What we’re reading (8/28)
“Higher Prices Are Coming For Household Staples” (Wall Street Journal). “U.S. companies have an unwelcome message for inflation-weary consumers: Prices are going up. Companies including Hormel Foods, J.M. Smucker and Ace Hardware said this week they would raise prices for reasons ranging from higher meat costs to tariffs. Large retailers like Walmart, Target and Best Buy said some tariff-related price increases are already in place. More are on the way.”
“Big Tech Investment Powers Nvidia Results, But Wall Street Says ‘Inevitable’ Slowdown Looms” (Yahoo! Finance). “Big Tech's massive artificial intelligence investments continued to fuel Nvidia’s (NVDA) rapidly growing data center business in the second quarter, but Wall Street is flagging the risk of a slowdown and what that means for the AI chipmaker.”
“The Calculus Of Value” (Howard Marks). “What’s the bottom line of the calculus? Fundamentals appear to me to be less good overall than they were seven months ago, but at the same time, asset prices are high relative to earnings, higher than they were at the end of 2024, and at high valuations relative to history. Most bull markets are built through the addition of a “constellation of positives” on top of a well-functioning economy. Today I see elements that include the following: the positive psychology and ‘wealth effect’ resulting from recent gains in markets, high-end real estate, and crypto, the belief that, for most investors, there really is no alternative to the U.S. markets, and the excitement surrounding today’s new, new thing: AI.”
“The Heroes Of US Central Banking” (Steven Roach). “The dual mandate – price stability and full employment – has created a tough balancing act for the central bank. Powell methodically laid out the factors currently weighing on both, from tariffs and immigration policy (which are affecting supply as well as demand) to the recent underlying loss of momentum in employment and GDP growth. Powell drew comfort from a still-low unemployment rate but emphasized a “curious kind of balance” in the labor market. That is Fedspeak for “precarious,” in that it could quickly give way to higher joblessness. I take this as a key factor in assessing the shifting balance of risks that will guide future policy actions.”
“The Boss Has Had It With All The Office Activists” (Wall Street Journal). “The new, hard-line playbook that companies are adopting to confront employee activism reflects two developments: One is a political climate in which companies risk the ire of the White House—and some consumers—if they appear to cater to ‘woke’ forces, including their own staff. The other is an ever-tougher job market in which white-collar workers—especially in tech—have lost considerable leverage. The result is a more adversarial employer-employee dynamic in which bosses are far less concerned with accommodating their workers’ political and personal views. These days, many business leaders would just as soon trim head count as appease vocal staff. That has fired up some office activists even more.”
September picks available soon
I’ll be publishing the Prime and Select picks for the month of September before Monday, September 1 (the first trading day of the month). As always, SPC’s performance measurement for the month of August, as well as SPC’s cumulative performance, will assume the sale of the August 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, August 29). Performance tracking for the month of September will assume the September 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, September 1).
What we’re reading (8/24)
“Dow, S&P 500, Nasdaq Futures Steady After Record Surge With Nvidia Earnings In Focus” (Yahoo! Finance). “With earnings season continuing to roll on, Nvidia, the most valuable stock in the S&P 500, reports results after the closing bell Wednesday. Analysts see the chipmaker posting earnings of $1.01 per share on $46.13 billion in revenue. Price targets have been climbing in the lead-up, reflecting optimism that demand for AI hardware remains high.”
“Stagnant Job Market Is A Rising Risk For The U.S. Economy” (Wall Street Journal). “The labor market has moved front and center for the Federal Reserve, highlighting its fragility and risk to the economy. The good news is that unemployment remains low, and employers haven’t been all that interested in laying people off. The bad news is that companies haven’t been all that interested in hiring, either. This precarious situation means even a relatively small increase in layoffs could lead the economy to start shedding jobs—a process that can be difficult to reverse once it starts.”
“‘Powell Clearly Opens The Door’: Markets Surge As Speculative Bets Get Another Boost From Dovish Jay Powell” (Yahoo! Finance). “‘Equity markets reacted very positively,’ Scott Chronert, managing director of US equity strategy at Citi, wrote in a Friday note, highlighting the Russell 2000, a benchmark for small-cap stocks, had the most ‘striking surge’ as investors shifted money into more economically sensitive names. That broadening story, which captured Wall Street’s attention this week, was also evident with the equal-weighted S&P 500, which gives smaller companies the same influence as megacap tech, slightly leading the headline index.”
“Why A Landmark Settlement On Realtor Fees Hasn’t Cut Costs” (Wall Street Journal). “The real-estate industry’s landmark settlement reworked how real-estate agents get paid, raising hopes that the costs associated with home buying and selling would come down. A year later, it hasn’t happened. The average commission paid to a buyer’s agent in the second quarter of 2025 was 2.43% of the home’s sale price, up from 2.38% a year earlier, according to an analysis by real-estate brokerage Redfin.”
