What we’re reading (10/12)
“The Big Crash: Are We Really Heading For Another 1929?” (The Telegraph). “The economy is becoming almost wholly dependent on just a handful of tech titan “hyperscalers” chasing a dream of uncertain substance and return. Rarely, if ever, have the fortunes of the world economy depended so precariously on the judgment of such a small cluster of men – the bosses of Meta, Alphabet, Microsoft, Apple, X, Amazon and others chasing the supposed crock of gold at the end of the AI rainbow.”
“The Dangers Of Passive Investing” (Torsten Sløk). “US workers contribute on average around $8,500 to their 401(k) accounts every year, and with 71% of 401(k) assets allocated to equities—and the Magnificent Seven having a weight of almost 40% in the S&P 500—the bottom line is that each worker in the US puts an estimated $2,300 into the Magnificent Seven stocks every year, see chart below. This is passive money going into the Magnificent Seven regardless of whether their outlook is good or bad.”
“The US Really Is Two Economies In One” (Joachim Klement). “[W]hat will show up in the official GDP and retail sales statistics is the change in consumption weighted by how much different income groups spend. And while the unweighted average is a drop in expenditure of 1.4%, the weighted expenditure drop is just a third as large at 0.5%. So, the US statistics will look just fine, but the people will not feel fine at all.”
“Is Private Credit Drowning In Capital? These Are The Strategic Implications For Investors” (Morningstar). “Crowdedness denotes a scenario in which investors collectively and simultaneously acquire significant volumes of the same assets. Those cash flows can drive equity valuations higher. In credit markets, cash inflows not only can drive spreads lower, but they can also lead to increased systemic risk as loan/value ratios can rise and interest coverage ratios fall.”
“California’s Wine Industry Is In Crisis” (Wall Street Journal). “The U.S. wine industry hasn’t had it this bad since Prohibition. The list of problems is long in California, the cradle of American wine. Vineyards have an oversupply of grapes. People are drinking less, especially younger drinkers, and tariffs have caused the biggest foreign market for U.S. wine—Canada—to dry up overnight. With this year’s grape harvest in full swing, way too much wine from previous years still hasn’t been sold.”
What we’re reading (10/9)
“The Big Dollar Short Is Turning Into A Pain Trade For Investors” (Bloomberg). “Betting against the dollar has been the dominant trade this year in the $9.6 trillion-a-day foreign exchange market, but the wager is starting to stumble. The world’s primary reserve currency is around a two-month high even as the US government shutdown drags on, and traders in Asia and Europe say hedge funds are adding options bets that the rebound versus most major peers will extend into year-end.”
“Gold Screams ‘Debasement Trade.’ Bonds Say Otherwise.” (Wall Street Journal). “Debasement fears seem to be everywhere—except the one place they should be most obvious: bonds. Sure, there was a nudge up in global long-end yields this week, thanks to politics. Japan’s ruling party picked a leader who likes big spending and low rates, and France lost yet another prime minister after failing to reconcile the need to save money with a parliament that disagrees.”
“Insurance Companies Likely To Take Hard Stance On Non-Domiciled CDLs” (FreightWaves). “A change in insurance policies could be coming to the trucking industry, signaling a major shift in their approach to non-domiciled commercial driver’s licenses (CDLs). As enforcement of the new non-domiciled CDL rule takes shape, insurance companies are likely to position themselves to avoid potential liability exposure.”
“This Stock And Bond Portfolio Won’t Give You Bragging Rights — But It Does Make You Money” (MarketWatch). “A slow and steady approach to investing is better over the long term than ‘going for broke.’ That’s because of a mathematical fact of life that Brian Chingono, Verdad Research’s director of quantitative research, calls ‘volatility drag.’ By that, he is referring to the percentage gain it takes to recover from a loss. ‘A portfolio that is down 10% in year one and up 10% in year two has lost 1% of value,’ he wrote in a recent email to clients. Similarly, ‘a portfolio down 20% and then up 20% has lost 4% of value, and a portfolio down 30% and up 30% has lost 9%. Linear changes in volatility drive squared losses in total return.’”
“Used Car Prices Are Revving Up” (Business Insider). “There's sticker shock, and then there's whatever is happening with America's used-car market. Prices for a slightly-less-than-new-car have been soaring over the past few years. Before the pandemic, the average price for a 3-year-old vehicle topped out at a little over $22,000. In 2025, the cost is upward of $31,000. And according to Edmunds, which tracks the car market, that number may soon sound like a bargain.”
What we’re reading (10/8)
“A Divided Fed Sees More Rate Cuts Ahead This Year: FOMC Minutes” (Yahoo! Finance). “There was some division at the Federal Reserve's last meeting about whether to cut interest rates and by how much, though most agreed the central bank could cut rates further in 2025. ‘Most judged that it likely would be appropriate to ease policy further over the remainder of this year,’ according to the minutes from the Federal Market Open Committee's Sept. 16-17 meeting, which were released Wednesday.”
