What we’re reading (2/9)
“Investors Await New Inflation Data Amid Tariff Concerns: What To Know This Week” (Yahoo! Finance). “In the week ahead, inflation will take center stage, with the Consumer Price Index (CPI) set for release on Wednesday morning. Updates on wholesale inflation and retail sales will also be closely tracked. On the corporate front, 78 S&P 500 companies, including McDonald's (MCD), Coca-Cola (KO), Super Micro Computer (SMCI), and Airbnb (ABNB), are set to report earnings.”
“Inside The Lovefest Between Palantir And Its Army Of Retail Investors” (Business Insider). “Karp has long eschewed the ‘rules"‘ of running a public company. He sidestepped the traditional IPO route, which relies on investment banks to market the stock to institutional investors and then gives those investors priority to buy the stock at an attractive price before retail can jump in. Instead, Palantir opted for a direct listing, which allowed retail investors to buy the stock at the same price as institutional investors when it went public. In continuing to lean into his retail fanbase, Karp often answers questions from retail investors before he addresses sell-side analysts during earnings calls. In its latest call, just two analysts—Wedbush analyst Dan Ives and Bank of America analyst Mariana Perez Mora—were given the opportunity to pitch inquiries about the business.”
“Wall Street Prepares To Defend A Favored Tax Break, Again” (DealBook). “Carried interest was one of several items Trump mentioned [this week], according to Karoline Leavitt, the White House press secretary. He reiterated ideas he promoted on the campaign trail, including ending taxes on tips, overtime and Social Security payouts, as well as expanding deductions for state and local taxes. But his call to end the carried interest exemption — and tax breaks for ‘billionaire sports-team owners’ (many of whom supported Trump) — wasn’t on many observers’ bingo cards.”
“Tommy Supreme And The Blitz” (Air Mail). “Tom Goldstein was a star in arguing cases before the Supreme Court. He was also one of the world’s highest-rolling—and most reckless—poker players. Then his worlds collided.”
“Forget Psychedelics. Everyone’s Microdosing Ozempic Now” (The Hollywood Reporter). “On a chilly January evening, Samira Shamoon, a 44-year-old health and beauty publicist, walked into an Italian restaurant to meet friends. They were stunned by the incandescence of her skin. Her cheekbones appeared more defined. After a flurry of questions about which dermatologist or plastic surgeon she had visited, she said, beaming, ‘I’m microdosing!’”
What we’re reading (2/8)
“SPAC Market Hums Again Following Multiyear Downturn” (Law360). “Special purpose acquisition companies are once again asserting their presence in the capital markets and M&A landscape, forming new vehicles at the highest pace in three years — albeit in leaner form than in the last cycle, when many deals ended in busts. Some 23 SPACs went public in the fourth quarter of 2024 and raised $3.8 billion, according to advisory firm ICR Inc., marking the strongest three-month clip since the first quarter of 2022. And the renewed momentum has carried over into the new year.”
“Europe’s Unloved Stocks Are Suddenly On Top Of The World” (Wall Street Journal). “Europe’s economy is stuck in the doldrums and President Trump’s threat to hit the trade-dependent region next with tariffs risks making things worse. Yet European stocks are on a hot streak. The German DAX has climbed more than 9% this year in dollar terms, and France’s CAC 40 is up about 8%. That is well above the 2.45% gain in the S&P 500. European indexes haven’t outpaced U.S. counterparts by such a wide mark at the start of a year since 2015, according to Dow Jones Market Data.”
“Activist Elliott Builds Stake In Oil Major BP, Source Says” (Reuters). “Activist investor Elliott Investment Management has built a stake in oil major BP, a source familiar with the matter told Reuters on Saturday. The source did not provide the size of the stake. U.S.-based Elliott is seeking to boost shareholder value by urging BP to consider transformative measures, Bloomberg News reported earlier on Saturday, calling Elliott's stake in the company ‘significant.’”
“Debt Derivatives Are So Tight Even Trump’s Tariff Talk Can’t Shift Them” (Bloomberg). “Prices on credit default swaps barely moved on Monday amid the prospect of levies being introduced on Mexican and Canadian goods, even as trading volume in the derivatives more than doubled from the previous week’s daily average. By Tuesday, activity had returned to more typical levels.”
“Fannie Mae Underpins The Mortgage Market. Should The Government Sell It?” (New York Times). “Fannie Mae and Freddie Mac, two giant mortgage finance firms, have been controlled by the federal government for nearly 17 years, but a long-dormant idea of making them private businesses is starting to make the rounds in Washington again.”
What we’re reading (2/7)
“US Jobs Report Today: Employers Added 143,000 Jobs In January, Unemployment Rate At 4%” (USA Today). “Hiring slowed in January as U.S. employers added 143,000 jobs amid the Los Angeles wildfires, frigid weather across much of the nation and uncertainty generated by President Donald Trump’s trade and immigration policies. But payroll gains for the previous two months were revised up by a whopping 100,000, depicting an even more robust picture of the labor market at the end of 2024.”
“The Mood Of The American Consumer Is Souring” (Wall Street Journal). “The Trump bump in consumer confidence is already over. Tariff threats, stock market swings and rapidly reversing executive orders are causing Americans across the political spectrum to feel considerably more pessimistic about the economy than they did before President Trump took office. Consumer sentiment fell about 5% in the University of Michigan’s preliminary February survey of consumers to its lowest reading since July 2024.”
