What we’re reading (1/8)
“The Stock-Market Rally Isn’t Just About Tech Anymore” (Wall Street Journal). “Investors are finally showing love to companies outside of the tech sector. Growing economic optimism, along with a more cautious view of the artificial-intelligence build-out, is prompting a major “rotation trade” on Wall Street, with investors selling technology stocks and buying up the shares of most every other type of business.”
“Why Big Tech Stocks Are So Much More Attractive Than They Were Only Two Months Ago” (MarketWatch). “For most Big Tech stocks, forward price/earnings ratios have declined recently, and it is not only because share prices have fallen. Forward price/earnings ratios are current stock prices divided by consensus 12-month earnings-per-share estimates among analysts working for brokerage and research firms. For this article, the forward P/E ratios are based on LSEG’s “smart estimates,” which are adjusted weekly to remove extreme outliers among the analysts’ estimates, as well as individual estimates that have not been revised recently.”
“This Simple Metric Could Predict Future Stock Market Returns” (Morningstar). “groundbreaking study, published in the September 2025 issue of the International Review of Economics & Finance, reveals that a surprisingly simple metric—the difference between current S&P 500 earnings yield and long-term real Treasury Inflation-Protected Securities yield—has significant power to possibly predict stock market returns. The research demonstrates that when actual returns deviate from this baseline prediction, these deviations are systematically related to inflation, monetary policy, and economic fundamentals, offering investors a new lens for understanding market dynamics.”
“Rebuilding Ukraine Could Be Top European Investment Theme Of 2026” (Joachim Klement, Reuters). “Rebuilding is expected to cost around $524 billion over the next decade, and it will likely be financed mainly by the European Union and the private sector. Brussels has signalled that, in exchange for its support, it expects European companies to win the bulk of rebuilding contracts. Washington is likely to attach similar conditions, steering any money invested in Ukraine’s reconstruction back toward U.S. contractors.”
“Artificial Intelligence Begins Prescribing Medications In Utah” (Politico). “The state has launched a pilot program with health-tech startup Doctronic that allows an AI system to handle routine prescription renewals for patients with chronic conditions. The initiative, which kicked off quietly last month, is a high-stakes test of whether AI can safely take on one of health care’s most sensitive tasks and how far that could spread beyond one AI-friendly red state.”
What we’re reading (1/7)
“Trump Wants To Bar Wall St. Investors From Buying Single-Family Homes” (New York Times). “President Trump said he wanted Congress to take immediate steps to stop private equity firms and other large investors from buying more single-family homes, embracing a position with populist appeal that has long failed to gain broader traction. Mr. Trump’s announcement, which he made in a social media post on Wednesday, is aimed at Wall Street-backed firms that for years have bought up homes and rented them out. Critics say this business has driven up prices in some markets and made it hard for first-time buyers to purchase homes.”
“Trump Blocks Defense Company Payouts Until Arms Production Speeds Up” (Yahoo! Finance). “U.S. President Donald Trump vowed to block defense contractors from paying dividends or buying back shares until they speed up weapons production, a rare presidential strike at Wall Street norms that sent defense stocks tumbling and signaled sweeping changes for America’s military-industrial complex.”
“Anthropic Raising $10 Billion At $350 Billion Value” (Wall Street Journal). “Anthropic, the developer of the chatbot Claude, plans to raise $10 billion at a valuation of $350 billion before the new investment, according to people familiar with the matter, nearly doubling its valuation from four months ago. GIC, Singapore’s sovereign-wealth fund, and Coatue Management plan to lead the new financing, the people said. The funding round, the third megadeal in the past year, follows a $13 billion investment in September that valued the company at $183 billion.”
“Why Bonds Now Look Like A Better Bet Over Stocks And Gold” (MarketWatch). “Contrarian investors are betting that bonds will outperform both stocks and gold in coming months. That’s because bond market-timers are highly pessimistic right now, kicking bonds out of favor. In contrast, stock and gold market timers are quite optimistic — even to the point of irrational exuberance. In just 15% of trading days since 2000 has the average bond-timer been more pessimistic than currently. In contrast, the average market-timer who focuses on the broad stock market is at the opposite end of the sentiment spectrum. In just 4% of all trading days over the past 25 years has this average stock-market timer been more optimistic than now. The average gold timer is almost as exuberant — 27% of the time over the past 25 years was the average timer more optimistic than today.”
“The Venezuelan Stock Market” (Marginal Revolution). “‘Venezuela’s stock market is now up +73% since President Maduro was captured. Since December 23rd, as President Trump ramped up pressure on Maduro’s government, Venezuela’s stock market is up +148%.’ Here is the link and chart. And up seventeen percent in the last day, and now some more on top of that. Note the bolivar is down only a small amount since December 23. I see the reality as such: a) Immoral actions were taken, leading up to the removal of Maduro, and immoral measures are likely to continue, both from the United States and from various Venezuelan replacement governments. b) Trump’s actions have been some mix of unlawful and unconstitutional, to what degree you can debate. c) In expected value terms, the people of Venezuela are now much better off. It can and should be debated how much a) and b) should be weighted against c). But to deny c), or even to fail to mention it, is, I think, quite delusional. Effective Altruists, are you paying attention?”
