What we’re reading (2/19)
“Consumers Are ‘Tapped Out' On Further Price Hikes: Fed’s Bostic” (Yahoo! Finance). “‘So in our surveys and in our conversations with leaders, we've asked them ‘What are they likely to do?’ And, what they've all said is that our first best choice would be to pass on this to the final price,’ Bostic says, while also citing how there's already been a period of intense inflation. ‘Consumers may not have an appetite to do that.’”
“Microsoft Claims Quantum Computing Breakthrough By Creating New State Of Matter” (Wall Street Journal). “Microsoft researchers say they created a chip that leverages a new state of matter that could underpin quantum computers more powerful than the world has ever seen. The chip employs a so-called topological superconductor—a material that isn’t a solid, liquid or gas—to produce building blocks that can be scaled up into a powerful quantum computer, Microsoft said.”
“Elon Musk Debuts Grok 3, An AI Model That He Says Outperforms ChatGPT And DeepSeek” (CNN Business). “In an event livestreamed on Musk’s X, leaders at the startup claimed Grok 3 performs better across math, science and coding benchmarks than Google’s Gemini, OpenAI’s GPT-4o, Anthropic’s Claude 3.5 and DeepSeek’s V3 model, although it’s not clear how it compares to other top reasoning models such as OpenAI o3-mini and DeepSeek R1. The company also described the tool’s new features, such as advanced web searching with ‘deep search,’ the ability to code online games and a ‘big brain’ mode to reason through more complex problems.”
“Concierge Medicine Is Booming — And Some New Yorkers Are Willing To Pay Almost Anything For The Privilege” (New York Post). “The doctor will see you — whenever you want. More and more wealthy New Yorkers are spending big for concierge medical care that goes way above and beyond annual check-ups. ‘I’m 70% doctor, 15% psychologist, 10% rabbi, 4% hairdresser and 1% friend,’ Dr. Jordan Shlain told NYNext. His team is also on call pretty much 24/7, with clients able to reach them via email, text or phone at all hours.”
“America Is About To Enter An Apartment Crunch” (Business Insider). “Renters have quietly enjoyed a nice run over the past two years. A historic wave of apartment construction has tamped down rents from their pandemic-era peak — last year developers finished the most units nationwide since 1974. With so many shiny high-rises hitting the market, landlords are fighting to fill their spaces, offering major discounts and perks to lure tenants. One housing economist even declared 2025 ‘the year of the resident.’ But as the cost of building has increased, the number of cranes on the horizon has dwindled. Formerly eager developers are cutting back on fresh construction plans, laying the groundwork for another apartment squeeze. In other words, the good times for renters are running out.”
What we’re reading (2/18)
“The Unicorn Boom Is Over, And Startups Are Getting Desperate” (Bloomberg). “A reckoning that has been looming for years is becoming painfully tangible. In 2021 more than 354 companies received billion-dollar valuations, thus achieving unicorn status. Only six of them have since held IPOs, says Ilya Strebulaev, a professor at Stanford Graduate School of Business. Four others have gone public through SPACs, and another 10 have been acquired, several for less than $1 billion…There are a record 1,200 venture-backed unicorns that have yet to go public or get acquired, according to CB Insights, a researcher that tracks the venture capital industry. Startups that raised large sums of money are beginning to take desperate measures. Startups in later stages are in a particularly difficult position, because they generally need more money to operate—and the investors who’d write checks at billion-dollar-plus valuations have gotten more selective. For some, accepting unfavorable fundraising terms or selling at a steep discount are the only ways to avoid collapsing completely, leaving behind nothing but a unicorpse.”
“Who’s Paying For The US Tariffs? A Longer-Term Perspective” (Mary Amiti, et al.). “Using another year of data including significant escalations in the trade war, we find that the costs of the US tariffs continue to be almost entirely borne by US firms and consumers. We show that the response of import values to the tariffs increases in absolute magnitude over time, consistent with the idea that it takes time for firms to reorganize supply chains. We find heterogeneity in the responses of some sectors, such as steel, where tariffs have caused foreign exporters to drop their prices substantially, enabling them to export relatively more than in sectors where tariff pass-through was complete.”