“The Man Who Took On Big Tobacco Has A New Target: Sports Betting” (Time). “America’s burgeoning love affair with sports gambling has come with costs. Calls to problem-gambling hotlines have spiked. Emerging research suggests that sports betting depletes investment accounts of already financially vulnerable households, increases bankruptcy risk, and even contributes to upticks in intimate-partner violence. ‘I am presently, or have recently been, treating divorces, breakups, estrangement from children, criminal charges, incarceration, loss of all savings, foreclosure of homes, end of careers, suicidal ideation, hospitalization for a suicide attempt,’ says PHAI director of gambling policy Harry Levant, a former gambling addict who’s now a clinical gambling-disorder therapist and also testified at that December congressional hearing. ‘The deepest forms of despair.’”
“The Last Days Of American Orange Juice” (The Atlantic). “Citrus greening has no cure: Labs around the country are racing to develop disease-resistant trees, but research is slow because trees take up to eight years to bear fruit, Tripti Vashisth, a citrus expert at the University of Florida’s Institute of Food and Agricultural Sciences, told me. At the rate trees are dying, a solution is likely to come too late.”
“Yum Bets Big On AI As It Attempts To Move To 100% Digital Sales” (International Business Times). “Chief Financial Officer Chris Turner talked about the company's goal of complete digital sales in the earnings report, saying ‘digital sales up approximately 15% and digital mix surpassing 50%.’ Turner said Yum Brands will be able to do this through, Byte by Yum!, a proprietary software and digital ecosystem that includes AI-driven products for easier operations.”
What we’re reading (2/6)
“Hydrogen-Truck Maker Nikola Nears Bankruptcy Filing” (Wall Street Journal). “Nikola, the much-hyped hydrogen-truck maker that was briefly valued more than Ford Motor, is nearing a bankruptcy filing, according to people familiar with the matter. Phoenix-based Nikola has been working with its law firm Pillsbury Winthrop Shaw Pittman to explore options that could include a sale or restructuring of the company in bankruptcy, the people said.”
“The End Of The Chinese Economic Miracle?” (American Enterprise Institute). “Even before the start of the latest round of the US-China trade war, the Chinese economy was in deep trouble. Now that another round of that trade war has started, it is difficult to see how China will extricate itself from its economic troubles anytime soon. A further slowing in the Chinese economy could have serious implications for the world economy in general and for China’s Asian trade partners in particular.”
“Have We Been Partying Like It’s 1999?” (Paul Krugman). “Back in 2000 the economist Robert Gordon argued that the IT revolution was far less significant than what he called the Second Industrial Revolution of the late 19th century, built around electricity, internal combustion engines, chemicals and — last but not least — indoor plumbing. (The great postwar boom was arguably about taking full advantage of this revolution.) So far the data have supported his skepticism. Still, the tech surge was real, and brought real benefits to the economy, adding perhaps 10 percent to real GDP. What it didn’t do was justify the high valuations temporarily placed on tech stocks.”
“Three Simple Principles Of Trade Policy” (Marginal Revolution). “A Tax on Imports is a Tax on Exports…Businesses are Consumers Too..Trade Imbalances Reflect Capital Flows[.]”
“Inside The Bust That Took Down Pavel Durov—And Upended Telegram” (Wired). “The Russian-born CEO styles himself as a free-speech crusader and a scourge of the surveillance state. Here’s the real story behind Pavel Durov’s arrest and what happened next.”
What we’re reading (2/5)
“Alphabet Shares Drop As Much As 9% On Revenue Miss, Soaring AI Investments” (CNBC). “Alphabet shares fell more than 9% in after-hours trading Tuesday after the company reported fourth-quarter results that missed on revenue expectations and announced more artificial intelligence investments.”
“Deep Research” (Marginal Revolution). “I have had it write a number of ten-page papers for me, each of them outstanding. I think of the quality as comparable to having a good PhD-level research assistant, and sending that person away with a task for a week or two, or maybe more.”
“Nissan To Reject Honda’s Merger Terms, Putting Deal In Peril” (Wall Street Journal). “Nissan’s board is planning to reject Honda’s terms for a combination of the two automakers, putting in danger a merger plan announced less than two months ago, people familiar with the matter said Wednesday.”
“A 25-Year-Old With Elon Musk Ties Has Direct Access To the Federal Payment System” (Wired). “A 25-year-old engineer named Marko Elez, who previously worked for two Elon Musk companies, has direct access to Treasury Department systems responsible for nearly all payments made by the US government, three sources tell WIRED. Two of those sources say that Elez’s privileges include the ability not just to read but to write code on two of the most sensitive systems in the US government: the Payment Automation Manager and Secure Payment System at the Bureau of the Fiscal Service (BFS). Housed on a secure mainframe, these systems control, on a granular level, government payments that in their totality amount to more than a fifth of the US economy.”
“About 100,000 Eggs Worth $40K Stolen From Trailer In Pennsylvania” (Wired). “Thieves poached about 100,000 eggs from the back of a distribution trailer, authorities in Pennsylvania said.”
