What we’re reading (12/8)
“S&P 500 Closes Lower As Investors Tap Brakes Before Fed Decision This Week” (CNBC). “Weighing on stock sentiment was the 10-year Treasury yield continuing its recent run higher. The benchmark has moved up this month despite the likelihood that the Fed is going to cut this week as investors worried about the state of inflation in the new year and whether the central bank will be able to continue easing.”
“Paramount Makes $77.9 Billion Hostile Bid For Warner After Netflix Struck Deal” (Wall Street Journal). “Paramount launched a $77.9 billion hostile takeover offer for Warner Bros. Discovery, taking its case for acquiring the storied entertainment company directly to shareholders just days after Warner agreed to a deal with Netflix.”
“Leaked Paramount Memo Reveals What CEO David Ellison Told Staffers About Its Hostile Bid For Warner Bros. Discovery” (Business Insider). “‘We believe the combination of Paramount and Warner Bros. Discovery represents a powerful opportunity to strengthen both companies and the entertainment industry as a whole,’ Ellison wrote in the memo to staffers, which was first obtained by Business Insider.”
“The Price Of Free” (Smead Capital Management). “In a textbook world, active managers would simply step into the widening mispricing and restore elasticity. In the real world, they are terrified of being fired. Haddad’s model shows that active managers do respond—by trading more aggressively when surrounded by passive capital, but only enough to offset about two-thirds of the distortion. The remaining one-third festers. Career risk, quarterly benchmarking and consultant scorecards cap how far any human being is willing to deviate before the redemption notices arrive.”
“The Quiet Surrender Of Fed Independence” (EightateEight). “[I]t is my view that financial markets will ultimately endure, adapting resiliently to the altered landscape of a partially independent Fed. Indeed, markets and economic actors alike will continue to forge a consensus on interest rates, navigating the uncertainties with pragmatic resolve. Yet, this shift evokes a poignant analogy: the US; and, by extension, the global economy, will have traded a sleek, fuel-efficient, and dependable vehicle for a dilapidated, second-hand relic, voraciously consuming resources while rattling precariously along the road. It may still convey us to the haven of consensus, but with an ever-present peril of catastrophic failure en route, underscoring the fragility of institutions once deemed inviolable and the profound stakes of their erosion.”
What we’re reading (12/6)
“How A Netflix-Warner Deal Would Change Everything In Hollywood—Again” (Wall Street Journal). “On Friday, Netflix agreed to acquire Warner Bros. for $72 billion after the entertainment company splits its studios and HBO Max streaming business from its cable networks, beating rival bidders Paramount and Comcast. The deal stunned Hollywood, where many assumed David Ellison’s Paramount was the most likely suitor. After Paramount’s aggressive unsolicited approaches to buy all of Warner Discovery prompted the company to put itself up for sale, Netflix’s winning bid came together at a breakneck pace.”
“The Regulatory Path Ahead For A Netflix And Warner Bros. Deal Could Get Dicey” (CNBC). “The size of the deal makes it ripe for scrutiny, from both industry insiders and U.S. lawmakers. The Trump administration is viewing the merger with ‘heavy skepticism,’ CNBC reported Friday, and Sen. Elizabeth Warren has already called for an antitrust review.”
“Beware Of The Unwinding Japanese Carry Trade” (American Enterprise Institute). “The challenge to world financial markets is that the narrowing of the interest rate spread between Japanese bonds and US bonds could lead to an unwinding of the Japanese carry trade and to the repatriation of capital to Japan by that country’s financial institutions. That process could be reinforced by a meaningful appreciation of the Japanese yen, which is currently estimated to be undervalued by between 15 and 20 percent.”
“Main Street Bust Threatens The Entire Economy” (Axios). “More small businesses are filing for bankruptcy under a special federal program this year than at any point in its six-year history. Subchapter V filings, which allow firms to shed debt faster and cheaper, are up 8% from last year, Bloomberg reported, citing data from Epiq Bankruptcy Analytics. Chapter 11 filings — a process used by larger businesses — are up roughly 1% over the same time frame…‘Small firms are the leading indicator what's going on nationally and right now they're signaling weakness,’ says ADP chief economist Nela Richardson.”
“Private Equity Fundraising Remains Glum, Four Years On” (Institutional Investor). “As 2025 nears its end, private equity firms are facing the fourth year of a slide in fundraising. During the first nine months these funds have raised $906.9 billion, down from more than $1.7 trillion in 2022, the year fundraising first began to decline, according to new data from PitchBook. Hilary Wiek, senior strategist at PitchBook, noted that both the number of funds closing and the amount of capital raised remain weak.”
What we’re reading (12/4)
“Layoff Announcements Top 1.1 Million This Year, The Most Since 2020 Pandemic, Challenger Says” (CNBC). “Announced job cuts from U.S. employers moved further ahead of 1 million for the year in November as corporate restructuring, artificial intelligence and tariffs have helped pare job rolls, consulting firm Challenger, Gray & Christmas reported Thursday.”
“Two Types Of Shoppers Are Powering Holiday Spending: The Wealthy And Deal-Hunters” (Wall Street Journal). “The myriad choices these more cautious shoppers are making help illuminate why spending is up but consumer confidence is dragging in the final stretch of the year. On Black Friday, the year’s busiest shopping day, sales rose 4.1% compared with last year, Mastercard data show. Even with holiday shopping off to a robust start, consumers—especially those from less-affluent households—are pulling back on routine purchases as they give priority to gifts and holiday meals. Sales on things that can wait, such as haircuts, pricier razors and fast-casual lunches, are slipping.”