What we’re reading (1/5)
“Dow Jumps Nearly 600 Points To Close At A Record As Markets Rally After U.S.-Venezuela Action” (CNBC). “Stocks rose on Monday even after the U.S.’ attack on Venezuela and capture of leader Nicolas Maduro as crude oil prices saw gains and investors bet the action would not lead to bigger geopolitical conflicts that upset markets.”
“A Mystery Trader Made $400,000 Betting On Maduro’s Downfall” (Wall Street Journal). “The trader’s final bet came at 9:58 p.m. ET on Friday, shortly before President Trump ordered the military to move forward. Such contracts were priced at just 8 cents apiece, implying that Polymarket users saw only an 8% probability of the Venezuelan strongman losing power this month, the platform’s data shows. Several hours later, news broke of the U.S. operation to capture Maduro and the contracts shot up in value. In the end, the trader earned nearly $410,000 in profit on about $34,000 worth of wagers. More than half the value of the total wager was placed the evening before the attack.”
“Chevron And Exxon Stocks Jump. Here’s What Analysts Are Saying About Big Oil Companies After Maduro’s Capture.” (MarketWatch). “Shares in the oil sector were flying on Monday as investors scrambled to assess what the capture of Venezuela’s President Nicolás Maduro could mean for the industry. While fresh geopolitical headlines appeared to have little impact on U.S. stocks or crude, the big oil names were moving as some investors gauged future access to oil reserves in the country.”
“Wall Street Sees Another Banner Year For Markets. Could Anything Stop It?” (New York Times). “To many investors, it feels as if the S&P 500 is on autopilot, with nothing but rising returns on the horizon. Last year, the benchmark index racked up 39 record highs — after 57 the year prior — on the way to an annual gain of 16.4 percent. Wall Street expects more of the same this year. Analysts polled by FactSet have forecast, in aggregate, that the benchmark index’s price target will finish 2026 a whisker below 8,000 — at 7,968.78. That would imply, yes, another 16 percent gain from Wednesday’s year-end close of 6,845.50, and would put the S&P 500 on its best four-year pace since the 1990s, according to Bloomberg.”
“What We Learned About Microplastics In 2025” (Washington Post). “They found the plastics were not only entering the brain — they were actually accumulating there. Brains of people who died in 2024, for example, had significantly higher concentrations of microplastics than the brains of people who died in 2016. And there was no correlation between the amount of microplastics and the age of the person at the time of their death.”
What we’re reading (1/4)
“Wall Street Expects The Market To Keep Rallying In 2026 Despite Lofty Valuations” (Wall Street Journal). “Wall Street is betting that falling interest rates and strong corporate earnings will be enough to eke out yet one more year of stock-market gains. It’s going to be close. After posting double-digit percentage increases for three straight years, from 2023 through 2025, the S&P 500 and other major U.S. indexes enter year four of their rally with stretched valuations on many big stocks and a cloudier economic picture. There are enough positives to give investors and analysts hope, but some worry there isn’t enough to keep up the pace of 2025.”
“December Jobs Numbers Get Data Back On Track During First Full Week Of Trading In 2026: What To Watch” (Yahoo! Finance). “Stocks finished trading on Friday — the second-to-last session of the ‘Santa Claus rally’ period — with the Dow Jones Industrial Average leading the major indexes higher to open the new year as investors began to evaluate the 2026 landscape.”
“Asian Markets Rise, Defense Stocks Lead After U.S. Captures Venezuela’s Maduro” (CNBC). “Asia-Pacific markets began the first full trading week of 2026 on a stronger note after the U.S. said it had attacked Venezuela and captured President Nicolas Maduro over the weekend. Oil prices edged lower as markets weighed the potential impact of geopolitical tensions.”
“U.S. Interventions In The New World, With Leader Removal” (Marginal Revolution). “I wish to focus on cases where the key leaders actually were removed. After all, we know that is the case in Venezuela today. Maybe these efforts were rights violations, or unconstitutional, and yes that matters. But how did they fare in utilitarian terms? […] the utilitarian in you, at least, should be happy about Venezuela, whether or not you should be happy on net. You should note two things. First, the Latin interventions on the whole have gone much better than the Middle East interventions. Perhaps that is because the region has stronger ties to democracy, and also is closer to the United States, both geographically and culturally. Second, looking only at the successes, often they took a long time and/or were not exactly the exact kinds of successes the intervenors may have sought.”
“Dow, S&P 500, Nasdaq Futures Steady After US Intervention In Venezuela, Arrest Of Maduro” (Yahoo! Finance). “US stock futures were little changed Sunday night as investors assessed geopolitical developments following a US military operation in Venezuela that led to the removal and arrest of President Nicolás Maduro.”
