What we’re reading (7/15)
“June Inflation Data Reaffirms Fed Pause As Tariff Uncertainty Grows” (Yahoo! Finance). “June’s Consumer Price Index (CPI) report likely gives the Federal Reserve room to continue its wait-and-see approach to cutting rates amid uncertainty over how President Trump's tariffs will impact inflation. On a ‘core’ basis, which excludes volatile food and energy costs, CPI increased 0.2% from the previous month, slightly lower than economists' expectations but ahead of May's 0.1% gain. Following the report, investors were placing a 97% probability on the Fed holding rates steady at its July meeting, up from 93% on Monday, according to the CME FedWatch Tool. Meanwhile, the chance of a September rate cut dropped sharply after the release, falling below 60% initially and inching closer to 50% as markets digested the data.”
“JPMorgan’s Dimon Warns Against ‘Playing Around With The Fed’ As Powell Pressure Mounts” (Yahoo! Finance). “JPMorgan Chase (JPM) CEO Jamie Dimon said Tuesday that the independence of the Federal Reserve is ‘absolutely critical’ for Jerome Powell and whoever succeeds him as chairman of the central bank. "Playing around with the Fed can often have adverse consequences," Dimon told reporters after JPMorgan reported its first quarter earnings, adding that it can produce ‘the absolute opposite of what may be hoping for.’”
“Trump Executive Order To Help Open Up 401(k)s To Private Markets” (Wall Street Journal). “President Trump is expected to sign an executive order in the coming days designed to help make private-market investments more available to U.S. retirement plans, according to people familiar with the matter. The order would instruct the Labor Department and the Securities and Exchange Commission to provide guidance to employers and plan administrators on including investments like private assets in 401(k) plans, the people said. The details of the order aren’t yet final and are still subject to review, the people said.”
“A Case For Concluding That Over 90% Of Shareholders Reject DEI” (RealClear Markets). “[A]pply a healthy dose of skepticism the next time you see a headline proclaiming that over 90% of shareholders support DEI because an anti-DEI proposal was defeated by that margin. The bottom line is that no corrupted voting regime should convince you that the true owners of corporations think it’s a good idea to discriminate on the basis of race and sex in the name of DEI or to use shareholders’ money to promote gender mutilation surgery in minors. That’s just plain common sense.”
“Why Is Manufacturing Productivity Growth So Low?” (Enghin Atalay, et al.). “We examine the recent slow growth in manufacturing productivity. We show that nearly all measured TFP [total factor productivity] growth since 1987—and its post-2000s decline—comes from a few computer-related industries. We argue conventional measures understate manufacturing productivity growth by failing to fully capture quality improvements. We compare consumer to producer and import price indices. In industries with rapid technological change, consumer price indices indicate less inflation, suggesting mismeasurement in standard industry deflators. Using an input-output framework, we estimate that TFP growth is understated by 1.7 percentage points in durable manufacturing, 0.4 percentage points in nondurable manufacturing, with no mismeasurement in nonmanufacturing industries.”
What we’re reading (7/14)
“Financial Stocks Rise Ahead Of Busy Week For Earnings, Inflation Data” (Wall Street Journal). “U.S. financial stocks inched higher Monday, raising expectations that banks’ quarterly earnings and a key measure on consumer prices will signal that economic conditions remain strong. Wells Fargo shares climbed 1.1%, JPMorgan Chase rose 0.6% and BlackRock increased 0.9%. All three financial firms are among those due to report second-quarter results on Tuesday, when investors will also receive a June reading on the U.S. Bureau of Labor Statistics’s monthly consumer-price index.”
“Private Equity Now Owns More Than 40 Minor League Baseball Teams, And The Number Keeps Growing” (Defector). “Diamond Baseball Holdings, a company backed by the private equity firm Silver Lake, has acquired 45 Minor League Baseball teams since its creation in late 2021. They own teams from coast to coast, in cities big and small. This means one company now owns more than 35 percent of all MiLB teams. And it shows no sign of slowing down.”
“Little Videos Are Cooking Our Brains” (Vox). “We’ve known for a while thatthe rise of AI would flood the internet with slop. Slop is already remarkably popular on YouTube, where nearly half ofthe 10 most popular channels contain AI-generated content. There are even virtual personalities powered by AI earning millions on YouTube. These platforms know that making content easier to produce will lead to more content, which leads to more engagement, which leads to more ads, which ultimately leads to a less enriching, more addictive internet. That’s why YouTube is pushing Veo 3 to its creators, and why, as oflast month, TikTok and Open AI have pushed out similar tools. This wouldn’t be such a concern if you wanted to seek out awful AI-generated videos. Instead, the slop finds you unwittingly and drowns you in anxiety.”
“Vanguard Goes Big On Crypto, Thanks To The Index-Fund Boom It Unleashed” (Bloomberg). “Vanguard Group Inc. executives, channeling the logic of the venerable Jack Bogle, have made their opinions on crypto clear. Yet thanks to the cold logic of index investing, the $10 trillion money-management giant is now the biggest backer of Strategy, the software firm that famously reinvented itself as a proxy for Bitcoin and became a poster child for the industry’s ambitions. Vanguard owns more than 20 million shares, nearly 8%, of all of Strategy’s (MSTR) outstanding Class A common stock, and likely surpassed Capital Group Cos. for the no. 1 spot sometime in the fourth quarter, according to data compiled by Bloomberg based on regulatory filings. The dozens of Vanguard mutual funds and ETFs that hold the stakes track everything from small- and mid-cap benchmarks to momentum, value and growth gauges, among others.”