“Manufacturers Shrink For 9th Month In A Row, ISM Finds. Tariffs Hurt Sales And Keep Lid On Hiring.” (MarketWatch). “American manufacturing contracted for the ninth straight month, a survey showed, as uncertainty tied to ever-changing tariffs and a historic government shutdown weighed on business. A closely followed manufacturing index fell to a four-month low of 48.2% in November from 48.7% in the prior month, the Institute for Supply Management said Monday. Any number below 50% signals contraction.”
“Manias, Panics, And AI” (Project Syndicate). “By any metric, the US and, by implication, the world, is now in an intense AI speculative boom. But will all the investment pouring into the industry build something useful? To whom, and for what purpose? And if there is a downside, what will it look like? Kindleberger’s work – and everything that has happened since 1978 – suggests that three salient questions should be used to assess investment booms. First, does the boom involve more than just a run-up in asset prices…Second, is the investment boom financed primarily by issuing debt…The third question may be the most important for this moment: How exactly will this technology be used? Conversations with senior executives of large-cap corporations across traditional sectors – companies commonly presumed to provide high demand for AI solutions – confirm that while all expect to achieve significant savings and efficiencies from AI, almost none can highlight with confidence additional sources of revenue (such as new lines of business).”
“The Spending Bubble Driving Corporate Profits Looks Set To Burst” (Barron’s). “Decades of government deficit spending, share buybacks, dividends, and overconsumption have buoyed profits and inflated U.S. economic output. These profit drivers are all looking increasingly vulnerable. That would dent the profit growth that markets have long used to justify lofty valuations.”
What we’re reading (12/3)
“Goodbye, Bull Market: This Spot-On Indicator Is Saying What You Don’t Want To Hear” (MarketWatch). “Contrarian investors are confident that a major stock-market top is on the horizon — they just don’t know when. That’s because investor optimism can stay dangerously elevated for months before the bull market breathes its last.”
“Sam Altman Has Explored Deal To Build Competitor To Elon Musk’s SpaceX” (Wall Street Journal). “Altman reached out to at least one rocket maker, Stoke Space, in the summer, and the discussions picked up in the fall, according to people familiar with the talks. Among the proposals was for OpenAI to make a series of equity investments in the company and end up with a controlling stake. Such an investment would total billions of dollars over time. The talks are no longer active, people close to OpenAI said.”
“The Case For A New Floating Rate Treasury Note” (Darrell Duffie, Donald Wilson Jr.). “The accelerating digitization of financial markets creates a clear and immediate need for a sovereign instrument that combines the safety of U.S. Treasury credit, the liquidity of overnight funding, and the transparency of on-chain settlement. The Treasury has an opportunity to meet this demand and to increase financial stability in digital-asset markets by issuing a new security, Perpetual Overnight Rate Treasury Securities (PORTS). These notes would be issued and redeemable at par, daily. Given their attractiveness as collateral and as a settlement medium, PORTS would likely yield below the Secured Overnight Financing Rate (SOFR), with a spread that depends on the supply. If we are right that there is significant latent demand for PORTS, the need to issue longer-maturity Treasuries would decline, saving taxpayer borrowing costs. PORTS would also advance the current U.S. administration’s strategy of further empowering the dollar with stablecoins.”
“Living In The Age Of Discontent” (Known Unknowns). “This is an age of discontent. Just note how often we use the word crisis—the affordability crisis, the housing crisis, the everything crisis. And yet we’ve never had so much, not only in terms of wealth (which I’ve written about before), but also income. It’s true the middle class is disappearing—but largely because so many people have become upper-middle class. And fewer people than ever live in poverty—even by real American poverty standards.”
“An Introduction To Auctions” (Homo Economicus). “We have both made incredible progress in estimating the parameters of auctions, and yet have so far to go. We know much less than we think we do about auctions. The assumptions needed to uncover the distribution of valuations are restrictive, and often not met in practice. These assumptions are not trivial, and often suffice to flip the sign of the results. I very often see papers make assumptions, often in a throwaway tone, which are wholly responsible for the observed results. This is not a field which you can very well venture into, reading only the abstracts and expecting never to be misled. One must, in order to choose to believe these papers, carefully consider how their assumptions interact with the results which they have found.”
What we’re reading (12/2)
“Strong Start To Online Holiday Shopping Masks Signs Of A Fragile U.S. Consumer” (Reuters). “Consumer confidence fell again in November. Still, Americans spent a record $44.2 billion online during the period retailers call Cyber Week - the U.S. shopping bonanza that runs from Thanksgiving through the following Monday - according to Adobe (ADBE) Analytics, which tracks shopper visits to online retail websites.”
“OpenAI Declares ‘Code Red’ As Google Threatens AI Lead” (Wall Street Journal). “Altman said OpenAI had more work to do on the day-to-day experience of its chatbot, including improving personalization features for users, increasing its speed and reliability, and allowing it to answer a wider range of questions. The companywide memo is the most decisive indication yet of the pressure OpenAI is facing from competitors that have narrowed the startup’s lead in the AI race. Of particular concern to Altman is Google, which released a new version of its Gemini AI model last month that surpassed OpenAI’s models on industry benchmark tests and sent the search giant’s stock soaring.”
“AI Adoption Rates Starting To Flatten Out” (Torsten Sløk, Apollo). “Data from the Census Bureau and Ramp shows that AI adoption rates are starting to flatten out across all firm sizes, see charts [enclosed].”
“Can Arizona Miners Unleash An American Copper Boom?” (Wall Street Journal). “Advances in mining technology, insatiable demand for the metal that is essential to everything electric, and President Trump’s push to boost U.S. raw-material output have made it worthwhile to revisit old mines and marginal deposits around copper-rich Arizona…The U.S. has plenty of copper in the ground, but smelting capacity is a pinch point. A big chunk of U.S. mine output is shipped abroad and sent back in processed forms that manufacturers can use.”
