What we’re reading (5/27)
“Stock Market Today: Dow, S&P 500, Nasdaq Soar As Trump Pauses EU Tariff Hikes For Fast-Tracked Talks” (Yahoo! Finance). “US stocks surged on Tuesday, buoyed by improved prospects for a US-EU trade agreement after President Trump delayed the implementation of 50% tariffs on imports from the European Union.”
“Consumer Confidence For May Was Much Stronger Than Expected On Optimism For Trade Deals” (CNBC). “Consumer optimism got a much-needed boost in May on hopes for trade peace between the U.S. and China, according to a survey Tuesday. The Conference Board’s Consumer Confidence Index leaped to 98.0, a 12.3-point increase from April and much better than the Dow Jones consensus estimate for 86.0.”
“Nvidia To Report Q1 Earnings As Middle East Deals, Export Control Reprieve Boost Stock” (Yahoo! Finance). “Nvidia (NVDA) will report its fiscal first quarter results after the bell on Wednesday in the most-anticipated earnings announcement of the season. Nvidia stock has fluctuated wildly since the start of the year as the company has dealt with setbacks ranging from the Trump administration's ban on shipments of its H20 chips bound for China to concerns related to expected semiconductor tariffs.”
“Rural Internet Is Still So Bad, Some States Are Turning To Outer Space” (Wall Street Journal). “From Maine to Nevada, states are starting to help some of the 24 million Americans who lack reliable broadband pay for satellite internet, rather than focusing such aid primarily on fiber connectivity as they have in the past. Fiber-optic cables provide the most reliable internet service and the most durable infrastructure, but are costly to install. For remote addresses, the cost of laying fiber to a single home can potentially top six figures.”
“The Rise And Fall Of Plastic Perks” (Business Insider). “[I]f our next downturn follows more historic patterns, credit card reward users may find themselves in a more tenuous spot. In the face of increased economic uncertainty, some airline rewards are already jacking up annual fees and limiting where perks can be used. In the event things really go south, the benefits will likely become less generous — the consumers who signed up to get blockbuster points deals might find card companies changing their perks. For the subset of consumers who use these rewards to bolster a lifestyle they might not otherwise be able to swing, that could be a real shock.”
What we’re reading (5/26)
“Investors Pile Into ETFs At Record Pace Despite Market Turmoil” (Wall Street Journal). “Investors have plowed a record $437 billion into U.S. ETFs so far this year, unfazed by the wildest markets since Covid. And if inflows maintain the current pace—historically, they accelerate in the summer and fall months—it will mark the second straight record year for U.S. ETF flows.”
“The Myth Of The Single Market” (Silicon Continent). “The IMF puts the hidden cost of trading goods inside the EU at the equivalent of a 45% tariff. For services the figure climbs to 110%, higher than Trump’s “Liberation day” tariffs on Chinese imports—measures many saw as a near-embargo.”
“At Amazon, Some Coders Say Their Jobs Have Begun To Resemble Warehouse Work” (New York Times). “Since at least the industrial revolution, workers have worried that machines would replace them. But when technology transformed auto-making, meatpacking and even secretarial work, the response typically wasn’t to slash jobs and reduce the number of workers. It was to “degrade” the jobs, breaking them into simpler tasks to be performed over and over at a rapid clip. Small shops of skilled mechanics gave way to hundreds of workers spread across an assembly line. The personal secretary gave way to pools of typists and data-entry clerks. The workers “complained of speed-up, work intensification, and work degradation,” as the labor historian Jason Resnikoff described it. Something similar appears to be happening with artificial intelligence in one of the fields where it has been most widely adopted: coding.”
“These Are The College Majors With The Lowest Unemployment Rates — And Philosophy Ranks Higher Than Computer Science” (Entrepreneur). “According to the Federal Reserve Bank of New York, the college majors with the lowest unemployment rates for the calendar year 2023 were nutrition sciences, construction services, and animal/plant sciences. Each of these majors had unemployment rates of 1% or lower among college graduates ages 22 to 27. Art history had an unemployment rate of 3% and philosophy of 3.2%…Meanwhile, college majors in computer science, chemistry, and physics had much higher unemployment rates of 6% or higher post-graduation. Computer science and computer engineering students had unemployment rates of 6.1% and 7.5%, respectively[.]”
“Fed To take In Stride Another Month Of Tame Inflation” (Bloomberg). “The Federal Reserve may take comfort that tariffs have yet to materially boost official inflation readings, but policymakers will continue to suggest interest rates are on hold until they better understand the coming impact of US trade policy.”
June picks available soon
I’ll be publishing the Prime and Select picks for the month of May before Monday, June 2 (the first trading day of the month). As always, SPC’s performance measurement for the month of May, as well as SPC’s cumulative performance, will assume the sale of the May 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, May 30). Performance tracking for the month of June will assume the June 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, June 2).
What we’re reading (5/25)
“Junkiest Junk Is Offering A Warning Sign For Debt” (Bloomberg). “For much of the year, money managers have embraced optimism and snatched up corporate bonds, sending valuations to ever more expensive levels. Now, Wall Street titans are saying it’s time to focus on how bad things can get.”