“Trump Excludes Generics From Big Pharma Tariff Plan” (Wall Street Journal). “The Trump administration said it isn’t planning to impose tariffs on generic drugs from foreign countries, after months of wrangling over whether to impose levies on the vast majority of drugs that are dispensed in the U.S. The administration has been weighing duties on a range of pharmaceutical products and ingredients, using a tariff investigation under Section 232 of the Trade Expansion Act of 1962, which covers threats to national security. President Trump last month posted online that he would impose 100% tariffs on name-brand drugs on Oct. 1, but didn’t mention generics. Trump ultimately delayed imposing tariffs, as officials said they would allow for more negotiations with drug companies.”
“Is There An AI Bubble? Financial Institutions Sound A Warning” (Associated Press). “Lingering doubts about the economic promise of artificial intelligence technology are starting to get the attention of financial institutions that raised warning flags this week about an AI investment bubble. ‘The risk of a sharp market correction has increased,’ the U.K. central bank said. Officials at the Bank of England on Wednesday flagged the growing risk that tech stock prices pumped up by the AI boom could burst.”
“Share Repurchases And Investment Policies” (Paul Brockman, et al.). “Our study examines the claim that share repurchases lead to reductions in real investments. Repurchase opponents argue that managers forego valuable investments to conduct opportunistic repurchases, while proponents argue that repurchases return excess cash to shareholders. We compare repurchasing firms’ real investments in capital expenditures, R&D, and employment to public and private non-repurchasing firms—holding constant their growth (i.e., investment) opportunity sets. Our results provide no support for the claim that repurchases lead to lower real investments. Consistent with these findings, we also show that financial analysts do not revise downward their capital expenditure forecasts following repurchases.”
“A New Wall Street Trade Is Powering Gold And Hitting Currencies” (Wall Street Journal). “The gold rally of 2025 is unusual in that it hasn’t been fueled by a financial meltdown. A 52% gain in futures this year is on track to outpace similar surges during the first year of the Covid-19 pandemic and the 2007-09 recession, trailing only the inflationary shock in 1979…As investors make increasingly speculative bets that the boom will continue, they are also looking for ways to shield themselves from potential fallout of U.S. policy dysfunction, including widening budget deficits and the current government shutdown. That is pushing them into assets not denominated in dollars.”
What we’re reading (10/7)
“Billionaire Tech Investor Orlando Bravo Says ‘Valuations In AI Are At A Bubble’” (CNBC). “Thoma Bravo co-founder Orlando Bravo said that valuations for artificial intelligence companies are “at a bubble,” comparing it to the dotcom era. But one key difference in the market now, he said, is that large companies with ‘healthy balance sheets’ are financing AI businesses. Bravo’s private equity firm boasts more than $181 billion in assets under management as of June, and focuses on buying and selling enterprise tech companies, with a significant chunk of its portfolio invested in cybersecurity.”
“Gold Prices Top $4,000 For First Time” (Wall Street Journal). “Gold surpassed $4,000 a troy ounce for the first time, signaling an investor rush into alternative assets at a time of concern about the outlook for the U.S. economy and its place in the world. The price of the precious metal has surged this year more than it did during some of America’s biggest crises. Rising more than 50%, futures’ run-up in 2025 has outpaced rallies during the pandemic and 2007-09 recession. Not since the inflationary shock of 1979 has gold catapulted so much higher in a year.”
“Evaluating The Impact Of AI On The Labor Market: Current State of Affairs” (Yale Budget Lab). “Overall, our metrics indicate that the broader labor market has not experienced a discernible disruption since ChatGPT’s release 33 months ago, undercutting fears that AI automation is currently eroding the demand for cognitive labor across the economy.”
“They Got To Live A Life Of Luxury. Then Came The Fine Print.” (New York Times Magazine). “An estimated half of Americans have used B.N.P.L. at least once. Promising instant gratification to an economically eager audience — half of users are early-career individuals under the age of 33 — B.N.P.L. has scaled quickly as an industry, with the total value of purchases ballooning to around $120 billion in 2023 in the United States alone, up from just $2 billion in 2019.”
“America Saw ‘Essentially No Job Growth’ Last Month, Moody’s Warns” (The Hill). “With official data on hold due to the government shutdown, economists are turning to private reports, and the early signs, according to Moody’s, aren’t good. ‘This data shows that the job market is weak and getting weaker,’ Moody’s Analytics chief economist Mark Zandi wrote Sunday on social platform X. Zandi pointed to two separate private reports — from ADP and Revelio Labs — which, when averaged together, suggest there was ‘essentially no job growth’ last month.”
What we’re reading (10/6)
“Wall Street Strategists Lift S&P Targets Ahead Of Earnings Season On ‘Fundamental Strength’” (Yahoo! Finance). “Stocks kicked off the week near record highs on Monday as investors looked ahead to earnings season to weigh whether the AI boom, Fed easing, and resilient economic data can keep powering the rally higher. Despite mounting concerns over a government shutdown and fresh warnings of an AI ‘bubble,’ strategists across Wall Street say there's still upside for US equities heading into year-end.”
“Costco To Sell Ozempic And Wegovy At A Large Discount For People Without Insurance” (NBC News). “Ozempic and Wegovy are coming to a Costco near you. Novo Nordisk, the company that makes Ozempic and Wegovy, announced Friday it will be selling the prescription injectable pens at the warehouse chain's pharmacies. A four-week supply of the weight loss drug will cost $499 out of pocket.”