January performance review
Hi friends, here with the performance numbers for December:
Prime: +0.88%
Select: +3.53%
SPY ETF: +2.11%
Bogleheads Portfolio (80% VTI, 20% BND): +2.00%
February picks available now
The new Prime and Select picks for February are available starting now, based on a model run put through Today (February 2). As a note, I will be measuring the performance on these picks from the first trading day of the month, Monday, February 3, 2025 (at the mid-spread open price) through the last trading day of the month, Friday, February 28, 2025 (at the mid-spread closing price).
February picks available soon
I’ll be publishing the Prime and Select picks for the month of February before Monday, February 3 (the first trading day of the month). As always, SPC’s performance measurement for the month of January, as well as SPC’s cumulative performance, will assume the sale of the January picks at the closing price (at the mid-point of the closing bid and ask prices) on the last trading day of the month (Friday, January 31). Performance tracking for the month of February will assume the February 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 (Monday, February 3).
What we’re reading (1/28)
“Global Economies, Converging On Equilibrium, Confront A Geopolitical Regime Shift” (Bob Prince, Bridgewater). “After five years of severe imbalances, global economies are converging on a reasonable state of equilibrium, a condition that is generally good for assets. Developed world central banks, including the Fed, are responding to the stabilization of conditions within tolerable ranges by gradually cutting rates toward what they view as a neutral posture. Meanwhile, China, which has been a deflationary outlier over this period, has begun to recognize the problem and is prioritizing boosting domestic demand, even if the policies are not yet clearly defined. And AI technology has advanced to show real potential to enhance productivity over time. If these were the only developments in the world, you should expect an era of stability and strong profits. That’s what markets are discounting and what is therefore required to generate a strong positive return, particularly for US equity indexes, which are pricing an even more exceptional decade than the last.”
“DeepSeek’s Rise Exposes Nvidia’s Weakness” (Wall Street Journal). “Nvidia cast the DeepSeek jolt in a positive light. In a statement Monday, it said that DeepSeek’s advance was an excellent illustration of new ways of operating AI models. Doing the work of serving up such AI models to users—a process called ‘inference’—required large numbers of Nvidia’s chips, it said. The concern for investors is that DeepSeek’s more efficient way of developing AI could upend a status quo where the most sophisticated AI models require the largest number of Nvidia’s AI chips to train. AI development has thus far led to insatiable demand and supply shortages for its most advanced chips as big tech pours cash into AI data centers.”
Olivier Blanchard on DeepSeek: “Probably the largest positive one day change in the present discounted value of total factor productivity [i.e., efficiency] growth in the history of the world.”
“Expect Record-High Egg Prices For Most Of The Year” (CNN Business). “Egg prices are estimated to increase about 20% in 2025, compared to about 2.2% for food prices in general, according to the US Department of Agriculture’s price outlook. Beef, coffee and orange juice are among groceries with higher prices, but eggs are uniquely impacted by the aggressive strain of avian flu, which has strained supply.”
“Why Tariffs Are Never The Optimal Industrial Policy” (Something To Consider). “In this essay, I will argue that differences in management quality explain much of the difference in productivity between countries. These differences are only able to exist because of uncompetitive markets and barriers to foreign trade, and I will show theoretically how trade affects both what is made, and how it is made. I will then show, with evidence from the United States and Latin America, how trade restrictions have led to poor productivity in the past, and what that implies for industrial policy in the present day.”
What we’re reading (1/27) - DeepSeek
“The DeepSeek AI Freakout” (Wall Street Journal). “Who saw that coming? Not Wall Street, which sold off tech stocks on Monday after the weekend news that a highly sophisticated Chinese AI model, DeepSeek, rivals Big Tech-built systems but cost a fraction to develop. The implications are likely to be far-reaching, and not merely in equities.”
“What To Know About DeepSeek And How It Is Upending A.I.” (New York Times). “Tech stocks tumbled. Giant companies like Meta and Nvidia faced a barrage of questions about their future. Tech executives took to social media to proclaim their fears. And it was all because of a little-known Chinese artificial intelligence start-up called DeepSeek.”
“China’s DeepSeek Surprise” (The Atlantic). “To understand what’s so impressive about DeepSeek, one has to look back to last month, when OpenAI launched its own technical breakthrough: the full release of o1, a new kind of AI model that, unlike all the “GPT”-style programs before it, appears able to ‘reason’ through challenging problems. o1 displayed leaps in performance on some of the most challenging math, coding, and other tests available, and sent the rest of the AI industry scrambling to replicate the new reasoning model—which OpenAI disclosed very few technical details about. The start-up, and thus the American AI industry, were on top…DeepSeek, less than two months later, not only exhibits those same “reasoning” capabilities apparently at much lower costs but has also spilled to the rest of the world at least one way to match OpenAI’s more covert methods.”
“Nvidia Sheds Almost $600 Billion In Market Cap, Biggest One-Day Loss In U.S. History” (CNBC). “Nvidia lost close to $600 billion in market cap on Monday, the biggest drop for any company on a single day in U.S. history. The chipmaker’s stock price plummeted 17% to close at $118.58. It was Nvidia’s worst day on the market since March 16, 2020, which was early in the Covid pandemic. After Nvidia surpassed Apple last week to become the most valuable publicly traded company, the stock’s drop Monday led a 3.1% slide in the tech-heavy Nasdaq.”