“Pulte’s Social Media Posts Become Must-Follow For Stock Traders” (Bloomberg). “[T]raders are being forced to pay attention to an unlikely official: Federal Housing Finance Agency head Bill Pulte. Stocks have swung wildly on Pulte’s comments as he opines on everything from credit score pricing, to cryptocurrencies as mortgage assets, and even the job security of Federal Reserve Chair Jerome Powell. Sometimes preceded by cryptic teasers, his online comments have fueled the worst one-day drop in half a decade for credit-score provider Fair Isaac Corp. (FICO), multiple slumps in credit bureau stocks and even a brief drip in the entire S&P 500 Index on Friday. His market moving ability has ‘thrust a normally obscure government official into the forefront of business news,’ said Steve Sosnick, chief strategist at Interactive Brokers.”
What we’re reading (7/13)
“Nvidia’s Jensen Huang Says AI Could Lead To Job Losses ‘If The World Runs Out Of Ideas’” (CNN Business). “‘If the world runs out of ideas, then productivity gains translates to job loss,’ said Nvidia CEO Jensen Huang in an interview with CNN’s Fareed Zakaria when asked about comments made by fellow tech leader Dario Amodei, who suggested AI will cause mass employment disruptions. Amodei, the head of Anthropic, warned last month that the technology could cause a dramatic spike in unemployment in the very near future. He told Axios that AI could eliminate half of entry-level, white-collar jobs and spike unemployment to as much as 20% in the next five years.”
“Steel Is Booming In Arkansas — So Why Are So Many People Still Struggling To Get By?” (NBC News). “For Mississippi County, Arkansas, the booming steel industry is an economic lifeline. In the last decade, billions of dollars have flowed in to expand mills or open new ones, and it’s often hailed as the top steel-producing county in the country. Last year, a $3 billion mill came online, employing hundreds, the largest private investment in Arkansas history…[b]ut for many residents in this county of roughly 38,000, the promise of the steel boom is still out of reach. In the shadow of the new steel plants, a quarter of residents live in poverty, more than double the national average.”
“The Gray Area At The Center Of Microsoft’s Battle With OpenAI” (Business Insider). “In this case, Microsoft had access to frequent updates of the core model at the time, but not the voice technology OpenAI built on top of it. Microsoft found out about the demo, and pressured OpenAI executives, including then-technology boss Mira Murati, to get access to the code so Microsoft could do its own announcement, the people said. The company did not want to appear flat-footed to investors, to whom the company has to justify its $13 billion investment in OpenAI, they said. The example illustrates the ongoing complexity of Microsoft's relationship with OpenAI, and why access to the AI startup's technology is a core issue as the companies renegotiate their agreement.”
“Jamie Dimon Says Private Credit Is Dangerous—And He Wants JPMorgan To Get In On It” (Wall Street Journal). “Jamie Dimon says Wall Street’s hottest trend is a recipe for a financial crisis, but he’s investing billions to get in on it anyway. His plan: swoop in strategically and profit if there’s a meltdown.”
“Crypto Companies Race To Secure Banking Foothold In US” (Financial Times). “Cryptocurrency companies are racing to expand into traditional banking in the US, as they seek to capitalise on a friendlier regulatory environment under President Donald Trump and become more embedded in the financial system. Crypto payments group Ripple, stablecoin company Circle and custodian BitGo have applied for national trust bank charters that will allow them to offer some banking services, while crypto exchange Kraken plans to launch bank cards in the next month. ‘It’s a natural convergence,’ Arjun Sethi, co-chief executive of Kraken, told the Financial Times, adding the company plans to launch debit and credit cards by roughly the end of the month.”
What we’re reading (7/12)
“Economists See Lower Recession Risk And Stronger Job Growth: WSJ Survey” (Wall Street Journal). “The economic fallout from President Trump’s policies may prove less dire than feared. Economists expect stronger growth and job creation, lower risk of recession and cooler inflation than they did three months ago, according to The Wall Street Journal’s quarterly survey of professional forecasters. The reason: The Journal’s previous survey was conducted at the height of the president’s threats to impose eye-watering tariffs on America’s biggest trading partners. He paused some of the tariffs shortly thereafter. Whether the improved mood lasts remains to be seen.”
“The Big Picture” (Briefing.com). “The second-quarter earnings reporting period is upon us, and, well, what a difference a quarter makes. Heading into the first-quarter earnings reporting period in mid-April, the world was awash in growth concerns linked to the D.O.G.E. cost-cutting campaign in the U.S., President Trump's reciprocal tariff announcements, and a cold trade war with China. There was ample concern that companies would either be slashing their full-year guidance or pulling their full-year guidance, citing a lack of visibility. There was some of that, but it wasn't the universal message. As it turned out, the first quarter results were much better than expected, and the guidance, which many companies still gave, was much better than feared.”
“Unsold Homes Surge Nationwide As Housing Market Stalls” (Newsweek). “Thousands of unsold homes are piling up in the U.S. housing market as Americans— facing climbing prices, historically high mortgage rates and growing economic uncertainty—buy fewer homes, according to the latest figures. This year was supposed to bring a rebound of the U.S. housing market, experts said in 2024. Instead, the market has come to a standstill as buyers retreat to the sidelines but prices refuse to budge.”