“Fed To Take In Stride Another Month Of Tame Inflation” (Bloomberg). “The Federal Reserve may take comfort that tariffs have yet to materially boost official inflation readings, but policymakers will continue to suggest interest rates are on hold until they better understand the coming impact of US trade policy.”
“The Fed Economist Accused Of Espionage For Beijing” (Wall Street Journal). “John Rogers was visiting Shanghai in May 2013, attending a business forum as a Federal Reserve economist, when he first received an email from an alleged Chinese intelligence agent. The man described himself as a Chinese graduate student who was interested in learning about the Fed. Rogers says he refused the man’s offer to pay him. But they stayed in touch, and later, the man invited Rogers to visit China again, all expenses paid. This time, Rogers made the trip, setting off a chain of events that led to espionage charges against him in the U.S.—and exposed new details about China’s alleged efforts to recruit informants inside U.S. government institutions.”
“Crypto Investor Charged With Kidnapping And Torturing Man For Weeks” (New York Times). “A 37-year-old cryptocurrency investor was charged on Saturday with kidnapping a man and beating, shocking and torturing him for weeks inside a luxury townhouse in downtown Manhattan, all in a scheme to get the man’s Bitcoin password, the authorities said.”
“The Prince, His Money Manager And The Corruption Scandal Rocking Monaco” (Wall street Journal). “Tucked one street behind Monte Carlo’s historic harbor, which is famously dotted with champagne bars and anchored by the storied casino that was the backdrop to multiple James Bond films, the Monaco police station may be the most unglamorous building in one of the world’s most glamorous settings…But over two days this February, in the police captain’s office with a window facing up the rocky slope toward the palace, a dapper 68-year-old suspect in a corruption scandal rattled one of Europe’s most storied royal families and shook the foundations of a tiny country built on polished appearances, ironclad confidentiality and tightly choreographed power.”
What we’re reading (5/23)
“Stock Market Today: Dow, S&P 500, Nasdaq Fall As Trump Tariff Threats Roar Back, US Deficit Anxiety Deepens” (Yahoo! Finance). “US stocks fell on Friday to register weekly losses as investors assessed President Trump's latest tariff threats and the potential impact of his massive tax bill on the deficit and the economy. The Dow Jones Industrial Average sank 0.6%. The S&P 500 also fell roughly 0.7%. The tech-heavy Nasdaq Composite backed off about 1%.”
“StubHub’s CEO Isn’t Delusional. That’s Why He Hasn’t IPO’d Yet.” (Wall Street Journal). “After spending more than three years trying to take StubHub public, Baker has to regroup. In addition to plotting how to time the listing amid tariff turmoil, he must also contend with a new executive order from the Trump administration that attempts to limit ticket scalping and fees. StubHub’s core business involves collecting fees on tickets to concerts, sports and other events resold at a markup. Baker’s plan for growth would put his company in a head-to-head battle with industry giant Ticketmaster.”
“Boeing Strikes Deal To Avoid Criminal Responsibility For 737 Max Crashes” (New York Times). “Boeing reached a deal with the Justice Department on Friday that would spare the company from taking criminal responsibility for a pair of deadly 737 Max crashes in 2018 and 2019. Under the deal, which was staunchly opposed by many families of the victims of the fatal crashes, Boeing would admit to obstructing federal oversight, pay a fine, contribute to a fund for the families and invest in safety and quality programs.”
“The Real Problem With The FAA” (The Atlantic). “Air-traffic control is not inherently a governmental function. Keeping planes safely separated is a complex but purely operational process that follows well-established rules. Like running an airline or manufacturing a commercial aircraft, air-traffic control can be performed by a nongovernmental entity as long as it is overseen by safety regulators—which perform a function that is inherently governmental. The most compelling evidence of this is that most developed countries have now “corporatized” their ATC provider.”
“United Airlines Reaches ‘Industry-Leading’ Labor Deal With Flight Attendants, Union Says.” (CNBC). “United Airlines reached an “industry-leading” tentative labor deal for its 28,000 flight attendants, their union said Friday. The deal includes ‘40% of total economic improvements’ in the first year and retroactive pay, a signing bonus, and quality of life improvements, like better scheduling and on-call time, the Association of Flight Attendants-CWA said.”
What we’re reading (5/22)
“Antitrust Cops Say BlackRock, Other Fund Giants May Have Hurt Coal Competition” (Wall Street Journal). “Large institutional investors who own shares in rival companies risk violating antitrust laws if they use their influence to affect how those businesses compete, U.S. antitrust enforcers argued Thursday for the first time. The Justice Department and Federal Trade Commission made those views public by submitting a brief in a case filed last year by Texas Attorney General Ken Paxton and other Republicans against BlackRock, State Street and Vanguard Group. The federal government’s filing, known as a statement of interest, says the asset managers’ holdings of multiple companies in the coal industry—known as common ownership—could violate competition laws.”
“Jamie Dimon Says The US Is Still At Risk Of A Fate Worse Than Recession” (Business Insider). “‘I think there's a chance you'll have stagflation,’ Dimon said, adding that he’s not predicting such a scenario necessarily but that he wants to be prepared. ‘I think global fiscal deficits are inflationary. I think the remilitarization of the world is inflationary. The restructuring of trade is inflationary,’ he said, adding that the sharp decline in oil prices could be a deflationary offset.”