“The Great Equity Reset - Global Dispersion” (Disciplined Systematic Global Macro Views). “What remains the key theme to watch is the rotation into global equities and emerging markets, which are up respectively by 29.84% and 22.40% through November. These indices are beating large, mid, and small-cap US stocks by a significant margin. Buying a broad set of US stocks is not the direction for success in the equity markets. We are seeing low correlation across US stocks and high dispersion. Investors need to be selective with their stock choices. This is a global stock-pickers market. If you are not a stock picker, you can see it in the differentials across risk premia. High beta and momentum factors are showing strong returns, while low volatility and dividend stocks are underperforming, even amid the current talk of market bubbles.”
What we’re reading (12/1)
“Amazon Offers Test Of ‘Ultrafast’ Delivery In Two US Cities” (Bloomberg). “Amazon.com Inc. plans to offer deliveries of hundreds of household items, including some fresh groceries and over-the-counter medicines, within 30 minutes in a test program beginning in Philadelphia and its home city of Seattle.”
“Office-To-Residential Conversions Are Booming And New York Is The Epicenter” (Wall Street Journal). “Over the past two decades, developers in New York have converted nearly 30 million square feet of office space into residential living, with the pace of transformation picking up in recent years. Most office buildings were considered too wide and mechanically complex to repurpose into apartments with kitchens, bathrooms and bedrooms. But New York developers are solving those problems with new architectural hacks—cut-through notches, carved light wells, and strategic wall-offs of interior cores that create space for new residential floors.”
“Working From Home Is Harming Young Employees. They’re Starting To See That.” (New York Times). “New research sheds some light on why that might be. In a recent paper, a team of economists at the Federal Reserve Bank of New York, the University of Virginia and Harvard University found that younger workers suffered career-wise by working from home, receiving less training and fewer opportunities for advancement. The economists found that remote work even contributed to higher unemployment among younger workers. They calculated that younger workers appeared to be responding accordingly, spending more time in the office than older workers over the past few years.”
“Getting Ready To Party Like It’s 2008” (Paul Krugman). “The clear lesson of 2008 is that effective financial regulation is essential. For three generations after the great bank runs of 1930-31, America avoided “systemic” banking crises — crises that threaten the whole financial system, as opposed to individual institutions. This era, which Yale’s Gary Gorton calls the Quiet Period, was the result of New-Deal-era protections — especially deposit insurance — and regulations that limited banks’ risk-taking. But post 1980, finance was increasingly deregulated. In particular, the government failed to extend bank-type regulation to shadow banks that posed systemic bank-type risks. And the crisis came.”
“Michael Burry Says Tesla Is ‘Ridiculously Overvalued,’ Slams Musk Pay Package” (Yahoo! Finance). “His post took aim at the "tragic algebra" of stock-based compensation, and Tesla was an example. Tesla dilutes its stock by 3.6% a year, he said, and offers no buybacks. ‘Tesla's market capitalization is ridiculously overvalued today and has been for a good long time,’ Burry said, adding that CEO Elon Musk's $1 trillion dollar pay package will dilute Tesla stock even further. Last month, Tesla shareholders approved the controversial pay package at its shareholder meeting.”
December picks available now
The new Prime and Select picks for December are available starting now, based on a model run put through today (November 30). As a note, I will be measuring the performance on these picks from the first trading day of the month, Monday, December 1, 2025 (at the mid-spread open price) through the last trading day of the month, Wednesday, December 31, 2025 (at the mid-spread closing price).
December picks available soon
I’ll be publishing the Prime and Select picks for the month of December before Monday, December 1 (the first trading day of the month). As always, SPC’s performance measurement for the month of November, as well as SPC’s cumulative performance, will assume the sale of the November 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, November 28).
What we’re reading (11/26)
“Nvidia Says It Isn’t Using ‘Circular Financing’ Schemes. 2 Famous Short Sellers Disagree.” (Yahoo! Finance). “Nvidia wrote a seven-page document — first reported by Barron's on Tuesday morning — rebuffing claims that it invests in its own customers to inflate its revenue. The memo was written in response to a newsletter from a little-known Substack author last week claiming that the $5 trillion AI chipmaker is engaged in a "circular financing scheme" — using vendor financing to boost sales — drawing parallels between Nvidia and famous dot-com era accounting frauds committed by Enron and Lucent.”
“Why Is Crypto Crashing?” (The Week). “The crypto industry is having a ‘terrible, horrible, no good, very bad month,’ said USA Today. Bitcoin has lost more than 10% of its value for the year, dropping from a high of $126,000 in October to under $90,000 last week. The drop in digital currency values is due to a ‘whirlwind of factors’ that include shaky showings for artificial intelligence and technology stocks amid growing concerns about the overall economy. ‘No one can say’ when the dust might settle.”
“Tech Trumps Tariffs: Why US Exceptionalism Will Last” (Nouriel Roubini, Financial Times). “[T]he US is experiencing a few quarters of a growth recession (GDP expansion below potential) and a modest rise in inflation rather than a serious stagflationary recession. By next year growth will recover as monetary easing and fiscal stimulus are still under way while financial conditions have eased and the tailwinds from AI-related capital expenditure will continue.”
“Uber Headhunted PhDs To Join 'Project Sandbox.’ After A Month, It Said That Their AI Training Contracts Were Over.” (Business Insider). “The workers are part of Project Sandbox, Uber’s name for the AI training work it carries out for Google. The project represents an early effort by Uber to develop AI tools for other companies under its AI Solutions division. About a dozen contractors were involved in the project, two workers told Business Insider, though it wasn't immediately clear how many were cut. ‘The client has recently communicated a change in their internal priorities, which directly affects ongoing work on this program,’ Uber emailed the affected contractors on Monday.”