“Macro Hedge Funds Diverge Sharply Amid Tariff Turbulence” (Institutional Investor). “Macro hedge funds posted wildly different results in the first six months of the year, a volatile period marked by President Trump’s on-again, off-again tariffs. These are the managers who make investment bets in various markets based on their takes on economic and political developments. For example, Bridgewater Associates reported a 17 percent gain in its flagship Pure Alpha fund in the first half of the year, according to someone who has seen the results. All Weather — its beta fund — picked up 8 percent for the period, and the Asia Total Return fund rose 18 percent…Robert Citrone’s Discovery Capital Management, meanwhile, posted a 2.5 percent increase in June, bringing its total gain for the first half to 12.5 percent. Discovery is a combination macro and fundamental global equities fund.”
“The First In 30 Years: Scientists Discover New Class Of Antibiotics” (SciTechDaily). “It has been nearly thirty years since a new class of antibiotics reached the market, but that could soon change. Researchers at McMaster University have made a breakthrough that could help turn the tide against drug-resistant bacteria. Led by scientist Gerry Wright, the team has discovered a powerful new molecule called lariocidin. This promising candidate shows the ability to fight some of the toughest, most drug-resistant bacteria known to science. Their groundbreaking findings were published in the journal Nature.”
What we’re reading (7/12)
“Google To Pay $2.4 Billion In Deal To License Tech Of Coding Startup, Hire CEO” (Wall Street Journal). “Google has agreed to pay about $2.4 billion in a deal to license the technology of AI coding startup Windsurf and hire its CEO and some of its employees, according to people familiar with the matter. The deal comes after talks for OpenAI to acquire Windsurf stalled, the people said.”
“Build Baby Build” (Paul Krugman). “Right now, maybe the moral is that between California’s anti-NIMBY reforms and NYC’s congestion charge, we’re seeing some real policy improvements in our coastal cities. At the same time, the frustrations experienced in Austin are a reminder of why agglomeration adds value. Cities: They’re a good thing.”
“Treasury Posts Unexpected Surplus In June As Tariff Receipts Surge” (CNBC). “The U.S. government posted a surplus in June as tariffs gave an extra bump to a sharp increase in receipts, the Treasury Department said Friday. With government red ink swelling throughout the year, last month saw a surplus of just over $27 billion, following a $316 billion deficit in May. That brought the fiscal year-to-date deficit to $1.34 trillion, up 5% from a year ago. However, with calendar adjustment, the deficit actually edged lower by 1%. There are three months left in the current fiscal year, which ends Sept. 30.”
“Walgreens Shareholders Approve $10 Billion Private Equity Buyout” (Yahoo! Finance). “Walgreens shareholders will receive $11.45 per share from Sycamore Partners per the terms of the deal first announced in March, the companies said Friday. They could also receive as much as an additional $3 per share from the future monetization of Walgreens' debt and equity interests in its VillageMD clinic business.”
“Hospital M&A Has Hit The Brakes — But Activity Could Pick Up In The Second Half Of 2025” (Dealbreaker). “There were only five hospital M&A transactions during the first quarter of 2025 — compared to the first quarters of 2024 and 2023, which had 20 and 15 deals, respectively. This slump is due mainly to the Trump administration’s flurry of new policies and the resulting widespread economic uncertainty.”
What we’re reading (7/10)
“Trump Threatens 35% Tariff On Some Canadian Goods” (Wall Street Journal). “The U.S. will put a 35% tariff on imports from Canada effective Aug. 1, President Trump announced on Thursday evening. But an exemption for goods that comply with the nations’ free-trade agreement, the U.S.-Mexico-Canada Agreement, would still apply, a White House official said, stressing that could change. Trump previously applied 25% tariffs to non-USMCA goods and the new rate, announced in a letter to Canadian Prime Minister Mark Carney and posted on social media, would mean that number rises to 35%, the official said. The U.S. and Canada had been involved in talks to lower tariffs ahead of a self-imposed July 21 deadline.”
“Stock Market Today: Dow, S&P 500, Nasdaq Futures Fall After Trump Threatens 35% Canada Tariff, Higher Blanket Rates” (Yahoo! Finance). “US stock futures fell late Thursday after President Trump threatened Canada with a 35% tariff on its imports to the US and floated higher blanket levies.”
“A New Twist On An Old Bet With Buffett” (Financial Times). “Comparing a portfolio of North American [private equity] buyouts to the S&P 500 has important consequences, as private equity enters wealth management and seeks to access pension plans. In fact, I’d argue that this match-up could help shed light on one of the thorniest, most contentious debates in finance today. I imagine we know what Warren thinks — high fees and extra expenses will doom private equity investors. A lot of outside factors could have impacted the result of our first bet (I wrote about it here), but that’s unlikely to happen with this comparison. This bet is much closer to faithfully representing Warren’s initial premise: that intelligent professionals with strong economic incentives to perform still cannot overcome the high fees they charge.”
“The Consulting Crash Is Coming” (The Free Press). “[T]iming the market is not my thing,’ Peter Thiel told me a few days ago. ‘But if the consulting business was a stock, I’d be shorting it right now.’”
“Archaeologists Just Pulled Pieces Of The Lighthouse Of Alexandria Out Of The Mediterranean Sea” (ati). “A French-led team of researchers has lifted 22 massive stone blocks out of the Mediterranean Sea that were once part of the legendary Lighthouse of Alexandria, one of the Seven Wonders of the Ancient World. These recovery efforts on Egypt’s northern coast are part of an ongoing project that aims to digitally recreate the entire lighthouse by scanning and analyzing its ruins. This project is now coming to fruition 30 years after the initial discovery of the lighthouse’s remains by archaeologist Jean-Yves Empereur in 1995.”