“The Tech Industry Is In A Frenzy Over DeepSeek. Here’s Who Could Win And Lose From China's AI Progress.” (Business Insider). “On Amazon's internal Slack, one person posted a meme suggesting that developers might drop Anthropic's Claude AI model in favor of DeepSeek’s offerings. The post included an image of the Claude model crossed out. ‘Friendship ended with Claude. Now DeepSeek is my best friend.’ the person wrote, according to a screenshot of the post seen by BI, which got more than 60 emoji reactions from colleagues.”
What we’re reading (1/26)
“Big Tech Earnings, A Key Fed Meeting, And Trump’s First Full Week In Office: What To Know This Week” (Yahoo! Finance). “The week ahead will bring investors a deluge of news that will put that rally to the test. Earnings from more than 100 members of the S&P 500 — highlighted by results from tech heavyweights Meta (META), Microsoft (MSFT), Apple (AAPL), and Tesla (TSLA) — are set for release, with Wednesday serving as the week's busiest. Starbucks (SBUX), Exxon (XOM), and Chevron (CVX) are also set to report. On Wednesday afternoon, the Federal Reserve will also announce its latest monetary policy decision, with the central bank expected to keep interest rates unchanged and investors focused on what Fed Chair Jay Powell has to say about the balance of 2025.”
“Currency Volatility Set To Wipe Out Emerging-Market Carry Trades” (Bloomberg). “Latin American currencies, often bought as part of such trades, face pressure from domestic fiscal issues along with the prospect of trade tensions with the US, according to Mackay Shields and Pictet Asset Management. Carry trades involve borrowing in currencies from countries with relatively-low interest rates, like the yuan or yen, and investing those funds in markets with higher rates.”
“Taboo Economics No More” (Axios). “Economic orthodoxy is out. Rule-busting and experimentation are in. That's a key takeaway from this week's gathering of top executives and world leaders at the World Economic Forum in Davos, Switzerland.”
“Silicon Valley Is Raving About A Made-In-China AI Model” (Wall Street Journal). “AI models from DeepSeek, the Chinese company, have zoomed to the global top 10 in performance, according to a popular ranking, suggesting Washington’s export curbs are having difficulty blocking rapid advances in China. On Jan. 20, DeepSeek introduced R1, a specialized model designed for complex problem-solving. ‘Deepseek R1 is one of the most amazing and impressive breakthroughs I’ve ever seen,’ said Marc Andreessen, the Silicon Valley venture capitalist who has been advising President Trump, in an X post on Friday.”
“Thieves Blow Up Dutch Museum Door And Steal 2,400-Year-Old Golden Helmet” (Washington Post). “Police in the Netherlands are searching for robbers who blasted open the door to a history museum early Saturday, damaging the building and stealing a 2,400-year-old golden helmet and golden bracelets traced back to ancient Romanian royalty.”
What we’re reading (1/25)
“Rates, Risk And Relative Value” (Standard & Poor’s). “Coupled with rising yields and continuous record highs for the stock market, Exhibit 1 shows that the S&P 500® equity risk premium, measured here as the difference between the S&P 500 trailing 12-month earnings yield versus the 10-year U.S. Treasury yield, has plummeted over the past year, most recently entering negative territory. The last time the equity risk premium was below zero was following the burst of the Tech bubble during the early 2000s.”
“CIA Now Says Covid-19 Is More Likely To Have Originated From A Lab Leak” (Politico). ”The Central Intelligence Agency said Saturday that it’s more likely a lab leak caused the Covid-19 pandemic than an infected animal that spread the virus to people, changing the agency’s yearslong stance that it couldn’t conclude with certainty where the pandemic started.”
“Airlines Are Charging Higher Fares And Are Confident You’ll Pay Up” (Wall Street Journal). “U.S. airlines are charging higher fares and signaling that business and leisure travel demand should remain strong this year. It is the latest sign of how companies are expecting consumers to pay more for services and items deemed desirable.”
“Why Is Homeowners Insurance Getting So Expensive?” (Construction Physics). “[h]omeowners insurance costs have risen steadily and substantially since the 1970s. Construction cost inflation and increasing home size can probably only explain a small portion of the increase. Insurers’ profits don’t seem to be a driver, and neither does state-level population shifts: the cost increases are across the board, in essentially every state. Increasingly destructive weather events and climate-related disasters are probably part of the explanation, with the cost in risky regions being spread over the rest of the country, but it’s hard to tell how much this is occurring. Looking at data from types of claims filed, the increasing frequency and severity of wind and hail damage is responsible for around half the increase in insurance losses over the past two decades, despite the fact that loss ratios in most wind and hurricane-prone states seem to be down. Fire risk is a relatively small portion of the increase. And another major source of increase isn’t anything related to climate at all, but due to the increasing frequency and severity of water damage.”