“The Untold Story Of Charlie Munger’s Final Years” (Wall Street Journal). “The unexpected last chapter of Munger’s life is less well-known. In the year before his death, Munger made over $50 million from a bet on an out-of-favor industry he had shunned for 60 years. He revved up his real-estate activities, working with a young neighbor to place big, long-term wagers, unusual for a nonagenarian. He faced down health challenges and wrestled with the future.”
What we’re reading (11/25)
“Hassett Emerges As Frontrunner In Trump Fed Chair Audition” (Bloomberg). “White House National Economic Council Director Kevin Hassett is seen by advisers and allies of President Donald Trump as the frontrunner to be the next Federal Reserve chair, according to people familiar with the matter, as the search for a new central bank leader enters its final weeks.”
“Meta Is In Talks To Use Google’s Chips In Challenge To Nvidia” (Wall Street Journal). “A deal could be worth billions of dollars, but the talks are continuing and may not result in one. It is still up in the air whether Meta would use the chips, known as tensor processing units or TPUs, to train its AI models or to do inference, one of the people said. Inference, the process a trained model uses to generate the response to a query, requires less computational power than training.”
“Lofty Valuations Of US Stocks Are Sparking Anxiety – Here’s What History Tells Us” (Ken Fisher). “For most investors, the forecasting power of valuation metrics is pure gospel. With the price-to-earnings ratio of US stocks hovering near 30, many are starting to taking it on faith that these are the last days of the bull market. Yet valuations don’t predict stocks’ direction – and they never have. Heresy? More like history – more than a century of it – proving that today’s lofty PEs mean little.”
“Traders Are Flooding Markets With Risky Bets. Robinhood’s CEO Is Their Cult Hero.” (Wall Street Journal). “Risk-taking is back for individual investors, and few people have done more to stoke those spirits than the 38-year-old Tenev. Robinhood’s trading app makes it easy not just to buy and sell ordinary stocks, but to invest in options, cryptocurrencies and other exotic financial products, even to make sports bets and play the prediction markets. The company’s critics liken the environment to a casino, but its fans credit Robinhood with democratizing the lucrative world of sophisticated investments.”
“Confidently Wrong” (Marginal Revolution). “If you’re going to challenge a scientific consensus, you better know the material. Most of us, most of the time, don’t—so deferring to expert consensus is usually the rational strategy. Pushing against the consensus is fine; it’s often how progress happens. But doing it responsibly requires expertise. This isn’t just my anecdotal impression. A paper by Light, Fernbach, Geana, and Sloman shows that opposition to the consensus is positively correlated with knowledge overconfidence…Light, Fernbach, Geana and Sloman do something clever. They ask respondents a series of questions on uncontroversial scientific topics…The authors then correlate respondents’ scores on the objective (uncontroversial) knowledge with their opposition to the scientific consensus on topics like vaccination, nuclear power, and homeopathy. The result is striking: people who are most opposed to the consensus…score lower on objective knowledge but express higher subjective confidence. In other words, anti-consensus respondents are the most confidently wrong—the gap between what they know and what they think they know is widest.”
What we’re reading (11/24)
“AI Investors Want More Making It And Less Faking It” (Wall Street Journal). “Two events this week illustrate the worsening environment for AI. First, Nvidia and Microsoft pledged to invest $15 billion between them into Anthropic, the No. 2 large language model developer. In turn, it promised to buy $30 billion of computing capacity from Microsoft, using Nvidia chips. This sort of circular deal had led to a nice bump in all the stocks involved in the past—but on Wednesday, nada. Second, Nvidia’s better-than-expected results were hailed by many investors and commentators as proof that there isn’t an AI bubble, and the stock jumped more than 5% on Thursday morning, while smaller AI-related stocks soared. It only took until that afternoon for people to realize that the argument was daft.”
“Wall Street Banks Scramble To Assess Fallout From Hack Of Real-Estate Data Firm” (CNN Business). “Hackers stole a trove of data from a company used by major Wall Street banks for real-estate loans and mortgages, setting off a scramble to determine what was taken and which banks were affected, according to people familiar with the investigation and a statement from the firm. New York-based SitusAMC, which boasts 1,500 clients, said Saturday night that account records and legal agreements related to some of its clients had been impacted in the hack.”
“Vibecessions, Part II” (Paul Krugman). “During the Biden years, inflation did temporarily spike – which people hated even though their incomes were growing fast enough to keep up with inflation. But the anger persisted even as inflation fell dramatically, and continues under Trump…I haven’t found a “unitary theory” of vibecessions. Rather, there appear to be several possible, and not mutually exclusive, explanations…[1] Media negativity [2] Extreme partisanship [3] People care about the level of prices, not the inflation rate [3] The economy is worse than it looks [4] Negative feelings arising from Trump’s chaotic economic policies[.]”
“How Tech Broke The Job Market” (Business Insider). “‘Congestion is the bane of a lot of markets,’ says Alvin Roth, a Nobel Prize-winning economist at Stanford who's helped design programs to better match students with schools, organ donors with patients, and hospitals with new doctors. ‘Successful marketplaces have to fight hard to defeat congestion.’”
“Apple Cuts Jobs Across Its Sales Organization In Rare Layoff” (Bloomberg). “Management notified the affected workers over the past couple of weeks, according to people familiar with the matter. The cuts extended across the sales organization — hitting some teams especially hard — though the company didn’t tell employees how many roles were involved.”
What we’re reading (11/19)
“Nvidia Stock Soars After Q3 Earnings, Forecasts Top Estimates With Sales For AI Chips ‘Off The Charts’” (Yahoo! Finance). “Nvidia (NVDA) reported its third quarter earnings on Wednesday, beating analysts' estimates on the top and bottom lines and offering a better-than-anticipated outlook. For the fourth quarter, Nvidia projects revenue of $65 billion plus or minus 2%. Wall Street was expecting revenue of $62 billion. ‘Blackwell sales are off the charts, and cloud GPUs are sold out,’ CEO Jensen Huang said in a statement.”