What we’re reading (7/9)
“This Early-Warning Indicator Is Telling The Stock Market That A Recession Is More Likely” (MarketWatch). “There’s a significantly elevated chance that a U.S. recession will begin within the next 12 months. The odds are roughly one in five, in fact, based on the unusually wide spread between the Conference Board’s Consumer Confidence Index (CCI) and the University of Michigan’s Consumer Sentiment Index (UMI). Though you may regard a one-in-five chance as unlikely, you should know that the risk now is abnormally high.”
“Why It’s Not Too Late To Add International Exposure” (Morningstar). “After spending most of the past 10-15 years wandering in the wilderness, international stocks have finally found their footing this year. For the year to date through July 2, 2025, the Morningstar Global Markets ex-US Index has gained 18.1%, compared with 6.4% for the Morningstar US Market Index.”
“How Nvidia Became The World’s First $4 Trillion Company” (Wall Street Journal). “Nvidia, based in Santa Clara, Calif., designs the chips, known as graphics processing units, or GPUs, that power the AI industry. The rally in Nvidia’s shares caps a remarkable run and comes barely two years after the company notched a $1 trillion closing valuation for the first time. The AI chip maker, which closed at $162.88 a share and just shy of the $4 trillion mark, is now worth as much as the 214 smallest companies in the S&P 500 combined, according to Dow Jones Market Data.”
“Trump Tariffs Live Updates: Trump Blasts Brazil With 50% Tariff, Puts Copper Tariff At 50% In Effect August 1” (Yahoo! Finance). “The highlight of his letter barrage late Wednesday was his announcement of a coming 50% tariff on goods from Brazil in a letter sent to its president, Luiz Inácio Lula da Silva. Trump cited the country's treatment of former President Jair Bolsonaro, who is on trial in Brazil’s Supreme Court on charges that he plotted a coup in 2022.”
“Brazil Assets Plunge After Trump Hikes Tariff Rate to 50%” (Bloomberg). “Donald Trump’s threat to impose 50% tariffs on Brazilian goods sent the country’s currency plunging as the US leader sharply escalated a dispute with Latin America’s largest nation and leftist leader Luiz Inacio Lula da Silva.”
June performance review
Prime Portfolio: +1.81%
Select Portfolio: +3.93%
SPY ETF: +5.43%
Bogleheads: +4.64%
What we’re reading (7/7)
“ETFs Are Eating The World. The Right—And Wrong—Ways To Invest.” (Barron’s). “Firms are now packaging just about everything in the funds, including Bitcoin and other cryptocurrencies, leveraged bets on individual stocks like Nvidia, and even bonds that would pay out sharply if a natural catastrophe strikes.”
“Cathie Wood’s Ark Files For New ETFs To Limit Losses In Flagship Fund” (Reuters). “Cathie Wood's Ark Investment Management has filed proposals for four new exchange-traded funds that aim to cushion potential losses in its flagship ARK Innovation fund. These ETFs mark Ark's entry into the buffer ETF market, where funds use options to limit losses while capping gains. The strategy, already used by companies such as BlackRock, Allianz and Innovator, has gained popularity among investors seeking protection in volatile markets.”
“Stocks Drop After Trump Unveils Higher Tariffs On Trading Partners” (Wall Street Journal). “President Trump‘s barrage of new tariffs drove stocks lower on Monday and moved trade tensions back to the forefront on Wall Street. Trump took to his Truth Social platform Monday afternoon to announce the U.S. would impose 25% tariffs on goods from Japan and South Korea. He later revealed that other nations, including Laos and Malaysia, would face higher levies. With each post, the major stock indexes fell further. Oil prices and bond yields rose, reflecting concerns that heavier tariffs would lead to higher inflation.”
“Stock Market Today: Dow, S&P 500, Nasdaq Futures Fall As Trump Ramps Up Tariff Threats Ahead Of August Deadline” (Yahoo! Finance). “US stock futures fell as President Trump threatened stiff tariffs on imports from more than a dozen countries and delayed the return of sweeping April levies.”
“The Declining Dollar Faces More Headwinds After Posting Worst First-Half Return In 52 Years” (CNBC). “Fresh off its worst performance since Richard Nixon was president, the U.S. dollar faces a variety of headwinds heading into the second half of the year that could have important investing implications. The greenback tumbled 10.7% against its global peers through June, making it the worst first half since 1973, back when Nixon broke the Bretton Woods gold standard. At its bottom, the currency hit its lowest point since February 2022.”
What we’re reading (7/6)
“Gold Edges Lower As Investors Track US Trade Policy And Dollar” (Bloomberg). “Gold fell as traders sought to track shifts in US trade policy, with bullion edging lower as President Donald Trump signaled an additional 10% tariff would apply to countries aligned with the BRICS group of nations.”
“The Force-Feeding Of AI On An Unwilling Public” (The Honest Broker). “Before proceeding let me ask a simple question: Has there ever been a major innovation that helped society, but only 8% of the public would pay for it? That’s never happened before in human history. Everybody wanted electricity in their homes. Everybody wanted a radio. Everybody wanted a phone. Everybody wanted a refrigerator. Everybody wanted a TV set. Everybody wanted the Internet. They wanted it. They paid for it. They enjoyed it. AI isn’t like that. People distrust it or even hate it—and more so with each passing month. So the purveyors must bundle it into current offerings, and force usage that way.”
“What The Rise Of “Buy Now, Pay Later” Services Tells Us About The Economy” (Vox). “US consumers, especially Gen Z and millennial ones, have been embracing “buy now, pay later” services like Klarna and Afterpay with gusto the last few years. It’s not hard to see the attraction: Unlike a credit card, most BNPL plans don’t carry interest, and they generally don’t impact your credit score (though that is now changing).”