“How America Claimed A Breathtaking Fortune At The Bottom Of The Ocean” (The Atlantic). “You’d be forgiven for thinking that America’s continental shelf couldn’t get any bigger. It is, after all, mostly rock, the submerged landmass linking shore and abyss. But in late 2023, after a long and expensive mapping project, the State Department announced that the continental shelf had grown by 1 million square kilometers—more than two Californias. The United States had ample motive to decide that the continental shelf extends farther than it had previously realized. A larger shelf means legal access to more of the ocean floor’s riches: animals, hydrocarbons, and, perhaps most important, minerals to power electric-vehicle batteries. America has no immediate plans to excavate its new seabed, which includes chunks of the Arctic Ocean, Bering Sea, and Atlantic, as well as several small pockets of the Gulf of Mexico and the Pacific. But, according to the State Department, the combined area could be worth trillions of dollars.”
What we’re reading (1/22)
“Pension Funds Want Private Equity To Open Up About Fees And Returns” (Wall Street Journal). “A group of U.S. pensions and other institutions is pushing private-equity firms to share more information on their fees and investment returns, in a bid to address simmering frustration with the industry’s disclosures. The Institutional Limited Partners Association, a trade group that counts the retirement plans of public workers in California and Wisconsin as members, proposed this week new guidelines to standardize financial reporting by private-equity firms, people familiar with the matter said.”
“Commodities Are Targeting 2022 Highs” (Price Action Lab Blog). “Since 2022, commodities ($CRB) are up 33.9%, stocks ($SPXTR) are up 31.9%, the US dollar index ($USDX) has gained 14.3%, and the 20+ year bond total return is down 35%.”
“Netflix Hikes Prices As Its Lead Widens Over Other Streaming Services” (Washington Post). “Netflix has raised its prices after gaining a record 41 million subscribers last year. The world’s largest streaming service said Tuesday that it had raised subscription rates for most plans in the United States, Canada, Portugal and Argentina. For U.S. users, Netflix’s ad-supported plan increased from $6.99 to $7.99 monthly, while a standard subscription has increased from $15.49 to $17.99. The platform’s premium ad-free plan — which allows four users to stream concurrently — went up by $2, to $24.99 per month.”
“China, UK Resume Economic Talks After 6-Year Hiatus” (Semafor). “The UK resumed high-level economic talks with China after a six-year hiatus. British finance minister Rachel Reeves’ trip to China reflected the Labour government’s self-described “pragmatic” approach to Beijing, with the aim of striking long-term economic deals. It’s a marked change from the previous Conservative government, which hardened London’s stance over human rights, Hong Kong, and spying allegations.”
“The Impact Of Risk Mismatch On Personal Portfolio Performance” (Georges Hübner). “Within the Modern Portfolio Theory framework, personal portfolio choice is driven by the investor's risk aversion. In practice, this criterion is usually replaced by a target volatility level, potentially leading to similar allocation choices. Reconciling these two approaches leads to the design of a performance measure that explicitly allows us to isolate a penalty for the portfolio unsuitability, defined as the mismatch between the actual and targeted portfolio risks. This penalty is particularly strong for defensive investors and when the market risk premium is high. We also show that the target volatility criterion leads to inadequate portfolio choices when the market conditions change or when the investor is confronted with a well-performing active portfolio. We extend this approach to attitudes towards extreme risks, through the investor's preference for skewness. The resulting performance measurement framework involves a penalty for unsuitability that can be substantially aggravated, especially for investors who simultaneously exhibit a strong aversion to volatility and asymmetry risks.”
What we’re reading (1/19)
“TikTok Says It Will Restore US Service After Brief Shutdown” (Semafor). “TikTok said it would restore its US service Sunday, having shut down for 14 hours after a national ban went into effect. The apparent reversal came after Donald Trump said in a social media post that he will issue an executive order to delay the ban Monday after his inauguration — which TikTok’s CEO is attending.”
“Hedge-Fund Fees Eat Up Half Of Clients’ Profits” (Wall Street Journal). “Hedge-fund investors often gripe about high fees. A new report puts the problem in sharp relief. Just over half of the industry’s total gross performance was eaten away by fees over the past two decades, according to LCH Investments. That compares to about 30% between 1969 and the early 2000s, said the company, which manages and advises on investments in hedge funds on behalf of investment firm Edmond de Rothschild and other investors.”
“Contrarian Bet Emerges That Next Fed Move Is Higher, Not Lower” (Bloomberg). “It’s at best, a longshot, but one that’s emerged among a group of die-hard bond traders — that the Federal Reserve’s next move on interest rates will be up, not down. The wager, which arose after a blowout jobs report on Jan. 10, stands in stark contrast to the consensus on Wall Street for at least one rate cut this year. That contrarian bet has remained in place even after a benign inflation report on Wednesday strengthened the Fed’s rate-cutting stance and caused yields in the US Treasury market to retreat from multi-year highs.”
“Amazon Has A New Way Of Checking Whether Employees Are Really Coming Into The Office Five Days A Week” (Business Insider). “Amazon's strict new RTO policy comes with changes to how the company tracks office attendance, according to internal messages viewed by Business Insider. The new approach provides managers with less granular data on office attendance and appears to give managers more freedom to decide which employees are not complying and how to deal with these situations, the messages show.”
“US Accuses Walgreens Of Filling Unlawful Opioid Prescriptions” (CNN Business). “The U.S. Justice Department on Friday accused pharmacy chain operator Walgreens Boots Alliance of contributing to the U.S. opioid epidemic by filling millions of unlawful prescriptions for addictive painkillers and other drugs. The department intervened in a whistleblower lawsuit filed in federal court in Chicago and accused Walgreens of ignoring ‘red flags’ and filling prescriptions for opioids and other controlled substances that lacked a legitimate medical purpose.”