What we’re reading (1/2)
“Global Stocks’ Great Year Was About More Than The Dollar” (Wall Street Journal). “Dollar worries definitely dominated the headlines in 2025 with “de-dollarization” entering the mainstream lexicon. Worries over the U.S. fiscal path and its political volatility helped power not just foreign stocks, but also gold and crypto. But the dollar’s slide hardly explained everything about non-U.S. stocks’ performance. Global equity strategists at Goldman Sachs, who had recommended global diversification for investors in 2025, broke down the individual performance of several major national indexes by four factors: earnings growth, valuation multiple, dividends and currency adjustments.”
“107% Tariffs On Italian Pasta No Longer Set To Take Effect” (CNN Business). “Most products from the European Union are already subject to tariffs of at least 15%. The pasta-specific tariffs, initially proposed in October at 92%, would have subject Italian pasta to a total rate of 107%. The newly announced rates would put the levies between 24% and 29%.”
“Bridgewater, D.E. Shaw Among Top Hedge Fund Gainers Of 2025” (Bloomberg). “Bridgewater Associates’ flagship money pool posted record gains, while D.E. Shaw & Co.’s strategies soared as much as 28% to rank among the biggest hedge fund winners of 2025 when tariff-fueled market uncertainty presented a fertile hunting ground for traders. Bridgewater’s Pure Alpha II macro fund returned 34% last year, its best ever, while the All Weather strategy rose 20%, a person with knowledge of the matter said, asking not to be identified discussing private information. D.E. Shaw’s flagship multistrategy Composite hedge fund gained 18.5% and Oculus made an estimated 28.2%.”
“Self-Driving Cars Aren’t Nearly A Solved Problem” (Yarrow Bouchard). “Contrary to popular belief, Waymos aren't actually fully autonomous, and the problem is harder than it may seem.”
“US On Verge Of Losing Measles Elimination Status As Outbreak Surges In South Carolina” (The Mirror). “The United States is on the verge of losing its measles elimination status as cases surge amid an ongoing outbreak in South Carolina, where hundreds are in quarantine.”
December performance update
Prime: -1.24% (-0.23% LTM)
Select: +7.15% (+44.05% LTM)
SPY ETF: +0.76% (+17.72% LTM)
Bogleheads Portfolio (80% VTI + 20% BND): +0.55% (+18.36% LTM)
January picks available now
The new Prime and Select picks for January are available starting now, based on a model run put through today (December 31). As a note, I will be measuring the performance on these picks from the first trading day of the month, Friday, January 2, 2026 (at the mid-spread open price) through the last trading day of the month, Friday, January 30, 2026 (at the mid-spread closing price).
January picks available soon
I’ll be publishing the Prime and Select picks for the month of January before Friday, January 2 (the first trading day of the month). As always, SPC’s performance measurement for the month of December, as well as SPC’s cumulative performance, will assume the sale of the December picks at the closing price (at the mid-point of the closing bid and ask prices) on the last trading day of the month (Wednesday, December 31).
What we’re reading (12/29)
“Every Wall Street Analyst Now Predicts A Stock Rally In 2026” (Bloomberg). “At the big banks and the boutique investment shops, an optimistic consensus has taken hold: the US stock market will rally in 2026 for a fourth straight year, marking the longest winning streak in nearly two decades.”
“Gold, Silver Plunge After Historic Rally: ‘When It Gets This Stretched, Be Careful’” (Yahoo! Finance). “Gold and silver tumbled after touching record highs, bringing a parabolic move in the precious metals space to a screeching halt. Gold futures fell 4.5% to just above $4,340 per troy ounce. Silver futures dropped nearly 8% after briefly touching $80 per ounce.”
“Why The A.I. Rally (And The Bubble Talk) Could Continue Next Year” (DealBook). “If there is one question that has been asked more than any other this year in the business world, it is this: Are we in an artificial intelligence bubble? DealBook’s managing editor, Brian O’Keefe, takes a look at all the arguments for and against that possibility — so you can make up your own mind.”
“Medical Breakthroughs In 2025” (Scientific Discovery). “when I read most science journalism, hardly any of it mentions these achievements, the stream of innovation, or explains what is still untreatable and why. There's instead far too much hyping up of preliminary studies – what caused/cured cancer in six mice, for example – and much less about what’s changing people’s lives right now, let alone how much people’s lives have changed over the decades. So, since last year, I’ve been writing round-ups of the biggest breakthroughs in medicine and putting them into context to give you a sense of where we are.”
