What we’re reading (3/24)
“Dow Jumps Nearly 600 Points On Monday As Investors Hope Trump Softens Tariff Stance” (CNBC). “Stocks jumped Monday on optimism that President Donald Trump may hold back from implementing some of his wide-ranging tariff plans and so the U.S. could skirt an economic slowdown from a protracted trade war.”
“Trade War Explodes Across World At Pace Not Seen In Decades” (Wall Street Journal). “Barriers to open trade are rising across the world at a pace unseen in decades, a cascade of protectionism that harks back to the isolationist fervor that swept the globe in the 1930s and worsened the Great Depression. It isn’t just President Trump’s extensive new tariffs, which have set off a barrage of retaliatory measures across Europe, China and Canada targeting hundreds of U.S. goods. Even before Trump retook the White House, many countries were increasing trade barriers, often against China, as they tried to beat back a flood of electric cars, steel and other manufactured goods pressuring their homegrown industries. Now those efforts are proliferating as countries brace for a new wave of goods redirected across the globe by the U.S.’s rising tariff shield.”
“What Does Musk’s ‘Dexit’ From Delaware Mean For The Future Of US Business?” (The Week). “Delaware's capitalist-friendly approach to taxes and regulation has long made it a lynchpin of the American economy: More than 1.5 million businesses from around the world are incorporated in the state. But Elon Musk's ‘Dexit’ to Nevada could change all that, and state legislators are scrambling to respond.”
“This Timing System [Allegedly] Beats The Market Using The Calendar. Here’s What It Says Now.” (MarketWatch). “Currently, for example, the [Seasonality Timing System] STS has investors 100% in cash until March 27, after which you would remain fully invested in the U.S. stock market until April 7. Fosback’s system has been successful because the market’s best and worst days don’t occur randomly. Instead they tend to follow a calendar-based rhythm. This year provides a good illustration.”
“The Trump Administration Accidentally Texted Me Its War Plans” (The Atlantic). “U.S. national-security leaders included me in a group chat about upcoming military strikes in Yemen. I didn’t think it could be real. Then the bombs started falling.”
What we’re reading (3/21)
“China Explores Limiting Its Own Exports to Mollify Trump” (Wall Street Journal). “During Donald Trump’s first presidency, China was determined not to yield to American pressure over trade like Japan did in the 1980s. Now, faced with an even greater economic assault from the second Trump presidency at a time of sluggish growth at home, Beijing may take a page from Tokyo’s playbook—on one specific issue it sees as in its own interest. Like Japan decades ago, China is considering trying to blunt greater U.S. tariffs and other trade barriers by offering to curb the quantity of certain goods exported to the U.S., according to advisers to the Chinese government. Tokyo’s adoption of so-called voluntary export restraints, or VERs, to limit its auto shipments to the U.S. in the 1980s helped prevent Washington from imposing higher import duties.”
“AI Wars” (Paul Taylor). “It is hard to know exactly how innovative DeepSeek is. Demis Hassabis of Google DeepMind has said that he doesn’t think it is an outlier, and many of the techniques described as novel in DeepSeek’s reports are similar to those implemented by others. The much quoted figure of $5.5 million for the cost of training the DeepSeek model is taken from a 2024 paper and refers only to the cost of the computation required for the final training run for the model that provided the foundation for R1.”
“A Solution To The Housing Shortage” (City Journal). “Housing is too expensive because its development is overregulated. Yet the regulations that drive up housing costs—arcane local zoning and building codes—are not the kinds that congressional Republicans are best positioned to fight. Moreover, many of the local codes protect suburban single-family-home neighborhoods, a residential ideal that Trump has pointedly defended.”
“Nvidia CEO Jensen Huang Says Every Company Will Become An ‘AI Factory.’ Here’s What He Means.” (Business Insider). “Huang, Rauch, and other technologists think modern companies will succeed by generating the most tokens. They will be AI factories churning out tokens that will be used to improve and run AI systems that help businesses make better products and services.”