What we’re reading (1/18)
“How Corn Syrup Took Over America” (The Hustle). “ Silos and grain elevators loom over flat prairies at the Archer Daniels Midland processing facility in Cedar Rapids, Iowa. Every day hundreds of trucks haul corn from heartland farms to the facility, where the crop is broken down into starches and liquids before trains with gargantuan tanks ship it out to the rest of the world. The plant opened more than 50 years ago, assembled with modular panels to enable flexibility, cost-savings, and growth. At the time, Archer Daniels Midland (ADM) expected expansion, as one of the plant’s main functions was making high fructose corn syrup, a revolutionary product. But today, the saccharine days of corn sweeteners, like those produced by ADM, may be under siege.”
“The Man Making Billions From The Wildest Bitcoin Bet” (Wall Street Journal). “Michael Saylor’s company doesn’t market any hot products or services. What he and MicroStrategy do is sell new shares and debt, at a pace rarely seen in corporate history. Saylor plows all that money into bitcoin, vowing to keep doing it, over and over. MicroStrategy shares are up about 690% in the past year and the 59-year-old executive chairman’s approximately 10% stake is worth about $9.7 billion, while he personally owns an additional $1.9 billion or so of bitcoin.”
“Florida Housing Market Facing 'Widespread Price Declines’” (Newsweek). “Home prices will be falling all across Florida this year, according to real estate analyst Nick Gerli, giving hopes to aspiring homebuyers who had been squeezed out of the market in recent years. ‘Locals are priced out of Florida's housing market, vacation homeowners have stopped buying, investors have stopped buying, and inbound migration has dropped significantly,’ Gerli, CEO of Reventure App, wrote on X earlier this month. ‘And sure enough: the market is now turning down.’”
“Trump Says He Will ‘Most Likely’ Give TikTok A 90-Day Extension To Avoid A Ban” (NBC News). “Trump said he hadn’t made a final decision but was considering a 90-day extension of the Sunday deadline for TikTok’s China-based parent company to sell to a non-Chinese-buyer or face a U.S. ban. ‘I think that would be, certainly, an option that we look at. The 90-day extension is something that will be most likely done, because it’s appropriate. You know, it’s appropriate. We have to look at it carefully. It’s a very big situation,’ Trump said in the phone interview.”
“Why Elite MBA Graduates Are Struggling To Find Jobs” (The Economist). “In business there is no surer sign of distress than when a firm delays its financial results. That also appears to be true of business schools. Around Christmas—and in many cases behind their usual schedules—America’s leading business schools published their equivalent of annual reports, which include data on the new jobs of graduates from their Master of Business Administration (MBA) programmes, typically two-year courses for students with professional experience. We have crunched the numbers. At the top 15 business schools, the share of students in 2024 who sought and accepted a job offer within three months of graduating, a standard measure of career outcomes, fell by six percentage points, to 84%. Compared with the average over the past five years, that share declined by eight points.”
What we’re reading (1/17)
“IMF Raises Global Economic Growth Forecast On Stronger US Demand” (Bloomberg). “The International Monetary Fund upgraded its global growth forecast for this year, spurred by stronger-than-expected US demand and slowing inflation worldwide that will let central banks continue to cut interest rates.”
“How Will Home Insurance Change After LA’s Fires?” (The Week). “The California fires have devastated Los Angeles. They may also wreak havoc on the insurance industry: Experts say total losses will reach $250 billion or more."
“China’s Very Bad, No Good Trillion-Dollar Trade Surplus” (Paul Krugman’s Substack). “I often run into people who believe that a successful economy, one achieving rapid productivity growth and leading in cutting-edge technology, will both run big trade surpluses because it’s so competitive and attract lots of foreign capital because it’s such a good investment. But that’s arithmetically impossible. In fact, when an economy surges past its rivals in productivity and technology, it usually does attract a lot of foreign investment — but that means that it runs a trade deficit, not a surplus. A case in point: U.S. productivity surged past productivity in Europe after around 1995, because we were quicker to take advantage of information technology. As a result, foreign money began flooding in — and that led to a much bigger U.S. trade deficit[.]”
“The 2024 Sector Quilt” (A Wealth Of Common Sense). “I understand the desire to pick sectors. Sure, picking stocks is hard but sectors can help you catch trends by investing in a group of stocks. I’m sorry to say I have some problems with this sector-picking strategy. For one thing, it doesn’t move the needle all that much.”
“Is TikTok Really Worth Saving?” (Vanity Fair). “The Supreme Court won’t be rescuing TikTok, as billionaires and political leaders scramble to keep the app alive in the US ahead of a looming deadline. But amid all the eleventh-hour drama, the rationale for banning it in the first place—national security concerns stemming from its Chinese ownership—hasn’t gone away.”