“The Case Of The $400,000 Massachusetts Lobster Heist” (Wall Street Journal). “New England is known for lobster. But lately, it is known for the lobsters that went missing. Thieves allegedly stole a truckload of lobster valued at $400,000 from a Massachusetts facility earlier this month. The scheme was complex, according to Dylan Rexing, chief executive of Rexing Cos., the logistics firm that was coordinating the shipment. The first part allegedly involved a phishing scam, and not of the seafood kind. According to Rexing, a culprit ever so slightly altered the email domain name of a real trucking company. The logistics firm hired what turned out to be a fraudulent entity, he said. Then, a perpetrator arrived on Dec. 12 to collect the lobster shipment at a Taunton, Mass., cold-storage center, run by a third party, where a Rexing customer was storing the lobster. Rexing said he believes the culprit impersonated a carrier by presenting a fake commercial driver’s license. The culprit’s tractor-trailer had the real trucking company’s name and trailer number on the side, he said.”
What we’re reading (12/28)
“In A Wild Year For Markets, Investors Who Did Nothing Did Just Fine” (Wall Street Journal). “Markets were assailed by a trio of disruptive forces this year. Yet investors were rewarded for doing nothing. If you owned U.S. stocks at the start of the year, you made good money. If you owned foreign stocks, even better. If you held Treasurys, you did well. And if you parked up in cash, the yield stayed high. But doing nothing was hard as tariffs, loss of trust in America and artificial intelligence whipsawed portfolios. Streetwise spent the year documenting these three major market themes, and the wild ups and downs they sparked.”
“Americans Hate AI. Which Party Will Benefit?” (Politico). “It’s become a common occurrence: Michigan Gov. Gretchen Whitmer posts a light-hearted video on social media. She’s Christmas shopping, or she’s talking about her Michigan accent or she’s touting her administration’s accomplishments. And immediately, the comments start rolling in, all demanding the same thing: Say no to data centers in the state. Stop construction. ‘All I want for Christmas is legislation banning data centers in Michigan.’”
“Pope Leo Prepares To Outline Stance On AI” (Semafor). “AI safety proponents are looking to the leader of the Catholic Church for help establishing guardrails on the fast-moving technology. A public letter from Pope Leo XIV is expected in the coming weeks, Transformer reported, establishing ‘a clear moral stance on both the dangers and opportunities posed by the technology.’ Leo — who picked his papal name from a pope who led the Church through another period of technological transformation — has signaled he is prioritizing AI and has overseen several meetings dedicated to the topic. Such Vatican guidance might not normally make waves, but Catholicism has seen a resurgence in the US in recent years, particularly in Silicon Valley, while AI is becoming salient politically.”
“He Was A Supreme Court Lawyer. Then His Double Life Caught Up With Him.” (New York Times). “Thomas Goldstein was a superstar in the legal world. He was also a secret high-stakes gambler, whose wild 10-year run may now land him in prison.”
“The School That Churns Out America’s Auctioneers” (Wall Street Journal). “The first thing you notice as people file into a Best Western hotel conference room for the first morning of auction school is nobody has coffee. It dries out the throat. Students stand in a circle as an instructor, Rusty Trzpuc, who wears a leather belt imprinted with the word ‘sold’ on the back, claps out a metronomic beat. The group chants tongue-twisters and numerical sequences, forward and backwards, in unison, guided by his rhythm. ‘Lean in,’ Trzpuc yells to one participant. He pivots. ‘Lighten up on the arm gestures,’ he shouts to another. ‘Palms up, invite those bids,’ he hollers to everyone. Welcome to the Western College of Auctioneering in Bozeman, Mont., a major training ground for a profession that is critical to the sale of cars and cattle in America. Since it was founded in 1948, the school has matriculated over 5,000 students, who also auction everything from real estate to farm equipment to fine art.”
What we’re reading (12/27)
“Companies Are Outlining Plans For 2026. Hiring Isn’t One Of Them.” (Wall Street Journal). “The corporate playbook for next year? Don’t hire. Companies are looking to stay lean into 2026 while relying on technology to take on more tasks. Forecasters at jobs site Indeed expect relatively minimal hiring growth in 2026 and e-commerce platform Shopify and Chime Financial are already vowing to keep the size of their employee bases roughly flat.”
“Rates Higher For Longer Continues” (Apollo). “Fiscal and inflation worries are putting upward pressure on long-term interest rates across the G3, and these concerns are not going away anytime soon...The bottom line is that long-term interest rates are going to stay higher for longer and investors should plan accordingly.”
“Beyond The 12-1 Rule” (Larry Swedroe). “Not all trading days contain equal amounts of new information. Consider these scenarios: Scenario A: A pharmaceutical company’s stock rises 5% on a random Wednesday with no news and light trading volume. This could be noise, perhaps driven by a large institutional rebalancing or temporary supply-demand imbalances. Scenario B: The same pharmaceutical company’s stock rises 5% immediately after announcing positive Phase 3 trial results during an earnings call. This return is directly tied to fundamental, value-relevant information. Traditional momentum strategies can’t distinguish between these scenarios—both contribute equally to the stock’s ranking. But intuitively, Scenario B contains far more predictive signal about future returns.”