“Is AI A Bubble? Not So Fast.” (Tyler Cowen). “It’s far too early to say if AI is a bubble. But the technology’s power to transform society means that believing it’s a bubble can be something of a security blanket.”
“Why The Fed’s December Rate Decision Isn’t The Stock Market’s Biggest Worry” (MarketWatch). “Investors are making too big a deal over whether interest rates will be cut at the December meeting of the Federal Reserve’s interest-rate-setting committee. Interest rates have surprisingly little ability to forecast the stock market’s direction.”
“Private Equity Firms Could Face More Litigation As They Push Into Retail” (Institutional Investor). “Private equity’s push into the wealth and retail channels could lead to class actions from individual investors in a way the sector has not previously experienced. But this increased litigation risk to PE could serve to help indirectly regulate retail investments in private assets, two researchers argue. “Private equity firms are not subject to the same regulations as public companies,” said William Magnuson, professor at the Texas A&M University School of Law. Under the PE model, investors have fewer rights and liquidity can be limited, among other things. In contrast, the SEC requires a long list of disclosures and standards for calculating fees and other expenses. With private equity set to enter 401(k)s, the gap between the two regulatory frameworks could lead to a flood of legal actions against PE firms.”
“Lawsuit Claims Farm Bureau Hid Fraudulent Activity From Insurance Regulators” (Iowa Capital Dispatch). “Two alleged whistleblowers are suing Farm Bureau Property & Casualty Insurance Co. and its affiliates for alleged racketeering, wrongful termination and concealment of information from state regulators. The lawsuit alleges Farm Bureau officials repeatedly concealed from regulators in Iowa and other states instances of fraudulent activity committed by company agents or employees. The defendants’ conduct in the matter amounts to racketeering, obstruction of justice, and mail fraud or wire fraud, the lawsuit claims.”
What we’re reading (11/18)
“Nvidia Results And Delayed Jobs Data Set Up Critical Test For Wall Street” (Wall Street Journal). “A selloff in Nvidia has dragged down indexes, with Peter Thiel’s macro hedge fund and others dumping shares. The tremors extended beyond other AI names into crypto, gold and more. Even Warren Buffett’s latest big-tech bet, on Alphabet, hasn’t stanched the bleeding. America’s richly valued stock market has retreated in similar fashion multiple times during its yearslong run-up. In every instance, bargain hunters snapped up stocks, tech giants pumped out profits and the economy kept motoring ahead.”
“Trump Says He Thinks He Knows His Choice For The Next Fed Chair” (Yahoo! Finance). “President Trump hinted Tuesday that he has started interviewing candidates for the next Federal Reserve chair and said he thinks he knows who his pick will be for the position. ‘I think I already know my choice,’ Trump told reporters in the Oval Office, regarding who will replace outgoing Fed Chair Jerome Powell, whose term ends in May.”
“This Is How Our Economy Comes Crashing Down” (Rebecca Peterson). “Economic growth is robust and stock markets are hovering around record highs. Set on a foundation of supportive fiscal and monetary policy, the tower appears sturdy enough. But a closer inspection shows that an increasing number of structural supports — across businesses, labor markets, consumers and stocks — are looking wobbly. A Jenga-like collapse, meaning an unexpected economic downturn, is not inevitable. But it is a growing, underappreciated possibility.”
“The Crypto Trades That Amplified Gains Are Now Turbocharging Losses” (Wall Street Journal). “Daily total liquidations on crypto exchanges have been on the rise this year. But in October, they shot up to a record high, according to data from CoinGlass, after President Trump’s surprise tariff announcement against China triggered a crypto selloff that compelled exchanges to close out underwater positions.”
“Main Street Bellwether Home Depot Gives Alarming Sales Update That Points To Recession” (Daily Mail). “On Tuesday morning, the home improvement chain said it served fewer customers in the past three months than expected. Its earnings come as Wall Street hits a concerning stretch of losses. In the past week, all three major stock indexes are in the red as investor confidence in AI begins to slide.”
What we’re reading (11/17)
“Market Rout Intensifies, Sweeping Up Everything From Tech To Crypto To Gold” (Wall Street Journal). “An intensifying selloff across financial markets Monday ensnared everything from gold to crypto to highflying tech stocks, dragging the Dow Jones Industrial Average to its worst three-day stretch since President Trump’s tariff turmoil in April. Investors in recent days have dumped assets in the lead-up to key tests for whether the artificial-intelligence boom and economic growth that powered stocks to successive records in 2025 will continue into the new year.”
“Arguments For A Coming Rebound In The Economy” (Torsten Sløk). “The arguments for a rebound in the economy over the coming quarters are that (1) Liberation Day was almost eight months ago, (2) fiscal and monetary policy are easy, and (3) easy financial conditions point to a reacceleration in the economy[.]”
“Fear Engulfs Bitcoin Traders Betting On Free Fall To $80,000” (Bloomberg). “The world’s largest cryptocurrency plunged below $91,500 Monday, deepening a selloff that’s erased all of its gains for the year. In the options market, traders are making increasingly bearish wagers, on the conviction that the slide is far from over as deep-pocketed buyers beat a retreat.”
“The Most Joyless Tech Revolution Ever: AI Is Making Us Rich And Unhappy” (Wall Street Journal). “The dot-com bubble, like the AI boom, had its excesses and absurdity. But it also shimmered with optimism and adventure. From Fortune 500 CEOs to college dropouts, everyone had a web-based business idea. Demand for digitally savvy workers was off the charts. Today, the optimism is largely confined to AI architects and gimlet-eyed executives calculating how much AI can reduce head count while workers wonder whether they will be replaced by AI, or someone who knows AI. Meta Platforms, Microsoft and Amazon, three of the leading purveyors of AI, have all announced layoffs this year.”