“Federal Judge Pushes Back On Acting Social Security Head Over Threat To Close Agency” (Washington Post). “Acting Social Security commissioner Leland Dudek threatened Thursday evening to bar Social Security Administration employees from accessing its computer systems in response to a judge’s order blocking the U.S. DOGE Service from accessing sensitive taxpayer data. Less than 24 hours later — after the judge rejected his argument and the White House intervened — Dudek is saying he was ‘out of line.’”
What we’re reading (3/20)
“Fed Projections See An Economy Dramatically Reset By Trump’s Election” (Wall Street Journal). “Months ago, policymakers presumed they would spend 2025 gradually cutting rates to keep inflation heading down without a big rise in joblessness to achieve the so-called soft landing. The latest projections point to the prospect that tariffs covering a swath of goods and materials will send up prices while sapping investment, sentiment and growth, at least in the short run.”
“U.S. Dollar Stands Tall After Fed Signals No Rush To Cut Rates” (Reuters). “The U.S. dollar was on the front foot against major peers on Friday after its best single-day performance for three weeks with the Federal Reserve indicating no rush to cut interest rates. The risk-sensitive Australian and New Zealand dollars remained on the defensive after steep slides on Thursday as worries about the economic drag from U.S. President Donald Trump's aggressive campaign of global trade tariffs dented sentiment.”
“Is The Stock Market Cheap Yet?” (Morningstar). “The recent selloff in stocks rattling investors has had one major side effect: The market is looking cheaper after pushing into overvalued territory late last year. As stock prices have fallen in the first months of 2025, so too have equity valuations.”
“Anti-Dividend Investing: Yield Matters—But Not How You Think!” (Alpha Architect). “Dividends are the comfort food of investing. Who wouldn’t love feeling like they’re getting a seemingly “free” payout just for holding onto a stock? It’s no wonder so many investors are drawn to the siren call of yield. As with all good things, there’s a little more—perhaps a whole lot more—to the story. Here’s why: it’s possible that even in a tax-free setting, selling stocks before dividend payouts can lead to abnormal returns.”
“Oxygen Discovered In Most Distant Known Galaxy” (Phys.Org). “Discovered last year, JADES-GS-z14-0 is the most distant confirmed galaxy ever found: it is so far away, its light took 13.4 billion years to reach us, meaning we see it as it was when the universe was less than 300 million years old, about 2% of its present age. The new oxygen detection with ALMA, a telescope array in Chile's Atacama Desert, suggests the galaxy is much more chemically mature than expected.”
What we’re reading (3/19)
“Accusations Of Corporate Espionage Shake A Software Rivalry” (DealBook). “One of the most bitter rivalries in the world of H.R. service providers just took a turn that wouldn’t be out of place in a spy thriller. Rippling on Monday sued Deel, accusing its competitor of hiring a mole in its Dublin office to comb through Rippling’s trade secrets, a scheme that reached its rival’s highest ranks, DealBook’s Michael de la Merced reports. Rippling said it had uncovered the defector through a ‘honeypot’ trap — a Slack channel set up specifically for the ruse that was mentioned in a letter to top Deel executives.”
“Data Broker Brags About Having Highly Detailed Personal Information On Nearly All Internet Users” (Gizmodo). “In 2019, the data broker Epsilon was acquired by French advertising conglomerate Publicis Groupe. Then, earlier this month, Publicis also acquired Lotame, another data and advertising firm, and announced it plans to integrate it with Epsilon’s business. At the time, Publicis CEO Arthur Sadoun said that the new corporate integration would allow his company to deliver “personalized messaging at scale” to some 91 percent of the internet’s adult web users.”
“Director Carl Rinsch Indicted On Charges Of Defrauding $11 Million From Netflix” (Variety). “According to the indictment, Rinsch had quickly transferred most of the $11 million to his brokerage account, where he promptly lost about half of it by speculating on investments such as call options on a biopharmaceutical company and put options on an S&P 500 ETF. At the time he was still reassuring Netflix that the show was ‘awesome and moving forward really well,’ the indictment states.”