“At The ‘Wall Street Of Eggs,’ Demand Is Surging” (Wall Street Journal). “The nation’s biggest egg marketplace doesn’t own hens, farms or processing plants. From an office building in New Hampshire, roughly a dozen people facilitate the trading of billions of eggs a year, a task that shapes what Americans pay per dozen at the supermarket or for omelets at diners. The Egg Clearinghouse, or ECI, is little known outside the industry: It operates an online marketplace that allows participants to place bids on eggs listed for sale and see the results of trades. Only ECI members—farmers and egg buyers—are allowed to trade. Lately, there are a lot more buyers than sellers using the ‘Wall Street of Eggs’ with bird flu roiling the poultry market. And that is after last year marked the company’s busiest, trading over 2.6 billion shell eggs and 39 million pounds of egg product valued at more than $600 million. ECI represents a sliver of the broader egg market—less than 5%—but plays a crucial role in providing eggs for those in need or having trouble getting them, and how they are priced.”
“KFC Moves U.S. Headquarters From Kentucky To Texas” (CNBC). “KFC is leaving Kentucky. The fried chicken chain’s U.S. headquarters will move from Louisville, Kentucky, to Plano, Texas, owner Yum Brands said Tuesday. About 100 KFC U.S. employees will be required to relocate over the next six months.”
“Homebuilder Confidence Falls To Lowest Level In Five Months Amid Tariff Concerns, High Mortgage Rates” (Yahoo! Finance). “Homebuilders are feeling less optimistic about the housing market as they navigate concerns over tariffs, elevated mortgage rates, and high housing costs. The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index was 42 in February, a five-point drop from January and the lowest level in five months. Economists were expecting a reading of 46, per Bloomberg data.”
What we’re reading (2/17)
“Investors Haven’t Been This Pessimistic About Stocks Since 2023” (Wall Street Journal). “Bearishness among individual investors—measured by the percentage who expect stock prices to fall over the next six months—reached 47.3% for the week ended Feb. 12, according to the latest survey from the American Association of Individual Investors. That is the highest level since November 2023.”
“Delaware Bill Would Limit Investor Lawsuits As Companies Threaten To Leave The State” (Reuters). “Delaware lawmakers on Monday proposed changes to the U.S. state's widely used corporate law that would limit shareholder lawsuits after several high-profile companies said they might move their legal home to another state. The bill sets out steps that corporate boards could take to insulate directors and controlling shareholders from litigation over alleged conflicts. The bill would also limit the kinds of internal records that shareholders can access, which they need to build their cases. The bill is sponsored by leaders of both parties in both houses of Delaware's state assembly.”
“Forget The US — Europe Has Successfully Put Tariffs On Itself” (Mario Draghi). “Recent weeks have provided a stark reminder of Europe’s vulnerabilities. The eurozone barely grew at the end of last year, underlining the fragility of the domestic recovery. And the US began imposing tariffs on its major trading partners, with the EU next in its sights. This prospect casts further uncertainty over European growth given the economy’s dependence on foreign demand. Two major factors have led Europe into this predicament — but they can also lead it out again if it is prepared to undergo radical change. The first is the EU’s long-standing inability to tackle its supply constraints, especially its high internal barriers and regulatory hurdles. These are far more damaging for growth than any tariffs the US might impose — and their harmful effects are increasing over time…The second factor holding Europe back is its tolerance of persistently weak demand, at least since the global financial crisis of 2008. This has exacerbated all the issues caused by supply constraints.”
“Musk’s DOGE Expected To Arrive At SEC In Coming Days” (Politico). “Elon Musk has repeatedly clashed with the Securities and Exchange Commission over the last decade. Now, his cost-cutting crusade is about to hit the regulator. The Musk-led Department of Government Efficiency is expected to arrive at the SEC in the coming days, according to two people briefed on the matter.”