“Her Stocks Were Quietly Stolen From Her I.R.A.” (New York Times). “It often happens like this: The criminal opens up a new account in a target’s name, using stolen data or a combination of stolen and false information (like an email address or a mobile phone number). Opening an account at Merrill Edge, as well as many other online brokers, doesn’t require much. That’s what the fraudsters did here, and Bank of America said it had received the all clear when it had run identify verification checks. With the new account, the impostor can request a transfer from another existing account, just like a real customer, which the institutions complete through the ACATS framework. But to pull off the heist, they need to know the other account’s details — and that’s what enabled the criminals to steal from the Vanguard I.R.A. belonging to Mr. Tran’s wife.”
“OpenAI’s New Chip Deals Raise A Tough Question: Where Will All The Power Come From?” (Business Insider). “The ChatGPT maker has signed a multibillion-dollar partnership deal with AMD to deploy 6 gigawatts of the semiconductor company's artificial intelligence chips. Just last week, OpenAI and chip designer Nvidia announced a deal for 10 gigawatts of computing power. OpenAI has said that it desperately needs access to more compute in order to realize its ambitious growth strategy, but its recent chip deals have begotten another crucial need: more power.”
“Ridley Scott Says Hollywood Is So “Drowning In Mediocrity” He’s Been Forced To Watch His Old Films” (Deadline). “‘The quantity of movies that are made today, literally globally – millions. Not thousands, millions… and most of it is s**t,’ he said. Scott added that films are too often ‘saved’ by digital effects because they haven’t got a ‘great thing on paper first.’”
September performance update
Prime: -1.13%
Select: +3.82%
SPY ETF: +4.79%
Bogleheads Portfolio: +3.98%
What we’re reading (10/4)
“Stock Funds Hold A 11% Gain For 2025 So Far” (Wall Street Journal). “With stock indexes smashing records, the average U.S.-stock fund rose 7.2% in the third quarter, to push the year-to-date gain to nearly 11%, according to LSEG data. Those are gaudy numbers for mutual funds and exchange-traded funds compared with earlier in the year, when it looked as if the stock market would register a poor year. In fact, stock funds are now on pace to rise in double digits for three straight years, even though the 2025 performance won’t likely match last year’s 17.4% gain or the previous year’s 21%.”
“Are We In A Recession? Yes — If You Live In One Of These 22 States.” (MarketWatch). “The U.S. economy is very close to falling into a damaging contraction — and many states are already in a recession, according to Mark Zandi, chief economist at Moody’s Analytics. Zandi estimates that 22 states and the District of Columbia are now experiencing persistent economic weakness and job losses that are likely to continue. Another 13 states are treading water, he noted. The overall picture is one of a weak U.S. economy that is vulnerable to being pushed into a ditch by a strong wind.”
“The Collapse Of The Econ PhD Job Market” (Chris Brunet). “For decades, a doctorate in economics was a golden ticket. It promised a path to tenure, or at worst, a lucrative role at a central bank, think tank, or tech firm. Not anymore. The economics job market is in freefall, and the profession’s own data proves it.”
“If You’re Not An AI Startup, Good Luck Raising Money From VCs” (TechCrunch). “PitchBook reports that VCs have poured $192.7 billion into the industry so far this year, out of a total $366.8 billion, according to Bloomberg. In the most recent quarter, AI accounted for 62.7% of the money invested by U.S. VCs, and for 53.2% of money invested by global firms.”
“What Bubble? By This Measure, The AI Boom Still Isn’t At Dotcom Bust Levels” (Fortune). “Relentless stock market highs, astronomical valuations for OpenAI, and reports of hyperscalers taking on more debt have stoked fears that the AI boom is another tech bubble ready to pop. Even OpenAI CEO Sam Altman acknowledged this summer that investors were getting ‘overexcited about AI’ and drew parallels with the dotcom bubble. But Capital Economics pointed out that year-ahead earnings forecasts for S&P 500 companies—forward-12-month (FTM) earnings per share (EPS)—are rising and underpin the stock market rally.”
What we’re reading (10/3)
“The Hidden Cost Of Playing The Stock Market’s Slot Machine” (Wall Street Journal). “Exchange-traded funds that seek to magnify the daily gains or losses of a single stock are generating returns that look like typos. Defiance Daily Target 2X Long RGTI, which aims to double the daily return of quantum-computer firm Rigetti Computing, is up roughly 1,000%. It’s only been around since March 31. Tradr 2X Long QBTS Daily targets twice the daily results of computing firm D-Wave Quantum. It has gained more than 700% since launching in late April. Those returns are net of all costs, including annual expenses that typically run 1% to 1.3%—but what buyers might not realize is how high those costs can go. On some of these funds, undisclosed costs can sometimes hit a 15% to 20% annualized rate.”
“The US Stock Market Has Been Exceptional, But One Region Made It Phenomenal” (Morningstar). “Currently, the six largest businesses in the world, as measured by stock market capitalization, are headquartered not merely in the US, but in just two of its 50 states.”
“AI Needs Data Centers—And People To Build Them” (City Journal). “[C]oders and computer programmers, including those with AI skills, account for less than 1 percent of all STEM jobs. But the surprise for our times is how those coders and computer scientists are driving a massive increase in demand for construction workers.”