“The $7 Billion Defense Contractor Who Became One Of America’s Biggest Alleged Tax Cheats” (Wall Street Journal). “Beyond the charges of tax evasion and misrepresentation, lawyers and accountants are watching the case for implications for other expatriates. The U.S. is unusual in taxing Americans living abroad. In virtually every other country, governments tax people based on residence, not citizenship. Americans generally pay taxes to the government where they are living, and must also file U.S. tax returns, with foreign-tax credits to avoid double taxation. But foreign spouses usually don’t pay U.S. taxes if they aren’t living there. For Americans settled abroad, it can be a no-brainer—and entirely legal—to keep homes and investments in their foreign spouse’s name. Edelman’s case could bring new scrutiny to the practice.”
“Purdue Pharma Files New Bankruptcy Plan For $7.4 Billion Opioid Settlement” (CNN Business). “Purdue Pharma filed a new bankruptcy plan on Tuesday, a major step toward finalizing a proposed opioid settlement of at least $7.4 billion after a setback in the U.S. Supreme Court last year. The payments are aimed at resolving thousands of lawsuits alleging that the company’s pain medication OxyContin caused a widespread opioid addiction crisis in the United States. The headline figure had been previously flagged by Purdue and its owners, members of the wealthy Sackler family.”
What we’re reading (3/18)
“Stock Market Today: Nasdaq Leads Stocks Lower, Nvidia Falls Over 3% As Tech Rout Resumes Ahead Of Fed Decision” (Yahoo! Finance). “US stocks pulled back on Tuesday, led by a nearly 2% decline in the Nasdaq, following two days of gains as investors concerned about an economic slowdown looked to the Federal Reserve's policy meeting for insights.”
“Slower Economic Growth Is Likely Ahead With Risk Of A Recession Rising, According To The CNBC Fed Survey” (CNBC). “Respondents to the March CNBC Fed Survey have raised the risk of recession to the highest level in six months, cut their growth forecast for 2025 and hiked their inflation outlook. Much of the change appears to stem from concern over fiscal policies from the Trump administration, especially tariffs, which are now seen by them as the top threat to the U.S. economy, replacing inflation. The outlook for the S&P 500 declined for the first time since September.”
“Leaked Memo: Inside JPMorgan’s RTO Plan For Its Largest Office” (Business Insider). “The bank told workers of its Polaris campus in Columbus, Ohio — a tech hub that houses roughly 12,000 employees — to return to the office five days a week beginning April 21, according to an internal memo viewed by BI.”
“Google’s $32 Billion Wiz Deal Is A Natsec Gamble” (Semafor). “Call it an act of Wiz-ardry: a dead deal has come back to life, with a $9 billion bump. Google will buy cybersecurity startup Wiz for $32 billion, its largest acquisition and a signal that the M&A market isn’t so dead for the right kind of company.”
“The Last Decision By The World’s Leading Thinker On Decisions” (Wall Street Journal). “Kahneman was one of the world’s most influential thinkers—a psychologist at Princeton University, winner of the Nobel Prize in economics and author of the international blockbuster “Thinking, Fast and Slow,” first published in 2011. He had spent his long career studying the imperfections and inconsistencies of human decision-making. By most accounts—although not his own—Kahneman was still in reasonably good physical and mental health when he chose to die.”
What we’re reading (3/16)
“A Fed Meeting And Retail Sales Data Greet A Flailing Stock Market: What To Know This Week” (Yahoo! Finance). “In the week ahead, the Federal Reserve and the health of the US economy will remain top of mind for investors. The central bank is largely expected to hold interest rates steady when it announces its next monetary policy decision on Wednesday. Markets will focus on any clues about when the central bank could cut rates again.”
“The Days Of Set-And-Forget Investing Just Ended For Many Americans” (Wall Street Journal). “The S&P 500, which had been delivering hard-to-beat gains, fell into correction territory this past week, with Wall Street fretting that the economy is sliding toward recession. In the first half of March, individual investors have been trading in their 401(k)s at more than four times the normal level, according to record-keeper Alight Solutions. The past month has had the most trading in almost five years. Investors who have dumped U.S. stocks say they are searching for stability in money-market funds, short-term bonds, gold and international markets. European defense stocks have been a popular bet, premised on increased security spending in the region.”