“Japan’s Core Inflation Climbs To 3.5%, Highest In More Than 2 Years” (CNBC). “Japan’s core inflation accelerated to 3.5% in April, government data showed Friday, bolstered in part by surging rice prices, as the central bank considers pausing its rate hike posture to assess the impact of U.S. tariffs. The core inflation figure, which strips out prices for fresh food, was higher than expectations of 3.4%, according to economists polled by Reuters, rising from 3.2% in the previous month and marking the highest level since January 2023.”
“What Makes An Asset ‘Safe’?” (Joachim Klement). “[T]he lack of ingrained investor base helps to explain why European supranational bonds trade at higher yields than German or Dutch government bonds, even though the European bonds are guaranteed by all EU member states, not just one, which should make them safer. And it is this psychological disconnect that makes these supranational bonds the safe asset for banks and funds, while national government bonds are the safe asset for private investors.”
“An Ode To The Penny” (Wall Street Journal). “After a lifespan nearly as long as the nation itself, America’s one-cent coin will begin to fade from the money supply. The U.S. Mint has ordered its last batch of the blanks used to mint the coins, and the Treasury expects to stop putting them into circulation early next year. The penny’s reputation has shifted over more than two centuries. At times a symbol of thriftiness, practicality and even luck, the penny more recently has come to symbolize wasteful government spending.”
What we’re reading (5/21)
“Bond Market Jitters Rise On ‘Narrative Shift’ From Positive Tariff News To Mounting US Debt Crisis” (Yahoo! Finance). “Bond market jitters are back — and this time, it’s not just about inflation. Long-term Treasury yields surged to kick off the week as Moody’s US credit downgrade reignited market concerns over the country’s worsening fiscal trajectory…Yields ticked higher again Tuesday, and by Wednesday the 30-year climbed back above the closely watched 5% mark. In afternoon trading, a weak Treasury auction sent yields even higher. It ended the trading day up about 12 basis points near 5.09%. The 10-year yield traded around 4.6%, the highest since February.”
“Nike Set To Raise Prices Next Week, Plans To Sell On Amazon Again” (Reuters). “Nike is planning to raise prices of some products from next week and will sell items on Amazon after six years, the company said on Wednesday. The footwear retailer will increase prices on apparel and equipment for adults between $2 and $10, while those priced between $100 and $150 will see a $5 hike, it said. The company sources a significant portion of its footwear from China and Vietnam. With the critical back-to-school shopping season approaching, Nike will not raise prices for children's products.”
“Walmart To Cut 1,500 Corporate Jobs In Restructuring” (Wall Street Journal). “Walmart and other retailers have been cutting costs, putting pressure on suppliers, shifting production to other countries and increasing prices to offset the cost of tariffs. Last week, Walmart said that it would raise some prices because of tariffs, prompting President Trump to criticize the company. The company reported strong sales growth in the latest quarter and executives said they would work to manage profits to keep prices as steady as possible.”
“Why Credit Ratings Do (Kinda) Matter” (Financial Times). “[C]redit rating agencies remain a (very profitable) fixture of the financial world, puzzling many outside observers. How can this pointless/malignant/backwards-looking (delete according to personal preference) oligopoly still endure in 2025? The most common explanation is that their importance remains embedded in the regulatory system, but this fails to explain exactly why that happened in the first place, or why efforts to lessen their grip since 2008 have failed. The best rationale we’ve come across is from David Beers, the head of sovereign ratings at S&P at the time of the first US downgrade in 2011 (and the father of an amazing public database of sovereign debt defaults). The rating agencies have helped form a ‘common language of credit risk’, he argues, which allows investors, borrowers and bankers to talk to each other.”
“An Awkward Truth About American Work” (The Atlantic). “Read’s indictment of MLM outfits is predictable enough, but her research also reveals how much corporate America has in common with this shady economy, which has long been dismissed as a kooky sideshow. Corporations have borrowed from the methods of MLM companies—hiring large, contingent workforces; pushing employees to think like entrepreneurs; and lobbying hard for friendlier regulations. MLMs turn out to be more closely aligned with the center of corporate life (and political power) than many people might like to think.”
What we’re reading (5/20)
“Stock Market Rally Driven By ‘Unwarranted Optimism’ As Tariff Risk Looms Over $9 Trillion Rebound” (Yahoo! Finance). “After a massive drawdown in the initial reaction to President Trump's April 2 tariff announcement, major stock indexes have roared back, with the S&P 500 adding $9 trillion in market value in just over a month. But after six straight days of gains that have brought the S&P 500 within 3% of a new all-time high, some on Wall Street are cautioning the market rally may have extended too far, even if the probability of recession has declined in recent days.”
“The Trade War Isn’t Over” (Paul Krugman). “[Y]ou might well think that the Trump trade war is basically over, that we’re back to more or less normal policy. The reality is that we’ve gone from a completely insane tariff rate on imports from China to a rate that’s merely crazy. And China accounts for only a fraction of our imports. Tariffs on everyone else are still at 10 percent, a level we haven’t seen in generations. And there are still other shoes to drop: Trump has, for example, been promising tariffs on pharmaceuticals. The trade war is still very much on. Anyone who reports otherwise (a) hasn’t done their homework (b) is misleading the public. And while the stock market has to some extent bought into unwarranted optimism, markets with fewer naive investors like oil and bonds don’t seem fooled.”