“Amazon Founder Jeff Bezos Says AI Bubble Is Real, But So Is The Technology” (Yahoo! Finance). “Add Amazon founder Jeff Bezos to the growing list of people calling Wall Street's AI craze a bubble. During a conversation at Italian Tech Week, Bezos said the artificial intelligence hype cycle is pushing investors to spend billions on both good and bad ideas. Despite that, Bezos said he believes AI is a very real product that will impact companies across industries and society more broadly.”
“Netflix Stock Logs Biggest Weekly Drop Since April As Elon Musk Calls For Users To Cancel Subscriptions” (Yahoo! Finance). “The drop comes as Musk amps up calls for a boycott, urging his 227 million followers on X to cancel their Netflix subscriptions and accusing the streamer of pushing alleged transgender messaging in kids’ shows. Over the past several days, Musk has posted or reposted a series of messages criticizing Netflix’s programming: ‘Cancel Netflix for the health of your kids,’ Musk wrote on Tuesday.”
What we’re reading (10/2)
“FICO Shakes Up Credit-Score Market” (Wall Street Journal). “Fair Isaac is upending the credit-scoring industry by giving mortgage lenders a way to get its credit scores without buying them from Experian, Equifax or TransUnion. Shares of Fair Isaac, which goes by the name FICO after its well-known credit score, surged 18% and the shares of the credit-scoring firms fell as much as 11%.”
“Why Nvidia, Broadcom And Other High-Flying Stocks Are Especially Risky Now” (MarketWatch). “October doesn’t deserve its reputation as the month when stock-market crashes occur. Though the two worst crashes in U.S. history happened in that month — 1929 and 1987 — the risk of a marketwide crash is no greater in October than in any other month. Investors worried about a broad market crash in October can perhaps take a bigger sigh of relief. The same cannot be said of momentum investors who are betting on industries that have recently performed the best. A few of their favorite sectors are especially vulnerable to a crash right now.”
“Gold Drops As Dollar Gains, Investors Take Profits After Rally” (Bloomberg). “Gold retreated as the dollar pushed higher and investors booked profits after a five-day rally that saw it reach fresh records. Traders also sought clues on the US economy as the government shutdown delayed key data.”
“Tom Lee sees S&P 500 topping 7,000 by year-end, says don’t be fooled by shutdown calamity talk” (CNBC). “Lee believes the suspension of economic data releases from federal agencies is a “sidebar issue,” adding that past shutdowns have had little lasting impact on equities. The widely followed strategist, who called 2025′s bull run to all-time highs in stocks, expects the S&P 500 to reach at least 7,000 by December with potential for further gains.”
“Move Fast And Break Nothing” (The Atlantic). “Every trip in a self-driving Waymo has the same dangerous moment. The robotaxi can successfully shuttle you to your destination, stopping carefully at every red light and dutifully following the speed limit. But at the very end, you, a flawed human being, will have to place your hand on the door handle, look both ways, and push the door open. From mid-February to mid-August of this year, Waymo’s driverless cars were involved in three collisions that came down to roughly identical circumstances: A passenger flung their door open and hit somebody passing by on a bike or scooter. That’s according to an independent analysis of crash reports the company has disclosed to the government, which found that most of the 45 serious accidents involving Waymos were the fault of other motorists or seemingly an act of God. (In one case, a pickup truck being towed in front of a Waymo came loose and smashed into the vehicle.) None were definitively the fault of Waymo’s actual self-driving technology.”
What we’re reading (10/1)
“Supreme Court Lets Lisa Cook Remain As A Federal Reserve Governor For Now” (Associated Press). “The Supreme Court on Wednesday allowed Lisa Cook to remain as a Federal Reserve governor for now, declining to act on the Trump administration’s effort to immediately remove her from the central bank. In a brief unsigned order, the high court said it would hear arguments in January over Republican President Donald Trump’s effort to force Cook off the Fed board. The court will consider whether to block a lower-court ruling in Cook’s favor while her challenge to her firing by Trump continues.”
“Crypto Stockpiling Craze Cools After Red-Hot Summer” (Wall Street Journal). “The hot crypto-treasury summer is over. More than 200 companies went all-in on stockpiling digital currencies this year. Many investors are already cooling to the idea. Corporate purchases of bitcoin have fallen steadily in recent months, and in September dropped to their lowest pace since April. A quarter of the public companies that adopted a bitcoin treasury strategy are now trading below the total value of their digital-token holdings, according to K33 Research.”
“The Battle To Save Intel: How A Great American Company Ended Up In The Fight Of Its Life” (Fortune). “Craig Barrett, a former Intel CEO, told Fortune recently that this model—customers putting new capital into the company—could save Intel, which desperately needs cash. ‘The only place the cash can come from is the customers,’ he says. ‘They are all cash-rich, and if eight of them were willing to invest $5 billion each, then Intel would have a chance.’ In addition to Nvidia, those companies would likely include Apple, Broadcom, Google, Qualcomm, and a few others that might want a second source of high-value chips that are otherwise available only from TSMC, the Taiwan-based chipmaker that is the world’s largest.”