“Price Control Apologia” (John Cochrane). “A rent control only makes rental ‘affordable’ for the lucky recipient. It does not make rental housing more ‘affordable’ for society as a whole. It does not increase the number of people who have housing. Indeed it reduces that number. It just changes who gets it. It does not even make housing more ‘affordable’ on average. For those who want it must now pay with time, and inconvenience, or pay by foregoing the great opportunities that moving to the city provided. The biggest losers of rent control are the young, the mobile, the ambitious, immigrants, and people without a lot of cash. If you want to move from Fresno to take a job in San Francisco and move up, and you don’t have millions lying around to buy, you need rentals. Rent control means they are not available. Income inequality, opportunity, equity, all get worse.”
What we’re reading (11/16)
“Stock Market Rally Is Dented As Signs Of Worry Emerge” (New York Times). “Wary of high valuations and potential market potholes, investors are punishing companies that miss earnings expectations more harshly than usual, which some analysts say is an indicator that they are more attuned to signs of stress than shows of strength. On average, companies in the S&P 500 that missed earnings expectations by more than 2 percent fell roughly 4 percent immediately after, while those that beat expectations by more than 2 percent gained only just over 1 percent, according to data from Fundstrat and FactSet.”
“Wall Street Blows Past Bubble Worries To Supercharge AI Spending Frenzy” (Wall Street Journal). “Not long ago, Blue Owl Capital was an upstart investment firm that lent money to midsize U.S. companies such as Sara Lee Frozen Bakery. These days, the firm is financing massive data centers costing tens of billions of dollars for the likes of Meta and Oracle—a sign of just how quickly Wall Street has become the enabler of America’s artificial-intelligence boom. Fund managers such as Blue Owl amassed trillions of dollars of investing firepower and have been hunting for big deals where they can put that money to work. They found slim pickings for years until a perfect match appeared in AI, which has provided a bigger target than anything in history due to the vast sums tech companies need to ramp up computing power.”
“The Hole Lurking In Big Tech’s Trillion-Dollar AI Blitz” (The Telegraph). “The threat of faster-than-expected depreciation is important because companies account for the cost of IT hardware assets over several years. Recently, tech giants have taken the view that Nvidia’s graphics processors will remain effective and profitable for longer, increasing their expected lifespans from three to five years. If these estimates are right, it will result in a huge boost to profits. If they are wrong, the tech giants will be forced into significant write-downs. Over time, their chips will begin to wear out, break, or become obsolete, compounding fears that tech companies have overstretched themselves to keep the AI show on the road. Commenting on Meta’s results in July, Jim Chanos, the investor who predicted the collapse of US energy giant Enron, said: ‘If the true economic life of its GPUs [graphics processing units] is actually two to three years, most of its ‘profits’ are materially overstated.’”
“Americans Really Want Their Cheap Stuff Back” (Business Insider). “[P]eople are tired of being surprised at how expensive everything is and increasingly annoyed that their paychecks aren't going as far, too. A Washington Post-ABC News-Pisos poll from October found that 71% of American adults say they're spending more money on groceries compared to a year ago. Many consumers have hoped prices would fall — they don't realize that, in many cases, the best they can hope for is for them to stop rising so much.”
“Are We Nearing The End Of Apple’s Tim Cook Era?” (TechCrunch). “The company’s board and senior executives are reportedly preparing for the possibility that Tim Cook could step down as CEO as soon as early next year. This would come after Apple’s earnings report in late January, giving the new leadership team time to settle into their roles before Apple’s big events like the Worldwide Developers Conference in June.”
What we’re reading (11/14)
“‘Buy The Dip’ Investors Save Stocks From A Brutal Week” (Wall Street Journal). “A selloff that thrashed U.S. stocks and extended into international markets ran headlong Friday into one of the most powerful forces in America’s multiyear rally. After the opening bell rang in New York Friday, shares in Nvidia, Oracle and other companies at the heart of the artificial-intelligence boom careened low enough to flash a green light for dip-buyers. Stocks quickly pared much of their losses, clawing back enough ground for major indexes to finish the week mixed.”
“Why Gen Z Hates Work” (The Free Press). “When you spend hours each day watching influencers get rich without much effort, you forget what it takes to succeed in this world.”
“He’s Been Right About AI For 40 Years. Now He Thinks Everyone Is Wrong.” (Wall Street Journal). “Meta Chief Executive Mark Zuckerberg has been pouring countless billions into the pursuit of what he calls ‘superintelligence,’ hiring an army of top researchers tasked with developing its large language model, Llama, into something that can outperform ChatGPT and Google’s Gemini. LeCun, by his choice, has taken a different direction. He has been telling anyone who asks that he thinks large language models, or LLMs, are a dead end in the pursuit of computers that can truly outthink humans…‘I’ve been not making friends in various corners of Silicon Valley, including at Meta, saying that within three to five years, this [world models, not LLMs] will be the dominant model for AI architectures, and nobody in their right mind would use LLMs of the type that we have today,’ the 65-year-old said last month at a symposium at the Massachusetts Institute of Technology.”