“Mortgage Rates Jump Above 7% After Moody’s Downgrade Of U.S. Credit” (MarketWatch). “Mortgage rates surged after the credit-rating agency Moody’s downgraded U.S. debt. Moody’s cut the U.S.’s sovereign credit rating from AAA to Aa1. It was the last of the major credit-rating firms to strip the country of its triple-A rating. S&P Global Ratings downgraded U.S. debt in the summer of 2011.”
“US Debt Rates Itself (Matt Levine). “The credit rating of US government debt, for most purposes for which people would use a credit rating, is ‘US government debt.’ The credit ratings assigned by S&P or Fitch or Moody’s are not, as far as I can tell, binding on any investors; the thing that is binding is the particular legal status of Treasuries as US sovereign debt.”
“AI Is Coming For The Big Four Too” (Business Insider). “AI could be poised to disrupt their business models, organizational structure, and employees' day-to-day roles, while driving opportunities for the midmarket.”
What we’re reading (5/15)
“Coinbase Confirms User Metric Investigation, Says It’s Working With Trump’s SEC To Resolve” (CNBC). “Coinbase on Thursday confirmed the U.S. Securities and Exchange Commission has been investigating whether the crypto exchange has misstated its user numbers. The stock was last lower by 6%.”
“Walmart’s Price Hikes Open Door To Increases From ‘Everybody Else’” (Wall Street Journal). “On Thursday, the retail giant Walmart said that the cost of tariffs was forcing the company’s hand, and that it would hike prices on all sorts of goods later this month and into the summer. So far, Trump’s tariffs have had a muted effect on inflation. Walmart’s announcement suggests that a dam is breaking and that a flood of higher prices could soon follow.”
“The Job Market Is Starting To Crack” (Business Insider). “What's important is whether labor market conditions are getting better or worse. Momentum matters, and the data tells a pretty obvious tale: Conditions are deteriorating. The cracks keep widening in the jobs market, pushing up unemployment, albeit slowly, and weighing on the growth of employee compensation. This was true before President Donald Trump came back onto the scene, though the negative pressures are being exacerbated by the jump in policy uncertainty as he reorients US trading relationships.”
“One Of America’s biggest Companies Is Imploding” (CNN Business). “UnitedHealth Group, one of America’s biggest corporations and a member of the exclusive Dow Jones Industrial Average, is suddenly unraveling. The crisis engulfing UnitedHealth hit a crescendo this week when CEO Andrew Witty stepped down abruptly for ‘personal reasons.’ UnitedHealth also swiftly abandoned its financial guidance, blaming skyrocketing medical costs. And then The Wall Street Journal dropped the hammer, revealing that UnitedHealth is under federal criminal investigation for possible Medicare fraud.”
“The US Dollar’s Fall from Grace” (Project Syndicate). “Despite his stated commitment to maintaining the dollar’s global dominance, US President Donald Trump is actively undermining the value of – and confidence in – the greenback. This does not bode well for the “exorbitant privilege” that the dollar’s status as the main international reserve currency has long bestowed on the US, though it does create space for possible replacements.”
What we’re reading (5/14)
“The China Trade Deal Doesn’t Solve The Fed’s Problems” (Bloomberg). “The agreement between the US and China to roll back their respective tariffs for 90 days has led to renewed optimism that the worst of America’s trade wars is over. I’m not seeing the ‘breakthrough’: There’s still plenty of scope for economic damage that the Federal Reserve will struggle to contain.”
“Drill, Baby, Dr … Never Mind” (Paul Krugman). “There appears to be a real chance that America will lose its newly reacquired energy independence…[t]o see why, we need to look at the factors responsible for America’s return to energy self-sufficiency. One of these is fracking — extracting oil and gas embedded in shale by fracturing that shale with high-pressure liquids. Yes, there are serious environmental issues involved both in the fracking process and in the fact that more fossil fuel production adds to greenhouse gas emissions…[t]he other factor was the incredible rise of renewable energy. Not that long ago wind and solar power were widely seen as silly, hippy-dippy conceits. Now they’re major contributors to energy supply[.]”
“Warner’s Streaming Service Has New Name: Its Old One. Meet ‘HBO Max.’” (Wall Street Journal). “Warner Bros. Discovery is rebranding its streaming service to ‘HBO Max.’ Again. The entertainment company said Wednesday that it would return to the service’s original moniker from its 2020 launch. It dropped the HBO in 2023, rebranding to Max, to the chagrin of many fans of the well-known HBO brand. After a slow start, the streaming service has gained momentum over the past year by sharpening its focus on adult content like ‘The Last of Us’ and ‘Hacks,’ instead of trying to provide endless entertainment to all types of consumers. At the end of 2024 it had 117 million subscribers worldwide, and the company projects that at the end of 2026, it will top 150 million subscribers.”