“Diversifying Society’s Leaders? The Determinants And Causal Effects Of Admission To Highly Selective Private Colleges” (Raj Chetty, David Deming, and John Friedman). “We use anonymized admissions data from several colleges linked to income tax records and SAT and ACT test scores to study the determinants and causal effects of attending Ivy-Plus colleges (Ivy League, Stanford, MIT, Duke, and Chicago). Children from families in the top 1% are more than twice as likely to attend an Ivy-Plus college as those from middle-class families with comparable SAT/ACT scores. Two-thirds of this gap is due to higher admissions rates for students with comparable test scores from high-income families; the remaining third is due to differences in rates of application and matriculation. In contrast, children from high-income families have no admissions advantage at flagship public colleges. The high-income admissions advantage at Ivy-Plus colleges is driven by three factors: (1) preferences for children of alumni, (2) weight placed on non-academic credentials, and (3) athletic recruitment. Using a new research design that isolates idiosyncratic variation in admissions decisions for waitlisted applicants, we show that attending an Ivy-Plus college instead of the average flagship public college increases students’ chances of reaching the top 1% of the earnings distribution by 50%, nearly doubles their chances of attending an elite graduate school, and almost triples their chances of working at a prestigious firm. The three factors that give children from high-income families an admissions advantage are uncorrelated or negatively correlated with post-college outcomes, whereas academic credentials such as SAT/ACT scores are highly predictive of post-college success.”
What we’re reading (8/23)
“Powell’s Rate Cut Signal Reflects Economy’s Delicate Position” (Wall Street Journal). “Federal Reserve Chair Jerome Powell cautiously laced up an interest-rate cut next month but delivered a subtle message to anyone expecting aggressive easing: Don’t expect a downhill sprint. The debate among central bankers gathered in Wyoming’s Grand Teton National Park over the past two days suggests the focus is now shifting beyond the September meeting to whether the Fed will entertain cutting again at either of its final two meetings of the year, in October and December. Powell’s cautious tone reflected the tricky economic dynamics the Fed is grappling with: a labor market he described as showing “curious” signs of softness despite a low unemployment rate, and tariff-driven price increases that are just beginning to work their way through the economy.”
“The Fed Gives Up” (Scott Sumner). “The Fed…has basically given up on the whole idea of reforming monetary policy based on the insights of our top monetary theorists. They’ve removed the useful policy reforms of the 2020 document (average inflation targeting) but promised not to repeat the mistake of doing the very different policy that was actually implemented during 2021-22. In a sense, we are back to the 2% flexible inflation target announced back in 2012 and informally adhered to for the most part since the early 1990s.”
“Why Is The Yield Curve Steepening?” (Torsten Sløk). “The US yield curve has started steepening, not only 2s10s but also 10s30s, see the first chart below. There are three reasons why this is happening: 1. The Fed is cutting rates. 2. If the market thinks the Fed is cutting for political reasons, it puts upward pressure on inflation expectations and ultimately long rates, which also steepens the curve […] 3. Growing Treasury issuance is putting upward pressure on long rates[.]”
“Credit Fuels The AI Boom — And Fears Of A Bubble” (Bloomberg). “key players in the industry acknowledge there is probably pain ahead for AI investors. OpenAI Chief Executive Officer Sam Altman said this week that he sees parallels between the current investment frenzy in artificial intelligence and the dot-com bubble in the late 1990s. When discussing startup valuations he said, ‘someone’s gonna get burned there.’ And a Massachusetts Institute of Technology initiative released a report indicating that 95% of generative AI projects in the corporate world have failed to yield any profit.”
“Corporate Share Repurchases And The 2023 Excise Tax” (Don Autore, et al.). “The Inflation Reduction Act of 2022 imposes a 1 % excise tax on US corporate share repurchases, effective January 1, 2023. The tax's implementation is associated with a significant decline in corporate repurchases that is not offset by a corresponding increase in dividends. Aggregate repurchases decline from about $1 trillion in 2022 to just over $800 billion in 2023, and the average firm reduces quarterly repurchases (as a fraction of market capitalization) by roughly 25 %. The decline in repurchases by US firms far exceeds a contemporaneous decline in repurchases by Canadian firms, is large in a historical context, and is not driven by firm fundamentals. Tax-induced cuts to repurchases are associated with an increase in cash but no increase in investment, implying that the tax has not generated the stated policy objective.”
What we’re reading (8/17)
“Powell’s Last Stand: His Legacy And The Fed’s Independence Are On The Line At Jackson Hole” (Barron’s). “Federal Reserve Chair Jerome Powell will take the stage next Friday at the Fed’s annual Jackson Hole Economic Symposium to deliver what may be the defining speech of his career. The speech won’t be lengthy— last year’s version clocked in at just over 15 minutes—but with his term as chair ending next May and the Fed’s performance under attack by the Trump administration, Powell may see Jackson Hole as his last or, at least, his best chance to cement his legacy and make the case for the central bank’s independence.”
“Strong Crop Of Earnings Eases Investors’ Economic Concerns” (Wall Street Journal). “The job market is cooling. Tariff rates are rising. But American companies still seem to be doing just fine. With the latest earnings season nearly done, top- and bottom-line results from companies in the S&P 500 are handily beating expectations that had been lowered after President Trump announced sweeping duties on imports in April. Profits are expected to have risen around 12% in the second quarter from a year earlier, according to FactSet, far ahead of the 5% growth analysts predicted in early July. While much of that earnings growth has been driven by tech companies, corporate chiefs also have sounded more optimistic about the economy than they did in the spring. Earnings calls including the word “recession” have plummeted 84%, according to AlphaSense.”