“‘Take Money Out Of Wall Street’: The Debate Animating The Fed Chair Race” (Politico). “[I]in the race to replace Powell, much of the conversation has focused on something that doesn’t feel particularly Trump-y: limiting the size of the Fed’s financial holdings. Trump, famously, loves low rates. He has said repeatedly that he wants lower mortgage rates and to reduce the amount of interest that the federal government pays on its debt. And yet, momentum seems to be building toward curbing a Fed tool that is aimed at doing exactly that. The reason why the U.S. central bank’s holdings are so large — well in excess of $6 trillion — is that the institution acted during the past couple of crises to stimulate the economy beyond just lowering short-term interest rates to zero. To drive down longer-term rates, which are more important to borrowers looking to finance the purchase of a home or a car, the Fed also grew its balance sheet by snapping up trillions of dollars in U.S. government debt and mortgage-backed securities. Now, Trump allies are debating whether the Fed should do less in the next recession.”
“Norway's Wealth Tax Unchains a Capital Exodus” (CitizenX). “Norway's wealth tax increase, expected to raise $146M, led to a $448M net loss as $54B in wealth left the country, reducing tax revenue by $594M.”
What we’re reading (11/13)
“Investors Dump Tech Shares As Shutdown Relief Evaporates” (Wall Street Journal). “Wall Street’s relief at the end of the government shutdown gave way on Thursday to new fears about a flood of delayed economic data, the prospect of slowing interest-rate cuts and the extreme valuations of tech giants. U.S. stocks posted their worst day in a month, unwinding a rally that began with news of a deal to end the federal government’s longest closure. Declines were broad, with tech stocks sliding alongside the Dow Jones Industrial Average, which lost almost 800 points. Shares of smaller companies dropped, with the Russell 2000 index losing 2.8%. Bitcoin extended a recent fall, slipping back below $100,000 to its lowest 4 p.m. level since May.”
“Hedge Funds Are Still Dumping Stocks While Retail Investors Keep The Bull Market Alive” (CNBC). “Professional investors have been using the market’s record-setting run as an opportunity to take profits, while retail investors have been doing much of the heavy lifting in the latest run of the three-year-old bull market. Hedge funds and other institutional clients have been the biggest net sellers of single stocks and exchange-traded funds this year, unloading more than $67 billion worth of equities in 2025, according to the latest client-flow data from Bank of America.”
“Foreclosures Surge 20% As Americans Struggle To Pay Mortgages — And Fears Of 2008-Style Crash Soar” (Daily Mail). “The rise is stirring uncomfortable memories of 2008, when a wave of foreclosures triggered the worst housing crash in modern US history. Back then, millions of Americans had adjustable-rate subprime mortgages that borrowers could not afford to pay. The fallout wiped out trillions in household wealth and pushed major banks to the brink, tipping the global economy into recession. Today's homeowners have safer loans, but experts warn that high borrowing costs, soaring insurance premiums, and dwindling savings could again push struggling families into default.”
“You Can Now Invest In A Hedge Fund Dedicated To Hermès Bags” (Forbes). “Stocks, bonds and commodities are the name of the game for most hedge funds. But Luxus has a unique investment: Hermès bags. The venture-backed wealth-tech company focused on luxury investments, which was founded by ex-Blackstone exec Dana Auslander, just unveiled two Hermès-only funds dedicated to Birkin and Kelly bags, treating them as investment-grade assets…Backed by Christie’s, as the world's first Hermès-dedicated investment fund strategy, the initial fund raised $1 million in May and realized a 34% net ROI, with a 43-day average resale timeline.”
“Causation Does not Imply Variation” (John Cochrane). “Tyler Muir suggested this lovely catchphrase, which should stand next to ‘Correlation does not imply causation’ in our menagerie of econometric sayings. ‘Do changes in x cause changes in y?’ does not answer the question ‘what are the most important causes of variation in y?’ Many identified causal effects explain very little variation, and we know there are many other sources of variation. People often jump from one to the other without stopping to think.”
What we’re reading (11/12)
“Why Buying The Biggest Stock-Market Losers Can Be A Winning strategy” (MarketWatch). “[I]t’s human nature to chase performance — favoring those stocks that are doing the best and avoiding those whose recent returns are at the bottom. But history teaches us that the contrarians are on to something. Consider a hypothetical portfolio that each month owned the 10% of stocks with the worst performance over the prior month. Since 1926, according to data compiled by Dartmouth’s Ken French, this portfolio produced an annualized gain of 13.2%. That’s 8.9 annualized percentage points better than a second portfolio that owned the decile of stocks with the prior month’s best returns. The source of this so-called short-term reversal effect, according to a consensus of researchers, is overreaction by investors: They exaggerate both the good news surrounding a stock that is performing well and the bad news about a stock that is losing. It therefore doesn’t take much for a stock that is losing to beat expectations and for a winning stock to fall short — thereby causing the prior loser to beat the prior winner.”
“FanDuel To Debut Prediction Market App To Fend Off Competitors” (Bloomberg). “FanDuel, the US online gambling division of Flutter Entertainment Plc, is launching its own prediction market product, which will allow it to open up in states where traditional sports betting is illegal and deal with competitive pressure from new startup exchanges in the space. The company plans to introduce a new mobile app in December, FanDuel Predicts, where users can bet on the outcome of sports and economic indicators, the company announced on Wednesday at the same time that it released quarterly financial results that fell short of analysts’ expectations.”
“Do Gamblers Invest Differently?” (Joachim Klement). “People who are at higher risk of problem gambling also tend to trade more in stock markets. So a propensity to gamble translates into investment behaviour. And we know that people who trade more tend to have worse returns due to transaction costs and other frictions that eat away at the returns. Hence, in real life, people who are naturally inclined to gamble should also have lower returns. Most people trade less in a low-volatility market, which means that as long as markets remain calm, their returns should be better. But for the most extreme gamblers, it doesn’t matter whether the market is low volatility or high volatility. They will always trade a lot. They truly are compulsive gamblers, no matter the environment they are in.”