“As Stock Market Booms, Americans Have More At Stake Than Ever” (Washington Post). “Data from the Federal Reserve Bank of St. Louis showed that households and nonprofits were investing about 45.4 percent of their assets in corporate equities as of the second quarter of 2025 — the highest exposure to stocks ever. An estimated 62 percent of Americans own stock as of May, matching 2024 and the highest level since 2007, according to the polling firm Gallup. And Federal Reserve data analyzed by the Securities and Exchange Commission shows the median U.S. household had about $52,000 in stock holding as of 2022, compared with nearly $46,000 in 2019.”
“The ‘Stupidity’ Of 300 Investment Bankers Tricked By A 20-Something Founder Is A Lesson In Due Diligence” (Business Insider). “Back in 2021, some 300 in-house diligence officers had vetted JPMorgan's decision to buy the then-28-year-old's startup Frank, a platform that helped students fill out federal financial aid applications. The bank didn't realize until a year after the merger closed that Javice's claimed database of 4 million Frank users — college-ready young adults the bank hoped to pitch for credit cards and checking accounts — was a fiction.”
October picks available now
The new Prime and Select picks for October are available starting now, based on a model run put through today (September 30). As a note, I will be measuring the performance on these picks from the first trading day of the month, Wednesday, October 1, 2025 (at the mid-spread open price) through the last trading day of the month, Friday, October 31, 2025 (at the mid-spread closing price).
What we’re reading (9/28)
“Why Microsoft Has Lower Borrowing Costs Than The U.S.” (Wall Street Journal). “Among U.S. corporate bonds rated AAA, two in the main index currently trade a little below the equivalent yield on Treasurys, known as a negative spread. This is extremely unusual, both because companies are in principle much more likely to default than the government that can tax them, and because the corporate bonds are harder to trade, so should yield a little more to compensate buyers for the difficulty in selling them quickly.”
“A Golden Opportunity To Upgrade A 60/40?” (Alpha Architect). “If you like your 60/40 but hate the drawdowns, consider adding a modest gold futures overlay on top. According to Corey/Rod’s research, a hypothetical portfolio can improve excess returns and lower drawdowns. Why? Well, gold’s long-run correlations to U.S. stocks and 10-year Treasuries are basically zero (0.01 and 0.07), and layering this asset into your 60/40 mix has made a lot of sense. Of course, if using leverage isn’t your thing, you could always pull some exposure out of your stocks and bonds and allocate it to gold (Google or ChatGPT, ‘permanent portfolio,’ for some ideas in this direction.). You might hurt your expected returns, but you may improve your risk-adjusted portfolio along the way.”
“Bond Traders Say Rally Hinges On Jobs Data At Risk From Shutdown” (Bloomberg). “The jobs report is what ‘you need to drive a rally from here — it’s the most crucial part of the weak-economy, dovish-Fed story,’ said James Athey, a portfolio manager at Marlborough Investment Management Ltd.”
“Recession Probability Declining” (Torsten Sløk, Apollo). “The consensus probability of a recession over the next 12 months continues to decline and currently stands at 30%.”
“‘The New Normal’: Wall Street Says High Stock Valuations May Be Here To Stay” (Yahoo! Finance). “‘Over the past 20 years, the S&P 500 is trading at roughly a 40% premium to its long-term average on forward estimates,’ he [Sam Stovall, chief investment strategist at CFRA Research] said. ‘But on a five-year basis, when mega-cap tech began to dominate market cap and earnings growth, that premium shrinks to a high single-digit range.’”
What we’re reading (9/27)
“How Zillow Got On Track For First Profitable Year Since 2012” (Wall Street Journal). “Zillow has focused on boosting revenue from services such as rentals and mortgages, while slowing head count growth following a hiring surge in 2021, to reach its profitability goal under U.S. generally accepted accounting principles, Chief Financial Officer Jeremy Hofmann said. ‘Even if the housing market were to stay where it is, we think there’s a lot of growth to come,’ Hofmann said.”
“AI-Generated ‘Workslop’ Is Destroying Productivity” (Harvard Business Review). “A confusing contradiction is unfolding in companies embracing generative AI tools: while workers are largely following mandates to embrace the technology, few are seeing it create real value. Consider, for instance, that the number of companies with fully AI-led processes nearly doubled last year, while AI use has likewise doubled at work since 2023. Yet a recent report from the MIT Media Lab found that 95% of organizations see no measurable return on their investment in these technologies. So much activity, so much enthusiasm, so little return. Why?”
“Big Banks Behaving Badly” (The American Prospect). “In the old days of relationship banking, a local official worked with small-business owners to prevent catastrophe, aiding businesses and the bank’s bottom line. But after decades of bank consolidation, about half of all companies now use large institutions as their primary financial services provider, according to the 2023 Small Business Credit Survey from the Federal Reserve Banks. This often puts key financial decision-makers far from the millions of businesses they serve, without the stake in community success that characterized previous eras. In these instances, off-ramps with mutual benefit were ignored, promises made were not kept, and emotion seemed to take precedence over sound decision-making.”
“Hedge-Fund Stars Are Making So Much Now That They Are Hiring Agents” (Wall Street Journal). “Compared with, say, outfielders, portfolio managers have to evaluate job offers with more complex structures. There’s the amount they’d need to cover deferred and forgone pay at their current employer and the budget needed to staff a team of analysts. There’s the cut of investment gains portfolio managers generate that they get to keep, usually around 20%, and the accelerated payouts they can get on early profits. There’s also the length of the contract itself, usually around three years but sometimes longer.”