“Inflation Alarm Bells Went Off Again And Prices Are Rising. Just How Bad Is It Going To Get?” (MarketWatch). “The biggest increase in wholesale prices in three and a half years stunned Wall Street, but is tariff-related inflation really set to soar? The proof is far from ironclad. The latest pair of inflation reports, to be sure, were not reassuring. A key measure of consumer prices showed the largest advance in six months and pushed the yearly rate back above 3%. Just six months ago — before the U.S. trade wars — the rate of inflation was widely expected to slow this year to close to the Federal Reserve’s 2% goal. Not anymore.”
“Why Hands-Off Investing Pays Off” (New York Times). “[A] new study of investor behavior by Morningstar…found that, on average, the actual returns of fund investors were significantly less than the posted market returns, a discrepancy explained by poor trading decisions — buying when the market was high and selling when prices were low. Over extended periods — say, 30 years — this drag on returns produces chilling results: a reduction in the money in an average investor’s portfolio of more than 18 percent, according to Morningstar calculations performed at my request.”
“1910: The Year the Modern World Lost Its Mind” (Derek Thompson). “When we hear about technological change and social crisis in the 21st century, it is easy to imagine that we are living through a special period of history. But many eras have grappled with the problems that seem to uniquely plague our own. The beginning of the 20th century was a period of speed and technological splendor (the automobile! the airplane! the bicycle!), shattered nerves, mass anxiety, and a widespread sense that the world had been forever knocked off its historical axis: a familiar stew of ideas.”
What we’re reading (8/15)
“Dow, S&P 500, Nasdaq Notch Weekly Wins As Slew Of Data Muddies Rate-Cut Path” (Yahoo! Finance). “US stocks were mixed on Friday as Wall Street tempered its rate-cut hopes amid economic data this week that showed higher-than-expected wholesale inflation and a rise in July retail sales. A meeting between President Trump and Russian President Vladimir Putin was also in focus as traders looked for clues on how the outcome could steer markets.”
“The Palantir Mafia Behind Silicon Valley’s Hottest Startups” (Wall Street Journal). “Alumni have either started or are leading more than 350 tech companies, and at least a dozen have been valued at over $1 billion, says Luba Lesiva, who was head of investor relations at Palantir from 2014 to 2016. Lesiva runs a venture firm called Palumni VC, a play on the words Palantir alumni, which invests in startups founded or led by ex-Palantir employees.”
“OpenAI Staffers To Sell $6 Billion In Stock To SoftBank, Other Investors” (Bloomberg). “Current and former OpenAI employees plan to sell approximately $6 billion worth of shares to an investor group that includes Thrive Capital, SoftBank Group Corp. and Dragoneer Investment Group, in a deal that values the ChatGPT maker at $500 billion, according to people familiar with the matter.”
“Spotting Clouds In A Carefree Summer Market” (Wall Street Journal). “The list of what is actually giving investors pause is remarkably short, itself a reason for concern. If stocks climb a wall of worry, they may be approaching the top—and the nasty slide down the slope of hope. What should be concerning them divides into three: the economy, stock valuations and politics.”
“This Is The Staggering Number Of Hours New Yorkers Spend On Their Phones Each Day: ‘Nonstop Loop of Distraction’” (New York Post). “To calculate the lengths, investigators converted the average screen time in every state into seconds, then multiplied each figure by 6.3 (the length of an iPhone 16 Pro Screen) over 10 (the frequency of a scroll, in seconds), resulting in the distance traveled in inches per day. The resulting figure was then divided by 12 to get the distance in feet per day. That figure was then divided by 5,280 to get the distance in miles per day, and then multiplied by 365 to get the final number.”
What we’re reading (8/14)
“Nobody’s Buying Homes, Nobody’s Switching Jobs—And America’s Mobility Is Stalling” (Wall Street Journal). “Americans are stuck in place. People are moving to new homes and new cities at around the lowest rate on record. Companies have fewer roles for entry-level workers trying to launch their lives. Workers who do have jobs are hanging on to them. Economists worry the phenomenon is putting some of the country’s trademark dynamism at risk.”
“The Hidden Risks In Private Equity Funds” (Larry Swedroe).Perhaps the most egregious practice in the 40 Act private equity space involves charging carry fees on unrealized gains. This means investors pay performance fees on paper profits that may never materialize into actual returns. No sophisticated institutional investor would accept such terms, understanding that unrealized gains—especially those created through immediate markups—may prove fictitious over time. The practice essentially allows fund managers to extract fees based on their own valuation assumptions rather than proven investment performance. This creates a dangerous misalignment of incentives where managers benefit from aggressive markups regardless of ultimate investment outcomes. Retail investors should absolutely avoid any fund that charges carry fees on unrealized gains.”
“Slowly Strangling The Pharmaceutical Industry” (Civitas Institute). “Unlike many private uses of monopoly power, a government monopoly, backed by state force, can last a long time. Its short-term effects are manifest, just as in the selection derby when companies lobby the government to direct its wrath against one of its competitors, so that it can ease its burden. But it will still not escape losses even if it avoids the executioner’s axe, because the presence in the market of an underpriced substitute will force it to cut rates or lose customers. And in the long run, drug development will be impaired across the board because no one wants to develop the next blockbuster drug if the government takes away its gains by clever regulation. Indeed, matters could get still worse if the government expands the program or eases the conditions for imposing its prices. And for what? The stated justification is to reduce Medicare costs—but in the worst possible way. The system is broken in its basic operations. Yet so long as these monopoly devices prop it up, meaningful reform remains far away, which is why the Second Circuit’s misplaced reliance on consent promises to usher in a bleak age for private drug development.”