What we’re reading (1/16)
“Wall Street Thinks U.S. Homes Are Overpriced” (Wall Street Journal). “House hunters don’t need to be told that property is too expensive right now. But Wall Street has an idea by just how much. The stock market is pricing portfolios of American homes at a hefty discount to what houses are changing hands for in the open market. Shares of single-family landlords Invitation Homes and American Homes 4 Rent are trading at 35% and 20% discounts to their net asset values, respectively, according to real-estate analytics firm Green Street. Invitation Homes’ stock has traded at a particularly large discount to NAV since interest rates began to rise in early 2022, but the gap has widened by 10 percentage points in the past year.”
“She Is In Love With ChatGPT” (New York Times). “ChatGPT, which now has over 300 million users, has been marketed as a general-purpose tool that can write code, summarize long documents and give advice. Ayrin found that it was easy to make it a randy conversationalist as well. She went into the ‘personalization’ settings and described what she wanted…And then she started messaging with it.”
“So Long, Net Neutrality, And Good Riddance” (Marginal Revolution). “One of the longest, most technical and, as it turns out, most inconsequential public-policy debates of the 21st century was about net neutrality. Now that a federal appeals court has effectively ended the debate by striking down the FCC’s net neutrality rules, it’s worth asking what we’ve learned. If you have forgotten the sequence of events, here’s a quick recap: In 2015, during President Barack Obama’s presidency and after years of debate, the Federal Communications Commission issued something called the Open Internet Order, guaranteeing net neutrality, which is broadly defined as the principle that internet service providers treat all communications equally, offering both users and content providers consistent service and pricing. Two years later, under President Donald Trump, the FCC rescinded the net neutrality requirement. It was then reinstated under President Joe Biden in 2024, until being struck down earlier this month. The actual reality has been somewhat different. Bandwidth has expanded, and Netflix transmissions do not interfere with Facebook, or vice versa. There is plenty of access to go around. That has been the case during periods with net neutrality and without. So one lesson of the net neutrality debate comes from economics: Supply is elastic, at least when regulation allows it to be.”
“The Surprise Winner Of The TikTok Ban” (Slate). “Press coverage of the potential winners of TikTok’s American demise has tended to focus on Meta and Google. That’s with fair reason: Instagram and YouTube would jockey for TikTok users (and creators) whose app was shut off. But the biggest beneficiaries might be the internet privacy and security firms that offer VPNs. After all, you could either find a new platform or, for a few dollars per month, maintain access to the one you already love. VPNs are likely to see an enormous influx of new sign-ups.”
“UnitedHealth Charged Cancer Patients 5000%, Bombshell FTC Report Claims” (Newsweek). “The FTC report found that from 2017 to 2022, three PBMs—UnitedHealth Group's Optum, CVS Health's CVS Caremark and Cigna's Express Scripts—marked up prices at their pharmacies by hundreds or thousands of percent…A spokesperson for Cigna's Express Scripts told Reuters that the report's findings were misleading and that the calculations are based on a subset of medications that represent less than 2 percent of what the company spends on medications in a year.”
What we’re reading (1/15)
“Core CPI Rises Less Than Forecast As Inflation Pressures Ease Slightly In December” (Yahoo! Finance). “New data from the Bureau of Labor Statistics out Wednesday showed that a key inflation metric eased for the first time since July. On a ‘core’ basis, which strips out the more volatile costs of food and gas, the December Consumer Price Index (CPI) climbed 0.2% over the prior month, a deceleration from November's 0.3% monthly gain. On an annual basis, prices rose 3.2%.”
“Wall Street’s Pre-Eminent Short Seller Is Calling It Quits” (Wall Street Journal). “‘I’ve spent most of the last eight years either in a fight or preparing for the next one,’ he [Nate Anderson] said in an interview with The Wall Street Journal. Anderson said he felt that he and Hindenburg had accomplished what they had set out to do, showing it was possible to build a business from hunting fraud and other issues in public and private markets. He hopes to soon share resources and training materials so others can use Hindenburg’s tactics in their own investigations.”
“The King of the 21st Century Wears A Golden Crown” (Standard & Poor’s). “Once again, gold has taken the crown as the best-performing asset in the 21st century. From the turn of the century to year-end 2024, the S&P 500® recorded an annualized return of 7.7%, while the S&P GSCI Gold recorded 8.5% annually. While besting stocks for a quarter century, gold is still considered a safe-haven asset, especially during periods of economic uncertainty. However, 2024 highlighted how gold can also perform well during bull markets. The S&P GSCI Gold and S&P 500 posted supersized returns for the year, topping 26.6% and 25%, respectively.”
“What Happens When A Plastic City Burns” (The Atlantic). “In 2020, the Fire Safety Research Institute set two living rooms on fire, on purpose. Both were identical in size and full of furnishings in an identical arrangement. But in one room, almost everything was synthetic: a polyurethane-foam sofa covered in polyester fabric sat behind an engineered-wood coffee table, both set on a polyolefin carpet. The curtains were polyester, and a polyester throw blanket was draped on the couch. In the other room, a wood sofa with cotton cushions sat on a hardwood floor, along with a solid-wood coffee table. The curtains and throw blanket were cotton. In the natural-material room, the cotton couch appeared to light easily, and then maintained a steady flame where it was lit, releasing little smoke. After 26 minutes, the flames had spread to the other side of the couch, but the rest of the room was still intact, if smoky. Meanwhile, in the synthetic room, a thick dark smoke rose out of the flame on the polyester couch. At just under five minutes, a flash of orange flame consumed the whole room all at once.”