“Bankruptcies Soar As Companies Grapple With Inflation, Tariffs” (Washington Post). “Corporate bankruptcies surged in 2025, rivaling levels not seen since the immediate aftermath of the Great Recession, as import-dependent businesses absorbed the highest tariffs in decades. At least 717 companies filed for bankruptcy through November, according to data from S&P Global Market Intelligence. That’s roughly 14 percent more than the same 11 months of 2024, and the highest tally since 2010.”
“Three In Four Americans Say Groceries Are So Expensive They’ve Been Forced To Cut Down On Other Spending” (Fortune). “More than 2 in 3 respondents (67.6%) said that they’re struggling to pay grocery bills because of inflation and rising food prices, according to a survey by Swiftly, which provides digital and media solutions for brick-and-mortar supermarkets. More than 3 out of 4 (75.2%) responded that they’ve reduced spending in other areas to afford groceries, and in a follow-up question selected what areas they’ve cut spending in the most to pay grocery bills, with entertainment spending the most likely to be cut, followed by spending on travel, clothing, and going out to eat or drink.”
What we’re reading (12/26)
“America’s Biggest Oil Field Is Turning Into A Pressure Cooker” (Wall Street Journal). “Shale drillers have turned the biggest oil field in the U.S. into a pressure cooker that is literally bursting at the seams. Producers in the Permian Basin of West Texas and New Mexico extract roughly half of the U.S.’s crude. They also produce copious amounts of toxic, salty water, which they pump back into the ground. Now, some of the reservoirs that collect the fluids are overflowing—and the producers keep injecting more.”
“Gold, Silver Bulls Taunt Bitcoin Investors Amid Parabolic Rally: ‘Time Has Come’ To Switch” (Yahoo! Finance). “On Friday, gold futures rose above $4,550 to hover at or near record highs, capping a year marked by more than 50 such records. Meanwhile, silver also jumped over $75 per ounce, extending its year-to-date gains to 150% in a parabolic rally driven by concerns about physical shortages during a time of robust industrial demand. Platinum and copper have also soared to records this year.”
“AI Made Tech Billionaires Even Richer This Year. Here’s How Much.” (MarketWatch). “This has been a great year for artificial-intelligence companies, which launched model after model and ramped up spending. AI has also made a lot of rich people much richer. More than 50 individuals involved in the AI sector became billionaires this year, Forbes reported on Thursday. Many of those people are entrepreneurs involved in startups, such as the seven co-founders of Anthropic, which nearly tripled its valuation in less than a year.”
“Why Private-Equity Millionaires Love South Dakota” (Wall Street Journal). “South Dakota is one of a handful of states, including Nevada, Wyoming and Alaska, that have no income tax and allow people who set up trusts to also be a beneficiary of them. Proponents say the state offers a host of other benefits for trusts—including protection of assets from creditors and the ability to last forever—that tip the scales in its favor.”
“Which Published Results Can You Trust?” (Marginal Revolution). “[T]rust literatures, not individual research studies. By a ‘literature,’ I mean the collective work conducted by many researchers, acting in decentralized fashion, to publish and circulate the results that will best persuade other researchers. Second, treat research articles, or their popular media coverage, as possibilities to put in your mental toolbox rather than settled truths.”
What we’re reading (12/20)
“The United States Of Fraud” (Business Insider). “Against that backdrop [of AI], some people have turned to petty fraud, policy abuse, and small acts of sabotage as a means of getting back at their economic overlords. They're engaging in spurts of shoplifting, taking part in return shenanigans, and using their credit cards for ‘friendly fraud’ that's anything but. They see — or at least excuse — these acts not as stealing but as small moments of deserved vengeance in a system that violates their sense of basic fairness at every turn.”
“When AI Comes To Town” (Sherwood). “A Delaware company called Laidley LLC wanted to build ‘a multi-billion-dollar datacenter campus in the Parish resulting in several hundred new good paying jobs,"‘ according to the text of the resolution, published later in the local newspaper. At a special meeting, in the middle of the day on a Thursday, the commissioners passed the plan with no opposition. It set a course for the transformation of hundreds of acres of state-owned farmland into a modern-day AI factory.”
“These Air-Traffic Controllers Are Leaving Their Jobs—And Heading To Australia” (Wall Street Journal). “Chris Dickinson was stunned after he took an impromptu tour of an air-traffic control tower in Sydney, Australia. Controllers there worked 36-hour weeks on average and seemed happy, rather than stressed. They had more weekends free. ‘It’s absolutely disgusting how much better their lifestyles are than ours,’ said Dickinson, who worked air-traffic control in the U.S. for 13 years and visited the Sydney tower on a trip two years ago. Now he is one of them. Dickinson is among dozens of controllers from the U.S. leaving for jobs overseeing air traffic in Australia, lured by the prospects of a less stressful work environment. Morale among U.S. air-traffic controllers has eroded, according to interviews with a dozen current and former controllers. Frustration has mounted over challenging workloads and pay that they say has lagged behind the rate of inflation.”