“‘Some Weird Elon Musk Shit’: Inside LA’s Young, Testosterone-Fueled Sperm Race” (Vanity Fair). “Soon after that conversation took place, Zhu says he was flown to New York by a billionaire who asked him the craziest idea he’d ever had for a company. Jokingly, and because he couldn’t come up with anything else—again, this is Zhu’s telling—Zhu replied, ‘Bro, if I wasn’t working on my current company, I’d be doing sperm racing.’ Here is where the billionaire did the very thing that billionaires are so uniquely positioned to do, which is to turn glib jokes into unavoidable realities. In the space of 30 minutes, the billionaire convinced Zhu not only that a live sperm race was a very good idea, but that Zhu was the one to do it.”
“‘Nobody Wants To Work Anymore’: Lifetime Wage Experiences And The Decline Of Male LFP In The United States” (Remy Levin and Daniela Vidart). “Male labor force participation (MLFP) has declined sharply over the past 50 years in the United States. We show that a key driver of this decline is changes in mens' beliefs about the returns to work, shaped by their lifetime experiences of aggregate male wages. Using PSID data tracking individual labor histories linked to state-level real male wage time series, we find that prime-age MLFP increases with the average male wage in a man's state of birth over his lifetime, even after controlling for current labor market conditions and a host of fixed effects and covariates. A one standard deviation increase in the average experienced aggregate lifetime hourly wage-corresponding to $0.33 and comparable to the difference in 2000 between being born in 1970 in Louisiana and Texas-raises the probability of labor force participation by 10 percentage points. These effects persist for men who migrate and are stronger when restricting to samerace wages. Our findings suggest that lifetime wage experiences shape long-term beliefs about work, generating lasting spillovers from labor demand to labor supply.”
What we’re reading (5/9)
“Baffled By The Trump Tariffs, C.E.O.s Lean On The Word ‘Uncertainty’” (New York Times). “Corporate America is stumbling in the dark, and so are investors. Ford and General Motors executives say they can’t estimate what lies ahead. There’s too much fog even to hazard a guess, so both companies have suspended earnings guidance — signals about future sales and profits — leaving investors to navigate on their own. And the automakers are not the only ones. A broad range of companies, including Delta Air Lines, Southwest Airlines, the footwear company Skechers, UPS and the engine manufacturer Cummins, say they can’t talk confidently about the future.”
“Wall Street Bonuses Could Drop As Much As 20% Because Of Trump Tariff Turmoil” (New York Post). “Bonuses on Wall Street could plunge by as much as 20% as dealmaking dries up and the stock market whipsaws because of economic turmoil caused by President Donald Trump’s trade war, according to a top consultancy. Johnson Associates, a compensation specialist, said deals have all but ground to a halt over Trump’s threats to slap stiff tariffs on imported goods. In its latest outlook report released Thursday, the firm predicted a 10% cut to bonuses for investment bankers as ‘expected M&A ‘mania’ disappoints with economic uncertainty’ over the looming heavy levies.”
“Paper Strips, Floppy Disks, And 1940’s Tech: Let’s Modernize Our Air Traffic System” (The Hill). “The root of the problem? The U.S. still relies on outdated, decades-old technology to maneuver jumbo jets. While other countries have embraced digital displays and infrared-based systems, American air traffic controllers are trained to use paper strips, floppy disks and World War II-era radar technology.”
“There’s A National Egg Crisis, And One Company Is Making A Lot Of Money” (Wall Street Journal). “Eggs are the most visible symbol of the toll that inflation is taking on U.S. consumers, and no one sells more of them than Cal-Maine. Its 50 million hens produce roughly one out of every five eggs sold in the U.S. As egg prices have tripled in three years during a nationwide bird-flu epidemic, its stock has doubled…Prices for a lot of major commodities like hogs, corn, wheat, soybeans and cattle trade on markets run by exchange operator CME Group. Futures trading in these commodities can help farmers and businesses hedge against price fluctuations. Eggs are different. The egg industry relies on contracts between a customer, like Walmart or Kroger, that wants to buy a certain amount of eggs from a supplier like Cal-Maine.”
“Convergence? Thoughts About The Evolution Of Mainstream Macroeconomics Over The Last 40 Years” (Olivier Blanchard). “This year marks the 40th anniversary of the NBER Macro Annual Conference, founded in 1986. This paper reviews the evolution of mainstream macroeconomics since then. It presents my views, informed by a survey of a number of researchers who have made important contributions to the field. I develop two main arguments. The first is that, starting from strikingly different positions, there has been substantial convergence, in terms of methodology, architecture, and main mechanisms. The second is that this convergence has been, for the most part, good convergence, i.e., the creation of a generally accepted conceptual and analytical structure, a core to which additional distortions can be added, allowing for discussions and integration of new ideas and evidence, rather than fights about basic methodology.”
What we’re reading (5/8)
“U.S. And U.K. Unveil Framework For Trade Deal” (Wall Street Journal). “The pact, which appeared to have been put together hastily by U.S. and British officials, is fairly limited in scope. The Trump administration agreed to roll back tariffs imposed on British steel and automobiles in exchange for purchasing Boeing jets and giving American farmers greater access to U.K. markets.”