“Oil Drops As Larger OPEC+ Supply Increase Raises Glut Concerns” (Bloomberg). “Oil extended declines after OPEC+ agreed to a bigger-than-expected production increase next month, raising concerns about oversupply just as US tariffs fan fears about the demand outlook.”
“Think Work-Life Balance Is Overrated? You’re Hired!” (Wall Street Journal). “In the tougher environment, many applicants find that managers are taking a harder line. They’re not just reining in flexible schedules, remote work and perks that became staples of the previously tight job market. They’re warning prospective and new employees to get ready for the grind—and they’re not afraid to say it out loud.”
What we’re reading (7/5)
“Meme Stocks And YOLO Bets Are Back And Fueling the Market’s Rally” (Wall Street Journal). “Forget the Magnificent Seven. Investors are now learning to love the Unprofitable 858. Meme stocks and money-losing companies are now back in favor, and underpinning a rally that has lifted the market to records. Of the 14 companies in the Russell 3000 index that have more than tripled since April 8, when the market bottomed out, 10 don’t generate any profits, according to analysts at Bespoke Investment Group. And through late June, the 858 Russell 3000 stocks with no earnings have since posted average gains of 36%, outperforming their profitable peers.”
“US Fiscal Folly Could Create Big, Beautiful Debt Spiral” (Joachim Klement). “The U.S. tax and spending bill passed on July 3 is expected to add more than $3 trillion to the country’s deficit over the next decade. If the current debt trajectory continues unabated, it could set off a slow motion debt spiral that could endanger the Federal Reserve’s independence. The sobering long-term debt projections of the Congressional Budget Office may actually understate the likely impact on U.S. debt-to-GDP levels of President Donald Trump’s ‘One Big Beautiful Bill.’”
“Homeowners Who Gambled On Lower Rates Are Paying The Price” (Wall Street Journal). “Millions of Americans bought homes in recent years with mortgage rates at 6.5% or higher, often betting they could refinance to a lower rate within a year or two. Now, with little hope of a rate cut in July after a solid jobs report on Thursday, many of these owners face the predicament of paying those higher costs for longer than they expected.”
“The ‘We’re Still Dancing’ Quote Of Our Time” (Financial Times). “Look, yes, the systemic dangers posed by popular bogeymen like private credit are possibly overstated (for now at least). Banks are historically the main locus of systemic financial risk, given the multitude of vital functions they fulfil. Investment managers really are built differently, and applying the same bank-centric “too big to fail” regulatory framework to them always seemed a bit weird. However, arguing that ‘non-bank financial institutions don’t pose systemic risk to our markets’ is plainly ludicrous.”
“OPEC+ To Boost Oil Production By 548,000 Barrels Per Day In August” (Associated Press). “Eight members of the OPEC+ alliance of oil exporting countries say they will boost production by 548,000 barrels per day in August in a move that could further reduce gas prices this year. The group that includes Saudi Arabia and Russia made the decision at a virtual meeting Saturday. They cited a ‘steady global economic outlook’ and low oil inventories.”
July picks available now
The new Prime and Select picks for July are available starting now, based on a model run put through today (June 29). As a note, I will be measuring the performance on these picks from the first trading day of the month, Tuesday, July 1, 2025 (at the mid-spread open price) through the last trading day of the month, Thursday, July 31, 2025 (at the mid-spread closing price).
July picks available soon
I’ll be publishing the Prime and Select picks for the month of July before Tuesday, July 1 (the first trading day of the month). As always, SPC’s performance measurement for the month of June, as well as SPC’s cumulative performance, will assume the sale of the June picks at the closing price (at the mid-point of the closing bid and ask prices) on the last trading day of the month (Monday, June 30). Performance tracking for the month of July will assume the July picks are bought at the open price (at the mid-point of the opening bid and ask prices) on the first trading day of the month (Tuesday, July 1).
What we’re reading (6/25)
“Housing Market Set For The 'Worst Year In Decades,’ Says Meredith Whitney” (Business Insider). “The CEO of investment research firm Meredith Whitney Advisory Group and senior advisor at Boston Consulting Group told Yahoo Finance that 2023 and 2024 were both bad years, but it's now looking even worse with about 4 million sales of existing homes expected. Whitney thinks the actual number may be significantly below that figure.”
“OpenAI, Microsoft Rift Hinges On How Smart AI Can Get” (Wall Street Journal). “The future of the OpenAI-Microsoft—one of the most storied in tech history—hinges in part on the meaning of an amorphous AI buzzword that divides many in the industry. The contract between the tech partners, who have been locked in acrimonious negotiations, stipulates that when OpenAI’s systems reach ‘artificial general intelligence,’ or AGI, the startup will be able to limit Microsoft’s access to its future technology. Microsoft is fighting hard to prevent that.”
“Coinbase Stock Touches 52-Week High As Analyst Calls Company ‘One-Stop Amazon’ Of Crypto Services” (Yahoo! Finance). “‘Coinbase is the most misunderstood company in our Crypto coverage universe,’ Bernstein analyst Gautam Chhugani and his team wrote on Wednesday morning, raising their price target on the stock to $510 from $310 with an Outperform rating. Coinbase dominates US crypto trading, operates the largest stablecoin business among exchanges, and serves as custodian for the underlying assets of the majority of US spot bitcoin ETFs, Bernstein analysts said.”