“If You’re Feeling FOMO, Envy And Greed About Record Stock Prices, You’re Not Alone. That’s How Market Bubbles Form.” (MarketWatch). “[A] market bubble can materialize even when most investors are worried about one. Like now. A recent Bank of America fund-manager survey found that a record 91% of survey participants believe the stock market is overvalued, and Google Trends shows a sizable increase in recent weeks in the number of finance-related searches focusing on bubbles, as you can see from the chart below.”
“Hedge Funds Shift Bets To Double Down On Big Tech Amid AI Boom” (Yahoo! Finance). “Wall Street's largest hedge funds, Bridgewater Associates, Tiger Global Management and Discovery Capital, increased their exposure to Big Tech in the second quarter amid a generational boom in the growth of artificial intelligence. During the June quarter, hedge funds cut their exposure to laggards in industries like aerospace and defense, and consumer and retail, as part of a broader move back to momentum investing.”
What we’re reading (8/13)
“What Does Palantir Actually Do?” (Wired). “Palantir is often called a data broker, a data miner, or a giant database of personal information. In reality, it’s none of these—but even former employees struggle to explain it.”
“How One Big Private-Equity Fund Makes Its Numbers Incomprehensible” (Wall Street Journal). “Partners Group Private Equity (Master Fund), which last reported almost $16 billion of net assets…is the largest SEC-registered private-equity fund, according to Interval Fund Tracker. Individuals investing in the fund must meet certain minimum financial criteria. To exit from the fund, investors submit redemption requests during designated tender periods. The schedule of investments in the fund’s latest annual report listed 1,089 individual private-equity investments in a table that included the fair value and acquisition date for each. In a footnote to that table, however, it listed 1,095 different cost figures. That is six more cost figures than there were investments. The footnote spanned three pages, single-spaced. In other words, there is no way someone reading the annual report could determine which cost figure applied to which investment—and no way to gauge which investments might have fishy markups.”
“Private Equity Is Knocking on the Door of Americans’ Retirement Funds. Don’t Let It In.” (Barron’s). “Employers are allowed to auto-enroll eligible employees into 401(k) plans. Though employees can opt out of enrollment or choose their own investments, in practice, nearly everyone who is auto-enrolled puts their savings into target date funds. Were those funds to include private equity, millions of workers’ savings would be channeled into one of Wall Street’s most opaque and expensive products. Plan committees would be shielded from fiduciary liability so long as they follow Department of Labor rules for which default funds they use. Savers would effectively be conscripted into alternative investments. If private equity truly offered compelling value for retirement savers, it wouldn’t require regulatory capture and behavioral inertia to access their capital. Genuine investment opportunities sell themselves to informed buyers over time, not through default settings and liability shields.”
“Allocators Are Betting on Active — But The Numbers May Be Against Them” (Institutional Investor). “Despite more allocators depending on active management to generate returns amid volatility, the numbers continue to show that the vast majority of actively managed funds fail to beat their benchmarks. New research from Morningstar shows that only 33 percent of actively managed mutual funds and ETFs survived and outperformed their passive peers over the year ending June 2025 — a 14 percentage-point drop from the previous year.”
“Can Lower(ed) Expert Opinions Lead To Better Consumer Ratings?: The Case Of Michelin Stars” (Xingyi Li, Yiting Deng, and Puneet Manchanda, and Bert de Reyck). “Expert opinion exerts tremendous influence on the purchase journey, but its effect on overall consumer experience is ambiguous because it can give rise to both “expectation” and “reputation” effects. This paper explores the effect of expert opinions on consumer experience via the lens of consumer reviews in the restaurant industry, where the expert opinions are conveyed by Michelin stars. The paper uses a unique data set based on the Michelin Guide for Great Britain & Ireland from 2010 to 2020. The data include consumer reviews on TripAdvisor for all restaurants that were awarded Michelin stars during this period and a large pool of potential control restaurants…We find…that a loss in Michelin stars leads consumers to become less focused on value and become less demanding regarding service.”
What we’re reading (8/11)
“The Death of Diversification: Why Buffett Was Right All Along” (RealClear Markets). “Warren Buffett famously said that “diversification is protection against ignorance. It makes little sense if you know what you are doing.” For decades, this statement has been brushed aside as the musings of a genius with an unusually high risk tolerance. In truth, it was a quiet indictment of the entire financial industry. Diversification was once a prudent guardrail. It is now a crutch. In a world increasingly allergic to judgment, we have replaced depth with breadth and conviction with convenience. Why learn to understand a business deeply when you can simply own all of them at once?”
“Trump Fired The Labor Statistics Chief And The Markets Shrugged. That’s Concerning.” (MSNBC). “What financial markets, and even the Supreme Court, seem to have overlooked in focusing on the important goal of an independent Federal Reserve is that independence without accurate information is of limited value. The Fed, like all of us trying to understand the macroeconomy in real time, relies on an immense flow of accurate, unbiased data produced by thousands of workers in both the digital and physical worlds.”