“Musk-Tied Investor Clashes With One Of World’s Biggest Asset Managers” (New York Times). “A prominent Silicon Valley investor is in a bitter dispute with his former employer, one of the world’s largest asset managers, accusing it of fraud and attempted bribery. In a lawsuit filed on Thursday in California, Josh Raffaelli, who until late last year was a fund manager at Brookfield Asset Management, said the company had mistreated investors in his funds as it sought to make up for losses in other parts of its business. The 100-page complaint is notable in part because Mr. Raffaelli has close ties to Elon Musk, the world’s richest man. That relationship enabled Mr. Raffaelli’s funds to put money into Mr. Musk’s private companies, a coveted opportunity in Silicon Valley. But among Mr. Raffaelli’s allegations is that Brookfield improperly limited the amount that he could invest in a Musk company on behalf of Brookfield’s clients.”
“Valuations Have Dropped, But Not Enough To Be ‘Cheap’” (Institutional Investor). “The key question now is whether earnings will hold up. Consensus expectations for Q1 and Q2 have been revised downward, while the second half of the year remain largely unchanged. Analysts are closely watching the Q1 earnings season to see if companies begin guiding lower for the back half of the year – tariffs could serve as a convenient rationale. Meanwhile, the percentage of companies with rising earnings estimates has dropped from 47% to 35%, edging closer to the 27% level that historically signals a broader weakness.”
“America’s Largest Real Estate Brokerages Are Fighting Over Private Listings” (CNN Business). “Compass has denied the accusation that it pushes sellers into private transactions. Instead, the company said many sellers choose to list their homes privately before sharing their homes more widely on the multiple listing service (MLS), which is a database that agents from all companies use to share home listings with each other. Most MLS listings are automatically picked up by homebuying websites like Zillow and Redfin.”
“Leo XIV, Elevated By Francis, Becomes First American Pope” (Washington Post). “As the sun set Thursday over St. Peter’s Basilica, a 69-year-old prelate who began his calling as a Chicago altar boy stepped onto the central balcony as the first American pope, stunning Vatican City and the world by breaking the long-standing taboo of electing the son of a global superpower to lead the Catholic Church.”
What we’re reading (5/7)
“Fed Warns Of Rising Economic Risks As It Leaves Rates Steady” (Wall Street Journal). “The Federal Reserve warned that tariffs were raising risks of higher unemployment and higher inflation when officials unanimously agreed to hold interest rates steady on Wednesday. ‘If the large increases in tariffs that have been announced are sustained, they’re likely to generate a rise in inflation, a slowdown in economic growth, and an increase in unemployment,’ Fed Chair Jerome Powell said at a news conference.”
“Countdown To China Trade Talks” (DealBook). “Treasury Secretary Scott Bessent said that the focus of the talks, which will involve Jamieson Greer, the United States trade representative, and He Lifeng, China’s vice premier for economic policy, would be more about de-escalation than achieving immediate tariff relief.”
“Buffett’s Bet Of The Century” (Financial Times). “Due to legal restrictions on gambling in some US states, the bet was arranged through something called Long Bets, a forum for big wagers on the future backed by Amazon’s Jeff Bezos. Although seemingly frivolous, friendly gambles can have a lot of power. In 1600, Johannes Kepler entered into a bet with a Danish astronomer that he could calculate a formula for the solar orbit of Mars in eight days. In the end it took him five years, but the work help revolutionise astronomy.”
“Amazon Unveils Hi-Tech Robots That Could Replace Huge Numbers Of Warehouse Workers” (Mirror). “The machines, called Vulcan, have cutting-edge technology that learn to ‘feel’ and have a human-like sense of touch. By doing so, they can carry out detailed picking and packing in warehouses that until now could only be done by people. It paves the way for the robots to take over jobs currently done by workers in Amazon’s vast warehouses - known as fulfilment centres - in the UK and around the world. Amazon, founded by billionaire Jeff Bezos, employs around 75,000 people in the UK alone, most of them in warehouses. Globally, it has about 1.5 million employees.”
“Young Banker’s Death That Sparked Backlash Against Jefferies Involved Fentanyl And Cocaine, Autopsy Reveals” (Business Insider). “Carter McIntosh, an associate with the bank's technology, media, and telecommunications coverage team in Dallas, was found dead in his apartment in January, leading Jefferies CEO Richard Handler to issue a memo defending the bank from ‘unfounded’ speculation about the banker's cause of death. The police initially ruled it an ‘unexplained death.’ An autopsy report by the medical examiner's office now says McIntosh's death was an accident caused by the ‘combined toxic effects’ of fentanyl and cocaine, according to a copy of the report obtained by Business Insider.”
What we’re reading (5/6)
“U.S. And Chinese Officials To Meet Amid Trade War” (Wall Street Journal). “Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer are traveling to Switzerland on Thursday to meet Beijing’s lead economic representative, potentially paving the way for broader trade talks. Bessent and Greer are expected to meet with Chinese Vice Premier He Lifeng, leader Xi Jinping’s economic czar, according to people familiar with the matter.”