“Why Today’s Graduates Are Screwed” (The Economist). “This is especially true for those jobs that require the rudimentary use of technology. Until relatively recently, many people could get to grips with a computer only by attending a university. Now everyone has a smartphone, meaning non-graduates are adept with tech, too. The consequences are clear. In almost every sector of the economy, educational requirements are becoming less strenuous, according to Indeed, a jobs website. America’s professional-and-business services industry employs more people without a university education than it did 15 years ago, even though there are fewer such people around.”
“The End Of Publishing As We Know It” (The Atlantic). “Not all publishers are at equal risk: Those that primarily rely on general-interest readers who come in from search engines and social media may be in worse shape than specialized publishers with dedicated subscribers. Yet no one is totally safe. Released in May 2024, AI Overviews joins ChatGPT, Claude, Grok, Perplexity, and other AI-powered products that, combined, have replaced search for more than 25 percent of Americans, according to one study.”
What we’re reading (6/24)
“Powell Reaffirms Wait-And-See Posture On Rate Cuts” (Wall Street Journal). “Federal Reserve Chair Jerome Powell told lawmakers on Tuesday that recent economic data would have likely justified continuing to lower interest rates if not for concerns that higher tariffs might derail the central bank’s yearslong fight to defeat inflation.”
“Wall Street Bull Calls For Another 10% Rally In S&P 500 By End Of 2025” (Yahoo! Finance). “[BMO Capital Markets chief investment strategist Brian] Belski's call for a roughly 10% rally for the S&P 500 from current levels joins a growing list of such predictions from rejuvenated bulls as the market marches back toward record highs. No fewer than 11 Wall Street firms lowered their S&P 500 targets amid the market sell-off in April. At least eight of those have since raised their bets on where the index will end 2025.”
“The Treasure Trove Of Platinum On The Moon” (The Week). “The moon is likely to become the next mining hot spot, as there may be extensive platinum and other metal deposits in its craters. Guidelines about resource mining on the moon are still not solidified, so this could lead to problems with more countries and private companies trying to stake their claim. But the potential for platinum could also entice private companies to invest more in space exploration.”
“A Key Gauge Signals Waning Demand For US Dollar In $7.5 Trillion Market” (Bloomberg). “A measure of demand in the $7.5-trillion-a-day foreign-exchange market is catching the attention of Wall Street, pointing to diminished appetite for the US dollar even during market turbulence that would otherwise send investors flocking to the greenback.”
“Milken Protege Peizer Gets 3-1/2 Years Prison For Insider Trading, Plans Appeal” (Reuters). “A protege of former junk bond king Michael Milken was sentenced on Monday to 3-1/2 years in prison for insider trading at a healthcare company he once led, over his use of a trading plan designed to protect executives against that crime. Terren Peizer, 65, the founder and former chief executive of Ontrak, was sentenced by U.S. District Judge Dale Fischer in Los Angeles. She also imposed a $5.25 million fine and forfeiture of more than $12.7 million of ill-gotten gains.”
What we’re reading (6/23)
“Oil Prices Sink After Trump Announces Israel And Iran Have Agreed To Ceasefire” (Yahoo! Finance). “Oil futures fell late Monday after President Trump announced a ceasefire timeline for the Israel-Iran conflict. West Texas Intermediate fell about 4% to trade near $66 per barrel, while Brent crude, the international benchmark, also tumbled to hover near $68 per barrel.”
“Why Factories Are Having Trouble Filling Nearly 400,000 Open Jobs” (New York Times). “The pool of blue-collar workers who are able and willing to perform tasks on a factory floor in the United States is shrinking. As baby boomers retire, few young people are lining up to take their place. About 400,000 manufacturing jobs are currently unfilled, according to the Bureau of Labor Statistics — a shortfall that will surely grow if companies are forced to rely less on manufacturing overseas and build more factories in the United States, experts say.”
“A New Meatpacking Plant’s Novel Pitch to Attract American Workers” (Wall Street Journal). “Steep challenges loom. Sustainable Beef is taking on the Big Four meatpackers—JBS, Tyson Foods, Cargill and National Beef—that control 85% of the beef industry. Cattle herd sizes have hit a 75-year low. And President Trump’s immigration crackdown is targeting the backbone of an industry known for some of America’s most-grueling jobs.”
“Happy Birthday, Money” (Jason Furman). “For most of history, money had been tangible: gold, silver, wampum, salt blocks, jewelry beads. Paper in the form of private bills of exchange or promissory notes was rare (China and Japan are the notable exceptions here), used mainly by merchants and bankers, and generally able to be converted into some underlying commodity. That changed in 1690 when Massachusetts had a problem paying its bills from a failed expedition against French Quebec. London would not reimburse the costs. The raid itself captured no plunder. So the colony’s resourceful government did something that was effectively unheard-of in the Western world: It created 7,000 pounds in its own ‘bills of credit,’ basically paper currency, with only a vague promise that they would be paid back (but a guarantee that they would be legal tender for tax payments). It created what was effectively fiat money.”
“Interest On Reserves” (John Cochrane). “The proposal, starting with comments from Senator Ted Cruz, that the Congress force the Fed to stop paying interest on reserves is having more legs than I thought it would. It also seems to be suffused with confusion — at least the AI and top three pages of hits generated by a google search certainly are. Hence this post. One reason given is that it would save the government money, so including the proposal in the Big Budget Bill would help to hit deficit targets. In addition, interest on reserves is paid to a lot of foreign banks, and sending foreigners money so they can buy American goods is somehow out of fashion. One answer: If you think that is a good and reasonable idea, here is a better one: stop paying interest on all Treasury debt. Reserves are just another form of government debt, so why stop there? That will generate $1 trillion per year, not in 10 years or so. And lots of foreigners hold Treasury debt too.”