“The Era Of Big Raises For Low-Paid Workers Is Over” (Wall Street Journal). “Something remarkable happened in the years immediately preceding and, especially, following the pandemic: Wages for poor workers began rising much faster than they did for the rich. That era may have now come to at least a temporary halt. And with worries about the health of the job market heightened following the disappointing July jobs report, it may have ended altogether. Wage growth for low-income workers looks to have significantly deteriorated in recent months, while wage growth for their higher-income counterparts has held up much better. It is a shift that could matter not just for low-paid workers, but the overall economy. “
“The Rising Returns To R&D: Ideas Are Not Getting Harder To Find” (Ando, Bessen, and Wang). “R&D investment has grown robustly, yet aggregate productivity growth has stagnated. Is this because “ideas are getting harder to find”? This paper uses micro-data from the US Census Bureau to explore the relationship between R&D and productivity in the manufacturing sector from 1976 to 2018. We find that both the elasticity of output (TFP) with respect to R&D and the marginal returns to R&D have risen sharply. Exploring factors affecting returns, we conclude that R&D obsolescence rates must have risen. Using a novel estimation approach, we find consistent evidence of sharply rising technological rivalry and obsolescence. These findings suggest that R&D has become more effective at finding productivity-enhancing ideas, but these ideas may also render rivals’ technologies obsolete, making innovations more transient. Because of obsolescence, rising R&D does not necessarily mean rising aggregate productivity growth.”
“July CPI Report Expected To Show Inflation Accelerated Amid Tariff Pressures” (Yahoo! Finance). “According to Bloomberg data, headline CPI is expected to have increased 2.8% year over year in July, up from a 2.7% rise in June. On a monthly basis, prices are forecast to increase 0.2%, a slight slowdown from June’s 0.3% gain, driven by lower gasoline prices and expectations of moderately softer food inflation.”
July performance review
Prime: -3.03%
Select: -1.55%
SPY ETF: 2.55%
Bogleheads (80% VTI + 20% BND): 2.02%
What we’re reading (8/10)
“Laffer Curve In The United Kingdom?” (Scott Sumner). “More broadly, I believe that the current malaise in the European economy partly reflects the long run effects of various tax and spending policies, which have slowly eroded the tax base. European countries that did not opt for a big government model, such as Switzerland, are doing better than their more highly taxed neighbors.”
“Retreats, Coaching, And Therapy: Inside The $1 Billion Cottage Industry Cashing In On The Retail-Trading Phenomenon” (Business Insider). “In recent years, a cottage industry has taken root amid the hype for stock trading. Social media is rife with businesses offering courses, getaways, one-on-one coaching, and other services that claim to improve traders' performance and get them in the right mindset to turn a profit.”
“American Companies Are Buying Their Own Stocks At A Record Pace” (Wall Street Journal). “U.S. companies have announced $983.6 billion worth of stock buybacks so far this year, the best start to a year on record, according to Birinyi Associates data going back to 1982. They are projected to purchase more than $1.1 trillion worth overall in 2025, which would mark an all-time high.”
“Dollar Steady Before Inflation Report, US-China Tariff Deadline” (Reuters). “The U.S. dollar stabilised on Monday after last week's losses, as markets await Tuesday's key U.S. CPI report for July and focus on developments in trade talks between Washington and Beijing ahead of a deadline to avoid the imposition of higher tariffs. The dollar index was flat at 98.25 after a 0.4% decline last week. Against the yen, the dollar was unchanged at 147.685 yen, with Japanese markets closed for the Mountain Day holiday. Trade talks were in focus as Trump's August 12 deadline for a deal between the U.S. and China loomed, particularly around chip policy.”
“Gold Prices Are On A Rollercoaster After A Curious Tariff Ruling That The White House Called ‘Misinformation’” (CNN Business). “
The global gold market has been thrown into fresh turmoil after a US government agency indicated that bullion would not be exempt from tariffs. Imports of one kilo and 100-ounce gold bars are subject to reciprocal tariffs, according to a July 31 Customs and Border Protection letter reviewed by CNN. The revelation perplexed Wall Street traders, who had expected bullion to be exempt from duties.”
What we’re reading (8/7)
“Dow Slides, Nasdaq Jumps To Record As Tariffs Kick In, Trump Nominates Miran To Fed board” (Yahoo! Finance). “US stocks trimmed losses on Thursday, finishing mixed after President Trump's sweeping tariffs hit dozens of US trade partners. Meanwhile, Trump also previewed coming chip tariffs, suggesting a carveout that could benefit Big Tech companies. The tech-heavy Nasdaq Composite rose nearly 0.4% to close at a fresh record, while the S&P 500 ended little changed. The Dow Jones Industrial Average slipped 0.5%.”
“Auto Industry Takes $12 Billion Hit From Trade War” (Wall Street Journal). “President Trump’s tariff war has inflicted almost $12 billion of losses on global automakers, the biggest hit they have faced since the pandemic. The scary reality: This may be just the beginning. Beyond the continuing cost of tariffs, automakers in the U.S., Japan, South Korea and Europe face years of retooling and supply-chain tweaks to adjust to the new realities. This comes after they spent heavily to reshape factories for electric vehicles.”
“Stock Buybacks Are Surging. Here’s Why It Matters To Your Portfolio.” (MarketWatch). “A surge in share repurchases represents tentativeness about the future. That might seem counterintuitive, but researchers have found that when corporate executives feel confident about what’s coming down the pike, they tend to use excess cash to increase dividends. When, like today, they are less confident, they instead tend to repurchase shares.”