“Stock Market Bulls Have Gone Into Hiding. Why Our Money Pros Are The Most Bearish In Nearly 30 Years.” (Barron’s). “America’s money managers are more bearish today than they have been in nearly 30 years. Barron’s latest Big Money poll of professional investors finds 32% of respondents bearish on the outlook for stocks over the next 12 months—the highest percentage since at least 1997. Just think about all the crises investors have weathered since then: the bursting of the dot-com bubble, the 9/11 terrorist attacks, the collapse of Lehman Brothers and the 2008-09 financial crisis, the Covid-19 pandemic. And yet the Big Money pros are more anxious now than during any of those painful points for the financial markets, the economy, and the country. The bulls’ ranks also stand at historic levels in our spring survey—historically low, that is. Just 26% of respondents call themselves bullish on the market’s prospects, the smallest percentage since 1997.”
“Traders Bet It Will Take Longer For Fed To Start Cutting Rates” (Bloomberg). “Traders are betting on a slower pace of interest-rate cuts from the Federal Reserve this year, with economic resilience forcing policymakers to remain on hold for longer before easing more sharply in 2026. Just a day ahead of the US central bank’s latest policy decision, money markets are pricing three quarter-point reductions this year, one less than at the start of April. About a half point of additional cuts are expected next year, the most priced in for 2026 at any point in the current easing cycle.”
“A New Study Raises Alarms About Plastics And Heart Disease. Here’s What To Know.” (New York Times). “The news made for an alarming headline this week: Research showed that common chemicals in plastics were associated with 350,000 heart disease deaths across the world in 2018…[w]hile experts agree that phthalates are harmful, they cautioned that the study relied on complex statistical modeling and a series of assumptions and estimates that make it difficult to determine how many deaths might be linked to the chemicals…In the latest study, researchers attempted to quantify global cardiovascular deaths attributable specifically to one type of phthalate, known as DEHP. One of the most widely used and studied phthalates, DEHP is found in vinyl products including tablecloths, shower curtains and flooring.”
“How Could Tesla Replace Elon Musk?” (The Week). “Will he stay or will he go? Tesla last week shot down a report that its board is searching for a new CEO to replace Elon Musk atop the company. But questions about the company's future are not going away. Finding somebody to take Musk's place is a ‘huge challenge’ for Tesla, said Axios. There are three ‘practically unanswerable’ questions about the process: Who could take his place? How would Musk react? What would investors think? The questions may soon need answering. Tesla has ‘suffered declining sales’ since Musk made himself the face of the Trump administration's government-slashing efforts. Despite the company's stumbles, any new CEO ‘will be operating in Musk's shadow.’”
April performance Review
April:
Prime: -3.09%
Select: -0.50%
SPY ETF: -0.52%
Bogleheads (80% VTI + 20% BND): -0.24%
Year-to-date 2025:
Prime: -1.99%
Select: +6.15%
SPY ETF: -5.10%
Bogleheads (80% VTI + 20% BND): -2.91%
May picks available now
The new Prime and Select picks for May are available starting now, based on a model run put through Today (April 30). As a note, I will be measuring the performance on these picks from the first trading day of the month, Thursday, May 1, 2025 (at the mid-spread open price) through the last trading day of the month, Friday, May 30, 2025 (at the mid-spread closing price).
May picks available soon
I’ll be publishing the Prime and Select picks for the month of May before Thursday, May 1 (the first trading day of the month). As always, SPC’s performance measurement for the month of April, as well as SPC’s cumulative performance, will assume the sale of the April picks at the closing price (at the mid-point of the closing bid and ask prices) on the last trading day of the month (Wednesday, April 30). Performance tracking for the month of May will assume the May 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 (Thursday, May 1).
What we’re reading (4/26)
“A Reckoning For The Magnificent Seven Tests The Market” (Wall Street Journal). “[E]ven after a rally this past week, the Magnificent Seven are off to their worst start to a year since the 2022 slide, according to Dow Jones Market Data. Each stock has fallen more than 6.5%, and they have collectively lost $2.5 trillion in market value. The Roundhill Magnificent Seven exchange-traded fund just posted its best four-day run ever, notching a 13% climb—that still left it down about 15% this year.”
“The Mystery Behind Gold’s Bull Market” (MarketWatch). “Gold’s recent meteoric rise above $3,400 might continue even further. But I know of no way to have much confidence that it will. That’s because none of the many theories advanced to explain gold’s rise are objectively provable.”
“The S&P 500’s Half-Decade Golden Age Of High Valuations Is Over, Bank Of America Says” (Business Insider). “Since 2020, investors have been willing to pay a premium relative to S&P 500 company earnings. So-called price-to-earnings ratios have been elevated thanks to mammoth stimulus efforts amid the pandemic and excitement around artificial intelligence developments. The optimistic outlook has propelled stocks to 146% gains from COVID-19 lows. Over that time, S&P 500 PE ratios on a trailing 12-month basis have barely dipped below 20 times and have risen as high as 41x. The average PE ratio during the last five years was just shy of 26x.”
“Large Language Models, Small Labor Market Effects” (Anders Humlum and Emilie Vestergaard). “We examine the labor market effects of AI chatbots using two large-scale adoption surveys (late 2023 and 2024) covering 11 exposed occupations (25,000 workers, 7,000 workplaces), linked to matched employer-employee data in Denmark. AI chatbots are now widespread—most employers encourage their use, many deploy in-house models, and training initiatives are common. These firm-led investments boost adoption, narrow demographic gaps in take-up, enhance workplace utility, and create new job tasks. Yet, despite substantial investments, economic impacts remain minimal. Using difference-in-differences and employer policies as quasi-experimental variation, we estimate precise zeros: AI chatbots have had no significant impact on earnings or recorded hours in any occupation, with confidence intervals ruling out effects larger than 1%. Modest productivity gains (average time savings of 2.8%), combined with weak wage pass-through, help explain these limited labor market effects. Our findings challenge narratives of imminent labor market transformation due to Generative AI.”