“Brace Yourself: Here Comes Stagflation!” (Tyler Cowen, The Free Press). “It seems increasingly likely that the American economy is sleepwalking toward stagflation. In case you’re wondering, that is not a good thing…If I had to guess, I think there’s a decent chance that 18 months from now, America could well have an inflation rate of 4 percent (up from last year’s 2.5 percent) and an unemployment rate of 7 percent, well above the current 4.3 percent.”
October picks available soon
I’ll be publishing the Prime and Select picks for the month of October before Wednesday, October 1 (the first trading day of the month). As always, SPC’s performance measurement for the month of September, as well as SPC’s cumulative performance, will assume the sale of the September picks at the closing price (at the mid-point of the closing bid and ask prices) on the last trading day of the month (Tuesday, September 30). Performance tracking for the month of October will assume the October 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 (Wednesday, October 1).
What we’re reading (9/25)
“Day Trading Is About To Get Easier For Smaller Retail Investors” (CNBC). “The Financial Industry Regulatory Authority on Tuesday approved amendments that would replace the long-standing threshold, making active day trading more accessible to smaller accounts. The change is pending approval by the Securities and Exchange Commission. The $25,000 minimum equity rule mandates that traders must maintain a minimum account balance of $25,000 in a margin account to execute four or more day trades within a five-business-day period. The rule was put in place in 2001 amid the dot-com bubble and crash as regulators grew worried that small traders were taking excessive risks with volatile internet stock.”
“Get Rich Or Get Wiped Out: Bitcoin’s Hottest New Trade” (Wall Street Journal). “Traders seeking rapid returns have made a speculative bitcoin play one of the most popular crypto bets globally: so-called perpetual futures. These potentially offer returns of 10, 20 or even 100 times an initial investment—or huge losses that could leave a trader with nothing. Known as perps, the contracts give traders access to extreme leverage and have exploded in popularity during a rally that has sent bitcoin prices up more than 70% over the past year. Though popular in other parts of the world, perps were largely unavailable until recently to U.S. traders on regulated venues.”
“Intel Is Seeking An Investment From Apple As Part Of Its Comeback Bid” (Bloomberg). “Intel Corp. has approached Apple Inc. about securing an investment in the ailing chipmaker, according to people familiar with the matter, part of efforts to bolster a business that’s now partially owned by the US government. Apple and Intel also have discussed how to work more closely together, said the people, who asked not to be identified because the deliberations are private. The talks have been early-stage and may not lead to an agreement, the people said.”
“Fed Officials Are Divided In Their Interest-Rate Outlook. How To Make Sense Of The ‘Dot Plot.’” (Barron’s). “The Federal Reserve cut interest rates this past week by a quarter of a percentage point. But where rates go from here is a coin toss, at best, given that Fed members’ latest forecasts diverge widely. Even Fed Chair Jerome Powell conceded that confidence is in short supply. Yet, markets mistakenly cling to the central bank’s projections, even though they are usually the first word, and not the last, on the trajectory of rates.”
“‘Coffee-Badging’ And Other Quiet Revolts: How Workers Are Defying In-Office Mandates” (The Hill). “Required in-office time from employer mandates climbed 13 percent between 2024’s second quarter and this year’s, from 2.49 to 2.82 days per week. Yet physical attendance stayed nearly flat, inching up 1 percentage point over that time. Stanford economist Nick Bloom summarizes the pattern in six deflating words: ‘Attendance is flat as a pancake.’ Rules multiplied; compliance did not. The data expose a mismatch between what leaders decree and what professionals accept.”
What we’re reading (9/23)
“Fed’s Powell Sees ‘No Risk-Free Path’ For Interest Rates After Central Bank’s Cut Last Week” (Yahoo! Finance). “Federal Reserve Chair Jerome Powell said there is ‘no risk-free path’ for the central bank's next policy move as inflation remains elevated and the job market weakens. It's ‘a challenging situation,’ Powell said during a speech in Rhode Island on Tuesday, reiterating that the Fed must balance its dual goals of maximum employment and price stability.”
“Wall Street Is Poaching Bankers In A Red-Hot Job Market” (Wall Street Journal). “A pickup in dealmaking and initial public offerings is helping fuel a hot job market on Wall Street. Big banks had been adding staff over the past year in strategic expansions, but now sudden jumps in activity have them seeking to hire even more and slowing layoffs they might have otherwise executed.”
“Private Equity Is Getting Boring” (Matt Levine, Bloomberg). “A simple gloomy model you could have of private equity is: (1) Once upon a time, companies were mispriced. Lots of companies were available cheaply […] (2) A few ambitious risk-seeking entrepreneurs noticed this systematic mispricing and set out to fix it. They raised money from friends and family and patient investors who were willing to take risk, they bought companies at low prices, levered them up, fixed their operations and resold them after a few years at higher prices. (3) It helped, in doing this business, that interest rates were declining for decades and valuation multiples were rising […] (4) The people who started this business — private equity — made great returns for their investors and became billionaires themselves. [5] This attracted many, many more people to the business. […] (6) So now private equity is the default career path for smart ambitious people entering the financial industry, and private equity firms are now giant alternative asset managers with hundreds of billions of dollars under management. [7] Why would companies be mispriced?”