“How AI Conquered the US Economy: A Visual FAQ” (Derek Thompson). “Nobody can say for sure whether the AI boom is evidence of the next Industrial Revolution or the next big bubble. All we know is that it’s happening. We can all stop talking about ‘what will happen if AI dominates the economy at such-and-such future date?’ No, the AI economy is here and now. We’re living in it, for better or worse.”
“Tesla’s Biggest Rivals Warn the EV Party Might Be Over” (Gizmodo). “After a brief sugar rush of sales, Tesla’s top rivals are bracing for a brutal hangover, hit by a double punch of hostile policies from the second Trump administration: crippling tariffs and the fast-approaching end of the federal EV tax credits that have propped up the industry for years.”
What we’re reading (8/6)
“How Palantir Won Over Washington—And Pushed Its Stock Up 600%” (Wall Street Journal). “The blind run into AI is one of a series of decisions by Palantir that have positioned the company today as a power player in the Trump administration, an integral tool for national security and the most expensive stock in the S&P 500. On Monday, it reported its best-ever earnings with more than $1 billion in revenue in the second quarter, 53% growth in earnings from U.S. government contracts and total booked contracts valued at $2.3 billion.”
“The Militarization Of Silicon Valley” (New York Times). “[W]eapons and defense start-ups are taking off. Andreessen Horowitz, a venture capital firm, said in 2023 that it would invest $500 million in defense technology and other companies that would help America ‘move forward.’ Y Combinator, the start-up incubator known for hatching companies like Airbnb and DoorDash, funded its first defense start-up in August 2024. Venture capital investment in defense-related companies surged 33 percent last year to $31 billion, according to McKinsey.”
“Healthcare Stocks Have Been Beaten Up. The Case For Buying Now.” (Barron’s). “[D]arn, don’t their valuations look attractive. The broader healthcare ETF is trading at just over 16 times expected aggregate earrings for the coming 12 months, 27% lower than the S&P 500’s just over 22 times. That’s a particularly steep discount, about double the average over the past decade.”
“Tokenised Trading Creates Structural Risks” (Financial Times). “A new generation of blockchain-based platforms is offering synthetic access to financial assets under the banner of decentralisation and financial inclusion, including fractional equities, indices, and yield-bearing tokens. Their promise is seductive: instant settlement, global access, and freedom from intermediaries. But behind the sleek interfaces and technical rhetoric lies a structural reality that regulators, institutions, and the public can no longer afford to ignore. These systems do not decentralise power in any meaningful governance sense. They decentralise accountability, dispersing legal obligations across a network of offshore entities, unaudited smart contracts, and user-facing wrappers that obscure the true nature of the risk.”
“Fed's Daly: Fed Will Likely Need To Lower Rates In Coming Months As Job Market Has Slowed” (Yahoo! Finance). “San Francisco Federal Reserve president Mary Daly said Wednesday that the Federal Reserve will likely need to lower rates in the coming months, noting that while tariffs will boost inflation in the near term, the job market has slowed. ‘The labor market has softened. And I would see additional slowing as unwelcome, especially since we know that once the labor market stumbles, it tends to fall quickly and hard,’ Daly said in a speech in Alaska. ‘All this means that we will likely need to adjust policy in the coming months.’”
What we’re reading (8/5)
“Bets On Fed Rate Cuts Are Sweeping Through The US Bond Market” (Bloomberg). “Positioning in options tied to the Secured Overnight Financing Rate, which closely tracks the expected trajectory of US monetary policy, shows investors readying for the possibility of cuts in each of the three remaining meetings this year, bringing down rates by a total of 75 basis points in 2025. Other plays on SOFR have included bets on a 50 basis-point cut at the central bank’s next meeting, in September.”
“Why America’s New Crypto Regime Makes Other Countries Nervous” (Kenneth Rogoff). “[B]y proffering an official stamp of approval, the U.S. is potentially providing a powerful vehicle for facilitating tax evasion and all manner of illegal activity worldwide. It doesn’t have to be this way.”
“Trump Says He Will Decide On Fed Governor Before End Of The Week” (Bloomberg). “President Donald Trump said he would make his decision on a replacement for outgoing Federal Reserve Governor Adriana Kugler this week as he looks to make his imprint on the central bank’s monetary policy. The Fed announced on Friday that Kugler would resign from her seat on the board of governors before her term is up in January, giving Trump an earlier than expected opportunity to tap a candidate more closely aligned with his calls for the central bank to lower interest rates.”
“Electricity Costs Rise Amid Data Center Boom” (Axios). “Electricity costs are rising nationwide — and could get even higher for some amid the explosion in data centers powering AI and more. Surging power bills could further stress many Americans' budgets as pretty much everything else gets more expensive, too.”
“Andreessen Horowitz Fled Delaware And Moved To Nevada. It’s More About Vibes Than Substance.” (Business Insider). “Andreessen Horowitz, often called a16z, cited several reasons for moving to Nevada: stronger legal protection for corporate directors, tighter limits on shareholder lawsuits, and a business-friendly court system. It said this sets Nevada apart from Delaware, where an outsize share of America's business lawsuits are filed. Some critics say a16z's beef with Delaware's corporate laws don't make much sense because it's not a corporation; all the entities that it moved to Nevada are LLCs, or limited liability companies. ‘They're either being accidentally imprecise or intentionally disingenuous,’ said Samantha Prince, a law professor at Penn State University. ‘Andreessen is criticizing Delaware and its statutory corporate framework, but that doesn't apply to LLCs.’”