“Home Sellers And Buyers Accuse Realtors Of Blocking Lower Fees” (New York Times). “One year after the National Association of Realtors agreed, as part of a legal settlement, to change a key rule on real estate commissions — a rule that had long upheld a tradition of commissions between 5 and 6 percent, little has changed. What was hailed as a watershed has so far produced a mere drizzle. Some economists predicted the rule change would upend the business model and bring competition to a long-stilted marketplace, breaking the standard 6 percent rate — one of the highest rates in the world — and forcing down home prices as a result. Though average commissions appear to be slipping, industry watchdogs say that Realtors and their brokerages have used workarounds and pressure on sellers like Mr. Chambers to subvert the settlement. So far, they’re finding success.”
“The World’s Deadliest Infectious Disease Is About to Get Worse” (The Atlantic). “Mycobacterium tuberculosis is a near-perfect predator. In 1882, Robert Koch, the physician who discovered the microbe, told a room full of scientists that it caused one in seven of all deaths. In 2023, after a brief hiatus, tuberculosis regained from COVID its status as the world’s deadliest infectious disease—a title it has held for most of what we know of human history.”
“Is Our Universe Trapped Inside A Black Hole? This James Webb Space Telescope Discovery Might Blow Your Mind” (Space.com). “Without a doubt, since its launch, the James Webb Space Telescope (JWST) has revolutionized our view of the early universe, but its new findings could put astronomers in a spin. In fact, it could tell us something profound about the birth of the universe by possibly hinting that everything we see around us is sealed within a black hole. The $10 billion telescope, which began observing the cosmos in the Summer of 2022, has found that the vast majority of deep space and, thus the early galaxies it has so far observed, are rotating in the same direction. While around two-thirds of galaxies spin clockwise, the other third rotates counter-clockwise. In a random universe, scientists would expect to find 50% of galaxies rotating one way, while the other 50% rotate the other way. This new research suggests there is a preferred direction for galactic rotation.”
What we’re reading (3/15)
“A New Economic Power Is Emerging In Europe” (Business Insider). “Polish Prime Minister Donald Tusk took a leaf out of President Donald Trump's book last month, turning to a controversial entrepreneur for support as he pushed for deregulation to help boost the economy. Presenting his government's economic plan in February, Tusk hailed ‘the moment when we can overtake everyone.’”
“Consumers And Businesses Send Distress Signal As Economic Fear Sets In” (Wall Street Journal). “Consumers are starting to freak out.”
“Cancer Patient's $100,000 Bill Shows Chaos Rocking Health Care” (Bloomberg). “Like countless Americans, Simons was caught in a conflict between her insurer and her provider. These clashes, long a fixture of the US health-care system, are intensifying as both care providers and insurers employ supercharged tactics to maximize their financial advantage. They’re turning to a growing brigade of middleman companies that face off over prior authorizations, denials, appeals and payments. Those businesses — sometimes backed by private equity, sometimes units of powerhouse incumbents — police the money insurers pay out or, on the other side, help hospital systems and medical practices boost their revenue.”
“How Elon Musk Lost The Plot: The Tycoon Is Flailing In Politics” (Richard Hanania). “To say Musk is biased in his posts or that he shows a disregard for the truth doesn’t come close to capturing the constant stream of nonsense he blasts out to the world. This isn’t a matter of being biased or getting things wrong like CNN occasionally does. His feed is more in the neighbourhood of InfoWars, where Alex Jones will typically point to a document that actually exists to make wild extrapolations about what Democrats or ‘globalists’ are up to. Musk is somehow more reckless: the things he regularly promotes lack even that kind of nexus to something based in reality.”
“Have Humans Passed Peak Brain Power?” (Financial Times). “In one particularly eye-opening statistic, the share of adults who are unable to ‘use mathematical reasoning when reviewing and evaluating the validity of statements’ has climbed to 25 per cent on average in high-income countries, and 35 per cent in the US.”
What we’re reading (3/12)
“Inflation Cooled To 2.8% In February, Lower Than Expected” (Wall Street Journal). “Inflation cooled last month, but the latest data may offer less comfort to U.S. businesses, consumers, and Federal Reserve policymakers than it otherwise would because tariffs are threatening to raise some prices in the months ahead.”