“World’s Largest Private Rembrandt Collection May Be Fractionalised, Owner Reveals” (The Art Newspaper). “Plans are underway for the Leiden Collection of Dutch Golden Age painting, amassed by billionaire investor Thomas S. Kaplan, to be offered as shares on a public stock exchange.”
“Boring Is Good” (Scott Jenson). “I want to answer the question: why should we still care? The tech is problematic, and signs point to the bubble bursting. When we hit the ‘Trough of Disillusionment,’ what rises from the ashes? Two lessons from my career help me navigate uncertainty: 1. technology flows downhill, and 2. we usually start on the wrong path.”
What we’re reading (9/17)
“Federal Reserve Cuts Interest Rates For First Time This Year, Sees 2 More Cuts In 2025” (Yahoo! Finance). “The Federal Reserve cut interest rates by a quarter percentage point on Wednesday — its first reduction of 2025 — and projected two more cuts for the rest of this year. The central bank voted in a split decision to cut its benchmark interest rate to a range of 4.00% to 4.25%. The 25 basis point cut marked the first time the Fed has eased rates since last December.”
“Miran’s Fed Dissent Makes A Splash, Fails To Sway The Outcome” (Reuters). “If President Donald Trump hoped that putting a close ally at the Federal Reserve would grab headlines, White House economic adviser Stephen Miran's dissent and way-below consensus interest rate projection on Wednesday delivered. If the hope was to have someone on the inside to get the Fed to lower interest rates as sharply as Trump wants, Miran's lone dissent was evidence the gambit had failed, at least for now.”
“SEC Allows Public Companies To Block Investors From Class-Action Lawsuits” (Financial Times). “The US Securities and Exchange Commission on Wednesday gave public companies a powerful new tool to curb shareholder lawsuits, as chair Paul Atkins pledged to ‘make IPOs great again’. The regulator said it will no longer block companies from the public markets if they banned shareholders from filing class-action lawsuits, ripping up a decades-old policy as it seeks to ease compliance requirements and fulfil President Donald Trump’s deregulation drive.”
“The Economy Is Turning Into A Black Box” (Peter Orszag, The Atlantic). “This situation is unsustainable. Business decisions about hiring, firing, and investment depend on knowledge of what’s happening in the wider economy. So do the choices made by policy makers in the White House and at the Federal Reserve. An incredible range of sophisticated private sources—including real-time payroll data, online transaction records, and consumer-spending databases—offer alternative sources of fine-grained, up-to-the-minute data that could, under the right conditions, be used to supplement a survey-based approach and provide a more dynamic and accurate picture of the state of the economy. The problem is that the government is not even trying to use them.”
“AI Agents Are Getting Ready To Handle Your Whole Financial Life” (Wall Street Journal). “Everyone who manages his or her own finances can relate to the headache. A half dozen apps and logins… Investments spread across several retirement and taxable accounts, employer-sponsored 401(k)s and pension funds.… It can be an arduous task to get a quick read on how much you have allocated to stocks, bonds and cash, not to mention picking the right mix of assets and periodically rebalancing it. Many people pay advisers to ease that burden of complexity. But in the not-too-distant future, your AI assistant could be doing much of that work for you.”
What we’re reading (9/16)
“Fed Meeting Likely To Produce First Rate Cut Of 2025. Will It Keep Going?” (Yahoo! Finance). “The Federal Reserve is widely expected this week to make its first interest rate cut of 2025, but the bigger question for investors is how many more cuts could be on the way as the central bank contends with a weak job market, sticky inflation, and mounting White House pressure…The last dot plot, released in June, revealed a consensus among Fed officials for two cuts this year amid uncertainties about how the Trump administration’s policies on tariffs, immigration, and taxes would impact the economy.”
“What To Watch At The Strangest Fed Meeting In Years” (Wall Street Journal). “The meeting is unfolding during an extraordinary political moment for the central bank, making it one of the strangest in years. It follows not only months of attacks from President Trump over the Fed’s reluctance to lower rates, but also parallel legal dramas that have cast doubt on who will attend the meeting.”
“Here’s How Trump Takes Over The Fed” (New York Times). “Every five years, all of the 12 regional bank presidents are reappointed by the board in Washington. In theory, this allows the board some oversight if, say, a bank president goes rogue. In practice, these reappointments have become formalities. No regional president has ever lost his or her job during the reappointment process, even when a bank president was under investigation by the F.B.I. and the Justice Department after breaking the Fed’s confidentiality rules and failing to disclose it. To call these reappointments pro forma is an understatement.”
“Credit Scores Drop At Fastest Pace Since The Great Recession” (CNN Business). “Credit scores are falling at the fastest pace since the Great Recession as Americans struggle to keep up with the high cost of living and the return of student debt payments. The national average FICO score dropped by two points this year, the most since 2009, according to data released Tuesday by the analytics company. Although credit scores remain significantly higher than during the Great Recession, they are down for the second year in a row. FICO found a growing share of borrowers are falling behind on car loans, credit cards and personal loans.”