What we’re reading (8/4)
“A Wild Year For Markets Hits Trend-Following Hedge Funds” (Wall Street Journal). “Many hedge funds have weathered this year’s trade-war turmoil well. The one big exception: fast-moving quantitative funds that are meant to flourish in tough markets. These funds, known as trend followers, use complicated computer algorithms to spot patterns in asset prices, then ride them up or down. The investment approach has a reputation for protecting portfolios in crashes and delivering uncorrelated returns during calmer periods.”
“Greenlight’s Gains Vanish As Bearish Bets Backfire” (Institutional Investor). “Greenlight Capital has shed all of this year’s gains after suffering another large monthly loss. The long-short hedge fund headed by David Einhorn dropped 4.1 percent in July and is now down 0.1 percent for the year, according to someone who has seen the results. The firm declined to comment.”
“Palantir Tops $1 Billion In Revenue For The First Time, Boosts Guidance” (CNBC). “The artificial intelligence software provider’s revenues grew 48% during the period. Analysts hadn’t expected the $1 billion revenue benchmark from the Denver-based company until the fourth quarter of this year. ‘We’re planning to grow our revenue … while decreasing our number of people,’ CEO Alex Karp told CNBC’s Morgan Brennan in an interview. ‘This is a crazy, efficient revolution. The goal is to get 10x revenue and have 3,600 people. We have now 4,100.’”
“Airport Lounges Sound Luxurious. I Keep Getting Duped.” (New York Times). “There have never been more airport lounges. Yet there also have never seemed to be more lounges that are not worth the hassle. Many are forlorn. Many others are overcrowded; sometimes the lines for the lounges are the longest in the airport. Yet we all still fight to get in. Many of us will choose to fork over too much in credit card fees or commit to flying on one airline to gain entry to these spaces, because we still believe they offer a taste of luxury amid the stress of travel.”
“Eric And Trump Jr-Backed Manufacturing SPAC Files For $300 Million US IPO” (Reuters). “The special purpose acquisition company, a vehicle previously used by the family to launch firearms retailers and media firms, aims to merge with businesses headquartered or primarily operating in the U.S., it said in a filing. The SPAC will ‘play a meaningful role in revitalizing domestic manufacturing, expanding innovation ecosystems, and strengthening critical supply chains’, the filing added.”
What we’re reading (8/3)
“American Consumers Are Getting Thrifty Again” (Wall Street Journal). “Americans are back on the hunt for a good deal. Consumer spending stagnated in the first half of this year, according to federal data issued last week, and the CEOs of Chipotle Mexican Grill, Kroger and Procter & Gamble, among others, are telling investors that their customers are more strapped—or appear to feel that way. ‘There’s a lot of consumer anxiety,’ said Dirk Van de Put, chief executive of Mondelez International, which makes Oreo cookies, Ritz crackers and Cadbury chocolate. Global sales of snacks rose last quarter, but U.S. sales fell a lot.”
“Forecasts Predict A Dismal Decade For Stocks. Here’s What To Do.” (USA Today). “In recent forecasts, Vanguard projects the stock market will rise by only 3.3% to 5.3% a year over the next decade. Morningstar sees U.S. stocks gaining 5.2% a year. Goldman Sachs forecasts the broad S&P 500 index will gain only 3% a year.”
“Poorest US Workers Hit Hardest By Slowing Wage Growth” (Financial Times). “America’s lowest-paid workers are suffering a sharper slowdown in wage growth than their richer peers, adding to the pressure on Donald Trump over inequality as he threatens to undermine the reliability of US economic data. Data from the Federal Reserve Bank of Atlanta shows wage growth for the lowest-paid quartile of workers — people earning roughly less than $806 a week — slowed to an annual rate of 3.7 per cent in June, down from a peak of 7.5 per cent in late 2022, when post-pandemic labour shortages in industries such as hospitality were most acute. Wage growth has also slowed for higher earners but to a lesser extent.”
“Why Trump’s Firing Of The B.L.S. Commissioner Is So Damaging” (Financial Times). “Trump’s ire was directed at the large revisions to the May and June jobs numbers, which went from a previously reported respectable average of 145,500 new jobs per month to a more concerning 16,500. The revisions were unusually large — the largest since 1979, not counting the pandemic, according to economist Ernie Tedeschi. But revisions are a normal part of the statistical process and, in fact, one of its strengths in balancing timeliness and accuracy of data.”
“‘The Revisions Are Hard Evidence’: White House Struggles To Justify Firing Of BLS Chief Over Weak Jobs Numbers” (CNBC). “National Economic Council Director Kevin Hassett on Sunday defended President Donald Trump’s sudden decision to fire the Bureau of Labor Statistics commissioner, without citing specific evidence. Hassett repeatedly pointed to the revisions in Friday’s employment data to justify Trump’s firing of BLS Commissioner Erika McEntarfer, but did not provide data showing the latest jobs report was ‘rigged,’ as Trump claimed. ‘I mean, the revisions are hard evidence,” he said on NBC News, adding that there ‘have been a bunch of patterns that could make people wonder.’”