“Consumer Sentiment Plunges 8%” (CNN Business). “Consumer sentiment plunged 8% in April from the prior month, to a final reading of 52.2, the University of Michigan said in its latest survey released Friday. That was a slightly smaller decline than a preliminary reading from earlier this month, which didn’t capture people’s reaction to Trump’s 90-day tariff delay announced on April 9.”
What we’re reading (4/23)
“Stocks Rally, Swayed By White House Comments On Fed, Tariffs And Trade” (New York Times). “A stock market surge on Wednesday was again fueled not by concrete evidence of policy changes, but by off-the-cuff comments from President Trump and other officials, as investors latched onto scraps of information about tariffs, trade and other crucial issues that can shift from day to day. Wall Street’s drastic swings this week — a sharp sell-off on Monday, followed by two big daily rallies — highlight how investors are swayed by the latest headlines amid the confusion and uncertainty about the White House’s intentions.”
“Huge Stock Swings Are The New Normal For Frazzled Investors” (Wall Street Journal). “The trade war’s swings—both higher and lower—have left many investors on edge. The S&P 500 has gained or lost at least 1% in seven of the past 10 sessions, and April is poised to be the most-volatile calendar month since the Covid crash in 2020, according to Dow Jones Market Data.”
“Markets Think They Hold All The Cards Over Trump” (Wall Street Journal). “The power of the markets isn’t magical. Asset prices are just many people assessing the prospects for the economy and future returns, and concluding that neither 145% tariffs on China nor Trump interfering in setting interest rates would be good for them. Markets are a live opinion poll of money. In that sense, they matter to Trump. But there is no assurance that he will be ruled by them. Sometimes doing what’s best for the country might be bad for stocks (tax rises) or bad for bonds (tax cuts) or bad for the dollar (rate cuts or a war, for example).”
“China’s ‘Bleeding’ Exporters Have 3 Options. All Of Them Are Bad.” (Barron’s). “Beneath the fluorescent lights of a warehouse in Foshan, a city in southern China, Liu Wenyi watches as workers tape shut boxes of ceramic teapots destined for no one. The buyer in California canceled the order last week, just after new U.S. tariffs pushed the total duty on her products above 150%.”
“Driverless Trucks Are Rolling In Texas, Ushering In New Era” (Axios). “Drivers along a 200-mile stretch of I-45 between Dallas and Houston should get ready for something new: the semi-truck in the next lane might not have anyone in the driver's seat.”
What we’re reading (4/22)
“Dow Jumps 1,000 Points Tuesday To Snap Four-Day String Of Losses” (CNBC). “Stocks rallied Tuesday on hopes that U.S.-China trade tensions could ease soon, as investors recovered from the steep declines suffered in the previous session…The major averages spiked on news that Treasury Secretary Scott Bessent told a group of investors Tuesday that there ‘will be a de-escalation’ in the trade war with China. ‘No one thinks the current status quo is sustainable,’ he said during a meeting with investors hosted by JPMorgan Chase, according to a person in the room.”
“Trump Says He Has ‘No Intention’ Of Firing Fed Chair Powell” (Wall Street Journal). “President Trump said he is not planning to fire Federal Reserve Chairman Jerome Powell and he signaled that tariffs on China could be lowered, prompting relief from investors who had been spooked by the White House’s aggressive moves in recent weeks. ‘I would like to see him be a little more active in terms of his idea to lower interest rates…but, no, I have no intention to fire him,’ he told reporters in the Oval Office.”
“Futures Rise After Trump Comments On China, Powell” (Yahoo! Finance). “Futures for the major stock indexes opened higher after President Trump said he is not planning on firing Federal Reserve Chairman Jerome Powell and that tariffs on goods from China will ultimately be less than 145%.”
“S&P 500 Bounce Has Traders Fearing Another Head-Fake Market” (Bloomberg). “Wall Street pros have a warning for investors eager to jump back into the stock market as it rebounds Tuesday: Watch out for headfakes in the middle of a longer-term decline…’I think what we’re seeing now is about as myopic a market as we’ve ever seen,’ said Michael Kantrowitz, chief investment strategist at Piper Sandler & Co.”
“Elon Musk Says He Will Spend Less Time in Washington as Tesla’s Profit Drops 71%” (New York Times). “Elon Musk, Tesla’s chief executive, said on Tuesday that he would spend less time in Washington working for President Trump after the automaker reported a profit drop of 71 percent in the first three months of the year. Mr. Musk told Wall Street analysts in a conference call that he would continue to spend ‘a day or two per week’ on Washington matters, probably for the duration of Mr. Trump’s presidency. The billionaire executive is one of Mr. Trump’s closest confidants and has played a leading role in the president’s efforts to slash government spending and cut tens of thousands of federal government jobs.”