“Chilling New Telescope Pic Of 30,000mph ‘City-Killer’ Asteroid With 1-In-48 Chance Of Smashing Into Earth” (The U.S. Sun). “The chance of the space rock smashing into Earth when it loops around in 7 years' time is estimated at a 1-in-48 chance - or just over two per cent.”
What we’re reading (2/16)
“Investors Spot Signs Of Market Froth During Long Bull Market” (Wall Street Journal). “One source of concern: Ordinary investors are really bullish about a handful of popular companies. Shares of Palantir Technologies, a highly popular stock among individual investors, surged 24% on Feb. 4 after the data-analytics company reported strong sales growth and robust demand for its artificial-intelligence products. Palantir’s stock has jumped roughly 58% this year and was last year’s best performer in the S&P 500. Traders are also bidding up shares of Strategy, formerly MicroStrategy, the software company turned bitcoin-buying machine. The company’s market capitalization was recently about $87 billion, nearly twice the value of the bitcoins it holds. Meme stocks have also jumped. Shares of GameStop, BlackBerry and online pet-products retailer Chewy have all soared more than 90% over the past 12 months, according to FactSet.”
“Fears Of Massive Crash On Wall Street After America’s Top 50 Companies See Record Levels Of ‘Fragility’” (The Daily Mail). “According to Bank of America strategists, ‘stock fragility’ is on track to reach its highest level in more than three decades among the largest 50 stocks in the S&P 500 index. That includes tech stocks such as Apple, Amazon, Microsoft and Nvidia, bank stocks such as JPMorgan Chase and Wells Fargo, and retail stocks like Costco and Walmart. Stock fragility is a measure of how much a share price moves a day relative to its usual volatility, Bloomberg reported.”
“Japan Perfected 7-Eleven. Why Can’t The US Get It Right?” (Bloomberg). “In Japan, which is much smaller, the chain relies on a robust supplier network, where inventory and food preparation take place at more than 150 factories churning out breakfast, lunch and dinner. Product lineups and displays change quickly based on consumer tastes, with each store responsible for analyzing the sales of every product and adjusting orders to reduce waste and control inventory. It’s a management method known as tanpin kanri, which was even taken up as a Harvard Business School case study. ‘Japan’s convenience stores’ food preparation central kitchens and logistics infrastructure would be more challenging to establish and operate efficiently over vast areas in the US,’ Boston says.”
“The Dot-Com Bubble Burst 25 Years Ago. AI Could Be Next.” (Barron’s). “The early internet bubble and bust isn’t the only tech antecedent to today’s tech industry. Radio Corp. of America was the pre-eminent tech stock of the first Roaring 20s. ‘All you had to do was include ‘radio’ in the name of your company and the price of your stock would shoot up, even if there was very little behind the company,’ Bryan Taylor, chief economist at data provider Finaeon, wrote in a 2023 essay. RCA stock rose 200-fold during the 1920s, only to plunge 98% from its 1929 peak to 1932.”
“Why Total Shareholder Yield Matters More Than Dividends” (Morningstar). “[T]here is nothing special about dividends, except that they are a tax-inefficient way to return capital to shareholders, and they are certainly not income (except from a tax perspective); they are just a return of investor capital—by definition, income increases wealth while dividends do not. Second, investors are better served by focusing on investing in strategies that provide exposure to the factors they want to invest in. A focus on dividends, whether dividend growth or high-dividend yield, is not likely to add value.”
What we’re reading (2/14)
“Bonds Rally As Weak Retail Sales Bolster Fed Bets: Markets Wrap” (Bloomberg). “The bond market ended the week with solid gains as a soft reading on retail sales revived bets on Federal Reserve rate cuts. A rally in Treasuries pushed the 10-year yield below 4.5%, with the bond notching its fifth straight week of gains — the longest run since 2021. Money markets are back to fully pricing in a first Fed reduction by September. The S&P 500 hovered near its all-time highs. The dollar hit a fresh low for 2025.”