August picks available now
The new Prime and Select picks for August are available starting now, based on a model run put through today (July 30). As a note, I will be measuring the performance on these picks from the first trading day of the month, Friday, August 1, 2025 (at the mid-spread open price) through the last trading day of the month, Friday, August 29, 2025 (at the mid-spread closing price).
What we’re reading (7/27)
“This Could Be The Most Consequential Week For The Economy In Years” (CNN Business). “A slew of crucial economic data is set for release this week, including the jobs report, inflation, consumer confidence and corporate earnings. We’ll get the first glimpse at America’s second-quarter gross domestic product, the broadest measure of the economy. And, most crucially, the Federal Reserve will decide whether to cut rates or hold steady one more time.”
“Investors Are Flocking To The Stock Market’s Discount Rack” (Wall Street Journal). “As recently as April, Chase Goodman plowed his extra savings into funds linked to stock-market indexes dominated by the world’s biggest technology companies. Lately though, the Detroit-based 29-year-old analyst at an auto company is reading corporate filings and tracking where the shares of companies trade relative to their book value.”
“A Price Just For You, Specifically” (DealBook). “Imagine that an airline notices you’ve booked a five-star hotel, so it charges you more for your ticket than it would have if you had booked a four- or three-star hotel. That’s the vision of personalized pricing, a concept that has for years intrigued companies and enraged consumer advocates. While consumer backlash may still give companies pause, some roadblocks to widespread use of the strategy may be clearing.”
“Oil Edges Higher As EU Agrees To US Trade Deal Ahead Of Deadline” (Bloomberg). “Oil rose after the US and European Union agreed on a trade deal ahead of President Donald Trump’s tariff deadline of Aug. 1.”
“Euro Rises After US, EU Agree To Tariff Deal” (Reuters). “The euro gained on Monday following the announcement of a framework trade agreement between the United States and the European Union, the latest in a flurry of deals to avert a global trade war. Meeting in Scotland on Sunday, U.S. President Donald Trump and European Commission President Ursula von der Leyen announced the deal, which will result in a 15% tariff on EU goods, half what Trump had threatened to impose from August 1.”
August picks available soon
I’ll be publishing the Prime and Select picks for the month of August before Friday, August 1 (the first trading day of the month). As always, SPC’s performance measurement for the month of July, as well as SPC’s cumulative performance, will assume the sale of the July picks at the closing price (at the mid-point of the closing bid and ask prices) on the last trading day of the month (Thursday, July 31). Performance tracking for the month of August will assume the August 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 (Friday, August 1).
What we’re reading (7/25)
“The Hottest Business Strategy This Summer Is Buying Crypto” (Wall Street Journal). “Companies are raising tens of billions of dollars, not to invest in their businesses or hire employees, but to purchase bitcoin and more obscure cryptocurrencies. A Japanese hotel operator, a French semiconductor manufacturer, a Florida toy maker, a nail-salon chain, an electric-bike maker—they’re all plowing cash into tokens, helping to send all kinds of digital currencies to record levels. News that a new company plans to buy crypto is enough to send its shares flying—spurring others to consider joining the frenzy. Since June 1, 98 companies have announced plans to raise over $43 billion to buy bitcoin and other cryptocurrencies, according to Architect Partners[.]”
“The Stock Market’s Most Unserious Season Is Back And Dorkier Than Before” (New York Times). “The fever in financial markets over ‘meme stocks’ is back and stranger than ever. Just how strange? So strange that on Monday, for no singular reason, shares in a medley of beaten-down companies suddenly soared as small-time investors bought up stocks that mainstream Wall Street analysts and investors had long given up on. It got odder on Tuesday, as that tsunami of trading intensified and the shares of four companies briefly doubled in value. Krispy Kreme (DNUT), Opendoor (OPEN), Rocket Mortgage (RKT) and Kohl’s (KSS) had become the meme stocks of the moment, along with a new moniker from traders — ‘DORK,’ a reference to the first letters of their tickers.”
“Wall Street ‘Euphoria’ Sparks Bubble Warnings” (Financial Times). “Wall Street’s relentless rally this summer has driven stock valuations close to record levels, prompting warnings that “euphoric” markets are entering bubble territory. The S&P 500 index has hit a string of all-time peaks this month, while US corporate borrowing costs are nearing their lowest level in decades, in a dramatic turnaround from the April slump sparked by Donald Trump’s trade war.”
“What Happens After The Dollar’s Hegemony Ends?” (ProMarket). “If the United States does run into problems making the fiscal adjustments needed to fund its debt, it will create a major and recurrent problem for the world that could unfold in higher interest rates, greater inflation, financial instability, or more intense financial repression — or more likely than not, all four. It would not be good for the dollar’s brand[.]”
“Partisan Bias In Professional Macroeconomic Forecasts” (Benjamin Kay, et al.). “Using a novel dataset linking professional forecasters in the Wall Street Journal Economic Forecasting Survey to their political affiliations, we document a partisan bias in GDP growth forecasts. Republican-affiliated forecasters project 0.3-0.4 percentage points higher growth when Republicans hold the presidency, relative to Democratic-affiliated forecasters. Forecast accuracy shows a similar partisan pattern: Republican-affiliated forecasters are less accurate under Republican presidents, indicating that partisan optimism impairs predictive performance. This bias appears uniquely in GDP forecasts and does not extend to inflation, unemployment, or interest rates.”