What we’re reading (6/22)
“Trump’s Airstrikes On Iran Leave Oil Market Poised For Surge” (Bloomberg). “The oil market has been wrestling for days with Donald Trump’s next act in an escalating Middle East conflict. Now American jets have struck Iran’s three main nuclear sites, a move that leaves traders preparing for a price surge — but still guessing where the crisis goes from here.”
“More On Repealing The Laws Of Economics” (Howard Marks, Oaktree). “Our elected officials may believe the status quo can be maintained forever, or more likely they count on being out of office by the time the wheels come off. But certainly, they’re not facing up to reality. The behavior in Washington with regard to both the fiscal deficit and the precariousness of Social Security remind me of the tale of the guy who jumped off the 20-story building. As he passed the 10th floor, he said, ‘So far, so good.’”
“Private Equity’s Fundraising Demands Far Outstrip Supply” (Institutional Investor). “Some 18,000 private capital funds are currently “on the road” seeking to raise a total of $3.3 trillion, according to Bain & Co. The problem is that for every $3 general partners seek, there’s only $1 dollar of potential allocations, the consultant estimated. Bain called it a ‘supply and demand’ problem. Private equity firms’ fundraising crisis, which has also been stoked by the lack of cash distributions for existing funds, is even prompting some investors to accept a haircut on their investments. ‘LPs are increasingly dissatisfied with partial or minority exits; instead, they are pushing for full, traditional realizations despite the headwinds faced by such transactions,’ according to Bain. It noted that some 63 percent of investors participating in a webinar poll conducted by the Institutional Limited Partners Association preferred a conventional exit “even accepting a valuation below recent marks if necessary.'“
“Want A Winning Stock-Market Play? Bet Against Meme Stocks.” (MarketWatch). “A lottery stock’s short-term potential traces in many cases to interest in the stock going viral on social media — becoming a meme stock, in other words. You can make a lot of money if you’re early to the party before a stock goes meme, but far more dollars are lost with meme stocks than gained. This was confirmed by a study of clients of Robinhood Markets Inc., a group of investors who disproportionately are drawn to meme stocks. Entitled ‘Attention Induced Trading and Returns: Evidence from Robinhood Users,’ the study was conducted by Brad Barber of the University of California at Davis, Xing Huang of Washington University, Terrance Odean of the University of California at Berkeley and Chris Schwarz of the University of California at Irvine. They found that ‘betting against Robinhood users is a profitable business; the top stocks bought by Robinhood users fall by 5% over the next month.’”
“Why Countries Are Suddenly Broadcasting Their Spies’ Exploits” (Wall Street Journal). “Instead, fighting in Ukraine and the Middle East is bringing a new doctrine to spycraft stemming from changes in both what their organizers seek to achieve and how information spreads. Operations that would have once been designed to remain under wraps are now meant to be seen, to produce spectacular optics. They play out not just on the battlefield, but also on social media, boosting morale at home while demoralizing the enemy watching from the other side of the screen.”
What we’re reading (6/20)
“Thousands Of Laid-Off Government Workers Are Flooding A Shrinking Job Market” (Bloomberg). “housands of private government consultants laid off during the Trump administration’s cost-cutting crusade are increasingly flooding a shrinking labor market. Job postings among seven of the 10 consulting companies singled out by the General Services Administration for contract cuts are down about 27% since 2023, and about 11% from a year ago, according to data scraped from job boards by labor market analytics firm Lightcast.”
“In A Rocky Job Market, Power Has Shifted Back To Employers. Hiring Is Down, Promotions Are Scarce, And RTO Is In.” (Business Insider). “It's getting harder to negotiate a new job and move up the career ladder at your current gig. Exclusive data from Gusto, a payroll and benefits platform for small and medium-sized businesses, showed that the rate of workers receiving a promotion, meaning a title bump and a raise of at least 5%, peaked at 14.5% around mid-2022 and has now fallen to just over 10%.”
“High Costs Have Ended America’s Love Affair With Cars” (Wall Street Journal). “Lately…Americans have been losing that car-loving feeling. Actually, they’re at the dish-throwing stage. Light-vehicle sales have fallen by about 1.7 million a year since 2016, reflecting the number of younger consumers declining the pleasures of ownership. Millions more remained trapped in toxic relationships with abusive elders. The average age of passenger cars on the road is currently 14.5 years, according to S&P Global’s data.”
“Mira Murati’s Thinking Machines Lab Closes On $2B At $10B Valuation” (TechCrunch). “Thinking Machines Lab, the secretive AI startup founded by OpenAI’s former chief technology officer Mira Murati, has closed a $2 billion seed round, according to The Financial Times. The deal values the 6-month-old startup at $10 billion. The company’s work remains unclear. The startup has leveraged Murati’s reputation and other high-profile AI researchers who have joined the team to attract investors in what could be the largest seed round in history. According to sources familiar with the deal cited by the FT, Andreessen Horowitz led the round, with participation from Sarah Guo’s Conviction Partners.”
“Pope Leo Calls For An Ethical AI Framework In A Message To Tech Execs Gathering At The Vatican” (CNN Business). “Pope Leo XIV says tech companies developing artificial intelligence should abide by an ‘ethical criterion’ that respects human dignity. AI must take ‘into account the well-being of the human person not only materially, but also intellectually and spiritually,’ the pope said in a message sent Friday to a gathering on AI attended by Vatican officials and Silicon Valley executives. ‘No generation has ever had such quick access to the amount of information now available through AI,’ he said. But ‘access to data — however extensive — must not be confused with intelligence.’”