“GSK Plans $30 Billion US Investment As Pharma Tariff Threat Looms” (Reuters). “GSK said on Wednesday it plans to invest $30 billion in research and development and supply chain infrastructure in the United States over the next five years, after U.S. President Donald Trump arrived in Britain for an unprecedented second state visit to seal investment deals.”
What we’re reading (9/15)
“Trump Says Companies Shouldn’t Have To Report Earnings Every Quarter” (Business Insider). “In a Truth Social post on Monday, Trump said that US companies should be able to report their earnings every six months, not every three months as currently required by the SEC. ‘This will save money, and allow managers to focus on properly running their companies,’ Trump said in his post.”
“Believe In A.I.? Buy Beaten-Down Value Stocks.” (New York Times). “Mr. Davis [of Vanguard] says value stocks are a good idea, whatever happens. Under the more upbeat of his two alternatives, A.I. turns out to be everything its promoters claim, and its benefits filter throughout the economy. Productivity soars. The advent of practical, widely available electricity at the turn of the 20th century may be an analogy, Mr. Davis says. Electricity made manufacturing immensely safer as factories ‘transitioned away from the steam-powered drives and pulleys that were often the cause of workplace fatalities,’ Mr. Davis wrote. And it spawned new industries, like mass-produced automobiles.”
“Former Fed Bullard, After Meeting Treasury Chief, Flags Conditions To Be Fed Chair” (Reuters). “James Bullard, the former president of the Federal Reserve Bank of St. Louis, said Monday he’d spoken last week with Treasury Secretary Scott Bessent about becoming central bank chair, and that he’s very interested in the job under the right set of conditions.”
“iOS 26: Liquid Glass Is Here And Your iPhone Will Never Be The Same” (Wall Street Journal). “When I started living with the new aesthetic this summer, my reaction was somewhere between ‘This is bad’ and ‘This is really bad.’ But that was the beta software. Over time, Apple softened some of the worst of it. Also? I resigned myself to living in a glass house. You’ll see it immediately: Menus are see-through, giving everything a layered look. Sometimes it’s a neat effect. Other times, especially with light backgrounds, it can be a mess. Text vanishes into whatever’s behind it.”
“Tesla Just Erased All Of Its Steep 2025 Losses After Elon Musk Buys $1 Billion Of Its Shares” (CNN Business). “Elon Musk just spent $1 billion of his own money to buy additional shares Tesla, giving the previously battered stock the vote of confidence needed to complete a comeback and turn positive for the year. The purchase, made Friday and disclosed in a filing Monday, represents a rare action – by Musk or any other CEO. Few business leaders use their own money to buy their company’s stock without exercising of options, which allows them to purchase shares at a fraction of their market price. The news lifted shares of Tesla (TSLA) 7% at the market open Monday. While it didn’t sustain those early gains, it did finish the day up nearly 4%.”
What we’re reading (9/14)
“‘Worst Kind Of Setup For The Fed’: What Wall Street Is Saying About The Central Bank’s Next Rate Decision” (Yahoo! Finance). “Weak labor market data overshadowed a sticky inflation print last week, keeping investor expectations intact that the Federal Reserve will cut interest rates at its policy meeting on Wednesday.”
“Exclusive: Fed Governor Cook Declared Her Atlanta Property As “Vacation Home,” Documents Show” (Reuters). “A loan estimate for an Atlanta home purchased by Lisa Cook, the Federal Reserve governor accused of mortgage fraud by the Trump administration, shows that Cook had declared the property as a ‘vacation home,’ according to a document reviewed by Reuters. The document, dated May 28, 2021, was issued to Cook by her credit union in the weeks before she completed the purchase and shows that she had told the lender that the Atlanta property wouldn’t be her primary residence. The document appears to counter other documentation that Cook’s critics have cited in support of their claims that she committed mortgage fraud by reporting two different homes as her primary residence, two independent real-estate experts said.”
“The Coming Electricity Crisis” (Foreign Affairs). “The surge in electricity demand is not inherently a problem. It reflects the technology-fueled progress that electrification can deliver. But rising demand is already starting to drive up electricity prices and push the grid to its limits. Without rapid action, consumers will pay more, businesses will be less competitive, and the country will risk losing its lead in technological innovation and advanced manufacturing.”
“The US Is Unlikely To Drop Into Recession” (Joachim Klement). “[T]he US is unlikely to drop into recession in 2025 or even 2026. A new study by the Boston Fed shows one key reason why this may be so. They wanted to find out why consumer spending has not slowed in the aftermath of the 2022 inflation spike and rising interest rates. They show that low-income households did indeed feel the pinch from the higher cost of living. Lacking any meaningful savings, they made up for the shortfall by using buy-now-pay-later schemes and – more commonly – racking up credit card debt. High-income households, meanwhile, kept on spending at almost unchanged growth rates thanks to excess savings from the pandemic years and low credit card balances overall. These high-income households masked an overall deterioration in consumer spending and prevented the US from dropping into a recession in 2022 or 2023.”
“The World’s Surprise Boomtown: Baghdad” (The Economist). “Cranes sprout above the Baghdad skyline. The shriek of electric saws echoes across the city. Under the heavy summer sun, workers lay a new pavement outside a chic fromagerie. Baghdad is enjoying a construction boom. Iraq looks remarkably stable—and that is drawing foreign investors and reshaping its capital.”