“Streaming Prices Are Soaring—And Consumers Are Still Paying” (Wall Street Journal). “In recent weeks, the streaming platforms HBO Max, Hulu and Disney+ all hiked prices for at least some of their services. Netflix did so in January, Peacock unveiled increases in July, and Apple TV detailed its latest bump in August. Paramount said Monday it would raise the price of Paramount+ early next year…Despite the price hikes, households aren’t significantly recalibrating their subscription habits.”
“Artificial Intelligence, Competition, And Welfare” (Susan Athey and Fiona Scott Morton). “We study how market power in artificial intelligence (AI) shapes wages and welfare in open-economy general equilibrium by treating AI as a priced, imported factor…When AI reduces unit costs and increases variety, it will not pull U from non-tradables, instead it will displace workers from the AI-using sector and lower wage due to diminishing returns in alternative sectors. Strategic upstream pricing of AI then harms welfare through unit-cost (usage fees) and variety (access fees) channels, with income leakage abroad.”
What we’re reading (11/11)
“Brokers And Bubbles” (Owen Lamont). “How can you tell if you’re in a speculative bubble? Well, bubbles are all about frenzied trading activity. And who benefits from frenzied trading activity? Brokers and other providers of trading services. Just as it’s profitable to sell picks and shovels during a gold rush, it’s profitable to sell trading services during a speculative bubble. Thus, when retail brokerages are extremely successful, that’s a clue that you may be in a bubble. Today, retail broker stocks are ripping. As shown in Figure 1, Robinhood is up more than 15x in the past two years, with Interactive Brokers up more than 3x. Both were added to the S&P 500 this year (Interactive Brokers in August and Robinhood in September).”
“Anthropic Is On Track To Turn A Profit Much Faster Than OpenAI” (Wall Street Journal). “The finances of Silicon Valley’s two largest artificial-intelligence startups show their diverging approaches to the AI boom, with Anthropic on a pace to turn a profit far more quickly than rival OpenAI, according to documents obtained by The Wall Street Journal. Anthropic, which has a growing number of business users because of the capabilities of its Claude chatbot in coding and other arenas, expects to break even for the first time in 2028, the documents show.”
“AI Fueled The Stock Market Rally. Earnings Are Now Giving It Staying Power.” (Yahoo! Finance). “After a year dominated by artificial intelligence headlines, Wall Street’s bull case is shifting toward something more fundamental to stocks: earnings power that’s beginning to broaden beyond Big Tech. Morgan Stanley, UBS, and other major firms are pointing to a clear throughline this earnings season: Profits are strong, margins are stabilizing, and growth, while still concentrated in AI-heavy tech, is beginning to spread.”
“SoftBank Just Sold Out Of Nvidia. Should You?” (CNBC). “Nvidia briefly tumbled nearly 4% Tuesday after the Japanese investment firm said it zeroed out its position in the AI chipmaker for $5.8 billion. That left investors wondering if SoftBank’s decision to exit the stock was a bad omen for Nvidia’s future stock performance, or if it was simply taking profits on a market leader.”
“The Roman Empire’s Entire Road Network Just Got Mapped, And It’s Mind-Blowing” (Gizmodo). “They say all roads lead to Rome—but exactly how many Roman roads were there? According to new research, potentially over 68,000 miles (over 110,000 kilometers) more than previously known. Meet Itiner-e, a new high-resolution digital dataset and map of the Roman Empire’s roads around 150 CE. A team of researchers used archaeological and historical records, topographic maps, and satellite imagery to create the behemoth, which charts 185,896 miles (299,171 km) of roads across almost 1,544,409 square miles (4,000,000 square km).”
What we’re reading (11/10)
“Investing In AI: The View From One Big Investor” (Wall Street Journal). “[Laela] Sturdy [of CapitalG:] AI companies are growing almost five times faster than the software companies that came before them, which is good and bad. It’s good because it demonstrates the market pull. You can really understand the customer value that’s being provided. But things like differentiation and moats [that is, whether a company has a durable, competitive advantage] are a lot more challenging to assess.”
“State Street Buys Private-Sector Inflation Data Provider” (American Banker). “On Monday, State Street Corporation announced that it has acquired PriceStats, a for-profit gatherer of daily inflation statistics. The Boston-based holding company of State Street Bank and Trust Company did not disclose the price of the acquisition. State Street had already been exclusively partnering with PriceStats since 2011, providing the custody bank's clients with proprietary data on the prices of goods and services. But acquiring the Cambridge, Massachusetts-based company outright, State Street said, will allow its research to go further.”
“Why The Buzziest IPO In History May Never Happen” (CNN Business). “ It’s a tad early for 2026 predictions, but given how the past few weeks have gone for OpenAI, I’ll offer one of my own: OpenAI isn’t going public. Not in 2026, anyway. Maybe not ever.”
“Trump Tariff Trouble” (Paul Krugman). “…the prize for doublethink surely went to Trump’s pitiful Solicitor General, John Sauer. With the Justices suggesting that Trump’s tariffs infringe on Congress’s unique right to set tax rates, Sauer declared that ‘they are not revenue-raising tariffs’. That’s essentially an impossible position to argue[.]”
“Paramount Skydance Expects Another $1B In Merger Savings As David Ellison Resets Spending” (CNBC). “Paramount Skydance said on Monday it expects $1 billion more in merger savings than it previously forecast as it outlines CEO David Ellison’s ambitions for the company. The update came in Paramount’s third-quarter earnings report — the company’s first since its merger closed in early August. Ellison has been investing heavily in streaming and content, including live sports rights, and paying for it in part with cuts to other parts of the business. Paramount on Monday announced a new round of layoffs, affecting roughly 1,600 employees, tied to divestitures of assets in Argentina and Chile. Those cuts come weeks after Paramount began the process to lay off approximately 1,000 employees.”