“Cheap Blood Test Detects Pancreatic Cancer Before It Spreads” (Nature). “Researchers have developed a simple blood test to detect pancreatic cancer before it spreads to other sites in the body. The test could be used for routine screening to improve the disease’s low survival rate. ‘It’s a very pragmatic, really translatable solution’ that builds on many advances in the field, says Simone Schürle-Finke, a biomedical engineer at Swiss Federal Institute of Technology (ETH) in Zurich, Switzerland. The results are described in Science Translational Medicine today.”
“How Zoning Ruined The Housing Market In Blue-State America” (Wall Street Journal). “In January, the devastating wildfires in Los Angeles spurred California Gov. Gavin Newsom to do something extraordinary for a progressive politician: take aim at regulations. In an executive order designed to help residents rebuild, Newsom suspended environmental reviews, told state agencies to identify rules that might impede construction and instructed bureaucrats to rush any necessary permits through the process. The measures, Newsom explained, were made necessary by the loss of thousands of homes in a city already suffering a housing crisis. All of which seemed perfectly reasonable. So reasonable, in fact, that it raised a troubling question: If the only way to rebuild was to suspend the regular rules, why were those rules there in the first place? The answer is that the rules were intended to make it all but impossible to build, not just in California but in much of blue-state America.”
“Meta Platforms Stock Just Closed Higher For The 20th Straight Day” (Yahoo! Finance). “Year to date, Meta stock is now up 25.8%, far outpacing its Magnificent Seven peers. Amazon (AMZN) is the next best-performing stock among this group of Big Tech stalwarts, having risen 4.2% this year through Friday's close. Tesla has been the laggard of the group, falling 11.9% in 2025.”
“READ: Prosecutors’ Resignation Letters After Refusing To Drop Eric Adams Case” (Axios). “There is a tradition in public service of resigning in a last-ditch effort to head off a serious mistake. Some will view the mistake you are committing here in the light of their generally negative views of the new Administration. I do not share those views. I can even understand how a Chief Executive whose background is in business and politics might see the contemplated dismissal-with-leverage as a good, if distasteful deal. But any assistant U.S. attorney would know that our laws and traditions do not allow using the prosecutorial power to influence other citizens, much less elected officials, in this way. If no lawyer within earshot of the President is willing to give him that advice, then I expect you will eventually find someone who is enough of a fool, or enough of a coward, to file your motion. But it was never going to be me.”
What we’re reading (2/13)
“Ackman’s Pershing Square Suffers From The ‘Passive’ Phenomenon” (Institutional Investor). “A number of Pershing Square’s dozen stock holdings aren’t in the index, which helps put his hedge fund’s performance in perspective. Last year, the net gain of 10.2 percent for Ackman’s Pershing Square Holdings, his publicly traded hedge fund, was less than half of the 25 percent gain for the S&P 500. The 2024 showing also dragged down the vehicle’s annualized performance below the S&P 500, according to the investor presentation. Pershing Square has far outdone the S&P 500 since it was launched in 2004, but most of those gains were in the earlier years — before the passive trend took hold. Ackman’s publicly traded fund, which was launched on Dec. 31, 2012, has an annualized net performance of 13.5 percent, compared with 14.8 percent for the S&P 500.”
“The Emperor’s New Tariffs: Small, Ugly And Stupid” (Paul Krugman). “Finally, the stupid part: Steel and aluminum aren’t consumer goods. They’re ‘intermediate inputs,’ used in the production of other things, notably cars and aircraft. Imposing taxes that raise the prices of these goods might encourage more U.S. production of metals (although that didn’t happen to any large degree the last time Trump imposed tariffs), but it will raise costs throughout the rest of U.S. manufacturing, making it less competitive and reducing employment. Even if we ignore indirect effects via interest rates, the dollar and so on, these tariffs are almost certain to reduce, not increase, manufacturing employment.”