“Wooly Mammoth, Dodo Get Another Shot As Startup Raises $200 Million” (Bloomberg). “Colossal Biosciences, now valued at $10.2 billion, aims to produce a mammoth by 2028.”
What we’re reading (1/14)
“Balance Of Power Shifts Back Toward Bosses” (Wall Street Journal). “On the surface, the job market looks as strong as ever. Beneath the surface, workers are getting a very different message: Their bosses are back in command. Big companies are tightening remote-work policies, shrinking travel budgets and cutting back on benefits.”
“Meta to cut 5% of staff based on performance” (Axios). “Meta notified employees Tuesday that it plans to lay off the lowest-performing 5% of its staff, or roughly 3,600 people…The eliminated roles will be backfilled, a Meta source confirmed to Axios.”
“Sony PlayStation Is Adding Smell—Yes, You Read That Right—To Its Games” (Fast Company). “Unveiled at CES 2025, the Future Immersive Entertainment Concept (FIEC) features a huge, room-size setup designed to push the boundaries of immersive gaming. A trailer for the concept shows a giant cube built from high-definition LED screens that enables players to step directly into their favorite games (unfortunately, this isn’t something you’ll be setting up in your living room anytime soon).”
“A Guide For Investment Analysts: The Prehistory Of The US Markets” (CFA Institute). “Jeremy Siegel’s path-breaking compilation of stock returns to 1802 used exclusively stocks listed in New York for most of the antebellum period. This is true for the Goetzmann, Ibbotson and Peng dataset back to 1815. I believe using exclusively stocks listed in New York introduces considerable survivorship bias. There’s a reason that the NYSE ultimately rose to national dominance. Economic, political, and financial conditions were more favorable for wealth accumulation through investing in New York City than anywhere else. I found much lower stock returns in Philadelphia and Baltimore, with more failures and busts, which had the effect of substantially lowering the stock returns reported in my paper in the Financial Analysts Journal, relative to those reported in Jeremy Siegel’s book, Stocks for the Long Run.”
“The Anti-Social Century” (The Atlantic). “Over the past few months, I’ve spoken with psychologists, political scientists, sociologists, and technologists about America’s anti-social streak. Although the particulars of these conversations differed, a theme emerged: The individual preference for solitude, scaled up across society and exercised repeatedly over time, is rewiring America’s civic and psychic identity. And the consequences are far-reaching[.]”
What we’re reading (1/13)
“Investors Hope Earnings Season Can Revive Faltering Stock Rally” (Wall Street Journal). “The Dow Jones Industrial Average has given up all of its gains since the presidential election, down 0.7% from Nov. 5. The Russell 2000 index of smaller stocks, thought to be one of the biggest potential beneficiaries of a second Donald Trump presidency, has fallen 10% from its recent high in late November. A spate of hotter-than-expected economic data, including Friday’s blockbuster jobs report, has spurred growing doubts about whether the Federal Reserve will cut interest rates this year. Government-bond yields have soared in response, putting pressure on stocks.”
“After A Great Run For Stocks, Be” (New York Times). “[H]istory suggests a sobering lesson: Stocks and sectors go out of fashion. What worked over the last two years may not work in the next one. Periods of outsize returns are followed by market declines, sooner or later…Tech stocks have bolstered returns before. They were the key to outstanding market performance in the 1990s, the dot-com era. From 1995 through 1998, the S&P 500 gained more than 20 percent annually, and came close to 20 percent in 1999, largely on the strength of tech stocks. But the market rose too high, forming a bubble that burst in March 2000. Starting that year, for three consecutive years, stocks had catastrophic losses. If you invested in stocks for the first time in late 1999, your holdings would have been underwater until well into 2006. Returns for an entire decade were disappointing. By some metrics, stocks aren’t as extravagantly priced today as they were then, but they are high enough to be concerning.”
“SEC Charges Robinhood With Securities Violations, Brokerage To Pay $45 Million Penalty” (CNBC). “Two Robinhood broker-dealers agreed to pay $45 million in combined penalties to settle administrative charges by the Securities and Exchange Commission that they violated more than 10 separate securities law provisions related to their brokerage operations. The violations by Robinhood Securities LLC and Robinhood Financial LLC related to failures to report suspicious trading in a timely manner, failing to implement adequate identity theft protections, and failing to adequately address unauthorized access to Robinhood computer systems, the SEC said Monday.”
“Economists Are in the Wilderness. Can They Find A Way Back To Influence?” (New York Times). “Partway through a panel discussion at a recent economics conference in San Francisco, Jason Furman, a former adviser to President Barack Obama, turned to Kimberly Clausing, a former member of the Biden administration and the author of a book extolling the virtues of free trade. ‘Everyone in this room agrees with your book,’ Mr. Furman said. ‘No one outside of this room agrees with your book.’”
“How Many Children Use TikTok Against the Rules? Most, Study Finds” (University of California San Francisco). “TikTok, Instagram, YouTube and Snapchat require users to be at least 13 years old to have an account. But [a new UC San Francisco] found that a majority of 11- and 12-years-olds across the country have accounts on the platforms, and 6.3% have a social media account they hide from their parents.”