“The Curious Surge Of Productivity In U.S. Restaurants” (Austan Goolsbee, et al.). “We document that, after remaining almost constant for almost 30 years, real labor productivity at U.S. restaurants surged over 15% during the COVID pandemic. This surge has persisted even as many conditions have returned to pre-pandemic levels. Using mobile phone data tracking visits and spending at more than 100,000 individual limited service restaurants across the country, we explore the potential sources of the surge. It cannot be explained by economies of scale, expanding market power, or a direct result of COVID-sourced demand fluctuations. The restaurants’ productivity growth rates are strongly correlated, however, with reductions in the amount of time their customers spend in the establishments, particularly with a rising share of customers spending 10 minutes or less.”
“The Internet Is In Awe Of Warren Buffett’s Perfectly Timed Cash-Out” (Business Insider). “Warren Buffett has sparked a raft of comments and memes on social media after the legendary investor sold most of his massive Apple stake and built a record cash pile before the stock market tumbled earlier this week.”
“Dimon: ‘Uncertainty Is Not A Good Thing’” (Semafor). “‘I don’t think the average American consumer who wakes up in the morning and goes to work…changes what they’re going to do because they read about tariffs,’ Dimon said in an interview with Semafor’s Gina Chon at a Washington, D.C., summit on retirement hosted by BlackRock and the Bipartisan Policy Center. ‘But I do think companies might,” he said. “Uncertainty is not a good thing.’”
“Short-Term Pain For... Long-Term Malaise?” (Drezner’s World). “As Catherine Rampell notes in her latest column, Trump ‘has already positioned America to lose the 21st century, in three simple steps. 1) Alienate your friends. 2) Destroy your business environment. 3) Slaughter your golden goose (i.e., science and research).’”
What we’re reading (3/10)
“Stock Market Today: Nasdaq Falls 4% After Trump Doesn’t Rule Out Recession” (Wall Street Journal). “Stocks slid Monday as concerns about the U.S. economy tipping into a recession grew. The Dow gave up nearly 900 points, the S&P 500 fell 2.7% and the Nasdaq Composite tumbled 4% as shares of big tech companies extended their selloff. Tesla's stock lost 15%. Shares of the other Magnificent Seven stocks—Apple, Microsoft, Alphabet, Amazon.com, Nvidia and Meta Platforms—fell between 2% and 5%.”
“Tesla Shares Plunge 15%, Suffering Steepest Drop In Five Years” (NBC News). “Tesla’s selloff on Wall Street intensified on Monday, with shares of the electric vehicle maker plunging 15%, their worst day on the market since September 2020. On Friday, Tesla wrapped up a seventh straight week of losses, its longest losing streak since debuting on the Nasdaq in 2010. The stock has fallen every week since CEO Elon Musk went to Washington, D.C., to take on a major role in the second Trump White House.”
“Are Palantir’s Passive Bona Fides Hurting The Stock?” (Institutional Investor). “[W]hile passive investment facilitates momentum investing and pushes stocks up because of regular buying for retirement accounts, it also can create ‘wild swings’ due to the lack of active managers to take the other side of the trade if things start to go south. (Green previously worked for Thiel’s macro hedge fund.)”
“Fed To Deliver Rapid-Fire Rate Cuts If Economic Downturn Happens, Traders Bet” (Reuters). “The Federal Reserve won't lower interest rates at its policy meeting next week, but could deliver the first of a set of rapid-fire reductions in borrowing costs in June if rising fears of an economic downturn triggered by a trade war materialize. At least that's where the betting is in futures markets, where contracts that settle to the Fed's policy rate were increasingly priced for quarter-percentage-point reductions in June, July and October following U.S. President Donald Trump's remarks last weekend about a "period of transition" as he ratchets up tariffs on China, Canada and Mexico. U.S. stocks and Treasury yields also dropped on Monday on concern that his comments signaled a coming recession.”
“Trump Wants To Kill Carried Interest. Wall Street Will Fight To Keep It.” (DealBook). “Nearly a month has passed since President Trump last spoke publicly of his desire to kill the carried interest loophole. (Yes, we know, some of you don’t consider it a ‘loophole.’) And yet the private equity industry, which stands to lose big if the president upends the tax break, is still bracing for a fight.”