“Government’s Historic Role As Trusted Information Source Is Under Threat” (Washington Post). “Researchers and activists increasingly fear that under the Trump administration, the U.S. government is abdicating its historic role as a clearinghouse for reliable information — a momentous shift for what has been the world’s foremost producer of widely accepted data for everyone including academic researchers, local governments and ordinary citizens. Despite sharp swings in the worldview of successive presidents, most agencies have maintained their reputation for evenhanded information.”
“There’s A 92 Percent Chance Trump Is Making It Up” (The Atlantic). “His fixation on the number between 91 and 93 has been a feature for a while. In April, Trump claimed that egg prices had fallen by 92 percent. (The Bureau of Labor Statistics said 12.7 percent.) And at a rally shortly before last November’s election, while railing against journalists and the media, he allowed that ‘not all of them’ are “sick people.” Just ‘about 92 percent.’ That one, admittedly, is difficult to fact-check…[m]ore often than not, the president links the 92 (or more) percent claim to another[.]”
What we’re reading (12/19)
“NY Fed President Williams Says Some ‘Technical Factors’ Distorted November’s CPI Reading Downward” (CNBC). “New York Federal Reserve President John Williams said Friday that ‘technical factors’ likely distorted November’s inflation data, pushing the headline reading lower than it otherwise would have been…The consumer price index rose at a 2.7% annualized rate last month, a delayed report from the Bureau of Labor Statistics showed. Economists polled by Dow Jones expected the CPI to have risen 3.1%.”
“Musk Wins Appeal That Restores 2018 Tesla Pay Deal Now Worth About $139 Billion” (Reuters). “The ruling overturns a decision that had prompted a furious backlash from Musk and damaged Delaware's business-friendly reputation. It assures Musk greater control over the company, which he has said is his main concern, even after shareholders recently approved a new pay package that could be worth $878 billion if Tesla meets certain targets.”
“When Your Private Fund Turns $1 Into 60 Cents” (Wall Street Journal). “For all fund investors, NAV is supposed to stand for ‘net asset value.’ For some, however, it’s turning out to mean ‘not actual value.’ That’s the hard lesson of recent weeks when some funds that invest in private assets have sought to become publicly traded. Prices that investors expected to be stable have collapsed as soon as the portfolios were exposed to public markets. These transitions from private to public cast doubt on Wall Street’s narrative that investors can have their cake and eat it, too. You can have the mild price fluctuations of nontraded assets, or you can have access to your money whenever you want—but it’s turning out that you can’t have both.”
“The Netflix Chief Who Insists He Won’t Ruin Hollywood” (Wall Street Journal). “Sarandos—a student of Hollywood history who worked as a video-store clerk growing up—has long sought an iconic studio property and production lot such as the sprawling Warner Bros. lot in Burbank, Calif., according to people close to him.”
“Mitt Romney: Tax the Rich, Like Me” (Mitt Romney, New York Times). “If, as projected, the Social Security Trust Fund runs out in the 2034 fiscal year, benefits will be cut by about 23 percent. The government will need trillions of dollars to make up the shortfall. When lenders refuse to provide the money unless they are paid much higher interest rates, economic calamity will almost certainly ensue. Alternatively, the government could print more money, inducing hyperinflation that devalues the national debt — along with your savings.”
November performance update
Prime: +1.96%
Select: +5.66%
SPY ETF: -0.33%
Bogleheads Portfolio (80% VTI + 20% BND): -0.02%
What we’re reading (12/13)
“Expected Returns In Public Equities Over The Coming Years” (Torsten Sløk). “The historical relationship between the S&P 500 forward P/E ratio and subsequent 10-year annualized returns shows that investors should expect to get zero in return in the S&P 500 over the coming decade[.]”
“The Fed Did Banks A Solid This Week. More Favors May Be Needed” (Wall Street Journal). “For banks and other players in the U.S. financial system, the Federal Reserve’s next moves on the size of its balance sheet could matter as much or more than its decisions on rates. Following the Fed’s quarter-point rate-cut decision this past week, banks were among the market’s strongest performers. The KBW Nasdaq Bank index was up over 3% for the week, while the S&P 500 was down. Banks undoubtedly benefit from what is being viewed as the Fed’s ‘dovish’ attitude toward its next rate move...But bank stocks’ sharp outperformance was also helped by something else the Fed did on Wednesday: Its somewhat quieter decision to start expanding its balance sheet by buying $40 billion of short-term Treasury securities this month.”
“The Stock Market’s ‘Santa Claus Rally’ Hasn’t Come To Town Yet — Despite What You’re Hearing” (MarketWatch). “The so-called Santa Claus rally didn’t begin this week. The stock market’s activity was a typical response when the Federal Reserve cuts interest rates — Santa had nothing to do with it. Yet that’s not how many in the financial media were describing the rally. These commentators are forgetting that not every rally in December can be credited to Santa. The stock market’s odds of rallying before Christmas are no better than at any other time of year — and maybe even worse. Those contending otherwise are taking Santa’s good name in vain.”