“The Scientific Literature Can’t Save You Now” (The Atlantic). “Profit motive can sometimes trump quality control even at the world’s largest publishers, which earn billions annually. It also fuels a ravenous pack of ‘paper mills’ that publish scientific work with barely any standards whatsoever, including those that might be used to screen out AI-generated scientific slop. An empiricist might say that the sum total of these articles simply adds to human knowledge. If only. Many, or even most, published papers serve no purpose whatsoever. They simply appear and … that’s it. No one ever cites them in subsequent work; they leave virtually no trace of their existence. Until, of course, someone convinces a gullible public—or a U.S. senator—that all research currency, new and old, is created equal.”
“Why Dealers Are Flying Gold Bars By Plane From London To New York” (Wall Street Journal). “Gold is, for the moment, worth substantially more in Manhattan than in the U.K. capital, sparking the biggest trans-Atlantic movement of physical bars in years. Traders at major banks are racing to yank gold from vaults deep below London’s medieval streets and from Swiss gold refineries and ferry them across the ocean. The cheapest way to transport such a valuable commodity safely: the cargo hold of commercial planes.”
“The Prison Routine Of Theranos founder Elizabeth Holmes: Clerking For 31 cents An Hour, Teaching French, And Reading ‘Harry Potter’” (Business Insider). “An inmate handbook for the federal minimum-security women's prison in Bryan, Texas, where she is incarcerated, says all medically cleared inmates are required to have a regular job for at least 90 days. Holmes has several jobs in the prison, including one as a reentry clerk, for which she makes 31 cents an hour helping prisoners expected to be released soon...She's also a law clerk and teaches French classes, the magazine said.”
What we’re reading (2/12)
“Health Insurers Deny 850 Million Claims a Year. The Few Who Appeal Often Win.” (Wall Street Journal). “Health insurers process more than five billion payment claims annually, federal figures show. About 850 million are denied, according to health-policy nonprofit KFF. Less than 1% of patients appeal. Few people realize how worthwhile those labors can be: Up to three-quarters of claim appeals are granted, studies show…Edward Stratton underwent four years of surgeries, radiation and chemotherapy after he was diagnosed with colorectal cancer in 2019. Doctors declared he had no evidence of cancer in July 2023. But the treatments had destroyed his liver. Doctors recommended a transplant. His insurer, Elevance Health, rejected the claim and three appeals in letters referencing research showing a new liver didn’t improve outcomes for people with colorectal cancer. Elevance didn’t respond to messages from Stratton’s doctors demonstrating he didn’t have cancer anymore. Stratton, with help from his daughter, appealed again in July 2024 and copied regulators, Elevance board members and journalists on his email. The appeal cited a similar case in which Elevance overturned its denial, and noted two other insurers used updated guidance with more nuanced views of transplantation. Stratton also said denying him a transplant would kill him. Elevance overturned the denial.”
“Fed Rate Cuts Bets Trimmed As Powell Says ‘Close But Not There’ On Inflation” (Yahoo! Finance). “A hotter-than-expected inflation reading at the start of 2025 makes it much more likely that the Federal Reserve will keep rates on hold for the foreseeable future, reinforcing a cautionary stance from Fed Chair Jerome Powell.”
“What Is Living Intelligence, The New Frontier In AI?” (The Week). “Artificial intelligence has been at the center of the tech world, but it's not the only technology businesses need to prepare for. In the future, AI will combine with other advancing technologies to create a new wave of personalized AI capable of anticipating users' actions and evolving independently, said Amy Webb, a futurist and professor at the NYU Stern School of Business, at the Harvard Business Review. This phenomenon, called living intelligence, could be the next big thing.”
“Joann, The Bankrupt Fabrics Retailer, Is Closing 500 Of Its 800 Stores” (CNN Business). “Joann, the fabrics and crafts retailer, is closing more than half of its 800 stores in the coming months as it continues to navigate the bankruptcy process. Approximately 500 stores across the United States are closing, the retailer said in a statement to CNN, saying that ‘right-sizing our store footprint is a critical part of our efforts to ensure the best path forward.’”
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.”