What we’re reading (6/19)
“The Fed Waits Out The Tariff Economy” (Wall Street Journal). “Federal Reserve Chair Jerome Powell projected confidence when he insisted the central bank was in a good position to handle whatever the economy does next—all while repeatedly acknowledging the Fed has little idea what’s actually coming…’We haven’t been through a situation like this, and I think we have to be humble about our ability to forecast it,’ Powell said. Inflation has eased recently, but tariff effects loom. The job market shows hints of softness, though unemployment remains low at 4.2%.”
“Profits Of Doom: Why Investors Seem To Shrug Off War” (DealBook). “Stocks tumble when geopolitical crises erupt — and then rebound as investors’ appetite for risk returns. This happened in April 2024, when Israel and Iran last traded strikes and set off fears of wider regional conflict. At the time, the S&P 500 fell by as much as 3.1 percent over five trading sessions, according to data from LPL Research, a market analytics firm. Fourteen trading sessions later, the benchmark index fully recovered. The S&P 500 later set record after record. That was no anomaly. LPL Financial analyzed 25 major geopolitical episodes, dating back to Japan’s 1941 attack on Pearl Harbor. ‘Total drawdowns around these events have been fairly limited,’ Jeff Buchbinder, LPL’s chief equity strategist, wrote in a research note on Monday.”
“Fidelity Fund Bets On Midcaps Saying Worst Of Tariffs Is Over” (Bloomberg). “Financial markets have seen the worst of Donald Trump’s tariff threats, helping make midcap stocks an attractive buy as the outlook improves, according to a Fidelity International money manager”
“Profit Pressure: Why COOs And CFOs Are Bracing For A Tough 2025” (Institutional Investor). “Polling…revealed the majority (68%) of CFOs and COOs [of asset managers] believe industry profits will decrease by as much as 20% at the end of 2025 in relation to the year prior. Another 8% believe the decrease will exceed 20%, reflecting possible growing concern among financial and operational leaders about near-term profitability across industries.”
“Is Washington Open To Railroad Mergers? This Regulator Isn’t Saying No.” (Semafor). “For weeks, railroad executives have played footsie in public, touting the benefits of mergers that would turn regional players into coast-to-coast juggernauts. Investors, too, have caught the bug, bidding up shares of smaller carriers most likely to be acquired. But their enthusiasm hinges on one question: Will the industry’s regulator be on board? Try him. Patrick Fuchs, the 37-year-old chairman of obscure and quaintly named Surface Transportation Board, has signalled what colleagues and industry players are interpreting as an openness to consolidation, or at least a clean break from the reflexive antipathy of his predecessor to deals.”
What we’re reading (6/15)
“‘Why Am I Doing This?’ These Investors Are Locking In Stock Gains While They Can.” (Wall Street Journal). “Overall, individual investors are still buying stocks more than they are selling. But a rally-chasing shopping spree cooled significantly in May, and analysts say they have observed signs of investors selling shares to pocket gains. Retail traders bought $23 billion worth of equities in May, according to a JPMorgan Chase report, down roughly $17 billion from the month prior. Last week, individual investors sold a net $400 million worth of individual stocks, the bank’s analysts found.”
“Wall Street Is Making Some Seriously Weird Trades” (CNN Business). “Wall Street traders hunting for profits might find that the most lucrative investments are in the peculiar market for precious metals. Gold, silver and platinum prices have surged this year as investors have piled into precious metals in search of places to hide from trade war uncertainty. President Donald Trump’s chaotic tariff plan has rocked markets, and investors have tried to minimize risk by putting some money in safe haven assets. While gold is historically considered a haven, demand for havens has spilled over into its wonky cousins like silver and platinum.”
“What If Stocks Don’t Go Up In The Long Run?” (A Wealth of Common Sense). “My baseline assumption is that human beings will strive to earn more money and better their station in life. Corporations will innovate and look for ways to increase profits. The economy will grow. Bad things will happen but the long run will see progress.”
“GenAI As An International Lawyer: A Case Study With The Jessup International Law Moot Court” (Damien Charlotin and Niccolò Ridi). “his paper investigates the capacity of Generative Artificial Intelligence, specifically Large Language Models, to craft compelling international legal arguments. We tested the performance of two popular models, Gemini 2.0 and GPT4o, in the Jessup International Law Moot Court Competition, generating ten complete written memorials with minimal human intervention. With the organisers' blessing, these AI-generated memorials were anonymously added to the pool of submissions and evaluated by judges, who remained unaware of their origins, providing a unique benchmark against humanproduced work. Our results demonstrate that LLM-generated memorials consistently achieve average to superior scores, with some submissions receiving exceptional praise and near-perfect ratings. However, a detailed analysis of judges' qualitative feedback reveals persistent shortcomings of LLMs, notably factual inaccuracies, hallucinated citations, and superficial legal analysis.”
“‘It Makes Sense To Be On Hold’: Why Wall Street Strategists Think Fed Rate Cuts Aren’t Coming Anytime Soon” (Finance! Yahoo). “‘The Fed is on hold until we get a little more clarity about not only the magnitude of the tariffs and the breadth of the tariffs, but what effect they all have on inflation and what effect the tariffs and other policies, including the budget bill, will have on growth and employment,’ Mester said.”