“Corporate-Bond Investors Party As Hangover Looms: Credit Weekly” (Bloomberg). “Fear is drifting out of the corporate-bond market again, even if the risks aren’t. US high-grade spreads touched 0.76 percentage point earlier this week, their tightest levels since October and close to their highest valuation in decades. They’ve been narrowing since late November. The cost of hedging in the North American high-grade credit derivatives market has been declining in recent weeks as well.”
“Humans Made Fire 350,000 Years Earlier Than Previously Thought, Discovery In Suffolk Suggests” (The Guardian). “Humans mastered the art of creating fire 400,000 years ago, almost 350,000 years earlier than previously known, according to a groundbreaking discovery in a field in Suffolk…The latest evidence, which includes a patch of scorched earth and fire-cracked hand-axes, makes a compelling case that humans were creating fire far earlier, at a time when brain size was approaching the modern human range and some species were expanding into harsher northern climates, including Britain.”
What we’re reading (12/12)
“Fresh Concerns About AI Spending Are Rattling Wall Street” (Wall Street Journal). “The potential delay of hundreds of billions of dollars in promised spending on artificial intelligence is dealing a new blow to the stock-market rally. Investors had piled into shares of banks, industrial firms and materials producers earlier this week, with bets that lower interest rates will reheat a sluggish economy sending the Dow Jones Industrial Average and S&P 500 to new highs. On Friday, that fell apart.”
“Why America Gave Up On Economists” (Vox). “Both parties have turned their backs on traditional economic advice. Is the country paying the price?”
“Of MAGA And Monetary Policy” (Paul Krugman). “[E]ven if Trump isn’t able to capture full control over monetary policy through his pick for Fed chair, the effects will still be negative. Because as I pointed out in my critique of Hassett, in times of crisis the Fed chair has to be capable of showing leadership and gravitas, as well as garnering trust. Given that the Fed’s future task has been made especially difficult by Trump’s chaotic policies, higher-than-desired inflation, a weakening job market, very high future deficits, and a falling dollar, installing a Trump sycophant as Fed chair would mean facing any future crisis without any of the reserves of credibility that got us through the global financial crisis in 2008 and the Covid crisis in 2020.”
“Fed Officials Split Over Risks to US Economy Going Into 2026” (Bloomberg). “Federal Reserve officials — including two who will become voters in 2026 — offered strongly opposing views Friday on what to do with interest rates, continuing a debate that will grip the US central bank into the new year. Three policymakers focused in their comments on inflation risks, though one of them suggested he was advocating only a temporary pause to rate cuts to confirm inflation is subsiding. Two more emphasized risks to the labor market instead.”
“SpaceX Sets $800 Billion Valuation, Confirms 2026 IPO Plans” (Bloomberg). “SpaceX is moving forward with an insider share sale that values Elon Musk’s rocket and satellite maker at about $800 billion, setting up what could be the largest initial public offering of all time.”
What we’re reading (12/11)
“How Likely Is A Stock Market Crash?” (Victor Haghani and James White). “Some well-known market observers see a big crash coming – e.g. Mark ‘the crash guy’ Spitznagel, protégé of Black Swan author Nassim Taleb, Michael Burry of The Big Short fame, and Bridgewater founder Ray Dalio. For example, in a recent interview with the WSJ, Spitznagel said: ‘I do expect an 80% crash…but only after a massive, euphoric, historic blow-off rally.’ A statement such as this suggests that Spitznagel believes there’s a greater than 50% chance of at least a 30% market sell-off coming in the foreseeable future, though he’s a bit vague about the exact timing, and the magnitude of the ‘blow-off rally’ that will precede it.”
“Behind The Deal That Took Disney From AI Skeptic To OpenAI Investor” (Wall Street Journal). “OpenAI and Disney disagreed over whether AI companies have the legal right to train models on copyrighted content, an enduring point of tension between Silicon Valley and creatives. Yet Gutierrez’s fireside chat with OpenAI’s intellectual property and content chief Tom Rubin was collegial, according to people familiar with the matter.”
“Fed Cuts Or Not, The Stock Market Is Likely To Move Higher In 2026” (MarketWatch). “There’s a 66% probability that the stock market will rise in 2026. Good news — but this bullishness is not based on an analysis of current market conditions. The U.S. stock market would have a 2 in 3 chance of rising in 2026 even if stocks had lost money this year or if market valuations were less stretched than they are currently.”
“Wall Street Is Starting To Worry About A ‘Lost Decade’ For US Stocks” (Business Insider). “A dark thought is starting to circulate around Wall Street. What if, after years of stellar gains, the US stock market is basically flat for the next decade?”
“With Trump Watching, Coke Makes Clear Its New CEO Is American” (Yahoo! Finance). “Coca-Cola Co.’s advertising has long made clear that its flagship product is “the Real Thing.” Now, the beverage giant wants you to know that its new chief is a real American. In Wednesday’s press release announcing that Henrique Braun would succeed James Quincey as the company’s top executive, Coca-Cola said Braun “is an American citizen who was born in California and raised in Brazil.”
What we’re reading (12/10)
“Divided Fed Approves Third Rate Cut This Year, Sees Slower Pace Ahead” (CNBC). “A Federal Reserve split over where its priorities should lie cut its key interest rate Wednesday, but signaled a tougher road ahead for further reductions. Fulfilling expectations of a ‘hawkish cut,’ the central bank’s Federal Open Market Committee lowered its key overnight borrowing rate by a quarter percentage point, putting it in a range between 3.5%-3.75%.”
“Oracle Shares Tumble As AI Spending Outruns Returns” (Wall Street Journal). “Oracle co-founder Larry Ellison. Oracle is facing mounting anxiety from investors about how much it’s spending to build out data centers for the artificial-intelligence industry. The cloud-computing company’s revenue and operating income for the most recent financial quarter fell slightly short of analysts’ expectations, while the company raised its spending forecast, adding fuel to concerns over the timeline for turning the AI industry’s ravenous demand for computing capacity into profits.”
“Is It A Bubble?” (Howard Marks). “The role of newness is well described in my favorite passage from a book that greatly influenced me, A Short History of Financial Euphoria by John Kenneth Galbraith. Galbraith wrote about what he called ‘the extreme brevity of the financial memory’ and pointed out that in the financial markets, ‘past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present.’ In other words, history can impose limits on awe regarding the present and imagination regarding the future. In the absence of history, on the other hand, all things seem possible.”
“Why The A.I. Boom Is Unlike The Dot-Com Boom” (New York Times). “For all the similarities, however, there are many differences that could lead to a distinctly different outcome. The main one is that A.I. is being financed and controlled by multitrillion-dollar companies like Microsoft, Google and Meta that are in no danger of going kaput, unlike the dot-com start-ups that were little more than an idea and a bunch of engineers.”
“The Elusive Returns To AI Skills: Evidence From A Field Experiment” (Teo Firpo, et al.). “As firms increasingly adopt Artificial Intelligence (AI) technologies, how they adjust hiring practices for skilled workers remains unclear. This paper investigates whether AI-related skills are rewarded in talent recruitment by conducting a large-scale correspondence study in the United Kingdom. We submit 1,185 résumés to vacancies across a range of occupations, randomly assigning the presence or absence of advanced AI-related qualifications. These AI qualifications are added to résumés as voluntary signals and not explicitly requested in the job postings. We find no statistically significant effect of listing AI qualifications in résumés on interview callback rates. However, a heterogeneity analysis reveals some positive and significant effects for positions in Engineering and Marketing. These results are robust to controlling for the total number of skills listed in job ads, the degree of match between résumés and job descriptions, and the level of expertise required. In an exploratory analysis, we find stronger employer responses to AI-related skills in industries with lower exposure to AI technologies. These findings suggest that the labor market valuation of AI-related qualifications is context-dependent and shaped by sectoral innovation dynamics. “
What we’re reading (12/9)
“Fed Cut This Week May Be Last For A While” (Bloomberg). “Federal Reserve officials are primed to deliver a third consecutive interest-rate cut on Wednesday, but the streak may end there. Concerns around lingering inflation have generated a deep division within the US central bank, likely preventing Fed Chair Jerome Powell from signaling any further moves early next year.”
“Massive Debt-Fueled Deals Are Back On Wall Street” (Wall Street Journal). “Big-ticket mergers and acquisitions, or those valued at $10 billion or more, hit a record dollar amount this year, according to Dealogic. Much of the price tag on those deals gets paid for with debt.”
“Netflix’s Swallowing Of Warner Bros. Will Be The End Of Hollywood” (New York Times). “The danger here is not annihilation but centralization. Netflix is the No. 1 premium streaming service. Warner Bros. is one of the most successful of the legacy film studios, and HBO has long been the premier brand in prestige television. These are not middling players; they are two of the main pillars of the modern entertainment industry.”
“JPMorgan Stock Tumbles Over 4% After Company Warns On Higher Spending In 2026” (Yahoo! Finance). “JPMorgan stock fell 4.65% on Tuesday after executive Marianne Lake warned that costs at the bank would rise in 2026 as competition in the credit card space and investments in AI drive higher spending at the firm. The stock's slide made JPMorgan the biggest loser in the Dow Jones Industrial Average on Tuesday. It was the bank's largest one day decline since April 4.”
“Investors’ Bearishness Is Often Overdone — But Their Market Bubble Fears May Be Spot-On” (MarketWatch). “You’re kidding yourself if you think a stock-market bubble can’t form when there is widespread concern about a bubble. Many investors are nevertheless guilty of this line of thinking. They forget that bubbles can — and often do — occur even when many experts and ordinary investors alike are worried about one forming.”